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EX-23.1 - CIS WORLD INC | v174204_ex23-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Amendment
No. 1
FORM
S-1
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
CIS
World, Inc.
(Name of
small business issuer in our charter)
Nevada
|
5045
|
26-1707182
|
||
(State
or other jurisdiction of
incorporation
or organization)
|
(Primary
Standard
Industrial
Classification
Code
Number)
|
IRS
I.D.
|
70
West Madison Street, Suite 1400
First
National Plaza, Chicago, IL 60602
|
60602
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Registrant’s
telephone number: 312-214-3138
InCorp
Services, Inc.
375 N.
Stephanie St., Suite 1411
Henderson,
NV 89014
(702)
866-2500
(Name,
address and telephone number of agent for service)
Approximate
date of commencement of proposed sale to the public: As soon as practicable
after the effective date of this Registration Statement.
If any of
the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box. ¨
If this Form is filed to register
additional securities for an offering pursuant to Rule 462(b) under the
Securities Act, check the following box and list the Securities Act Registration
Statement number of the earlier effective Registration Statement for the same
offering. ¨
If this Form is a post-effective
amendment filed pursuant to Rule 462(c) under the Securities Act, check the
following box and list the Securities Act Registration Statement number of the
earlier effective Registration Statement for the same offering. ¨
If this Form is a post-effective
amendment filed pursuant to Rule 462(d) under the Securities Act, check the
following box and list the Securities Act Registration Statement number of the
earlier effective Registration Statement for the same offering. ¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting
company.
Large accelerated filer ¨ Accelerated Filer ¨
Non-accelerated
filer ¨ Smaller
reporting company ¨
CALCULATION
OF REGISTRATION FEE
Title of each class of
securities to be registered
|
Amount to be
registered [1]
|
Proposed
maximum
offering
price per
unit
|
Proposed
maximum
aggregate
offering price
|
Amount of
registration fee
[2] [3]
|
||||||||||||
Common
Stock offered by the Selling
Stockholders [4]
|
9,513,658
|
$
|
0.20
|
$
|
1,902,731.60
|
$
|
106.17
|
(1) In
accordance with Rule 416(a), the registrant is also registering hereunder an
indeterminate number of shares that may be issued and resold resulting from
stock splits, stock dividends or similar transactions.
(2) Estimated
in accordance with Rule 457(c) of the Securities Act of 1933 solely for the
purpose of computing the amount of the registration fee based on recent prices
of private transactions.
(3) Calculated
under Section 6(b) of the Securities Act of 1933 as .00005580 of the aggregate
offering price.
(4) Represents
shares of the registrant’s common stock being registered for resale that have
been issued to the selling shareholders named in this registration
statement.
The
registrant hereby amends this registration statement on such date or dates as
may be necessary to delay our effective date until the registrant shall file a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a) may
determine.
PROSPECTUS
CIS
World, Inc.
Selling
shareholders are offering up to 9,513,658 shares of common stock. The
selling shareholders will offer their shares at $0.20 per share until our shares
are quoted on the OTC Bulletin Board and, assuming we secure this qualification,
thereafter at prevailing market prices or privately negotiated
prices. We will not receive proceeds from the sale of
shares from the selling shareholders.
There are
no underwriting commissions involved in this offering. We have agreed
to pay all the costs of this offering. Selling shareholders will pay no offering
expenses.
Prior to
this offering, there has been no market for our securities. Our common stock is
not now listed on any national securities exchange, the NASDAQ stock market, or
the OTC Bulletin Board. There is no guarantee that our securities
will ever trade on the OTC Bulletin Board or other exchange.
This
offering is highly speculative and these securities involve a high degree of
risk and should be considered only by persons who can afford the loss of their
entire investment. See “Risk Factors” beginning on page
8.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or passed upon the accuracy or
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.
The date
of this prospectus is _________________
2
TABLE OF
CONTENTS
SUMMARY
INFORMATION AND RISK FACTORS
|
4 | |||
Risk
Factors
|
7 | |||
USE
OF PROCEEDS
|
16 | |||
DETERMINATION
OFFERING PRICE
|
16 | |||
DILUTION
|
16 | |||
SELLING
SHAREHOLDERS
|
16 | |||
PLAN
OF DISTRIBUTION
|
19 | |||
LEGAL
PROCEEDINGS
|
21 | |||
DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
|
21 | |||
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|
23 | |||
DESCRIPTION
OF SECURITIES
|
24 | |||
INTEREST
OF NAMED EXPERTS
|
25 | |||
DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES
LIABILITIES
|
25 | |||
DESCRIPTION
OF BUSINESS
|
26 | |||
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
28 | |||
DESCRIPTION
OF PROPERTY
|
34 | |||
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
|
35 | |||
MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
|
36 | |||
EXECUTIVE
COMPENSATION
|
38 | |||
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
|
42 | |||
FINANCIAL
STATEMENTS
|
43 |
3
SUMMARY
INFORMATION AND RISK FACTORS
You
should carefully read all information in the prospectus, including the financial
statements and their explanatory notes, under the Financial Statements prior to
making an investment decision.
Organization
CIS
World, Inc. is a Nevada corporation formed on November 9, 2007, with registered
address at 375 N. Stephanie St., Suite 1411, Henderson, NV
89014-8909. CIS World, Inc. transacts its business in the U.S.
located in the State of Illinois and has principal office at 70 West Madison
Street, Suite 1400, First National Plaza, Chicago, IL 60602, and contact
telephone number 312-214-3138.
On
December 14, 2008, we established a wholly owned subsidiary, CIS WORLD (HK) LTD,
a wholly-owned subsidiary of CIS World, Inc., is located in Hong Kong, the
address: Flat C, 2F., Eastern Street, Sai Ying Pun, Hong Kong; and contact
number: 0852-60522088.
Business
We
selling ink printer cartridges and printer consumables Asia, Europe, North
America and South America.
Our
Products are:
¨
|
Refillable Cartridge:
Designed for inkjet printers as such as Epson, Canon, HP, Brother with the
same printing effects as the original cartridge, the refillable cartridge
can be refilled and used for many times. Thus it serves both cost-saving
and environment protective
function.
|
¨
|
Continuous Ink Supply
System: Designed for inkjet printers as Epson, Canon, Hp, Brother,
CISS includes ink tanks connected with cartridges and supplies ink
continuously to cartridges. Thus the users need not replace cartridges,
saving cost and achieving environment
protection.
|
From
April 2008 through December 2008, we accomplished a sales amount of $244,362;
and from January to September 30, 2009, we sold total of $
469,367.
During
the year 2008, CIS World, Ltd purchased most of the products and Continue Ink
Supply System and Refillable cartridges from the supplier Shenzhen DZX
Technology Co., Ltd on order basis, which is located at 2nd FL, A
Building, Fuhai Street, Xihe Community, Fuhai Road, Fuyong, Bao’an District, and
Shenzhen, Guangdong, China.
4
On
December 10, 2008, CIS World and KZX signed a 3 year contract authorized CIS
World as KZX’s exclusive selling agent for the products mentioned above in Asia
(China is excluded), Europe, North America, south America and in other regions
as agreed. In general, the cost plus pricing system shall be used by
KZX. The prices and terms offered for CIS World shall be discussed by KZX and
CIS World at the time with terms considering the international trade custom and
existing market competition, so as to realize profits for both
parties. If KZX provides more favorable offers to any other
distributors or manufacturers concerning the Products, KZX shall inform CIS
World in written and provide more favorable terms to CIS World. Kangzhixin
Technology (Shenzhen) Co., Ltd. (“KZX”), manufacturer of our products, which is
located at B3 Third Layer of the east, Fourth Industrial Parks of Rich Briade,
Fuyong Neighborhood Bridgehead Community, Bao’an District, Shenzhen, Guangdong
China, produces various refillable cartridges and continuous ink supply
systems.Ms. Wu Cuixian, a Director of CIS World, owns 39 percent of
KZX.
The
Offering
As of the
date of this prospectus, we had 39,535,861 shares of common stock
outstanding.
Selling
shareholders are offering up to 9,513,658 shares of common stock. The
selling shareholders will offer their shares at $0.20 per share until our shares
are quoted on the OTC Bulletin Board and thereafter at prevailing market prices
or privately negotiated pricesWe will pay all expenses of registering the
securities, estimated at approximately $100,000. We will not receive
any proceeds of the sale of these securities.
To be
quoted on the OTC Bulletin Board, a market maker must file an application on our
behalf in order to make a market for our common stock. The current
absence of a public market for our common stock may make it more difficult for
you to sell shares of our common stock that you own.
Financial
Summary
Because
this is only a financial summary, it does not contain all the financial
information that may be important to you. Therefore, you should carefully read
all the information in this prospectus, including the financial statements and
their explanatory notes before making an investment decision.
STATEMENT
OF LOSS
Period
|
||||||||||||
November 9,
|
||||||||||||
Nine Month
|
Year
|
2007 (Date of
|
||||||||||
Ended
|
Ended
|
Inception)
|
||||||||||
September 30
|
December
|
Through
|
||||||||||
2009
|
31,
|
September 30
|
||||||||||
(unaudited)
|
2008
|
2009
|
||||||||||
Revenues:
|
$
|
469367
|
$
|
244,362
|
$
|
713,729
|
||||||
COGS:
|
$
|
452,504
|
$
|
234,963
|
$
|
687,467
|
||||||
Gross
Profit
|
$
|
16,863
|
$
|
9,399
|
$
|
26,262
|
||||||
Operating
expenses:
|
$
|
33,951
|
$
|
93,898
|
$
|
132,975
|
||||||
Net
Loss
|
$
|
(17,082
|
)
|
$
|
(84,437
|
)
|
$
|
(106,645
|
)
|
5
CIS
World, INC.
BALANCE
SHEETS
|
September 30
2009
|
December 31
|
December
31
|
|||||||||
|
(unaudited)
|
2008
|
2007
|
|||||||||
ASSETS
|
177,179
|
$
|
205,510
|
$
|
20,000
|
|||||||
LIABILITIES
|
13,492
|
$
|
24,741
|
$
|
5,126
|
|||||||
STOCKHOLDERS’
Equity
|
163,687
|
$
|
180,769
|
$
|
14,874
|
|||||||
TOTAL
LIABILITIES & EQUITY
|
177,179
|
$
|
205,510
|
$
|
20,000
|
6
Risk
Factors
In
addition to the other information provided in this prospectus, you should
carefully consider the following risk factors in evaluating our business before
purchasing any of our common stock. All material risks are discussed
in this section.
There is substantial doubt
about our ability to continue as a going concern as a result of our lack of
significant revenues and if we are unable to generate significant revenue or
secure financing we may be required to cease or curtail our
operations.
Our lack
of significant revenues raise substantial doubt about our ability to continue as
a going concern. Our financial statements do not include adjustments
that might result from the outcome of this uncertainty and if we are unable to
generate significant revenue or secure financing we may be required to cease or
curtail our operations.
Any decrease in the
availability, or increase in the cost, of printer cartridges and CISS we
purchase for resale could materially affect our earnings.
Our
operations depend heavily on the availability of printer cartridges and CISS we
resell. We purchase printer cartridges from KZX and then resell it to our
customers. However, if KZX is unable or unwilling to provide us with printer
cartridges or CISS on terms favorable to us, we may be unable to produce certain
products and services. This could result in a decrease in profit and damage to
our reputation in our industry. In the event our costs of acquiring
these printer cartridges and CISS increases, we may not be able to pass these
higher costs on to our customers in full or at all. Any increase in the prices
for printer cartridges and CISS could materially increase our costs and
therefore lower our earnings.
The competitive pressures we
face could harm our revenue, gross margin and prospects.
We
encounter aggressive competition from numerous and varied competitors in the
sale of our products. We may have to lower the prices of our products and
services to stay competitive, while at the same time trying to maintain or
improve revenue and gross margin. The markets in which we do business, printing
supplies markets, are highly competitive, and we encounter aggressive price
competition for all of our products from numerous companies globally. Over the
past several years, price competition in the market for printing related
products has been particularly intense as competitors have aggressively cut
prices and lowered their product margins for these products. In addition,
competitors in some of the markets in which we compete with a greater presence
in lower-cost jurisdictions may be able to offer lower prices than we are able
to offer. Our results of operations and financial condition may be adversely
affected by these and other industry-wide pricing pressures.
7
Due to the international
nature of our business, political or economic changes or other factors could
harm our future revenue, costs and expenses and financial
condition.
Our sales
outside the United States make up 100% of our net revenue in emerging markets,
including Asia and South America. Our future revenue, gross margin, expenses and
financial condition could suffer due to a variety of international factors,
including:
¨
|
ongoing
instability or changes in a country's or region's economic or political
conditions, including inflation, recession, interest rate fluctuations and
actual or anticipated military or political
conflicts;
|
¨
|
longer
accounts receivable cycles and financial instability among
customers;
|
¨
|
trade
regulations and procedures and actions affecting production, pricing and
marketing of products;
|
¨
|
changes
in the regulatory or legal
environment;
|
¨
|
differing
technology standards or customer
requirements;
|
¨
|
import,
export or other business licensing requirements or requirements relating
to making foreign direct investments, which could affect our ability to
obtain favorable terms for components or lead to penalties or
restrictions;
|
¨
|
difficulties
associated with repatriating cash generated or held abroad in a
tax-efficient manner and changes in tax laws;
and
|
¨
|
fluctuations
in freight costs and disruptions in the transportation and shipping
infrastructure at important geographic points of exit and entry for our
products and shipments.
|
The
factors described above also could disrupt our product and component
manufacturing and key suppliers located outside of the United States. For
example, we rely on manufacturers in China for the production of all of our
products.
Due to
all of our sales being from countries outside of the United States, other
currencies, particularly the Hong Kong dollars, euro, the British pound, Chinese
Yuan Renminbi and the Japanese yen, can have an impact on our results (expressed
in U.S. dollars). Currency variations also contribute to variations in sales of
products and services in impacted jurisdictions. Accordingly, fluctuations in
foreign currency rates could have a material impact on our revenue growth in
future periods. In addition, currency variations can adversely affect margins on
sales of our products in countries outside of the United States and margins on
sales of products that include components obtained from suppliers located
outside of the United States.
8
We depend exclusively on a
third-party supplier KZX for the products we sell, and our revenue and gross
margin could suffer if we fail to manage suppliers properly.
Our
operations depend on our ability to anticipate our needs for products and our
suppliers' ability to deliver sufficient quantities of quality products at
reasonable prices in time for us to meet delivery schedules. Supplier problems
that we could face include component shortages, excess supply, risks related to
the terms of our contracts with suppliers, and risks related to our
relationships with KZX, our single source suppliers. Our agreement
with KZX contains various termination provisions, including the right of either
party to terminate the agreement “in written 90 days before theexpiration of
[the] agreement.” Our use of a single source supplier for our could
exacerbate our supplier issues. We obtain all our products from single sources
due to technology, availability, price, quality or other considerations. If the
agreement is terminated or we are otherwise unable to obtain required supplies
from KZX, replacing our single source supplier could delay sales of our products
as replacement suppliers initially may be subject to capacity constraints or
other output limitations. Alternative sources may not exist or those alternative
sources may be unable to produce the quantities of those components necessary to
satisfy our production requirements. In addition, terms but that may be
unilaterally modified or terminated by the supplier with limited notice and with
little or no penalty. The performance of such single source suppliers under this
agreement (and the renewal or extension of this agreement upon similar terms)
may affect the quality, quantity and price of supplies to us. The loss of our
single source supplier, the deterioration of our relationship with a single
source supplier, or any unilateral modification to the contractual terms under
which we are supplied components by our single source supplier could adversely
affect our revenue and gross margins.
Our revenues are highly
concentrated in several customers which accounts for more than 85% of our
revenues, and our revenues could be reduced if these customers reduce their
orders from us.
In our
fiscal year ended December 31, 2008, the following customers accounted for the
following amounts and percentages of our total revenues:
Name of Customers
|
Amount of
Revenue
|
Percentage of
Total Revenues
|
||||||
Hendra
H
|
$
|
65,027.70
|
27
|
%
|
||||
Hendri
Wongso
|
$
|
43,761.50
|
18
|
%
|
||||
TNY
Trading Co. Ltd
|
$
|
64,228.50
|
26
|
%
|
||||
$
|
173,017.70
|
71
|
%
|
In our
nine months ended September 30, 2009, the following customers accounted for the
following amounts and percentages of our total revenues:
Name of Customers
|
Amount of
Revenue
|
Percentage of
Total Revenues
|
||||||
Hendra
H
|
$
|
172,618
|
37
|
%
|
||||
Machtec
Comercio Imp& Exp. Ltd
|
$ |
51,928
|
11%
|
|||||
Hendri
Wongso
|
$
|
113,537
|
24
|
%
|
||||
$
|
338,083
|
72
|
%
|
9
We have
no agreements with these customers, who purchases from us on purchase orders
only. If we cease
to do business with these customers at current levels and are unable to generate
additional sales with new and existing customers that purchase a similar amount
of our products, our revenues and net income would decline
considerably.
Risks Related to Management
and Personnel
We depend heavily on key
personnel, and turnover of key senior management could harm our
business.
Our
future business and results of operations depend in significant part upon the
continued contributions of our senior management personnel, including Rui Xia
Yuan, Chairman of Board of Directors; Lijun Wu, Director, President & CEO;
Cuixian Wu, Director, Secretary; Honghui Wen, Director, CFO. If we
lose Rui Xia Yuan, Chairman; Lijun Wu, President and CEO, Cuixian Wu, Secretary,
and Honghui Wen, CFO; or if Rui Xia Yuan, Chairman; Lijun Wu, President &
CEO, Cuixian Wu, Secretary, Honghui Wen, CFO fail to perform in their current
positions, or if we are not able to attract and retain skilled employees as
needed, our business could suffer. Significant turnover in our senior management
could significantly deplete our institutional knowledge held by our existing
senior management team. We depend on the skills and abilities of these key
employees in managing the product acquisition, marketing and sales aspects of
our business, any part of which could be harmed by turnover in the
future.
Our management has limited
experience in managing the day to day operations of a public company and, as a
result, we may incur additional expenses associated with the management of our
company.
The
management team, including Rui Xia Yuan, Chairman; Lijun Wu, President and CEO;
Cuixian Wu, Secretary; and Honghui Wen , CFO, is responsible for the operations
and reporting of the combined company. The requirements of operating as a small
public company are new to the management team and the employees as a whole. This
may require us to obtain outside assistance from legal, accounting, investor
relations, or other professionals that could be more costly than planned. We may
also be required to hire additional staff to comply with additional SEC
reporting requirements and compliance under the Sarbanes-Oxley Act of 2002. Our
failure to comply with reporting requirements and other provisions of securities
laws could negatively affect our stock price and adversely affect our results of
operations, cash flow and financial condition.
10
Although we believe that we
currently have adequate internal control over financial reporting, we are
exposed to risks from recent legislation requiring companies to evaluate
internal control over financial reporting.
Section
404 of the Sarbanes-Oxley Act of 2002 ("Section 404") requires our
management to report on the operating effectiveness of the Company's
Internal Controls over financial reporting for the year ending December 31
following the year in which this registration statement is declared effective,
assuming that year is 2010. Enterprise CPAs, Ltd., our independent registered
public accounting firm, will be required to attest to the effectiveness of our
internal control over financial reporting beginning with the year ending
thereafter. We must establish an ongoing program to perform the system and
process evaluation and testing necessary to comply with these requirements. We
expect that the cost of this program will require us to incur expenses and to
devote resources to Section 404 compliance on an ongoing basis.
It is
difficult for us to predict how long it will take to complete management's
assessment of the effectiveness of our internal control over financial
reporting for each year and to remediate any deficiencies in our internal
control over financial reporting. As a result, we may not be able to complete
the assessment and process on a timely basis. In the event that our Chief
Executive Officer, Chief Financial Officer or independent registered public
accounting firm determine that our internal control over financial reporting is
not effective as defined under Section 404, we cannot predict how regulators
will react or how the market prices of our shares will be affected.
Because we do not have an
audit or compensation committee, shareholders will have to rely on the entire
board of directors, none of which are independent, to perform these
functions.
We do not
have an audit or compensation committee comprised of independent
directors. Indeed, we do not have any audit or compensation
committee. These functions are performed by the board of directors as
a whole. No members of the board of directors are independent
directors. Thus, there is a potential conflict in that board members
who are also part of management will participate in discussions concerning
management compensation and audit issues that may affect management
decisions.
Certain
of our stockholders hold a significant percentage of our outstanding voting
securities which could reduce the ability of minority shareholders to effect
certain corporate actions.
Our
officers, directors and majority shareholders are the beneficial owners of
approximately 51% of our outstanding voting securities. As a result, they
possess significant influence and can elect a majority of our board of directors
and authorize or prevent proposed significant corporate transactions. Their
ownership and control may also have the effect of delaying or preventing a
future change in control, impeding a merger, consolidation, takeover or other
business combination or discourage a potential acquirer from making a tender
offer.
11
Risks Related to our
Operations due to Relationship with Supplier in China
Because
our exclusive supplier is located in China, the following risks could affect the
business of our supplier. If these factors result in cost increases
to our supplier, because our agreement with our supplier is based upon their
costs, the prices of products we buy from our supplier for resale would
increase. If we are unable to increase prices to our customers in
this event, our profitability would be reduced.
Changes in China’s political
or economic situation could increase our suppliers costs.
Economic
reforms adopted by the Chinese government have had a positive effect on the
economic development of the country, but the government could change these
economic reforms or any of the legal systems at any time. This could either
benefit or damage operations and profitability. Some of the things that could
have this effect are:
•
|
Level
of government involvement in the
economy;
|
•
|
Control
of foreign exchange;
|
•
|
Methods
of allocating resources;
|
•
|
Balance
of payments position;
|
•
|
International
trade restrictions; and
|
•
|
International
conflict.
|
The
Chinese economy differs from the economies of most countries belonging to the
Organization for Economic cooperation and Development, or OECD, in many ways.
For example, state-owned enterprises still constitute a large portion of the
Chinese economy, and weak corporate governance traditions and a lack of flexible
currency exchange policy continue to persist. As a result of these differences,
the business of our supplier could be adversely affected.
The Chinese government
exerts substantial influence over the manner in which our supplier must conduct
its business activities.
Only
recently has China permitted provincial and local economic autonomy and private
economic activities. The Chinese government has exercised and continues to
exercise substantial control over virtually every sector of the Chinese economy
through regulation and state ownership. The central or local governments of the
jurisdictions in which our supplier operates may impose new, stricter
regulations or interpretations of existing regulations that would require
additional expenditures and efforts on its part to ensure our compliance with
such regulations or interpretations.
12
We may be
unable to enforce our rights due to policies regarding the regulation of foreign
investments in China, which could reduce our ability to compete and our
revenues.
The PRC's
legal system is a civil law system based on written statutes in which decided
legal cases have little value as precedents, unlike the common law system
prevalent in the United States. The PRC does not have a
well-developed, consolidated body of laws governing foreign investment
enterprises. As a result, the administration of laws and regulations by
government agencies may be subject to considerable discretion and variation, and
may be subject to influence by external forces unrelated to the legal merits of
a particular matter. China's regulations and policies with respect to
foreign investments are evolving. Definitive regulations and policies with
respect to such matters as the permissible percentage of foreign investment and
permissible rates of equity returns have not yet been
published. Statements regarding these evolving policies have been
conflicting and any such policies, as administered, are likely to be subject to
broad interpretation and discretion and to be modified, perhaps on a
case-by-case basis. The uncertainties regarding such regulations and policies
present risks which may affect our ability to achieve our business
objectives. If we are unable to enforce any legal rights we may have
under our contracts or otherwise, our ability to compete with other companies in
our industry could be materially and negatively affected and our revenues could
be reduced.
It may be difficult for
stockholders to enforce any judgment obtained in the United States against us,
which may limit the remedies otherwise available to our
stockholders.
All
except one of our directors and officers are nationals or residents of
China. All or a substantial portion of the assets of these persons
are located outside the United States. As a result, it may be
difficult for our stockholders to effect service of process within the United
States upon these persons. In addition, there
is uncertainty as to whether the courts of China would
recognize or enforce judgments of U.S. courts obtained against such
officers and/or directors predicated upon the civil
liability provisions of
the securities law of the United States or any state
thereof, or be competent to hear original actions brought in China against such
persons predicated upon
the securities laws of the United States or any state
thereof. Further, China’s treaties do not provide for reciprocal
recognition and enforcement of judgments of U.S. courts.
Risks Related to the Market
for our Stock
Investors may have
difficulty in reselling their shares due to the lack of market or state Blue Sky
laws.
Our
common stock is currently not quoted on any market. No market may ever develop
for our common stock, or if developed, may not be sustained in the
future.
13
The
holders of our shares of common stock and persons who desire to purchase them in
any trading market that might develop in the future should be aware that there
may be significant state law restrictions upon the ability of investors to
resell our shares. Accordingly, even if we are successful in having the Shares
available for trading on the OTCBB, investors should consider any secondary
market for the Company's securities to be a limited one. We intend to seek
coverage and publication of information regarding the company in an accepted
publication which permits a "manual exemption." This manual exemption permits a
security to be distributed in a particular state without being registered if the
company issuing the security has a listing for that security in a securities
manual recognized by the state. However, it is not enough for the security to be
listed in a recognized manual. The listing entry must contain (1) the names of
issuers, officers, and directors, (2) an issuer's balance sheet, and (3) a
profit and loss statement for either the fiscal year preceding the balance sheet
or for the most recent fiscal year of operations. We may not be able
to secure a listing containing all of this information. Furthermore,
the manual exemption is a non issuer exemption restricted to secondary trading
transactions, making it unavailable for issuers selling newly issued securities.
Most of the accepted manuals are those published in Standard and Poor's, Moody's
Investor Service, Fitch's Investment Service, and Best's Insurance Reports, and
many states expressly recognize these manuals. A smaller number of states
declare that they “recognize securities manuals” but do not specify the
recognized manuals. The following states do not have any provisions and
therefore do not expressly recognize the manual exemption: Alabama, Georgia,
Illinois, Kentucky, Louisiana, Montana, South Dakota, Tennessee, Vermont and
Wisconsin.
Accordingly,
our shares should be considered totally illiquid, which inhibits investors’
ability to resell their shares.
We will be subject to penny
stock regulations and restrictions and you may have difficulty selling shares of
our common stock.
The SEC
has adopted regulations which generally define so-called “penny stocks” to be an
equity security that has a market price less than $5.00 per share or an exercise
price of less than $5.00 per share, subject to certain exemptions. We
anticipate that our common stock will become a “penny stock”, and we will become
subject to Rule 15g-9 under the Exchange Act, or the “Penny Stock Rule”. This
rule imposes additional sales practice requirements on broker-dealers that sell
such securities to persons other than established customers. For transactions
covered by Rule 15g-9, a broker-dealer must make a special suitability
determination for the purchaser and have received the purchaser’s written
consent to the transaction prior to sale. As a result, this rule may affect the
ability of broker-dealers to sell our securities and may affect the ability of
purchasers to sell any of our securities in the secondary market.
For any
transaction involving a penny stock, unless exempt, the rules require delivery,
prior to any transaction in a penny stock, of a disclosure schedule prepared by
the SEC relating to the penny stock market. Disclosure is also required to be
made about sales commissions payable to both the broker-dealer and the
registered representative and current quotations for the securities. Finally,
monthly statements are required to be sent disclosing recent price information
for the penny stock held in the account and information on the limited market in
penny stock.
14
We do not
anticipate that our common stock will qualify for exemption from the Penny Stock
Rule. In any event, even if our common stock were exempt from the Penny Stock
Rule, we would remain subject to Section 15(b)(6) of the Exchange Act, which
gives the SEC the authority to restrict any person from participating in a
distribution of penny stock, if the SEC finds that such a restriction would be
in the public interest.
Sales of our common stock
under Rule 144 could reduce the price of our stock.
There are
19,027,316 shares of our common stock held by non-affiliates and 20,508,545
shares held by affiliates Rule 144 of the Securities Act of 1933 defines as
restricted securities.
All of
our shares held by non-affiliates are currently eligible for resale as they are
either being registered in this offering or may be resold under Rule 144,
however affiliates will still be subject to the resale restrictions of Rule
144. In general, persons holding restricted securities, including
affiliates, must hold their shares for a period of at least six months, may not
sell more than one percent of the total issued and outstanding shares in any
90-day period, and must resell the shares in an unsolicited brokerage
transaction at the market price. The availability for sale of
substantial amounts of common stock under Rule 144 could reduce prevailing
market prices for our securities.
If we do not file a
Registration Statement on Form 8-A to become a mandatory reporting company under
Section 12(g) of the Securities Exchange Act of 1934, we will continue as a
reporting company but will not be subject to the proxy statement or other
information requirements of the 1934 Act, our securities can no longer be quoted
on the OTC Bulletin Board, and our officers, directors and 10% stockholders will
not be required to submit reports to the SEC on their stock ownership and stock
trading activity, all of which could reduce the value of your investment and the
amount of publicly available information about us.
As a
result of this offering assuming it is declared effective in the year ended
December 31, 2010, as required under Section 15(d) of the Securities Exchange
Act of 1934, we will file periodic reports with the Securities and Exchange
Commission through December 31, 2010, including a Form 10-K for the year ending
December 31, 2010, assuming this registration statement is declared effective
before that date. At or prior to December 31, 2010, we intend
voluntarily to file a registration statement on Form 8-A which will subject us
to all of the reporting requirements of the 1934 Act. This will require us to
file quarterly and annual reports with the SEC and will also subject us to the
proxy rules of the SEC. In addition, our officers, directors and 10%
stockholders will be required to submit reports to the SEC on their stock
ownership and stock trading activity. We are not required under
Section 12(g) or otherwise to become a mandatory 1934 Act filer unless we have
more than 500 shareholders and total assets of more than $10 million on December
31, 2010. If we do not file a registration statement on Form 8-A at
or prior to December 31, 2010, we will continue as a reporting company that will
not be subject to the proxy rules, Section 16 ownership reporting and short
swing profits provisions or other requirements of the 1934 Act, our securities
can no longer be quoted on the OTC Bulletin Board, and our officers, directors
and 10% stockholders will not be required to submit reports to the SEC on their
stock ownership and stock trading activity.
15
Special
Information Regarding Forward Looking Statements
Some of
the statements in this prospectus are “forward-looking
statements.” These forward-looking statements involve certain known
and unknown risks, uncertainties and other factors which may cause our actual
results, performance or achievements to be materially different from any future
results, performance or achievements expressed or implied by these
forward-looking statements. These factors include, among others, the
factors set forth above under “Risk Factors.” The words “believe,”
“expect,” “anticipate,” “intend,” “plan,” and similar expressions identify
forward-looking statements. We caution you not to place undue
reliance on these forward-looking statements. We undertake no
obligation to update and revise any forward-looking statements or to publicly
announce the result of any revisions to any of the forward-looking statements in
this document to reflect any future or developments. However, the
Private Securities Litigation Reform Act of 1995 is not available to us as a
non-reporting issuer. Further, Section 27A(b)(2)(D) of the Securities
Act and Section 21E(b)(2)(D) of the Securities Exchange Act expressly state that
the safe harbor for forward looking statements does not apply to statements made
in connection with an initial public offering.
USE
OF PROCEEDS
Not
applicable. We will not receive any proceeds from the sale of shares
offered by the selling shareholders.
DETERMINATION
OFFERING PRICE
The
offering price has been arbitrarily determined and does not bear any
relationship to our assets, results of operations, or book value, or to any
other generally accepted criteria of valuation. Prior to this offering, there
has been no market for our securities. In order to assure that
selling shareholders will offer their shares at $.20 per share until our shares
are quoted on the OTC Bulletin Board, we will notified our shareholders and our
Transfer Agent that no sales will be allowed prior to the date our shares are
quoted on the OTC Bulletin Board without proof the selling price.
DILUTION
Not
applicable. We are not offering any shares in this registration statement. All
shares are being registered on behalf of our selling
shareholders.
16
SELLING
SHAREHOLDERS
The
selling shareholders named below are selling the securities. The
table assumes that all of the securities will be sold in this offering. However,
any or all of the securities listed below may be retained by any of the selling
shareholders, and therefore, no accurate forecast can be made as to the number
of securities that will be held by the selling shareholders upon termination of
this offering. These selling shareholders acquired their shares by
purchase exempt from registration under section 4(2) of the Securities Act of
1933 or Regulation S under the Securities Act of 1933. We believe
that the selling shareholders listed in the table have sole voting and
investment powers with respect to the securities indicated. We will
not receive any proceeds from the sale of the securities by the selling
shareholders. No selling shareholders are broker-dealers or
affiliates of broker-dealers.
Selling Shareholder
|
Shares to
offered by the
Selling
Shareholders
|
% owned
before
Offering
|
Amount
owned
after the
offering,
assuming
all shares
sold
|
% owned
after the
offering,
assuming
all shares
sold
|
Any
Transaction
or
Relationaship
in past 3
years
|
||||||||||||
CLAUDIA
LEVY
|
10,000 | 0.03 | % | 10,000 | 0.03 | % | |||||||||||
SHAN
FU CHEN
|
150,000 | 0.38 | % | 150,000 | 0.38 | % | |||||||||||
SIBLY
L.OFFUTT
|
10,000 | 0.03 | % | 10,000 | 0.03 | % | |||||||||||
YUN
COYNE
|
250,000 | 0.63 | % | 250,000 | 0.63 | % | |||||||||||
ANTHONY
C. BRUCE
|
500,000 | 1.26 | % | 500,000 | 1.26 | % | |||||||||||
JIA
B CHEN
|
50,000 | 0.13 | % | 50,000 | 0.13 | % | |||||||||||
CHANG
FEI ZHENG
|
100,000 | 0.25 | % | 100,000 | 0.25 | % | |||||||||||
SURANDY
C. SANDERS
|
50,000 | 0.13 | % | 50,000 | 0.13 | % | |||||||||||
ODELL
ROBERTSON
|
10,000 | 0.03 | % | 10,000 | 0.03 | % | |||||||||||
EVA
LIANG
|
50,000 | 0.13 | % | 50,000 | 0.13 | % | |||||||||||
LIFEN
HUI
|
100,000 | 0.25 | % | 100,000 | 0.25 | % | |||||||||||
LINDA
RUAN
|
50,000 | 0.13 | % | 50,000 | 0.13 | % | |||||||||||
GRACE
NWAKA WABOMNOR
|
75,000 | 0.19 | % | 75,000 | 0.19 | % | |||||||||||
LIAN
ZHI LIU
|
250,000 | 0.63 | % | 250,000 | 0.63 | % | |||||||||||
XUE
LAN CHEN
|
50,000 | 0.13 | % | 50,000 | 0.13 | % | |||||||||||
OOMMEN
GEORGE
|
25,000 | 0.06 | % | 25,000 | 0.06 | % | |||||||||||
RALPH
LOUIS SIRIANNI
|
500,000 | 1.26 | % | 500,000 | 1.26 | % | |||||||||||
JIANYONG
ZHANG
|
152,968 | 0.39 | % | 152,968 | 0.39 | % | |||||||||||
JUAN
ZHEN
|
152,832 | 0.39 | % | 152,832 | 0.39 | % | |||||||||||
MEIYAN
LIU
|
51,089 | 0.13 | % | 51,089 | 0.13 | % | |||||||||||
HANQUAN
LIU
|
154,062 | 0.39 | % | 154,062 | 0.39 | % | |||||||||||
ZHIPING
SU
|
52,824 | 0.13 | % | 52,824 | 0.13 | % | |||||||||||
HUAJUAN
WU
|
50,105 | 0.13 | % | 50,105 | 0.13 | % | |||||||||||
MINRU
SU
|
50,105 | 0.13 | % | 50,105 | 0.13 | % | |||||||||||
QING
CHEN
|
50,105 | 0.13 | % | 50,105 | 0.13 | % | |||||||||||
WEI
CUI
|
49,637 | 0.13 | % | 49,637 | 0.13 | % | |||||||||||
PING
ZHOU
|
255,022 | 0.65 | % | 255,022 | 0.65 | % | |||||||||||
ZHONGXIANG
HUANG
|
255,022 | 0.65 | % | 255,022 | 0.65 | % | |||||||||||
YULING
LIANG
|
254,975 | 0.64 | % | 254,975 | 0.64 | % | |||||||||||
XIAOMEI
LIU
|
254,975 | 0.64 | % | 254,975 | 0.64 | % | |||||||||||
NIYAN
WU
|
254,975 | 0.64 | % | 254,975 | 0.64 | % | |||||||||||
SHIWEI
WU
|
203,465 | 0.51 | % | 203,465 | 0.51 | % | |||||||||||
LINWANG
ZHANG
|
77,265 | 0.20 | % | 77,265 | 0.20 | % | |||||||||||
DANXIA
HUANG
|
50,573 | 0.13 | % | 50,573 | 0.13 | % | |||||||||||
HUAN
HUANG
|
258,175 | 0.65 | % | 258,175 | 0.65 | % | |||||||||||
FANG
WU
|
75,579 | 0.19 | % | 75,579 | 0.19 | % | |||||||||||
XIAOYING
CHEN
|
254,273 | 0.64 | % | 254,273 | 0.64 | % | |||||||||||
XIANGHUI
LU
|
353,079 | 0.89 | % | 353,079 | 0.89 | % | |||||||||||
CHUHUA
LUO
|
254,273 | 0.64 | % | 254,273 | 0.64 | % | |||||||||||
ZHENJIA
LIANG
|
254,273 | 0.64 | % | 254,273 | 0.64 | % | |||||||||||
YANYUN
LIAO
|
254,273 | 0.64 | % | 254,273 | 0.64 | % | |||||||||||
JINBIAO
YUAN
|
254,273 | 0.64 | % | 254,273 | 0.64 | % | |||||||||||
WANLAN
YUAN
|
254,273 | 0.64 | % | 254,273 | 0.64 | % | |||||||||||
DONGYANG
YUAN
|
254,273 | 0.64 | % | 254,273 | 0.64 | % | |||||||||||
SUWEN
CHEN
|
254,273 | 0.64 | % | 254,273 | 0.64 | % | |||||||||||
XIAOXIA
YUAN
|
254,273 | 0.64 | % | 254,273 | 0.64 | % | |||||||||||
YANXIA
CHEN
|
152,189 | 0.38 | % | 152,189 | 0.38 | % | |||||||||||
WANPING
YUAN
|
101,147 | 0.26 | % | 101,147 | 0.26 | % | |||||||||||
JINWANG
WEN
|
178,646 | 0.45 | % | 178,646 | 0.45 | % | |||||||||||
JUN
FENG WU
|
127,137 | 0.32 | % | 127,137 | 0.32 | % | |||||||||||
LIHENG
WU
|
101,381 | 0.26 | % | 101,381 | 0.26 | % | |||||||||||
FENG
YING LUO
|
101,381 | 0.26 | % | 101,381 | 0.26 | % | |||||||||||
HONGDONG
DING
|
60,173 | 0.15 | % | 60,173 | 0.15 | % | |||||||||||
YING
CHEN
|
49,871 | 0.13 | % | 49,871 | 0.13 | % | |||||||||||
CHANGXIN
HAN
|
45,891 | 0.12 | % | 45,891 | 0.12 | % | |||||||||||
LING
YANG
|
257,551 | 0.65 | % | 257,551 | 0.65 | % | |||||||||||
ZILING
LIU
|
257,551 | 0.65 | % | 257,551 | 0.65 | % | |||||||||||
HAIYIN
LIU
|
152,189 | 0.38 | % | 152,189 | 0.38 | % | |||||||||||
SUZHEN
CHEN
|
254,273 | 0.64 | % | 254,273 | 0.64 | % | |||||||||||
MICHAEL
T. WILLIAMS
|
99,000 | 0.25 | % | 99,000 | 0.25 | % |
Attorney
|
||||||||||
Total
|
9,513,658 | 24.06 | % | 9,513,658 | 24.06 | % |
17
Blue Sky
The
holders of our shares of common stock and persons who desire to purchase them in
any trading market that might develop in the future should be aware that there
may be significant state law restrictions upon the ability of investors to
resell our shares. Accordingly, even if we are successful in having the Shares
available for trading on the OTCBB, investors should consider any secondary
market for the Company's securities to be a limited one. We intend to seek
coverage and publication of information regarding the company in an accepted
publication which permits a "manual exemption." This manual exemption permits a
security to be distributed in a particular state without being registered if the
company issuing the security has a listing for that security in a securities
manual recognized by the state. However, it is not enough for the security to be
listed in a recognized manual. The listing entry must contain (1) the names of
issuers, officers, and directors, (2) an issuer's balance sheet, and (3) a
profit and loss statement for either the fiscal year preceding the balance sheet
or for the most recent fiscal year of operations. We may not be able
to secure a listing containing all of this information. Furthermore,
the manual exemption is a non issuer exemption restricted to secondary trading
transactions, making it unavailable for issuers selling newly issued securities.
Most of the accepted manuals are those published in Standard and Poor's, Moody's
Investor Service, Fitch's Investment Service, and Best's Insurance Reports, and
many states expressly recognize these manuals. A smaller number of states
declare that they “recognize securities manuals” but do not specify the
recognized manuals. The following states do not have any provisions and
therefore do not expressly recognize the manual exemption: Alabama, Georgia,
Illinois, Kentucky, Louisiana, Montana, South Dakota, Tennessee, Vermont and
Wisconsin.
We
currently do not intend to and may not be able to qualify securities for resale
in other states which require shares to be qualified before they can be resold
by our shareholders.
PLAN
OF DISTRIBUTION
Our
common stock is currently not quoted on any market. No market may
ever develop for our common stock, or if developed, may not be sustained in the
future. Accordingly, our shares should be considered totally
illiquid, which inhibits investors’ ability to resell their shares.
Selling
shareholders are offering up to 9,513,658 shares of common stock. The
selling shareholders will offer their shares at $0.20 per share until our shares
are quoted on the OTC Bulletin Board and thereafter at prevailing market prices
or privately negotiated prices. We will not receive any proceeds of
the sale of these securities. We will pay all expenses of registering
the securities.
The
securities offered by this prospectus will be sold by the selling shareholders
without underwriters and without commissions. The distribution of the
securities by the selling shareholders may be effected in one or more
transactions that may take place in the over-the-counter market or privately
negotiated transactions.
18
The
selling shareholders may pledge all or a portion of the securities owned as
collateral for margin accounts or in loan transactions, and the securities may
be resold pursuant to the terms of such pledges, margin accounts or loan
transactions. Upon default by such selling shareholders, the pledge in such loan
transaction would have the same rights of sale as the selling shareholders under
this prospectus. The selling shareholders may also enter into exchange traded
listed option transactions, which require the delivery of the securities listed
under this prospectus. After our securities are qualified for quotation on the
OTC Bulletin Board, the selling shareholders may also transfer securities owned
in other ways not involving market makers or established trading markets,
including directly by gift, distribution, or other transfer without
consideration, and upon any such transfer the transferee would have the same
rights of sale as such selling shareholders under this prospectus.
In
addition to the above, each of the selling shareholders will be affected by the
applicable provisions of the Securities Exchange Act of 1934, including, without
limitation, Regulation M, which may limit the timing of purchases and sales of
any of the securities by the selling shareholders or any such other
person. We have instructed our selling shareholders that they many
not purchase any of our securities while they are selling shares under this
registration statement. We have advised them that we will monitor our
stock transfer records on a regular basis and will void any transaction they
undertake in violation of this restriction.
Upon this
registration statement being declared effective, the selling shareholders may
offer and sell their shares from time to time until all of the shares registered
are sold; however, this offering may not extend beyond two years from the
initial effective date of this registration statement.
There can
be no assurances that the selling shareholders will sell any or all of the
securities. In various states, the securities may not be sold unless
these securities have been registered or qualified for sale in such state or an
exemption from registration or qualification is available and is complied
with.
All of
the foregoing may affect the marketability of our securities. Pursuant to oral
promises we made to the selling shareholders, we will pay all the fees and
expenses incident to the registration of the securities.
Should
any substantial change occur regarding the status or other matters concerning
the selling shareholders or us, we will file a post-effective amendment
disclosing such matters.
OTC Bulletin Board
Considerations
To be
quoted on the OTC Bulletin Board, a market maker must file an application on our
behalf in order to make a market for our common stock. We have
engaged in preliminary discussions with an NASD Market Maker to file our
application on Form 211 with the NASD, but as of the date of this prospectus, no
filing has been made. Based upon our counsel’s prior experience, we
anticipate that after this registration statement is declared effective, it will
take approximately 2 – 8 weeks for the NASD to issue a trading
symbol.
19
The OTC
Bulletin Board is separate and distinct from the NASDAQ stock
market. NASDAQ has no business relationship with issuers of
securities quoted on the OTC Bulletin Board. The SEC’s order handling
rules, which apply to NASDAQ-listed securities, do not apply to securities
quoted on the OTC Bulletin Board.
Although
the NASDAQ stock market has rigorous listing standards to ensure the high
quality of our issuers, and can delist issuers for not meeting those standards,
the OTC Bulletin Board has no listing standards. Rather, it is the
market maker who chooses to quote a security on the system, files the
application, and is obligated to comply with keeping information about the
issuer in our files. The NASD cannot deny an application by a market
maker to quote the stock of a company. The only requirement for
inclusion in the bulletin board is that the issuer be current in our reporting
requirements with the SEC.
Although
we anticipate listing on the OTC Bulletin board will increase liquidity for our
stock, investors may have greater difficulty in getting orders filled because it
is anticipated that if our stock trades on a public market, it initially will
trade on the OTC Bulletin Board rather than on NASDAQ. Investors’ orders
may be filled at a price much different than expected when an order is
placed. Trading activity in general is not conducted as efficiently
and effectively as with NASDAQ-listed securities.
Investors
must contact a broker-dealer to trade OTC Bulletin Board
securities. Investors do not have direct access to the bulletin board
service. For bulletin board securities, there only has to be one
market maker.
Bulletin
board transactions are conducted almost entirely manually. Because
there are no automated systems for negotiating trades on the bulletin board,
they are conducted via telephone. In times of heavy market volume,
the limitations of this process may result in a significant increase in the time
it takes to execute investor orders. Therefore, when investors place
market orders - an order to buy or sell a specific number of shares at the
current market price - it is possible for the price of a stock to go up or down
significantly during the lapse of time between placing a market order and
getting execution.
Because
bulletin board stocks are usually not followed by analysts, there may be lower
trading volume than for NASDAQ-listed securities.
LEGAL
PROCEEDINGS
There are
no pending or threatened lawsuits against us.
20
DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL
PERSONS
The board
of directors elects our executive officers annually. A majority vote
of the directors who are in office is required to fill
vacancies. Each director shall be elected for the term of one year,
and until his successor is elected and qualified, or until his earlier
resignation or removal. Our directors and executive officers are as
follows:
Name
|
Age
|
Position
|
|||
Rui
Xia Yuan
|
44
|
Chairman,
Director
|
|||
Honghui
Wen
|
35
|
CFO,
Director
|
|||
Lijun
Wu
|
35
|
President,
CEO, Director
|
|||
Cuixian
Wu
|
31
|
Secretary,
Director
|
Rui Xia
Yuan joined us as Chairman of Board of Directors in January 1, 2009. From
January 1, 1999 to December 31, 2008, she was president of Guangdong YongYang
Toys Factory Co. Ltd., at township of Chasha, Dongguan city, Guanggong Province,
which manufactures and sells toys. In 1983 she received an High
School Diploma from DongGuan High School.
Honghui
Wen joined us as Director and CFO in November 2007. From July 1994 to
September 2000, he was network engineer of Guangdong Maoming Guoxin
Communication Company, a communication company. From September 2000
to February 2002, he was network department manager of Shenzhen EDO Network
Technology Company, an IT company. From February 2002to October 2003,
he was network department manager of Nanning Jiaruite Industry and
Trade Company, a construction company. From October 2003to November
2007, he was manager of Dongguan Jingzhong Plastic & Mould Factory, a
manufacturing company. In 1994, he received a bachelor's degree from
Huazhong University of Science & Technology School.
Lijun Wu
joined us as Director, President & CEO in November 2007. From June 1995to June
1999, he was network engineer of Guangdong Gaozhou Post
and Telecommunications Office. From June 1999 to May 2006, he was
manager of Guangdong Shenzhen EDO Network Technology Company, an IT
company. From May 2006to November 2007, he was manager of Shenzhen
DongZhiXin Science and Technology Company, a manufacturing
company. In 1995, he received a bachelor's degree from
Shantou University.
Cuixian
Wu joined us as Secretary and Director in November 2007. From January
2000to May 2006, she was the sales director of Maoming branch of China Unicom
(Guang Dong) Limited, a communications company. From May 2006to
November 2007, she was sales manager of Shenzhen DongZhiXin Science and
Technology Company, a manufacturing company.
Family
Relationships
There are
no family relationships between our officers and directors.
21
Legal
Proceedings
No
officer, director, promoter or significant employee has been involved in the
last five years in any of the following:
¨
|
Any
bankruptcy petition filed by or against any business of which such person
was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that
time;
|
¨
|
Any
conviction in a criminal proceeding or being subject to a pending criminal
proceeding (excluding traffic violations and other minor
offenses);
|
¨
|
Being
subject to any order, judgment, or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently
or temporarily enjoining, barring, suspending or otherwise limiting his
involvement in any type of business, securities or banking activities;
and
|
¨
|
Being
found by a court of competent jurisdiction (in a civil action), the
Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgment has not
been reversed, suspended, or
vacated.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following tables set forth the ownership, as of the date of this prospectus, of
our common stock by each person known by us to be the beneficial owner of more
than 5% of our outstanding common stock, our directors, and our executive
officers and directors as a group. To the best of our knowledge, the
persons named have sole voting and investment power with respect to such shares,
except as otherwise noted. There are not any pending or anticipated
arrangements that may cause a change in control.
The
information presented below regarding beneficial ownership of our voting
securities has been presented in accordance with the rules of the Securities and
Exchange Commission and is not necessarily indicative of ownership for any other
purpose. Under these rules, a person is deemed to be a "beneficial owner" of a
security if that person has or shares the power to vote or direct the voting of
the security or the power to dispose or direct the disposition of the security.
A person is deemed to own beneficially any security as to which such person has
the right to acquire sole or shared voting or investment power within 60 days
through the conversion or exercise of any convertible security, warrant, option
or other right. More than one person may be deemed to be a beneficial owner of
the same securities. The percentage of beneficial ownership by any person as of
a particular date is calculated by dividing the number of shares beneficially
owned by such person, which includes the number of shares as to which such
person has the right to acquire voting or investment power within 60 days, by
the sum of the number of shares outstanding as of such date plus the number of
shares as to which such person has the right to acquire voting or investment
power within 60 days. Consequently, the denominator used for calculating such
percentage may be different for each beneficial owner. Except as otherwise
indicated below and under applicable community property laws, we believe that
the beneficial owners of our common stock listed below have sole voting and
investment power with respect to the shares shown. The business address for
these shareholders is 70 West Madison Street, Suite 1400, First National Plaza,
Chicago, IL 60602.
22
Name
|
Title
|
Number of
Shares
|
% of
Common
Share
|
|||||||
Rui
Xia Yuan
|
Chairman
of Board Directors
|
8,508,545
|
21.52
|
%
|
||||||
Lijun
Wu
|
President,
CEO, Director
|
6,000,000
|
15.18
|
%
|
||||||
Cuixian
Wu
|
Secretary
& Director
|
4,000,000
|
10.12
|
%
|
||||||
Honghui
Wen
|
CFO
& Director
|
2,000,000
|
5.06
|
%
|
||||||
All
officers and directors as a group [4 persons]
|
20,508,545
|
51.88
|
%
|
This
table is based upon information derived from our stock records. Unless otherwise
indicated in the footnotes to this table and subject to community property laws
where applicable, each of the shareholders named in this table has sole or
shared voting and investment power with respect to the shares indicated as
beneficially owned. Except as set forth above, applicable percentages are based
upon 39,535,861 shares of common stock outstanding as of November 1,
2009.
DESCRIPTION
OF SECURITIES
The
following description as a summary of the material terms of the provisions of
our Articles of Incorporation and Bylaws. The Articles of
Incorporation and Bylaws have been filed as exhibits to the registration
statement of which this prospectus is a part.
Common
Stock
We are
authorized to issue 200,000,000 shares of common stock with $0.001 par
value per share. As of the date of this registration statement, there were
39,535,861 shares of common stock issued and outstanding held by 64
shareholders of the record.
23
Each
share of common stock entitles the holder to one vote, either in person or by
proxy, at meetings of shareholders. The holders are not permitted to vote their
shares cumulatively. Accordingly, the shareholders of our common stock who hold,
in the aggregate, more than fifty percent of the total voting rights can elect
all of our directors and, in such event, the holders of the remaining minority
shares will not be able to elect any of such directors. The vote of the holders
of a majority of the issued and outstanding shares of common stock entitled to
vote thereon is sufficient to authorize, affirm, ratify or consent to such act
or action, except as otherwise provided by law.
Holders
of common stock are entitled to receive ratably such dividends, if any, as may
be declared by the Board of Directors out of funds legally available. We have
not paid any dividends since our inception, and we presently anticipate that all
earnings, if any, will be retained for development of our business. Any future
disposition of dividends will be at the discretion of our Board of Directors and
will depend upon, among other things, our future earnings, operating and
financial condition, capital requirements, and other factors.
Holders
of our common stock have no preemptive rights or other subscription rights,
conversion rights, redemption or sinking fund provisions. Upon our liquidation,
dissolution or winding up, the holders of our common stock will be entitled to
share ratably in the net assets legally available for distribution to
shareholders after the payment of all of our debts and other liabilities. There
are not any provisions in our Articles of Incorporation or our Bylaws that would
prevent or delay change in our control.
INTEREST
OF NAMED EXPERTS
The
financial statements for the year ended December 31, 2008, the period from
November 9, 2007 (Date of Inception) to December 31, 2007, and cumulative from
November 9, 2007 (Date of Inception) to December 31, 2008 included in this
prospectus have been audited by Enterprise CPAs, Ltd. which are independent
certified public accountants, to the extent and for the periods set forth in our
report and are incorporated herein in reliance upon such report given upon the
authority of said firm as experts in auditing and accounting.
The
legality of the shares offered under this registration statement is being passed
upon by Williams Law Group, P.A., Tampa, Florida. Michael T. Williams,
principal of Williams Law Group, P.A., owns 198,000 shares of our common stock,
of which 99,000 are being registered in this offering.
DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES
LIABILITIES
Our
Bylaws, subject to the provisions of Nevada Law, contain provisions which allow
the corporation to indemnify any person against liabilities and other expenses
incurred as the result of defending or administering any pending or anticipated
legal issue in connection with service to us if it is determined that person
acted in good faith and in a manner which he reasonably believed was in the best
interest of the corporation. Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to our directors,
officers and controlling persons, we have been advised that in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable.
26
DESCRIPTION
OF BUSINESS
CIS
World, Inc. is a Nevada corporation formed on November 9, 2007, with registered
address at 375 N. Stephanie St., Suite 1411, Henderson, NV 89014-8909. CIS
World, Inc. transacts its business in the U.S. located in the State of Illinois
and has principal office at 70 West Madison Street, Suite 1400, First National
Plaza, Chicago, IL 60602 , and contact telephone number
312-214-3138.
On
December 14, 2008, we established a wholly owned subsidiary, CIS WORLD (HK) LTD,
a wholly-owned subsidiary of CIS World, Inc. , is located in Hong Kong, the
address: Flat C, 2F., Eastern Street, Sai Ying Pun, Hong Kong; and contact
number: 0852-60522088.
Business
We
selling ink printer cartridges and printer consumables Asia, Europe, North
America and South America.
Our
Products are:
¨
|
Refillable Cartridge:
Designed for inkjet printers as such as Epson, Canon, HP, Brother with the
same printing effects as the original cartridge, the refillable cartridge
can be refilled and used for many times. Thus it serves both cost-saving
and environment protective
function.
|
¨
|
Continuous Ink Supply
System: Designed for inkjet printers as Epson, Canon, Hp, Brother,
CISS includes ink tanks connected with cartridges and supplies ink
continuously to cartridges. Thus the users need not replace cartridges,
saving cost and achieving environment
protection.
|
From
April 2008 through December 2008 we accomplished a sales amount of $244,362; and
from January to September 2009, we sold total amount of $
469,367.
Distribution
Agreement
Our
supplier, a manufacturer of our products, Kangzhixin Technology (Shenzhen) Co.,
Ltd.(“KZX”), which is located at B3 Third Layer of the east, Fourth Industrial
Parks of Rich Briade, Fuyong Neighborhood Bridgehead Community, Bao’an District,
Shenzhen, Guangdong China , produces various refillable cartridge and CISS. On
December 10, 2008, CIS World and KZX signed a 3 year contract authorized CIS
World as KZX’s exclusive selling agent for the products mentioned above in Asia
(China is excluded), Europe, North America, south America and in other regions
as agreed. In general, the cost plus pricing system shall be used by KZX.
The prices and terms offered for CIS World shall be discussed by KZX and CIS
World at the time with terms considering the international trade custom and
existing market competition, so as to realize profits for both parties. If
KZX provides more favorable offers to any other distributors or manufacturers
concerning the Products, KZX shall inform CIS World in written and provide more
favorable terms to CIS World.
27
Ms. Wu
Cuixian, a Director of CIS World, is an independent director and owns 39 percent
of KZX, and she doesn’t involve any business activity of KZX.
Market and
Marketing
We sell
directly to the wholesaler trade companies and printer technology companies in
various countries on a purchase order basis. We have no written agreements
with any of these companies.
Name of Country
|
Name of Customer
|
|||
Indonesia
|
TNY
TRADING CO. LTD
|
|||
Thailand
|
Skyhorse
Printer Technology
|
|||
Malaysia
|
Mewatech
Solutions Enterprise
|
|||
Philippines
|
n/a
|
|||
Korea
|
Eoasis
|
|||
Brazil
|
Torre
Brasil Equipamentes
|
|||
Columbia
|
ASIA
SUPPLIES LTD
|
|||
Bolivia
|
Carlos
Alberto Antelo Jimenez
|
|||
Poland
|
Gellex,
sp. z o.o.(LTD)
|
|||
Indonesia
|
ELLA
Co., Ltd.
|
We
identify our clients through approaches like website research and attending
related trade fairs. We then follow up with contacts to secure
customers.
Our Competition and Our
Market Position
Competition
within the printer cartridge industry is intense. We compete with large printer
manufacturers such as Epson, Canon, HP, Brother that sell their own printer
cartridges and smaller scale private companies. Our competitors also include the
small and medium size companies from the same industry in China. Besides, we are
also confronted with competition from the international traders with greater
capital, manpower and market share. With regard to sales of refillable
cartridge and CISS in China, our major competitors include: Changzhou Tanli
Technology Co,.Ltd., Hangzhou Huifeng Technology Co,.Ltd, Shenzhen NXY
Technology Co,.Ltd. We are a very small competitor in the
industry.
28
We
compete with these companies based mainly upon our cost saving products with
customer warranty, our high quality after sales service, our established sales
network in Southeastern Asia. During the current global economic
recession, our cost saving strategy for our customers are very effective, our
selling price for the similar products is averaged ¼ or 1/5 of our major
competitors’ price, which significantly reduce customers cost.
Research and
Development
We have
not incurred research and development expenses in the last fiscal
year.
Our Intellectual
Property
We have
no intellectual property.
Our
Employees
We have
the following number of full time employees:
¨
|
Clerical
–1
|
¨
|
Administrative
– 1
|
¨
|
Management
–2
|
¨
|
Sales
–2
|
We have
no part time employees. We have no collective bargaining agreement with our
employees. We consider our relationship with our employees to be
excellent.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION
AND RESULTS OF OPERATIONS
The
following discussion of our financial condition and results of operations should
be read in conjunction with our financial statements and the related notes, and
other financial information included in this Form S-1.
29
Our
Management’s Discussion and Analysis contains not only statements that are
historical facts, but also statements that are forward-looking (within the
meaning of section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934). Forward-looking statements are, by their
very nature, uncertain and risky. These risks and uncertainties include
international, national, and local general economic and market conditions; our
ability to sustain, manage, or forecast growth; our ability to successfully make
and integrate acquisitions; new product development and introduction; existing
government regulations and changes in, or the failure to comply with, government
regulations; adverse publicity; competition; the loss of significant customers
or suppliers; fluctuations and difficulty in forecasting operating results;
change in business strategy or development plans; business disruptions; the
ability to attract and retain qualified personnel; the ability to protect
technology; the risk of foreign currency exchange rate; and other risks that
might be detailed from time to time in our filing with the Securities and
Exchange Commission.
Although
the forward-looking statements in this Registration Statement reflect the good
faith judgment of our management, such statements can only be based on facts and
factors currently known by them. Consequently, and because forward-looking
statements are inherently subject to risks and uncertainties, the actual results
and outcomes may differ materially from the results and outcomes discussed in
the forward-looking statements. You are urged to carefully review and
consider the various disclosures made by us in this report and in our other
reports as we attempt to advise interested parties of the risks and factors that
may affect our business, financial condition, and results of operations and
prospects.
Overview
CIS
World, Inc. (the “Company”) incorporated under the laws of Nevada on November 9,
2007. CIS World, Inc. has principle office at 375 N. Stephanie, Suite
1411, Henderson, NV 89104-8909. CIS World, Inc. wholly owned branch
located in the State of Illinois and has principle office at 70 W Madison ST,
Suite 1400, Chicago IL 60602.
Besides
USA branch, CIS World, Inc. also established one subsidiary in Hong Kong.
CIS World, Ltd, as the wholly owned subsidiary, is registered on December 14,
2007 In Hong Kong. It is a subsidiary on behalf of CIS World, Inc. to
conduct and operate the business of trading services, distribution, and
marketing of the printer consumables parts in Asia including China, Europe,
North and South America. The CIS World, Ltd is located at Flat C,
2F., Eastern Street, Sai Ying Pun, HongKong.
The
Company’s main business includes sourcing, distribution and marketing of
Continue Ink Supply System and Refillable Cartridges in Asia, Europe, North and
South America.
These
parts are manufactured in China by Kang Zhi Xin Science and Technology
(ShenZhen), Ltd. (“KZX”). It was established in 2008 specializing in
Continue Ink Supply System and Refillable Cartridges (“CISS”) in manufacturing,
and located at Fourth Industrial Parks of Rich Bridge, Fuyong Neighbourhood
Bridgehead Community, B3 East Third Layer, Bao An District, ShenZhen City,
Guangdong Province, PR China. On December 10, 2008, CIS World, Ltd. signed
a three years long-term exclusive distribution agreement with Kang Zhi Xin
Science and Technology (ShenZhen), Ltd. KZX gives CIS World, Ltd the
exclusive right of import and sell its products in KZX’s trademark and brand
name in Asia, Europe, North and South America. KZX is a Chinese
manufacturing company owned 39% by Ms. Cuixian Wu, the secretary of the
Company.
30
Various
significant matters could impact our financial condition and results of
operations. Our operations depend heavily on the availability of printer
cartridges and CISS we resell. We purchase printer cartridges from KZX, our
single source supplier, and then resell them to our customers. However, if we
lose our relationship with KZX and cannot find acceptable alternative suppliers
or if KZX is unable or unwilling to provide us with printer cartridges or CISS
on terms favorable to us, we may be unable to produce certain products and
services. This could result in a decrease in profit and damage to our reputation
in our industry. In the event our costs of acquiring these printer
cartridges and CISS increases, we may not be able to pass these higher costs on
to our customers in full or at all. Any increase in the prices for printer
cartridges and CISS could materially increase our costs and therefore lower our
earnings.
Our
sales outside the United States make up 100% of our net revenue in emerging
markets, including Asia and South America. Our future revenue, gross margin,
expenses and financial condition could suffer due to a variety of international
factors could disrupt our product and component manufacturing and key suppliers
located outside of the United States. For example, we rely on manufacturers in
China for the production of all of our products.
Due to
all of our sales being from countries outside of the United States, other
currencies, particularly the Hong Kong dollars, euro, the British pound, Chinese
Yuan Renminbi and the Japanese yen, can have an impact on our results (expressed
in U.S. dollars). Currency variations also contribute to variations in sales of
products and services in impacted jurisdictions. Accordingly, fluctuations in
foreign currency rates could have a material impact on our revenue growth in
future periods. In addition, currency variations can adversely affect margins on
sales of our products in countries outside of the United States and margins on
sales of products that include components obtained from suppliers located
outside of the United States.
Our
revenues are highly concentrated in several customers which accounts for more
than 85% of our revenues, and our revenues could be reduced if these customers
reduce their orders from us. We have no agreements with these customers,
who purchase from us on purchase orders only. If we cease to do
business with these customers at current levels and are unable to generate
additional sales with new and existing customers that purchase a similar amount
of our products, our revenues and net income would decline
considerably.
From
April 2008 through December 2008 we accomplished a sales amount of $244,362; and
from January to September 2009, we
sold total amount of $ 469,367.
Results of
Operations
For
the period ended December 31, 2008, and September 30,
2009:
31
Revenue
Since
our company incorporated on November 9, 2007, and started to have sales
recognized in the month of April there was $244,362 revenue realized as of
December 31, 2008 and $469,367 revenue for the nine month period from January 1
to September 30, 2009 as we are getting more loyalty customer and repeated sales
orders
Cost of
Revenue
Our
Costs of Goods Sold, might be increased slightly due to the possible increasing
Chinese Yuan’s currency exchange rate, and labor costs as we originally
expected On the other hand, however, due to the global economic recession
and more labor market pool supply, we may keep our cost of goods sold
stable. And our customers are very cost sensitive, so our sales price was
stable too. We did not adjust our sales price or unit price upward.
Because of the current economic conditions, in fact we did not incur any
increase of labor cost and any fluctuation of Chinese Yuan’s exchange rate since
May 2008. Accordingly, we did not incur any increase of Cost of Goods Sold
as we originally expected. Our gross profit margin for the year 2008 and
nine month period is almost the same, 4%.Since our company incorporated on
November 9, 2007, and started to have sales recognized in April, 2008, there was
$244,362 revenue realized as of December 31, 2008 and $469,367 revenue for
the nine month period from January 1 to September 30, 2009. Accordingly,
there the cost of goods sold associated with the revenue were $234,963, and $
452,504 respectively for the year ending December 31, 2008, and nine month
period from January 1 to September 30, 2009.
Our
gross profit margin in 2008 since the Company started to sell the products in
April, 2008 was 4%, and the gross margin for the nine month period from January
1 to September 30, 2009, was also 4%, respectively.
Expense
Our
expenses consist of selling, general and administrative expenses, and
amortization.
32
CIS
World, Inc
|
||||||||||||
9/30/2009
|
12/31/2008
|
12/31/2007
|
||||||||||
Expense
|
||||||||||||
Advertising
Expenses
|
-
|
2,736
|
||||||||||
Bank
Service Charges
|
660
|
1,152
|
||||||||||
Business
License & Fees
|
25
|
449
|
||||||||||
Car/Truck
Expense
|
||||||||||||
Gas
|
87
|
931
|
||||||||||
Total
Car/Truck Expense
|
-
|
931
|
||||||||||
Directors
fee
|
-
|
6,179
|
||||||||||
Marketing
and promotion fee
|
-
|
25,029
|
||||||||||
Meals
and Entertainment
|
627
|
2,474
|
||||||||||
Misc
Expense
|
-
|
19
|
||||||||||
Office
Supplies
|
159
|
2,082
|
||||||||||
Organization
cost
|
5,126
|
|||||||||||
Postage
and Shipping
|
-
|
264
|
||||||||||
Printing
and Reproduction
|
-
|
1,152
|
||||||||||
Professional
Fees
|
||||||||||||
Accounting
fee
|
15,972
|
-
|
||||||||||
Legal
Fees
|
1613
|
13,980
|
||||||||||
Total
Professional Fees
|
17,585
|
13,980
|
||||||||||
Rent
|
12,015
|
11,270
|
||||||||||
Telephone
and Fax
|
267
|
190
|
||||||||||
Trade
Show & Exhibition
|
-
|
7,697
|
||||||||||
Travel
|
||||||||||||
Air
Tickets
|
2,352
|
8,709
|
||||||||||
Hotels
|
-
|
4,042
|
||||||||||
Taxi
& Local Transportation
|
58
|
710
|
||||||||||
Travel
- Other
|
-
|
4,000
|
||||||||||
Total
Travel
|
2,410
|
17,461
|
||||||||||
Utilities
|
||||||||||||
Electricity
Expense
|
-
|
374
|
||||||||||
Gas
|
116
|
459
|
||||||||||
Total
Utilities
|
116
|
833
|
||||||||||
Total
Expense
|
$
|
33,951
|
$
|
93,898
|
5,126
|
We had
total operation expenses of $93,898, $5,126, and $33,951 for the fiscal year
ended December 31, 2008, and 2007, and nine month ended September 30, 2009,
respectively by the Company as selling, general, and administrative
expenses.
We
expect selling, general, and administrative expenses to increase in future
periods as our revenue grow. we initiate incurred a number of marketing and
promotional activities and other related expense in the first business year 2008
to get started..
Income & Operation
Taxes
We are
subject to income taxes in the U.S., while the Hong Kong branch was subject to
the income tax laws of Hong Kong.
We paid
no income taxes in USA for the year ended December 31, 2008, and December 31,
2007 due to the net operation loss in USA.
We paid
no income taxes in Hong Kong for the year ended December 31, 2008, and December
31, 2007 due to the net operation loss in Hong Kong.
Net Loss
We
incurred net losses of ($84,437) for the period ended December 31, 2008, net
loss of ($17,082) for the nine month period ended September 30,
2009.
33
Commitments
and Contingencies
Our
supplier, the manufacturer of our products, Kangzhixin Technology (Shenzhen)
Co., Ltd., or “KZX”, which is located at Fourth Industrial Parks of Rich Bridge,
Fuyong Neighbourhood Bridgehead Community, B3 East Third Layer, Bao An District,
ShenZhen City, Guangdong Province, PR China, produces various Continue Ink
Supply System and Refillable Cartridges (“CISS”). On December 10, 2008,
CIS World, Inc. and KZX signed a 3 year contract authorized CIS World as KZX’s
exclusive selling agent for the products mentioned above in Asia (China is
excluded), Europe, North America, south America and in other regions as
agreed. In general, the cost plus pricing system shall be used by KZX. The
prices and terms offered for CIS World shall be discussed by KZX and CIS World
at the time with terms considering the international trade custom and existing
market competition, so as to realize profits for both parties. If KZX
provides more favorable offers to any other distributors or manufacturers
concerning the Products, KZX shall inform CIS World in written and provide more
favorable terms to CIS World.
Foreign
Currency Translation
The
Company has determined the United States dollars to be its functional currency
for CIS World, Inc.; Hong Kong dollars to be its functional currency in CIS
World (Hong Kong) Limited . Assets and liabilities were translated to U.S.
dollars at the period-end exchange rate. The exchange rate of issuance of
common stocks to shareholders was used as one U.S. dollar to 7.0 HK
dollars. Statement of operations amounts were translated to U.S. dollars
using the historic rate, i.e., the rate at first date of each month during the
year. Gains and losses resulting from translating foreign currency
financial statements are accumulated in other comprehensive income (loss), a
separate component of shareholders’ equity.
Liquidity and Capital
Resources
At September
30
|
At December
31
|
|||||||
2009
|
2008
|
|||||||
Current
Ratio
|
13.13
|
8.31
|
||||||
Cash
|
$
|
173,434
|
$
|
153,791
|
||||
Working
Capital
|
$
|
163,687
|
$
|
180,769
|
||||
Total
Assets
|
$
|
177,179
|
$
|
205,510
|
||||
Total
Liabilities
|
$
|
13,492
|
$
|
24,741
|
||||
Total
Equity
|
$
|
165,770
|
$
|
180,769
|
||||
Total
Debt/Equity
|
0.08
|
0.14
|
*Current
Ratio = Current Assets /Current Liabilities
** Total
Debt / Equity = Total Liabilities / Total Shareholders Equity.
34
The
Company had cash and cash equivalents of $153,791 at December 31, 2008 and the
working capital of $180,769, and cash and cash equivalent of $173,434 at
September 30, 2009 and the working capital of $163,687.
At
December 31, 2009, we have $137,033in cash. This is sufficient to fund our
operations the next 12 months. We anticipate we will need $100,000 to fund
our proposed operations during the next 12 months, including an anticipated
$50,000 to fund the costs of our being a public company. We plan to fund
our proposed operations including the cost of being a public company by through
revenues from our on-going operations if we start to generate such
revenues. We are also planning to obtain additional funding by issuing
debt or the sale of stock, if market conditions are appropriate. We are
not currently in negotiations with any lenders or other funding sources and we
are not certain that we will be able to obtain additional funding on terms
favorable to us or at all. Management has orally committed to fund
any of these requirements not funded from operations or from additional debt or
equity capital we may raise. The loan terms will be short-term without
interest charge as needed by the Company to support the daily
operation .
The
Company’s lack of operating history and financial resources raise substantial
doubt about its ability to continue as a going concern. The financial
statements do not include adjustments that might result from the outcome of this
uncertainty and if the Company is unable to generate significant revenue or
secure financing, then the Company may be required to cease or curtail its
operations.
DESCRIPTION
OF PROPERTY
We rent
the following properties:
Our
Headquarters
70 W.
Madison St.
Suite
1400
First
National Plaza
Chicago,
IL 60602
¨
|
Name
of Landlord: Regus Group
|
¨
|
Term
of Lease: Oct 1, 2009 to Sept 30,
2010
|
¨
|
Monthly
Rental: $179 US dollars
|
¨
|
Adequate
for current needs: yes
|
Wholly-owned Subsidiary in
Hong Kong
¨
|
Address:
City/State/Zip: Flat C, 2/F., Eastern Street, Sai Ying Pun, Hong
Kong.
|
¨
|
Number
of Square Feet: 300 Square Feet
|
¨
|
Name
of Landlord: HK Biz Limited
|
¨
|
Term
of Lease: from
1st April 2009 to
31th March 2011
|
35
¨
|
Monthly
Rental: 6000 HK Dollars (HKD were translated to U.S. dollars using the
first date of each month, the current exchange rate is 1 US dollar to 7.75
HKD, i.e., the rent is USD per
month
|
¨
|
Adequate
for current needs: √ Yes
|
We do not
intend to renovate, improve, or develop properties. We are not subject to
competitive conditions for property and currently
have no property to insure. We have no policy with respect to
investments in real estate or interests in real estate and no policy
with respect to investments in real estate mortgages. Further, we
have no policy with respect to investments in securities of or interests in
persons primarily engaged in real estate activities.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
On
November 9, 2007, the Company issued 20,000,000 shares of common stock to the
four founders of the Company, Ruixia Ruan, Lijun Wu, Cuixian Wu and Honghui Wen
at $0.001 per share or $20,000 for initial capital stock subscription
receivable. This receivable was subsequently paid in full during April
2008.
Our main
supplier, a manufacturer of our products, Kangzhixin Technology (Shenzhen) Co.,
Ltd. (“KZX”), which is located in Shenzhen, Guangdong, China, produces various
refillable cartridges and continuous ink supply systems. On December 10, 2008,
CIS World and KZX signed a 3 year contract authorized CIS World as KZX’s
exclusive selling agent for the products mentioned above in Asia (China is
excluded), Europe, North America, south America and in other regions as
agreed. In general, the cost plus pricing system shall be used by KZX. The
prices and terms offered for CIS World shall be discussed by KZX and CIS World
at the time with terms considering the international trade custom and existing
market competition, so as to realize profits for both parties. If KZX
provides more favorable offers to any other distributors or manufacturers
concerning the Products, KZX shall inform CIS World in written and provide more
favorable terms to CIS World. Ms. Wu Cuixian, a Director of CIS World,
owns 39 percent of KZX.
At the
nine month ended of September 30, 2009 and the year ended December 31, 2008, the
Company incurred cost of good sold of $ 452,504 and $234,963 respectively.
Even though, the Company signed a distribution agreement with KZX on Dec 10,
2008, in fact, the Company’s products sold to customers were by other local
Chinese manufacturers on the sales order basis, there was no purchase incurred
in 2008. Therefore, the dollar value of amount involved in the transaction
with KZX in 2008 was zero. In 2009, the Company purchased the products
from KZX according to the agreement, all the cost of goods sold $452,504 for
nine month period of September 30, 2009 was from KZX. Therefore, the
dollar value of the amount involved in the transaction with KZX as of September
was $452,504. There was zero dollar value of the amounts of Ms. Cuixian
Wu’s interest in the transaction of cost of goods sold with
KZX.
36
Except as
set forth above, we have not entered into any material transactions with any
director, executive officer, and promoter, beneficial owner of five percent or
more of our common stock, or family members of such persons.
MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Market
Information
There is
no established public trading market for our securities and a regular trading
market may not develop, or if developed, may not be sustained. A
shareholder in all likelihood, therefore, will not be able to resell his or her
securities should he or she desire to do so when eligible for public resales.
Furthermore, it is unlikely that a lending institution will accept our
securities as pledged collateral for loans unless a regular trading market
develops.
Penny Stock
Considerations
Our
shares will be "penny stocks", as that term is generally defined in the
Securities Exchange Act of 1934 to mean equity securities with a price of less
than $5.00. Thus, our shares will be subject to rules that impose sales
practice and disclosure requirements on broker-dealers who engage in certain
transactions involving a penny stock.
Under the
penny stock regulations, a broker-dealer selling a penny stock to anyone other
than an established customer must make a special suitability determination
regarding the purchaser and must receive the purchaser's written consent to the
transaction prior to the sale, unless the broker-dealer is otherwise
exempt.
In
addition, under the penny stock regulations, the broker-dealer is required
to:
¨
|
Deliver,
prior to any transaction involving a penny stock, a disclosure schedule
prepared by the Securities and Exchange Commission relating to the penny
stock market, unless the broker-dealer or the transaction is otherwise
exempt;
|
¨
|
Disclose
commissions payable to the broker-dealer and our registered
representatives and current bid and offer quotations for the
securities;
|
¨
|
Send
monthly statements disclosing recent price information pertaining to the
penny stock held in a customer's account, the account's value, and
information regarding the limited market in penny stocks;
and
|
¨
|
Make
a special written determination that the penny stock is a suitable
investment for the purchaser and receive the purchaser's written agreement
to the transaction, prior to conducting any penny stock transaction in the
customer's account.
|
37
Because
of these regulations, broker-dealers may encounter difficulties in their attempt
to sell shares of our Common Stock, which may affect the ability of selling
shareholders or other holders to sell their shares in the secondary market, and
have the effect of reducing the level of trading activity in the secondary
market. These additional sales practice and disclosure requirements could
impede the sale of our securities, if our securities become publicly
traded. In addition, the liquidity for our securities may be decreased,
with a corresponding decrease in the price of our securities. Our shares
in all probability will be subject to such penny stock rules and our
shareholders will, in all likelihood, find it difficult to sell their
securities.
OTC Bulletin Board
Qualification for Quotation
To have
our shares of Common Stock on the OTC Bulletin Board, a market maker must file
an application on our behalf in order to make a market for our Common
Stock. We have engaged in preliminary discussions with a FINRA Market
Maker to file our application on Form 211 with FINRA, but as of the date of this
Prospectus, no filing has been made. Based upon our counsel's prior
experience, we anticipate that after this registration statement is declared
effective, it will take approximately 2 - 8 weeks for FINRA to issue a trading
symbol and allow sales of our Common Stock under Rule 144.
Sales of our common stock
under Rule 144.
There are
19,027,316 shares of our common stock held by non-affiliates and 20,508,545
shares held by affiliates Rule 144 of the Securities Act of 1933 defines as
restricted securities.
All of
our shares held by non-affiliates are currently eligible for resale as they are
either being registered in this offering or may be resold under Rule 144,
however affiliates will still be subject to the resale restrictions of Rule
144. In general, persons holding restricted securities, including
affiliates, must hold their shares for a period of at least six months, may not
sell more than one percent of the total issued and outstanding shares in any
90-day period, and must resell the shares in an unsolicited brokerage
transaction at the market price. The availability for sale of substantial
amounts of common stock under Rule 144 could reduce prevailing market prices for
our securities.
Holders
As of the
date of this registration statement, we had approximately 64 shareholders
of record of our common stock.
Dividends
We have
not declared any cash dividends on our common stock since our inception and do
not anticipate paying such dividends in the foreseeable future. We plan to
retain any future earnings for use in our business. Any decisions as to
future payments of dividends will depend on our earnings and financial position
and such other facts, as the Board of Directors deems relevant.
38
Reports to
Shareholders
As a
result of this offering and assuming the registration statement is not declared
effective until after December 31, 2009, as required under Section 15(d) of the
Securities Exchange Act of 1934, we will file periodic reports with the
Securities and Exchange Commission through December 31, 2010, including a Form
10-K for the year ended December 31, 2010, assuming this registration statement
is declared effective before that date. At or prior to December 31, 2010,
we intend voluntarily to file a registration statement on Form 8-A which will
subject us to all of the reporting requirements of the 1934 Act. This will
require us to file quarterly and annual reports with the SEC and will also
subject us to the proxy rules of the SEC. In addition, our officers, directors
and 10% stockholders will be required to submit reports to the SEC on their
stock ownership and stock trading activity. We are not required under
Section 12(g) or otherwise to become a mandatory 1934 Act filer unless we have
more than 500 shareholders and total assets of more than $10 million on December
31, 2010. If we do not file a registration statement on Form 8-A at or
prior to December 31, 2010, we will continue as a reporting company not subject
to the proxy statement or other information requirements of the 1934 Act, our
securities can no longer be quoted on the OTC Bulletin Board, and our officers,
directors and 10% stockholders will not be required to submit reports to the SEC
on their stock ownership and stock trading activity.
Where You Can Find
Additional Information
We have
filed with the Securities and Exchange Commission a registration statement on
Form S-1. For further information about us and the shares of common stock
to be sold in the offering, please refer to the registration statement and the
exhibits and schedules thereto. The registration statement and exhibits may be
inspected, without charge, and copies may be obtained at prescribed rates, at
the SEC's Public Reference Room at 100 F St., N.E., Washington, D.C.
20549. The public may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The registration
statement and other information filed with the SEC are also available at the web
site maintained by the SEC at http://www.sec.gov.
EXECUTIVE
COMPENSATION
Summary Compensation
Table
The
table below summarizes all compensation awarded to, earned by, or paid to our
Principal Executive Officer, our two most highly compensated executive officers
other than our PEO who occupied such position at the end of our latest fiscal
year and up to two additional executive officers who would have been included in
the table below except for the fact that they were not executive officers at the
end of our latest fiscal year, by us, or by any third party where the purpose of
a transaction was to furnish compensation, for all services rendered in all
capacities to us for the years ended December 31, 2009 and
2008.
39
Name
|
Title
|
Year
|
Salary
|
Bonus
|
Stock
awards
|
Option
awards
|
Non equity
incentive plan
compensation
|
Non
qualified
deferred
compensation
|
All other
compensation
|
Total
|
||||||||||||||||||||||||||||
Rui
Xia Yuan
|
Chairman
|
2008
2009
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
||||||||||||||||||||||||||||
Lijun
Wu
|
CEO
|
2008
2009
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
||||||||||||||||||||||||||||
Cuixian
Wu
|
Secretary
|
2008
2009
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
||||||||||||||||||||||||||||
Honghui
Wen
|
CFO
|
2008
2009
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Summary Equity Awards
Table
The
following table sets forth certain information for our executive officers
concerning unexercised options, stock that has not vested, and equity incentive
plan awards as of December 31, 2009.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END DECEMBER 31, 2009
|
||||||||||||||||||||||||||||||||||||
Name
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of
Shares
or Units
of Stock
That
Have
Not
Vested
(#)
|
Market
Value
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
($)
|
Equity
Incentive
Plan
Awards:
Number
Of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested
(#)
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested
($)
|
|||||||||||||||||||||||||||
Rui
Xia Yuan
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|||||||||||||||||||||||||||
Lijun
Wu
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|||||||||||||||||||||||||||
Cuixian
Wu
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|||||||||||||||||||||||||||
Honghui
Wen
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
40
Narrative disclosure to
summary compensation and option tables
We have
no written or oral employment agreements or compensation arrangements with our
named executive officers.
At no
time during the last fiscal year with respect to any person listed in the Table
above was there:
¨
|
any
outstanding option or other equity-based award repriced or otherwise
materially modified (such as by extension of exercise periods, the change
of vesting or forfeiture conditions, the change or elimination of
applicable performance criteria, or the change of the bases upon which
returns are determined;
|
¨
|
any
waiver or modification of any specified performance target, goal or
condition to payout with respect to any amount included in non-stock
incentive plan compensation or
payouts;
|
¨
|
any
option or equity grant;
|
¨
|
any
non-equity incentive plan award made to a named executive
officer;
|
¨
|
any
nonqualified deferred compensation plans including nonqualified defined
contribution plans; or
|
¨
|
any
payment for any item to be included under All Other Compensation (column
(i)) in the Summary Compensation
Table.
|
Board of
Directors
Director
Compensation
Name
|
Fees
earned
or paid
in cash
($)
|
Stock
awards
($)
|
Option
awards
($)
|
Non-equity
incentive plan
compensation
($)
|
Nonqualified
deferred
compensation
earnings
($)
|
All other
compensation
($)
|
Total
($)
|
|||||||||||||||||||||
Rui
Xia Yuan
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|||||||||||||||||||||
Lijun
Wu
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|||||||||||||||||||||
Cuixian
Wu
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|||||||||||||||||||||
Honghui
Wen
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
We have
no compensation arrangements (such as fees for retainer, committee service,
service as chairman of the board or a committee, and meeting attendance) with
directors.
41
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
42
CIS
WORLD, INC
(A Development Stage
Enterprise)
Audited
Financial Statements
AS
OF DECEMBER 31, 2008 & 2007
AND
FOR THE PERIOD FROM NOVEMBER 9, 2007
(DATE
OF INCEPTION) TO DECEMBER 31, 2008
F-1
Table
of Contents
Independent
Auditor’s Report on the Consolidated Financial Statements
|
F-3
|
Consolidated
Balance Sheets
|
F-4
|
Consolidated
Statement of Operation
|
F-5
|
Consolidated
Statement of Shareholders Equity
|
F-6
|
Consolidated
Statement of Cash Flows
|
F-7
|
Notes
to Consolidated Financial Statements
|
F-8
|
F-2
Independent Registered
Public Accounting Firm’s Auditor’s Report on the Consolidated Financial
Statements
Board
of Directors and Shareholders of CIS World, Inc.
We have
audited the accompanying consolidated balance sheets of
CIS World, Inc December 31, 2008 & 2007 and the related statements of
operation, shareholders’ equity, and cash flows for the period from November 9,
2007 (date of inception) through December 31, 2008. These financial statements
are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We
conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our
opinion, the consolidated
financial statements referred to above present fairly, in all material respects,
the financial position of CIS World, Inc. as of December 31, 2008 and 2007, and
the results of its operations and their cash flows for the period from November
9, 2007 (date of inception) through December 31, 2008 in conformity with
accounting principles generally accepted in the United States of
America.
The
Company’s lack of operating history and financial resources raise substantial
doubt about its ability to continue as a going concern. The financial
statements do not include adjustments that might result from the outcome of this
uncertainty and if the Company is unable to generate significant revenue or
secure financing, then the Company may be required to cease or curtail its
operations.
/s/ Enterprise CPAs,
Ltd.
Enterprise
CPAs, Ltd.
Chicago,
IL
November
10, 2009
F-3
CIS
WORLD, INC
|
||||||||
(A
Development Stage Enterprise)
|
||||||||
CONSOLIDATED
BALANCE SHEETS
|
||||||||
December
31
|
December
31
|
|||||||
2008
|
2007
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 153,791 | $ | - | ||||
Accounts
receivable, net
|
- | - | ||||||
Total
Current Assets
|
$ | 153,791 | $ | - | ||||
Other
current assets:
|
||||||||
Stock
subscription receivable
|
- | 20,000 | ||||||
Deposit
|
1,335 | - | ||||||
Loan
to shareholder / officer
|
35,359 | - | ||||||
Prepaid
expense
|
2,025 | - | ||||||
Prepaid
payment to supplier
|
13,000 | - | ||||||
Total
Other Current Assets
|
$ | 51,719 | $ | 20,000 | ||||
TOTAL
ASSETS
|
$ | 205,510 | $ | 20,000 | ||||
LIABILITIES
& EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Account
payable
|
4,488 | 1,026 | ||||||
Total
current liabilities
|
$ | 4,488 | $ | 1,026 | ||||
Other
current liabilities:
|
||||||||
Loan
from shareholders / officers
|
- | 4,100 | ||||||
Unearned
income
|
20,253 | - | ||||||
Total
other current liabilities
|
$ | 20,253 | $ | 4,100 | ||||
Total
liabilities
|
$ | 24,741 | $ | 5,126 | ||||
Stockholders'
Equity:
|
||||||||
Common
stock, $0.001 par value;
|
||||||||
200,000,000
shares authorized;
|
||||||||
39,535,861
shares issued and outstanding.
|
$ | 39,536 | $ | 20,000 | ||||
Paid-in
capital
|
230,871 | - | ||||||
Deficit
accumulated during the development stage
|
(89,563 | ) | (5,126 | ) | ||||
Accumulated
other comprehensive loss
|
(75 | ) | - | |||||
Total
stockholders' equity
|
$ | 180,769 | $ | 14,874 | ||||
TOTAL
LIABILITIES & EQUITY
|
$ | 205,510 | $ | 20,000 |
F-4
CIS
WORLD, INC
|
||||||||||||
(A
Development Stage Enterprise)
|
||||||||||||
CONSOLIDATED
STATEMENT OF LOSS
|
||||||||||||
Period
from
|
Cumulative
from
|
|||||||||||
Year
Ended
|
November
9, 2007
|
November
9, 2007
|
||||||||||
December
31
|
(
Date of Inception)
|
(
Date of Inception)
|
||||||||||
2008
|
to December 31, 2007
|
to December 31, 2008
|
||||||||||
Revenues
|
$ | 244,362 | $ | - | $ | 244,362 | ||||||
Cost
of Goods Sold
|
234,963 | - | 234,963 | |||||||||
Gross
Profit
|
$ | 9,399 | $ | - | $ | 9,399 | ||||||
Operating
expenses:
|
||||||||||||
Research
and development
|
- | - | - | |||||||||
Selling,
general and administrative expenses
|
93,898 | 5,126 | 99,024 | |||||||||
Depreciation
and amortization expenses
|
- | - | - | |||||||||
Total
Operating Expenses
|
93,898 | 5,126 | 99,024 | |||||||||
Operating
Loss
|
$ | (84,499 | ) | $ | (5,126 | ) | $ | (89,625 | ) | |||
- | ||||||||||||
Investment
income, net
|
$ | 62 | $ | - | $ | 62 | ||||||
Interest
Expense, net
|
- | - | - | |||||||||
Loss
before income taxes
|
(84,437 | ) | (5,126 | ) | (89,563 | ) | ||||||
Loss
tax expense
|
- | - | - | |||||||||
Net
loss
|
$ | (84,437 | ) | $ | (5,126 | ) | $ | (89,563 | ) | |||
- | ||||||||||||
Net
loss per common share- Basics
|
$ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | |||
Net
loss per common share- Diluted
|
$ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | |||
Other
comprehensive loss, net of tax:
|
||||||||||||
Foreign
currency translation adjustments
|
(75 | ) | - | (75 | ) | |||||||
Other
comprehensive loss
|
$ | (75 | ) | $ | - | $ | (75 | ) | ||||
Comprehensive
Loss
|
$ | (84,512 | ) | $ | (5,126 | ) | $ | (89,638 | ) |
F-5
CIS
WORLD, INC
|
||||||||||||||||||||||||
(A
Development Stage Enterprise)
|
||||||||||||||||||||||||
STATEMENT
OF STOCKHOLDERS EQUITY
|
||||||||||||||||||||||||
The
Period November 9, 2007 ( Date of Inception)
|
||||||||||||||||||||||||
through
December 31, 2008
|
||||||||||||||||||||||||
Deficit
|
||||||||||||||||||||||||
Accumulated
|
Accumulated
|
|||||||||||||||||||||||
Additional
|
During
the
|
Other
|
Total
|
|||||||||||||||||||||
Common
Stock
|
Paid-in
|
Development
|
Comprehensive
|
Stockholders'
|
||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Stage
|
Income
(Loss)
|
Equity
|
|||||||||||||||||||
Issuance
of common stocks
|
||||||||||||||||||||||||
to
shareholders @0.001 per
|
||||||||||||||||||||||||
share
on November 9, 2007
|
20,000,000 | $ | 20,000 | $ | - | $ | - | $ | 20,000 | |||||||||||||||
Net
loss for the period
|
||||||||||||||||||||||||
ended
December 31, 2007
|
$ | (5,126 | ) | $ | (5,126 | ) | ||||||||||||||||||
Balance,
December 31, 2007
|
20,000,000 | $ | 20,000 | $ | - | $ | (5,126 | ) | $ | - | $ | 14,874 | ||||||||||||
Issuance
of common stocks
|
||||||||||||||||||||||||
to
shareholders @0.01 per
|
||||||||||||||||||||||||
share
on January 31, 2008
|
4,460,000 | $ | 4,460 | $ | 40,140 | $ | 44,600 | |||||||||||||||||
Issuance
of common stocks
|
||||||||||||||||||||||||
to
shareholders @0.0137 per
|
||||||||||||||||||||||||
share
on March 31, 2008
|
611,598 | $ | 612 | $ | 7,767 | $ | 8,379 | |||||||||||||||||
Issuance
of common stocks
|
||||||||||||||||||||||||
to
shareholders @0.0137 per
|
||||||||||||||||||||||||
share
on April 30, 2008
|
14,266,263 | $ | 14,266 | $ | 181,182 | $ | 195,448 | |||||||||||||||||
Issuance
of common stocks
|
||||||||||||||||||||||||
to
Williams @0.01 per share
|
||||||||||||||||||||||||
on
June 30, 2008
|
198,000 | $ | 198 | $ | 1,782 | $ | 1,980 | |||||||||||||||||
Adjustment
for Exchange
|
||||||||||||||||||||||||
rate
changes
|
$ | (75 | ) | $ | (75 | ) | ||||||||||||||||||
Net
loss for the period
|
||||||||||||||||||||||||
ended
December 31, 2008
|
$ | (84,437 | ) | $ | (84,437 | ) | ||||||||||||||||||
Balance,
December 31, 2008
|
39,535,861 | $ | 39,536 | $ | 230,871 | $ | (89,563 | ) | $ | (75 | ) | $ | 180,769 |
F-6
CIS
WORLD, INC
|
|||||||||||||
(A
Development Stage Enterprise)
|
|||||||||||||
CONSOLIDATED
STATEMENT OF CASH FLOWS
|
|||||||||||||
Period
from
|
Cumulative
from
|
||||||||||||
November
9, 2007
|
November
9, 2007
|
||||||||||||
Year
Ended
|
(date
of Inception)
|
(date
of Inception)
|
|||||||||||
December
31,
|
to
December 31,
|
to
December 31,
|
|||||||||||
2008
|
2007
|
2008
|
|||||||||||
Operating
Activities:
|
|||||||||||||
Net
loss
|
$ | (84,437 | ) | $ | (5,126 | ) | $ | (89,563 | ) | ||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|||||||||||||
Non-cash
portion of share based legal fee expense
|
1,980 | - | 1,980 | ||||||||||
Deposit
|
(1,335 | ) | - | (1,335 | ) | ||||||||
Loan
to shareholder / officer
|
(35,359 | ) | - | (35,359 | ) | ||||||||
Prepaid
Expense
|
(2,025 | ) | - | (2,025 | ) | ||||||||
Prepaid
payment to supplier
|
(13,000 | ) | - | (13,000 | ) | ||||||||
Account
payable
|
3,462 | 1,026 | 4,488 | ||||||||||
Unearned
income
|
20,253 | - | 20,253 | ||||||||||
Loan
from shareholders / officer
|
(4,100 | ) | 4,100 | $ | - | ||||||||
Net
cash provided by operating activities
|
(114,561 | ) | $ | - | $ | (114,561 | ) | ||||||
Investing
Activities:
|
|||||||||||||
Net
cash provided by investing activities
|
$ | - | $ | - | $ | - | |||||||
Financing
Activities:
|
|||||||||||||
Proceeds
from issuance of common stock
|
268,427 | - | $ | 268,427 | |||||||||
Net
cash provided by financing activities
|
$ | 268,427 | $ | - | $ | 268,427 | |||||||
Effect
of Exchange Rate on Cash
|
$ | (75 | ) | $ | - | $ | (75 | ) | |||||
Net
increase (decrease) in cash and cash equivalents
|
$ | 153,791 | $ | - | $ | 153,791 | |||||||
Cash
and cash equivalents at beginning of the year
|
$ | - | $ | - | $ | - | |||||||
Cash
and cash equivalents at end of year
|
$ | 153,791 | $ | - | $ | 153,791 | |||||||
Supplemental
schedule of non-cash investing and financing activities:
|
|||||||||||||
Common
stock issued pursuant to stock
|
|||||||||||||
subscription receivable
-officers
|
(Note D) | $ | - | $ | 20,000.00 | $ | - |
F-7
CIS
WORLD, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
A- BUSINESS DESCRIPTION
CIS
World, Inc. (the “Company”) incorporated under the laws of Nevada on November 9,
2007. CIS World, Inc. has principle office at 375 N. Stephanie, Suite
1411, Henderson, NV 89104-8909. CIS World, Inc. wholly owned branch
located in the State of Illinois and has principle office at 70 W Madison ST,
Suite 1400, Chicago IL 60602, and the contact number is
(312)214-3138.
Besides
USA branch, CIS World, Inc. also established one subsidiary in Hong
Kong. CIS World, Ltd, as the wholly owned subsidiary, is registered
on December 14, 2007 in Hong Kong. It is a subsidiary on behalf of
CIS World, Inc. to conduct and operate the business of trading services,
distribution, and marketing of the printer consumables parts in Asia including
China, Europe, North and South America. The CIS World, Ltd is
located at Flat C, 2F., Eastern Street, Sai Ying Pun, HongKong, and contact
number is (0852)6052-2088.
The
Company’s main business includes sourcing, distribution and marketing of
Continue Ink Supply System and Refillable Cartridges in Asia, Europe, North and
South America.
These
parts are manufactured in China by Kang Zhi Xin Science and Technology
(ShenZhen), Ltd. (“KZX”). It was established in 2008 specializing in
Continue Ink Supply System and Refillable Cartridges (“CISS”) in manufacturing,
and located at Fourth Industrial Parks of Rich Bridge, Fuyong Neighbourhood
Bridgehead Community, B3 East Third Layer, Bao An District, ShenZhen City,
Guangdong Province, PR China. On December 10, 2008, CIS World, Ltd.
signed a three years long-term exclusive distribution agreement with Kang Zhi
Xin Science and Technology (ShenZhen), Ltd. KZX gives CIS World, Ltd
the exclusive right of import and sell its products in KZX’s trademark and brand
name in Asia, Europe, North and South America. KZX is a Chinese
manufacturing company owned 39% by Ms. Cuixian Wu, the secretary of the
Company.
Going Concern and Plan of
Operation
The
Company's financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company is in the
development stage and has not earned any revenues from operations to date. These
conditions raise substantial doubt about its 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.
F-8
CIS
WORLD, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
B – SIGNIFICANT ACCOUNTING POLICIES
Development Stage
Company
The
Company is considered to be in the development stage as defined in Statement of
Financial Accounting Standards (SFAS) No. 7, “Accounting and Reporting by
Development Stage
Enterprises”. The Company has devoted substantially all of its efforts to
the corporate formation, the raising of capital and attempting to secure
environmental remediation contracts.
Basis of
accounting
The
financial statements reflect the assets, revenues and expenditures of the
Company on the accrued basis of accounting.
The
Company’s fiscal year end is the last day of December 31.
Use of
Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles in the United States of America requires management to
make estimates and assumptions that affect certain amounts reported in the
financial statements and disclosures. Accordingly, actual results
could differ from those estimates.
Cash and Cash
Equivalents
The
Company considers all highly-liquid investments with an original maturity of
three months or less when purchased to be cash equivalents. As of December 31,
2008, the company has cash and cash equivalents of $ 153,791.
Organization Cost and
Amortization
The
Company incurred certain travel fee, legal fee and organization cost for setting
up CIS World, Inc. in the State of Nevada, and the Company was incorporated on
November 9, 2007, the cost was $5,126, which was fully expensed as December 31,
2007.
Property, Plant, and
Equipment Depreciation
Property,
plant, and equipment are stated at cost. Depreciation is being
provided principally by straight line methods over the estimated useful lives of
the assets. As of December 31, 2008, there were no fixed assets in
the Company’s balance sheets.
F-9
CIS
WORLD, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
B – SIGNIFICANT ACCOUNTING POLICIES (Continue)
Stock-Based
Compensation
The
Company accounts for stock issued for services using the fair value
method. In accordance with Emerging Issues Task Force (“EITF”) 96-98,
the measurement date of shares issued for services is the date at which the
counterparty’s performance is complete.
Basics and Diluted Net Loss
Per Common Share
The
Company computes per share amounts in accordance with SFAS No. 128, “Earnings
per Share”. SFAS No. 128 requires presentation of basis and diluted
EPS. Basic EPS is computed by dividing the income (loss) available to
Common Shareholders by the weighted-average number of common shares outstanding
for the period. Diluted EPS is based on the weighted-average number
of shares of common stock and common stock equivalents outstanding during the
periods.
As of
December 31, 2008, the Company only issued one type of shares, i.e., common
shares only. There are no other types securities were
issued. Accordingly, the diluted and basics net loss per common share
are the same.
The
following table I illustrated the calculations for basics and diluted net loss
per common share for the period of year 2007 and 2008 and the period of November
9 (Date of inception) to December 31, 2008.
Table
I
Year
2007
|
||||||||||||
Basic
& Diluted EPS Computation
|
||||||||||||
Net
Loss
|
$ | 5,126 | ||||||||||
Loss
available to common stockholders
|
$ | 5,126 | ||||||||||
Dates
|
Shares
|
Fraction
of
Period
|
Weighted
-
|
|||||||||
Outstanding
|
Outstanding
|
On Daily Basis
|
Average Shares
|
|||||||||
November
9, 2007
|
20,000,000 |
53
/ 365
|
2,904,110 | |||||||||
Weighted-average
shares
|
2,904,110 | |||||||||||
Basic
& Diluted Net Loss Per Common Share
|
$ | 0.00 |
F-10
CIS
WORLD, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
B – SIGNIFICANT ACCOUNTING POLICIES (Continued)
Basics and Diluted Net Loss
Per Common Share (Continue)
Table
I (Continue)
Basic
& Diluted EPS Computation
|
Year
2008
|
|||||||||||
Net
Loss
|
$ | 84,437 | ||||||||||
Loss
available to common stockholders
|
$ | 84,437 | ||||||||||
Dates
|
Shares
|
Fraction
of Period
|
Weighted
-
|
|||||||||
Outstanding
|
Outstanding
|
On Daily Basis
|
Average Shares
|
|||||||||
January
1, 2008
|
20,000,000 |
1
|
20,000,000 | |||||||||
February
28, 2008
|
4,460,000 |
306/365
|
3,739,068 | |||||||||
March
31, 2008
|
661,598 |
275/365
|
498,464 | |||||||||
April
30,2008
|
14,266,263 |
245/365
|
9,575,985 | |||||||||
June
30, 2008
|
198,000 |
184/365
|
99,814 | |||||||||
Weighted-average
shares
|
33,913,331 | |||||||||||
Basic
& Diluted Net Loss Per Common Share
|
$ | 0.00 | ||||||||||
Cumulative
Period From November 9 2007 to December 31, 2008
|
||||||||||||
Basic
& Diluted EPS Computation
|
||||||||||||
Net
Loss December 31, 2007
|
$ | 84,437 | ||||||||||
Net
Loss December 31, 2008
|
$ | 5,126 | ||||||||||
Loss
available to common stockholders
|
$ | 89,563 | ||||||||||
Dates
|
Shares
|
Fraction
of Period
|
Weighted
-
|
|||||||||
Outstanding
|
Outstanding
|
On Daily Basis
|
Average Shares
|
|||||||||
November
9, 2007
|
20,000,000 |
1
|
20,000,000 | |||||||||
February
28, 2008
|
4,460,000 |
306/418
|
3,264,976 | |||||||||
March
31, 2008
|
661,598 |
275/418
|
435,262 | |||||||||
April
30,2008
|
14,266,263 |
245/418
|
8,361,805 | |||||||||
June
30, 2008
|
198000 |
184/418
|
87,158 | |||||||||
December
31, 2008
|
0 |
0
|
0 | |||||||||
Weighted-average
shares
|
32,149,201 | |||||||||||
Basic
& Diluted Net Loss Per Common Share
|
$ | 0.00 |
The
equation from computing basic and diluted EPS is:
Income
available to common shareholders/Weighted-average shares
F-11
CIS
WORLD, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
B – SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue
Recognition
In
accordance with the Securities and Exchange Commission’s (“SEC”) Staff
Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition,” the Company
recognizes revenue when it is realized or realizable and earned. The Company
must meet all of the following four criteria under SAB 104 to recognize
revenue:
|
·
|
Persuasive
evidence of an arrangement exists
|
|
·
|
Delivery
has occurred
|
|
·
|
The
sales price is fixed or
determinable
|
|
·
|
Collection
is reasonably assured
|
In
accordance with paragraph 7-19 of EITF 99-19, "Reporting Revenues Gross as a
Principal versus Net as an Agent", the Company will recognize revenues on a
gross basis. EITF 99-19 discusses whether revenues and cost of goods
sold to arrive at gross profit and their corresponding assets and liabilities
should be recorded at gross or net. The following indicators of gross
revenue recognition are existed in the Company:
|
·
|
Acts
as principal in the transaction.
|
|
·
|
Has
risk and rewards of ownership, such as general inventory risk, risk of
loss for collection, delivery and
returns
|
|
·
|
Takes
title to the products
|
|
·
|
Flexibility
in pricing
|
|
·
|
Assumes
credit risk
|
|
·
|
The
company can change the products or perform part of the service, and the
Company is involved in the determination of products or service
specifications based on customer’s
needs.
|
All the
indicators of net revenue reporting (EITF 99-19, paragraph 15-19) are not
existed in the Company.
The
company started to have sales orders from the month of April, 2008; and most of
those customers are from Indonesia, Thailand, Bolivia, Columbia, and
Brazil.
During
the year 2008, CIS World, Ltd purchased most of the products and Continue Ink
Supply System and Refillable cartridges from the supplier Shenzhen DZX
Technology Co., Ltd on order basis, which is located at 2nd FL, A
Building, Fuhai Street, Xihe Community, Fuhai Road, Fuyong, Bao’an District, and
Shenzhen, Guangdong, China.
F-12
CIS
WORLD, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
B - SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue Recognition (
Continue)
For the
year ended of December 31, 2008, CIS World, Inc has total Continue Ink Supply
System and Refillable cartridges revenue of $244,362 from the Company’s major
customers. The
Continue Ink Supply System and Refillable cartridges and related products were
manufactured and supplied by Shenzhen DZX Technology Co. The products
were shipped out at FOB shipping point Shenzhen, China.
Operating
Expense
2008 was
the started up year of the corporation, it majority focused on marketing and
promoting the products of the company. As of December 31, 2008, there was a
total of $93,898 operating expenses, which include $25,029 marketing and
promotion expense for the brand new company, $ 17,462 travel expense, $13,980
legal expense, and $7,697 trade show and exhibition expense relating to
operating and promoting the products of the Company.
Prepaid
Expense
As of
December 31, 2008, the company prepaid $2,025 for the trade show and exhibition
expense for year 2009.
Prepaid Payment to
Supplier
As of
December 31, 2008, the company prepaid $13,000 to the product supplier and
manufacturer for the purchase orders incurred in year 2009.
Unearned
Income
As of
December 31, 2008, two of the company’s Indonesia customers had paid $20,253 for
the sales orders that incurred in January 2009. Therefore, the Company has an
unearned income of $20,253 at December 31, 2008.
F-13
CIS
WORLD, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
B - SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income
Tax
Income
taxes are provided for tax effects of transactions reported in the financial
statements and consist of taxes currently due plus deferred taxes. Deferred
taxes are recognized for differences between the bases of assets and liabilities
for financial statement and income tax purposes.
The differences in asset and liability bases relate primarily to organization
and start-up costs (use of different methods and periods to calculate
deduction). Deferred taxes are also recognized for operating losses and tax
credits that are available to offset future income taxes. The deferred tax
assets and/or liabilities represent the future tax return consequences of those
differences, which will either be taxable or deductible when the assets and
liabilities are recovered or settled. The components of the deferred tax asset
and liability are classified as current and concurrent based on their
characteristics. Valuation allowances are provided for deferred tax assets based
on management’s projection of the sufficiency of future taxable income to
realize the assets.
Recent Accounting
Pronouncements
In
December 2004, the FASB issued Statement of Financial Accounting Standards No.
153 (SFAS 153), “Exchange of Non-monetary Assets.” SFAS 153 amends
the guidance in APB No. 29, “Accounting for Non-monetary Assets.” APB
No. 29 was based on the principle that exchanges of non-monetary assets should
be measured on their fair value of the assets exchanged. SFAS 153
amends APB No. 29 to eliminate the exception for non-monetary exchanges of
similar productive assets and replaces it with a general exception for exchanges
of non-monetary assets that do not have commercial substance if the future cash
flows of the entity are expected to change significantly as a result of the
exchange. SFAS 151 is effective for financial statements issued for
fiscal years beginning after June 15, 2005. The adoption of SFAS 153
did not have a material effect on the Company’s financial position or results of
operation.
In
December 2004, the FASB revised Statement of Financial Accounting Standards No.
123 (SFAS 123 (R)), “Accounting for Stock-Based Compensation.” The
SFAS 123(R) revision established for accounting for transactions in which an
entity exchanges its equity instruments for goods or services and focuses
primarily on accounting for transactions in which an
entity obtains employee services in share-based payment
transactions. It does not change the accounting guidance for
share-based payment transactions with parties other than
employees. For public entities that file as small business issuers,
the revisions to SFAS 123 (R) are effective as of the beginning of the first
interim or annual reporting period that begins after December 15,
2005. Adoption of SFAS 123 (R) is not expected to have a material
impact on the Company’s financial position or results of
operations.
F-14
CIS
WORLD, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
B – SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recent Accounting
Pronouncements (Continued)
In May
2005, the FASB issued SFAS no. 154, “Accounting Changes and Error Corrections
(“SFAS No. 154”) which replaces APB Opinion No. 20, “Accounting Changes” and
SFAS No. 3, “Reporting Accounting Changes in Interim Financial
Statements-An Amendment of ABP Opinion No. 28. SFAS No. 154 provides
guidance on the accounting for and reporting of accounting changes and error
corrections. Specifically, this statement requires “retrospective application”
of the direct effect for a voluntary change in accounting principle to prior
periods’ financial statements, if it is practical to do so. SFAS No.
154 also strictly defines the term “restatement” to mean the correction of an
error revising previously issued financial statements.
SFAS No.
154 is effective for accounting changes and corrections of errors made in fiscal
years beginning after December 15, 2005. The management believes that
adoption of SFAS No. 154 will not have a material impact on the results of
operations, financial positions or cash flows.
In July
2006, the FASB issued Financial Interpretation No. 48, “Accounting for
Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109” (“FIN
48”), and supplemented by FASB Financial Staff Position FIN 48-1, Definition of
Settlement in FASB Interpretation No. 48, issued May 2, 2007. FIN 48
specifies how tax benefits for uncertain tax positions are to be recognized,
measured, and derecognized in financial statements; requires certain disclosures
of uncertain tax matters; specifies how reserves for uncertain tax positions
should be classified on the balance sheet; and provides transition and interim
period guidance, among other provisions. FIN 48 is effective for
fiscal years beginning after December 15, 2006 and as a result, is effective for
the Company in the fiscal year 2008.
In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS
157”). SFAS 157 defines fair value, establishes a framework for using fair value
assets and liabilities, and expends disclosures about fair value measurements.
This statement applies whenever other statements require or permit assets or
liabilities to be measured at fair value. SFAS 157
is effective for fiscal years beginning after November 15, 2007. The management
believes
that there is no material impact on its consolidated results of operations, cash
flows, and financial position.
In
September 2006, the Securities and Exchange Commission (“SEC”) issued Staff
Accounting Bulletin (“SAB”) No. 108, Quantifying Financial Misstatements (“SAB
108”), which expresses the Staff’s views regarding the process of quantifying
financial statement misstatements. Registrants are required to
quantify the impact of correcting all misstatements, including both carryover
and reversing effects of prior year misstatements, on the current year financial
statements. The financial statements would require adjustment when
either approach results in quantifying a misstatement that is material, after
considering all relevant quantitative and qualitative factors.
F-15
CIS
WORLD, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
B – SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recent Accounting
Pronouncements (Continued)
SAB 108
is effective for financial statements covering the first fiscal year ending
after November 15, 2006. The management believes that there is no
material impact on its consolidated results of operations, cash flows, and
financial position.
In
December 2007, the SEC issued Staff Accounting Bulletin (“SAB”) 110 Share-Based
Payment. SAB 110 amends and replaces Question 6 of Section D.2 of Topic 14,
“Share-Based Payment,” of the Staff Accounting Bulletin series. Question 6 of
Section D.2 of Topic 14 expresses the views of the staff regarding the use of
the “simplified” method in developing an estimate of the expected term of “plain
vanilla” share options and allows usage of the “simplified” method for share
option grants prior to December 31, 2007. SAB 110 allows public companies which
do not have historically sufficient experience to provide a reasonable estimate
to continue use of the “simplified” method for estimating the expected term of
“plain vanilla” share option grants after December 31, 2007. SAB 110 is
effective January 1, 2008 which the Company adopted upon its inception. The
Company currently uses the “simplified” method to estimate the expected term for
share option grants to employees as it does not have enough historical
experience to provide a reasonable estimate. The Company will continue to use
the “simplified” method until it has enough historical experience to provide a
reasonable estimate of expected term in accordance with SAB 110. The Company
does not expect SAB 110 will have a material impact on its balance sheet,
statement of operations and cash flows.
In
December 2007, the Financial Accounting Standards Board (“FASB”) issued
Statement No.141R, Business Combinations. Statement No.141R modifies the
accounting & disclosure requirements for business combinations and broadens
the scope of the previous standard to apply to all transactions in which one
entity obtains control over another business.
In
December 2007, the FASB issued SFAS No. 160 Non-controlling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51, this Statement
amends Accounting Research Bulletin No. 51, “Consolidated Financial Statements”
to establish accounting and reporting standards for the non-controlling interest
in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 is
required to be adopted simultaneously with SFAS 141R and is effective for
reporting periods on or after December 15, 2008. An earlier adoption is not
permitted. Currently, the Company does not have any non-controlling interests
and accordingly, the adoption of SFAS 160 is not expected to have a material
impact on our financial position, cash flows or results of
operations.
F-16
CIS
WORLD, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
C – RELATED PARTY TRANSACTIONS
Loans from Officer /
Shareholder
As of
December 31, 2007, there was an amount of $4,100 due to Officer for setting up
the company. And the same amount had returned back to the Officer on January
2008. And at the period ended December 31, 2008, there’s no more balance due to
officer or shareholder.
Loans to Officer /
Shareholder
As
December 31 2008, the Company advance $ 35,359 to the Company’s director and
shareholder Cuixian Wu; the outstanding balance is due on demand.
Common Shares Issued to
Executive and Non-Executive Officers and Directors
As of
December 31, 2008, total 20,508,545 shares were issued to officers and
directors. Please see the Table below for details:
Name
|
Title
|
Total
Shares
|
Total
Amount
|
%
of Common
Share
|
||||||||||
RUIXIA
YUAN
|
CHAIRMAN
|
8,508,545 | $ | 14,967 | 21.52 | % | ||||||||
LI
JUN WU
|
CEO
|
6,000,000 | $ | 6,000 | 15.18 | % | ||||||||
CUIXIAN
WU
|
DIRECTOR
|
4,000,000 | $ | 4,000 | 10.12 | % | ||||||||
HONG
HUI WEN
|
CFO
|
2,000,000 | $ | 2,000 | 5.06 | % | ||||||||
TOTAL
|
20,508,545 | $ | 26,967 | 51.87 | % |
Operating
Leases
The
Company entered into two leases for its corporate offices in under terms of
non-cancelable operating leases. The lease term is from June 1, 2008 through
December 31, 2009 and requires a $ 950 monthly lease payment, and this office is
located at 522 West 26th Street,
Chicago IL 60616, USA. Also, CIS World, Ltd entered into a lease for its Hong
Kong branch as well; and the lease term is from January 1, 2008 through March
31, 2010 and requires a $385 monthly lease payment; and it is located Flat C,
2F, Eastern Street, Sai Ying Pui, Hong Kong.
F-17
CIS
WORLD, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
C – RELATED PARTY TRANSACTIONS (Continue)
Cost of Goods
Sold
During
the year 2008, CIS World, Ltd purchased the related products and Continue Ink
Supply System and Refillable cartridges from the supplier Shenzhen DZX
Technology Co., Ltd on order basis, which is located at 2nd FL, A
Building, Fuhai Street, Xihe Community, Fuhai Road, Fuyong, Bao’an District, and
Shenzhen, Guangdong, China.
The cost
of goods sold for the year 2008 was $234,963, and there were no sales in 2007,
accordingly there was no cost of goods sold was incurred in 2007.
On
December 10, 2008, CIS World, Ltd. signed a three years long-term exclusive
distribution agreement with Kang Zhi Xin Science and Technology (ShenZhen), Ltd.
(“KZX”), an manufacturing company in China. KZX gives CIS World, Ltd
the exclusive right of import and sell its products in KZX’s trademark and brand
name in Asia, Europe, North and South America. KZX is owned 39% by
Ms. Cuixian Wu, a Director of CIS World, Inc. The two entities, CIS
World, Inc., and Kang Zhi Xin Science and Technology (ShenZhen), Ltd, are under
common control according to EITF 02-5.
The
products the Company will sell are manufactured in China by Kang Zhi Xin Science
and Technology (ShenZhen), Ltd, (“KZX”). KZX was established in 2008
specializing in Continue Ink Supply System and Refillable Cartridges (“CISS”) in
manufacturing, and located at Fourth Industrial Parks of Rich Bridge, Fuyong
Neighbourhood Bridgehead Community, B3 East Third Layer, Bao An District,
ShenZhen City, Guangdong Province, PR China.
The
management of CIS World, Inc. believes that the purchase price for the parts
from KZX will be market price. CIS World, Inc. and KZX are two totally separated
entities, i.e., CIS World, Inc. is a USA corporation and will fully comply with
USA regulations and USA general accepted accounting principles; KZX is a Chinese
company and it will comply with Chinese legal systems. KZX, as a Chinese local
manufacturer, will record their manufacturing costs and inventories based on the
Chinese accounting regulations rulings.
But, when
CIS World, Inc. purchases the parts from KZX, CIS World will record the actual
costs paid to KZX as the costs for inventory of CIS World, Inc. There is no any
relationship for KZX’s manufacturing historic costs with CIS World’s inventory
value. Specifically, CIS’s inventory value is equal to the purchase price or
actual cost of the parts purchased from KZX, and the purchase price of the parts
will be fair market price. CIS World, Inc. will adopt the first-in and first-out
inventory system according to generally accepted accounting principles in
USA.
F-18
CIS
WORLD, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
D – SHAREHOLDERS’ EQUITY
Common
Stock
Under the
Company’s Articles of Incorporation dated November 9, 2007, the Company is
authorized to issue 200,000,000 shares of capital stock with a par value of
$0.001.
On
November 9, 2007, the Company was incorporated in the State of
Nevada.
On
November 9, 2007, the Company issued 20,000,000 shares of common stock to the
four founders of the Company, Ruixia Ruan, Lijun Wu, Cuixian Wu and Honghui Wen
at $0.001 per share or $ 20,000 for initial capital (stock subscription
receivable).
On
January 31, 2008, total 4,460,000 shares were issued at price of $0.01 per share
to 17 shareholders for $44,600.
On March
31, 2008, additional 611,598 common shares were issued to 2 shareholders and
sold at price of $0.0137 per share. The proceeds of $ 8,379 were
received.
Stock Subscription
Receivable - Officers
On April
30, 2008, one of the Company founder and Chairman Ruixia Ruan purchased
additional 508,545 common shares at $ 0.0137 per share, and the amount of $
6,967 was received. Also, additional 13,757,718 common shares at $ 0.0137 per
share were issued to 40 shareholders for total proceeds of $
188,481.
On June
30, 2008, 198,000 common shares were issued to Williams Law Group at $ 0.01 per
share for the legal service value of $ 1,980.
Therefore,
as of December 31, 2008, there was total of 39,535,861 shares issued and
outstanding.
At
November 9, 2007, the Company had receivables from its four founding
stockholders aggregating $20,000 for the purchase of their Company common stock.
The outstanding balance is due on demand and is unsecured. This receivable was
subsequently paid in full during April 2008.
F-19
CIS
WORLD, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
E– SUBSEQUENT EVENTS
The unearned income of $
20,253 was recognized as sales revenue of the company at January
2009.
NOTE
F– GOING CONCERN
The
Company is currently in the development stage and their activities consist
solely of corporate formation, raising capital, and attempting to sell products
to generate revenues.
There is
no guarantee that the Company will be able to raise enough capital or generate
revenues to sustain its operations and carry out its business
plan. These conditions raise substantial doubt about the Company’s
ability to continue as a going concern.
The
financial statements do not include any adjustments relating to the carrying
amounts of recorded assets or the carrying amounts and classification of
recorded liabilities that may be required should the Company be unable to
continue as a going concern.
The
Company’s lack of operating history and financial resources raise substantial
doubt about its ability to continue as a going concern. The financial
statements do not include adjustments that might result from the outcome of this
uncertainty and if the Company is unable to generate significant revenue or
secure financing, then the Company may be required to cease or curtail its
operations.
NOTE
G – INCOME TAXES
The
Company has incurred net losses since inception. The Company has not reflected
any benefit of such net operating loss carry forward in the accompanying
financial statements.
The
income tax benefit differed from the amount computed by applying the US federal
income tax rate of 34% to net loss as a result of the following:
2008
|
2007
|
|||||||
Computed
expected tax benefit
|
(34.00 | )% | (34.00 | )% | ||||
State
income tax, net of federal benefit
|
(0.00 | ) | (0.00 | ) | ||||
Change
in federal tax rate apportionment
|
19.00 | 19.00 | ||||||
Change
in valuation allowance
|
15.00 | 15.00 | ||||||
Income
tax benefit
|
- | % | - | % |
F-20
CIS
WORLD, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
G – INCOME TAXES (Continue)
The tax
effect of temporary differences that give rise to significant portions of the
deferred tax assets as of December 31, 2008 and December 31, 2007 is presented
below:
Deferred
Tax Assets:
2008
|
2007
|
|||||||
Organizational
start-up costs
|
0.00 | $ | 5,126 | |||||
Valuation
allowance
|
(5,126 | ) | ||||||
Net
deferred tax assets
|
$ | - | $ | - |
In
assessing the realization of deferred tax assets, management considers whether
it is more likely than not that some portion or all of the deferred tax assets
will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during periods in which
those temporary differences become deductible.
Based
upon the lack of historical taxable income and uncertain projections of future
taxable income over the periods in which the deferred tax assets are deductible,
management believes that it is more likely than not that the Company will not
realize the benefits of these deductible differences. Accordingly, the Company
has provided a valuation allowance against the net deferred tax assets
aggregating $5,126 as of December 31, 2007.
F-21
CIS
WORLD, INC
(A Development Stage
Enterprise)
Unaudited
Financial Statements
As
of September 30, 2009 & 2008
Table
of Contents
Unaudited
Consolidated Balance Sheets
|
F-23
|
Unaudited
Consolidated Statement of Operation
|
F-24
|
Unaudited
Consolidated Statement of Shareholders Equity
|
F-25
|
Unaudited
Consolidated Statement of Cash Flows
|
F-26
|
Notes
to Unaudited Consolidated Financial Statements
|
F-27
|
F-22
CIS
WORLD, INC
|
||||||||||||
(A
Development Stage Enterprise)
|
||||||||||||
CONSOLIDATED
BALANCE SHEETS
|
||||||||||||
September
30
|
December
31
|
December
31
|
||||||||||
2009
|
2008
|
2007
|
||||||||||
|
Unaudited
|
|||||||||||
ASSETS
|
||||||||||||
Current
assets:
|
||||||||||||
Cash
and cash equivalents
|
$ | 173,434 | $ | 153,791 | $ | - | ||||||
Accounts
receivable, net
|
- | - | - | |||||||||
Total
Current Assets
|
$ | 173,434 | $ | 153,791 | $ | - | ||||||
Other
current assets:
|
||||||||||||
Stock
subscription receivable
|
- | - | 20,000 | |||||||||
Deposit
|
1,720 | 1,335 | - | |||||||||
Loan
to shareholder / officer
|
- | 35,359 | - | |||||||||
Prepaid
expense
|
2,025 | 2,025 | - | |||||||||
Prepaid
payment to supplier
|
- | 13,000 | - | |||||||||
Total
Other Current Assets
|
$ | 3,745 | $ | 51,719 | $ | 20,000 | ||||||
TOTAL
ASSETS
|
$ | 177,179 | $ | 205,510 | $ | 20,000 | ||||||
LIABILITIES
& EQUITY
|
||||||||||||
Current
liabilities:
|
||||||||||||
Account
payable
|
11,409 | 4,488 | 1,026 | |||||||||
Total
current liabilities
|
$ | 11,409 | $ | 4,488 | $ | 1,026 | ||||||
Other
current liabilities:
|
||||||||||||
Loan
from shareholders / officers
|
- | - | 4,101 | |||||||||
Unearned
income
|
2,083 | 20,253 | - | |||||||||
Total
other current liabilities
|
$ | 2,083 | $ | 20,253 | $ | 4,101 | ||||||
Total
liabilities
|
$ | 13,492 | $ | 24,741 | $ | 5,126 | ||||||
Stockholders'
Equity:
|
||||||||||||
Common
stock, $0.001 par value;
|
||||||||||||
200,000,000
shares authorized;
|
||||||||||||
39,535,861
shares issued and outstanding.
|
$ | 39,536 | $ | 39,536 | $ | 20,000 | ||||||
Paid-in
capital
|
230,871 | 230,871 | - | |||||||||
Deficit
accumulated during the development stage
|
(106,645 | ) | (89,563 | ) | (5,126 | ) | ||||||
Accumulated
other comprehensive loss
|
(75 | ) | (75 | ) | - | |||||||
Total
stockholders' equity
|
$ | 163,687 | $ | 180,769 | $ | 14,874 | ||||||
TOTAL
LIABILITIES & EQUITY
|
$ | 177,179 | $ | 205,510 | $ | 20,000 |
F-23
CIS
WORLD, INC
|
||||||||||||
(A
Development Stage Enterprise)
|
||||||||||||
CONSOLIDATED
STATEMENT OF LOSS
|
||||||||||||
Cumulative
from
|
||||||||||||
Nine
Month Ended
|
Nine
Month Ended
|
November
9, 2007
|
||||||||||
September
30
|
September
30
|
(
Date of Inception)
|
||||||||||
2009
|
2008
|
to September 30, 2009
|
||||||||||
Unaudited
|
Unaudited
|
Unaudited
|
||||||||||
Revenues
|
$ | 469,367 | $ | 151,053 | $ | 713,729 | ||||||
Cost
of Goods Sold
|
452,504 | 147,036 | 687,467 | |||||||||
Gross
Profit
|
$ | 16,863 | $ | 4,017 | $ | 26,262 | ||||||
Operating
expenses:
|
||||||||||||
Research
and development
|
- | - | - | |||||||||
Selling,
general and administrative expenses
|
33,951 | 71,735 | 132,975 | |||||||||
Depreciation
and amortization expenses
|
- | - | - | |||||||||
Total
Operating Expenses
|
33,951 | 71,735 | 132,975 | |||||||||
Operating
Loss
|
$ | (17,088 | ) | $ | (67,718 | ) | $ | (106,713 | ) | |||
- | ||||||||||||
Investment
income, net
|
$ | 6 | $ | 25 | $ | 68 | ||||||
Interest
Expense, net
|
- | - | - | |||||||||
Loss
before income taxes
|
(17,082 | ) | (67,693 | ) | (106,645 | ) | ||||||
Loss
tax expense
|
- | - | - | |||||||||
Net
loss
|
$ | (17,082 | ) | $ | (67,693 | ) | $ | (106,645 | ) | |||
- | ||||||||||||
Net
loss per common share- Basics
|
$ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | |||
Net
loss per common share- Diluted
|
$ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | |||
Other
comprehensive loss, net of tax:
|
||||||||||||
Foreign
currency translation adjustments
|
- | (116 | ) | (75 | ) | |||||||
Other
comprehensive loss
|
$ | - | $ | (116 | ) | $ | (75 | ) | ||||
Comprehensive
Loss
|
$ | (17,082 | ) | $ | (67,809 | ) | $ | (106,720 | ) |
F-24
CIS
WORLD, INC
|
||||||||||||||||||||||||
(A
Development Stage Enterprise)
|
||||||||||||||||||||||||
STATEMENT
OF STOCKHOLDERS EQUITY
|
||||||||||||||||||||||||
The
Period November 9, 2007 ( Date of Inception)
|
||||||||||||||||||||||||
through
September 30, 2009 (unaudited)
|
||||||||||||||||||||||||
Deficit
|
||||||||||||||||||||||||
Accumulated
|
Accumulated
|
|||||||||||||||||||||||
Additional
|
During
the
|
Other
|
Total
|
|||||||||||||||||||||
Common
Stock
|
Paid-in
|
Development
|
Comprehensive
|
Stockholders'
|
||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Stage
|
Income
(Loss)
|
Equity
|
|||||||||||||||||||
Issuance
of common stocks
|
||||||||||||||||||||||||
to
shareholders @0.001 per
|
||||||||||||||||||||||||
share
on November 9, 2007
|
20,000,000 | $ | 20,000 | $ | - | $ | - | $ | 20,000 | |||||||||||||||
Net
loss for the period
|
||||||||||||||||||||||||
ended
December 31, 2007
|
$ | (5,126 | ) | $ | (5,126 | ) | ||||||||||||||||||
Balance,
December 31, 2007
|
20,000,000 | $ | 20,000 | $ | - | $ | (5,126 | ) | $ | - | $ | 14,874 | ||||||||||||
Issuance
of common stocks
|
||||||||||||||||||||||||
to
shareholders @0.01 per
|
||||||||||||||||||||||||
share
on January 31, 2008
|
4,460,000 | $ | 4,460 | $ | 40,140 | $ | 44,600 | |||||||||||||||||
Issuance
of common stocks
|
||||||||||||||||||||||||
to
shareholders @0.0137 per
|
||||||||||||||||||||||||
share
on March 31, 2008
|
611,598 | $ | 612 | $ | 7,767 | $ | 8,379 | |||||||||||||||||
Issuance
of common stocks
|
||||||||||||||||||||||||
to
shareholders @0.0137 per
|
||||||||||||||||||||||||
share
on April 30, 2008
|
14,266,263 | $ | 14,266 | $ | 181,182 | $ | 195,448 | |||||||||||||||||
Issuance
of common stocks
|
||||||||||||||||||||||||
to
Williams @0.01 per share
|
||||||||||||||||||||||||
on
June 30, 2008
|
198,000 | $ | 198 | $ | 1,782 | $ | 1,980 | |||||||||||||||||
Adjustment
for Exchange
|
||||||||||||||||||||||||
rate
changes
|
$ | (75 | ) | $ | (75 | ) | ||||||||||||||||||
Net
loss for the period
|
||||||||||||||||||||||||
ended
December 31, 2008
|
$ | (84,437 | ) | $ | (84,437 | ) | ||||||||||||||||||
Balance,
December 31, 2008
|
39,535,861 | $ | 39,536 | $ | 230,871 | $ | (89,563 | ) | $ | (75 | ) | $ | 180,769 | |||||||||||
Adjustment
for Exchange
|
||||||||||||||||||||||||
rate
changes
|
$ | - | $ | - | ||||||||||||||||||||
Net
loss for the period
|
||||||||||||||||||||||||
ended
September 30, 2009
|
$ | (17,082 | ) | $ | (17,082 | ) | ||||||||||||||||||
Balance,
September 30, 2009
|
39,535,861 | $ | 39,536 | $ | 230,871 | $ | (106,645 | ) | $ | (75 | ) | $ | 163,687 |
F-25
CIS
WORLD, INC
|
|||||||||||||
(A
Development Stage Enterprise)
|
|||||||||||||
CONSOLIDATED
STATEMENT OF CASH FLOWS
|
|||||||||||||
Cumulative
from
|
|||||||||||||
Nine
Month Ended
|
Nine
Month Ended
|
November
9, 2007
|
|||||||||||
September
30
|
September
30
|
(date
of Inception) to
|
|||||||||||
2009
|
2008
|
September 30, 2009
|
|||||||||||
Unaudited
|
Unaudited
|
Unaudited
|
|||||||||||
Operating
Activities:
|
|||||||||||||
Net
loss
|
$ | (17,082 | ) | $ | (67,693 | ) | $ | 72,481 | |||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|||||||||||||
Non-cash
portion of share based legal fee expense
|
- | 1,980 | 1,980 | ||||||||||
Account
receivable
|
- | (3,577 | ) | - | |||||||||
Deposit
|
(385 | ) | (1,335 | ) | (1,720 | ) | |||||||
Loan
to shareholder / officer
|
35,359 | (54,267 | ) | - | |||||||||
Prepaid
expense
|
- | - | (2,025 | ) | |||||||||
Prepaid
payment to supplier
|
13,000 | (16,410 | ) | - | |||||||||
Account
payable
|
6,921 | (1,026 | ) | 11,409 | |||||||||
Unearned
income
|
(18,170 | ) | - | 2,083 | |||||||||
Loan
from shareholders / officer
|
- | (4,100 | ) | - | |||||||||
Net
cash provided by operating activities
|
$ | 19,643 | $ | (146,428 | ) | $ | 84,208 | ||||||
Investing
Activities:
|
|||||||||||||
Net
cash provided by investing activities
|
$ | - | $ | - | $ | - | |||||||
Financing
Activities:
|
|||||||||||||
Proceeds
from issurance of common stock
|
- | 268,427 | 268,427 | ||||||||||
Net
cash provided by financing activities
|
$ | - | $ | 268,427 | $ | 268,427 | |||||||
Effect
of Exchange Rate on Cash
|
$ | - | $ | (116 | ) | $ | (75 | ) | |||||
Net
increase (decrease) in cash and cash equivalents
|
$ | 19,643 | $ | 121,883 | $ | 173,434 | |||||||
Cash
and cash equivalents at beginning of the year
|
$ | 153,791 | $ | - | $ | - | |||||||
Cash
and cash equivalents at end of year
|
$ | 173,434 | $ | 121,883 | $ | 173,434 | |||||||
Supplemental
schedule of non-cash investing and financing activities:
|
|||||||||||||
Common
stock issued pursuant to stock
|
|||||||||||||
subscription receivable -officers
|
(Note D) | $ | - | $ | - | $ | - |
F-26
CIS
WORLD, INC.
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE
A- BUSINESS DESCRIPTION
CIS
World, Inc. (the “Company”) incorporated under the laws of Nevada on November 9,
2007. CIS World, Inc. has principle office at 375 N. Stephanie, Suite
1411, Henderson, NV 89014-8909. CIS World, Inc. wholly owned branch
located in the State of Illinois and has principle office at 70 W Madison ST,
Suite 1400, Chicago IL 60602, and the contact number is
(312)214-3138. Besides USA branch, CIS World, Inc. also established
one subsidiary in Hong Kong:
CIS
World, Ltd, as the wholly owned subsidiary, is registered on December 14, 2007
In Hong Kong. It is a subsidiary on behalf of CIS World, Inc. to
conduct and operate the business of trading services, distribution, and
marketing of the printer consumables parts in Asia, Europe, North and South
America. The CIS World, Ltd is located at Flat C, 2F., Eastern Street, Sai Ying
Pun, HongKong, and contact number is (0852)6052-2088.
The
Company’s main business includes sourcing, distribution and marketing of
Continue Ink Supply System and Refillable Cartridges in Asia, Europe, North and
South America.
These
parts are manufactured in China by Kang Zhi Xin Science and Technology
(ShenZhen), Ltd. (“KZX”). It was established in 2008 specializing in
Continue Ink Supply System and Refillable Cartridges (“CISS”) in manufacturing,
and located at Fourth Industrial Parks of Rich Bridge, Fuyong Neighbourhood
Bridgehead Community, B3 East Third Layer, Bao An District, ShenZhen City,
Guangdong Province, PR China. On December 10, 2008, CIS World, Ltd.
signed a three years long-term exclusive distribution agreement with Kang Zhi
Xin Science and Technology (ShenZhen), Ltd. KZX gives CIS World, Ltd the
exclusive right of import and sell its products in KZX’s trademark and brand
name in Asia, Europe, North and South America. KZX is a Chinese
manufacturing company owned 39% by Ms. Cuixian Wu, the secretary of the
Company.
Going Concern and Plan of
Operation
The
Company's financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company is in the
development stage and has not earned any revenues from operations to date. These
conditions raise substantial doubt about its 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.
F-27
CIS
WORLD, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
B – SIGNIFICANT ACCOUNTING POLICIES
At
September 30, 2009 and for the nine months then ended, the consolidated
financial statements reflect the assets, revenues and expenditures of the
Company on the accrued basis of accounting. And the consolidated financial
statements of the Company include the accounts of CIS World, Inc and CIS World,
Ltd. All significant intercompany balances and transactions have been eliminated
in consolidation.
The
preparation of consolidated financial statements in conformity with generally
accepted accounting principles in the United States of America requires
management to make estimates and assumptions that affect certain amounts
reported in the financial statements and disclosures. Accordingly, actual
results could differ from those estimates.
The
Company has determined the United States dollars to be its functional currency
for CIS World, Inc; Hong Kong dollar and US dollar to be its functional currency
in CIS World, Ltd. Assets and liabilities were translated to U.S. dollars at the
period-end exchange rate. Statement of operations amounts were translated to
U.S. dollars using the first date of each month during the year. Gains and
losses resulting from translating foreign currency financial statements are
accumulated in other comprehensive income (loss), a separate component of
shareholders’ equity.
Cash and Cash
Equivalents
The
Company considers all highly-liquid investments with an original maturity of
three months or less when purchased to be cash equivalents. As of September 30,
2009, the company has cash and cash equivalents of $ 173,434.
Property, Plant, and
Equipment Depreciation
Property,
plant, and equipment are stated at cost. Depreciation is being
provided principally by straight line methods over the estimated useful lives of
the assets. As of September 30, 2009, there were no fixed assets in
the Company’s balance sheets.
Stock-Based
Compensation
The
Company accounts for stock issued for services using the fair value
method. In accordance with Emerging Issues Task Force (“EITF”) 96-98,
the measurement date of shares issued for services is the date at which the
counterparty’s performance is complete.
F-28
CIS
WORLD, INC.
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE
B – SIGNIFICANT ACCOUNTING POLICIES (Continue)
Basics and Diluted Net Loss
Per Common Share
The
Company computes per share amounts in accordance with SFAS No. 128, “Earnings
per Share”. SFAS No. 128 requires presentation of basis and diluted
EPS. Basic EPS is computed by dividing the income (loss) available to
Common Shareholders by the weighted-average number of common shares outstanding
for the period. Diluted EPS is based on the weighted-average number
of shares of common stock and common stock equivalents outstanding during the
periods.
As of
September 30, 2009, the Company only issued one type of shares, i.e., common
shares only. There are no other types securities were
issued. Accordingly, the diluted and basics net loss per common share
are the same.
Revenue
Recognition
In
accordance with the Securities and Exchange Commission’s (“SEC”) Staff
Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition,” the Company
recognizes revenue when it is realized or realizable and earned. The Company
must meet all of the following four criteria under SAB 104 to recognize
revenue:
|
·
|
Persuasive
evidence of an arrangement exists
|
|
·
|
Delivery
has occurred
|
|
·
|
The
sales price is fixed or
determinable
|
|
·
|
Collection
is reasonably assured
|
In
accordance with paragraph 7-19 of EITF 99-19, "Reporting Revenues Gross as a
Principal versus Net as an Agent", the Company will recognize revenues on a
gross basis.EITF 99-19 discusses whether revenues and cost of goods sold to
arrive at gross profit and their corresponding assets and liabilities should be
recorded at gross or net. The following indicators of gross revenue
recognition are existed in the Company:
|
·
|
Acts
as principal in the transaction.
|
|
·
|
Has
risk and rewards of ownership, such as general inventory risk, risk of
loss for collection, delivery and
returns
|
|
·
|
Takes
title to the products
|
|
·
|
Flexibility
in pricing
|
|
·
|
Assumes
credit risk
|
F-29
CIS
WORLD, INC.
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE
B – SIGNIFICANT ACCOUNTING POLICIES (Continue)
Revenue Recognition
(Continue)
|
·
|
The
company can change the products or perform part of the service, and the
Company is involved in the determination of products or service
specifications based on customer’s
needs.
|
All the
indicators of net revenue reporting (EITF 99-19, paragraph 15-19) are not
existed in the Company.
For the
nine month period ended of 2009 and 2008, the Company recognized the total
revenue of $ 469,367 and $ 151,053 respectively.
Unearned
Income
As of
September 30, 2009, the company had a total of $ 2,083 unearned income which is
the sales order realized in October 2009.
Operating
Expense
At the
nine month period ended of 2009 and 2008, there was a total of $ 33,951 and $
71,735 operating expenses of the Company respectively. Comparable
detail as below:
F-30
CIS
WORLD, INC.
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE
B – SIGNIFICANT ACCOUNTING POLICIES (Continue)
Operating Expense(
Continue)
Nine
Month Ended
|
Nine
Month Ended
|
|||||||
9/30/2009
|
9/30/2008
|
|||||||
Expense
|
||||||||
Advertising
Expense
|
0.00 | 2,736.37 | ||||||
Bank
Service Charges
|
660.07 | 834.83 | ||||||
Business
License & Fees
|
25.00 | 0.00 | ||||||
Car/Truck
Expense
|
||||||||
Gas
|
87.17 | 628.23 | ||||||
Total
Car/Truck Expense
|
87.17 | 628.23 | ||||||
Director
fee
|
0.00 | 3,082.76 | ||||||
Marketing
and promotion fee
|
0.00 | 16,512.51 | ||||||
Meals
and Entertainment
|
627.13 | 1,625.46 | ||||||
Office
Supplies
|
159.00 | 1,477.26 | ||||||
Other
expense
|
0.00 | 19.00 | ||||||
Printing
and reproduction
|
0.00 | 759.96 | ||||||
Postage
and shipping
|
0.00 | 56.50 | ||||||
Professional
Fees
|
||||||||
Accounting
Fees
|
971.61 | 0.00 | ||||||
Audit
|
15,000.00 | 0.00 | ||||||
Legal
Fees
|
1,612.72 | 13,980.00 | ||||||
Total
Professional Fees
|
17,584.33 | 13,980.00 | ||||||
Rent
|
12,015.00 | 7,265.00 | ||||||
Telephone
and Fax
|
267.08 | 0.00 | ||||||
Trade
show & exhibition
|
0.00 | 7,697.47 | ||||||
Travel
|
||||||||
Air
Tickets
|
2,351.61 | 7,595.65 | ||||||
Hotels
|
0.00 | 2,684.83 | ||||||
Travel
-other
|
0.00 | 4,000.00 | ||||||
Taxi
& Local Transportation
|
58.60 | 417.73 | ||||||
Total
Travel
|
2,410.21 | 14,698.21 | ||||||
Utilities
|
||||||||
Gas
|
116.30 | 361.34 | ||||||
Total
Utilities
|
116.30 | 361.34 | ||||||
Total
Expense
|
33,951.29 | 71,734.90 |
F-31
CIS
WORLD, INC.
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE
C – RELATED PARTY TRANSACTIONS
Loans to Officer /
Shareholder
As
September 30 2009, the Company’s director and shareholder Cuixian Wu have been
returned all loan amount of $ 35,359 back to the company.
Common Shares Issued to
Executive and Non-Executive Officers and Directors
As of
September 30, 2009, total 20,508,545 shares were issued to officers and
directors. Please see the Table below for details:
Name
|
Title
|
Total
Shares
|
Total
Amount
|
%
of Common
Share
|
||||||||||
RUIXIA
YUAN
|
CHAIRMAN
|
8,508,545 | $ | 14,967 | 21.52 | % | ||||||||
LI
JUN WU
|
CEO
|
6,000,000 | $ | 6,000 | 15.18 | % | ||||||||
CUIXIAN
WU
|
DIRECTOR
|
4,000,000 | $ | 4,000 | 10.12 | % | ||||||||
HONG
HUI WEN
|
CFO
|
2,000,000 | $ | 2,000 | 5.06 | % | ||||||||
TOTAL
|
20,508,545 | $ | 26,967 | 51.87 | % |
Cost of Goods
Sold
On
December 10, 2008, CIS World, Ltd. signed a three years long-term exclusive
distribution agreement with Kang Zhi Xin Science and Technology (ShenZhen), Ltd
(“KZX”), a manufacturing company in China. KZX gives CIS World, Ltd
the exclusive right of import and sell its products in KZX’s trademark and brand
name in Asia, Europe, North and South America. KZX is owned 39% by
Ms. Cuixian Wu, director and shareholder of 10.12% issued common shares for CIS
World, Inc. The two entities, CIS World, Inc., and Kang Zhi Xin
Science and Technology (ShenZhen), Ltd, , are under common control according to
EITF 02-5.
The
products the Company will sell are manufactured in China by Kang Zhi Xin Science
and Technology (ShenZhen), Ltd, (“KZX”). It was established in 2008 specializing
in Continue Ink Supply System and Refillable Cartridges (“CISS”) in
manufacturing, and located at Fourth Industrial Parks of Rich Bridge, Fuyong
Neighbourhood Bridgehead Community, B3 East Third Layer, Bao An District,
ShenZhen City, Guangdong Province, PR China.
F-32
CIS
WORLD, INC.
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE
C – RELATED PARTY TRANSACTIONS (Continue)
Cost of Goods
Sold (Continue)
The
management of CIS World, Inc. believes that the purchase price for the parts
from KZX will be market price. CIS World, Inc. and KZX are two totally separated
entities, i.e., CIS World, Inc. is a USA corporation and will fully comply with
USA regulations and USA general accepted accounting principles; KZX is a Chinese
company and it will comply with Chinese legal systems. KZX, as a Chinese local
manufacturer, will record their manufacturing costs and inventories based on the
Chinese accounting regulations rulings. But, when CIS World, Inc. purchases the
parts from KZX, CIS World will record the actual costs paid to KZX as the costs
for inventory of CIS World, Inc. There is no any relationship for KZX’s
manufacturing historic costs with CIS World’s inventory value. Specifically,
CIS’s inventory value is equal to the purchase price or actual cost of the parts
purchased from KZX, and the purchase price of the parts will be fair market
price. CIS World, Inc. will adopt the first-in and first-out inventory system
according to generally accepted accounting principles in USA.
At the
nine month ended of 2009 and 2008, the Company incurred cost of good sold of $
452,504 and $147,036 correspondingly.
NOTE
D – SHAREHOLDERS’ EQUITY
Common
Stock
Under the
Company’s Articles of Incorporation dated November 9, 2007, the Company is
authorized to issue 200,000,000 shares of capital stock with a par value of
$0.001.
On
November 9, 2007, the Company was incorporated in the State of
Nevada.
On
November 9, 2007, the Company issued 20,000,000 shares of common stock to the
four founders of the Company, Ruixia Ruan, Lijun Wu, Cuixian Wu and Honghui Wen
at $0.001 per share or $ 20,000 for initial capital (stock subscription
receivable).
On
January 31, 2008, total 4,460,000 shares were issued at price of $0.01 per share
to 17 shareholders for $ 44,600.
On March
31, 2008, additional 611,598 common shares were issued to 2 shareholders and
sold at price of $0.0137 per share. The proceeds of $ 8,379 were
received
F-33
CIS
WORLD, INC.
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE
D – SHAREHOLDERS’ EQUITY (Continue)
.
On April
30, 2008, one of the Company founder and Chairman Ruixia Ruan purchased
additional 508,545 common shares at $ 0.0137 per share, and the amount of $
6,967 was received. Also, additional 13,757,718 common shares at $ 0.0137 per
share were issued to 40 shareholders for total proceeds of $
188,481.
On June
30, 2008, 198,000 common shares were issued to Williams Law Group at $ 0.01 per
share for the legal service value of $ 1,980.
As of
September 30, 2009, there’s no more additional shares issued.
Therefore,
as of September 30, 2009, there was total share of 39,535,861 shares issued and
outstanding.
NOTE
E– SUBSEQUENT EVENTS
The
company leases an office in Chicago Loop, 70 W Madison St., Suite 1400, Chicago
IL 60602. The lease term is from October 1, 2009 through September 30, 2010 and
requires a $179 monthly lease payment.
NOTE
F– GOING CONCERN
The
Company is currently in the development stage and their activities consist
solely of corporate formation, raising capital, and attempting to sell products
to generate revenues.
There is
no guarantee that the Company will be able to raise enough capital or generate
revenues to sustain its operations and carry out its business
plan. These conditions raise substantial doubt about the Company’s
ability to continue as a going concern.
The
financial statements do not include any adjustments relating to the carrying
amounts of recorded assets or the carrying amounts and classification of
recorded liabilities that may be required should the Company be unable to
continue as a going concern.
The
Company’s lack of operating history and financial resources raise substantial
doubt about its ability to continue as a going concern. The financial
statements do not include adjustments that might result from the outcome of this
uncertainty and if the Company is unable to generate significant revenue or
secure financing, then the Company may be required to cease or curtail its
operations.
F-34
CIS
WORLD, INC.
Dated
_____________, 2010
Selling
shareholders are offering up to 9,513,658 shares of common stock. The
selling shareholders will offer their shares at $0.20 per share until our shares
are quoted on the OTC Bulletin Board and thereafter at prevailing market prices
or privately negotiated prices.
Our
common stock is not now listed on any national securities exchange, the NASDAQ
stock market or the OTC Bulletin Board.
Dealer Prospectus Delivery
Obligation
Until
_________ (90 days from the date of this prospectus) all dealers that effect
transactions in these securities, whether or not participating in this offering,
may be required to deliver a prospectus. This is in addition to the dealers'
obligation to deliver a prospectus when acting as underwriters and with respect
to their unsold allotments or subscriptions.
44
Part
II-INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION
OFFICERS AND DIRECTORS
Our
Articles of Incorporation provide that no director or officer of the Company
shall be personally liable to the Company or its stockholders for monetary
damages for any breach of fiduciary duty by such person as a director or
officer, except for the payment of dividends in violation of Nevada law.
Our Bylaws provide, in pertinent part, that the Company shall indemnify
any person made a party to or involved in any civil, criminal or administrative
action, suit or proceeding by reason of the fact that such person is or was a
director or officer of the Company, or of any corporation which such person
served as such at the request of the Company, against expenses reasonably
incurred by, or imposed on, such person in connection with, or resulting from,
the exercise of such action, suit, proceeding or appeal thereon, except with
respect to matters as to which it is adjudged in such action, suit or proceeding
that such person was liable to the Company, or such other corporation, for
negligence or misconduct in the performance of such persons duties as a director
or officer of the Company. The determination of the rights of such
indemnification and the amount thereof may be made, at the option of the person
to be indemnified, by (1) order of the Court or administrative body or agency
having jurisdiction over the matter for which indemnification is being sought;
(2) resolution adopted by a majority of a quorum of our disinterested directors;
(3) if there is no such quorum, resolution adopted by a majority of the
committee of stockholders and disinterested directors of the Company; (4)
resolution adopted by a majority of the quorum of directors entitled to vote at
any meeting; or (5) Order of any Court having jurisdiction over the Company.
Such right of indemnification is not exclusive of any other right which
such director or officer may have, and without limiting the generality of such
statement, they are entitled to their respective rights of indemnification under
any bylaws, agreement, vote of stockholders, provision of law, or otherwise in
addition to their rights under our Bylaws.
With
regard to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act of 1933, as amended,
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by us of expenses incurred or
paid by a director, officer or controlling person of the Corporation in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, we will, unless in the opinion of our counsel the matter has been
settled by a controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by us is against
public policy as expressed in the Securities Act of 1933, as amended, and will
be governed by the final adjudication of such case.
45
OTHER
EXPENSES OF ISSUANCE AND DISTRIBUTION
The
following table is an itemization of all expenses, without consideration to
future contingencies, incurred or expected to be incurred by us in connection
with the issuance and distribution of the securities being offered by this
prospectus. Items marked with an asterisk (*) represent estimated expenses. We
have agreed to pay all the costs and expenses of this offering. Selling security
holders will pay no offering expenses.
ITEM
|
AMOUNT
|
|||
SEC
Registration Fee*
|
$
|
25
|
||
Legal
Fees and Expenses
|
50,000
|
|||
Accounting
Fees and Expenses*
|
50,000
|
|||
Total*
|
$
|
100,025
|
*
Estimated Figure
RECENT
SALES OF UNREGISTERED SECURITIES
On
November 9, 2007, the Company issued 20,000,000 shares of common stock to the
four founders of the Company, Ruixia Ruan, Lijun Wu, Cuixian Wu and Honghui Wen
at $0.001 per share or $ 20,000 for initial capital (stock subscription
receivable).
On
January 31, 2008, total 4,460,000 shares were issued at price of $0.01 per share
to 17 non U.S. shareholders for $44,600.
On March
31, 2008, additional 611,598 common shares were issued to 2 non U.S.
shareholders and sold at price of $0.0137 per share. The proceeds of $
8,379 were received.
On April
30, 2008, one of the Company founder and Chairman Ruixia Ruan purchased
additional 508,545 common shares at $ 0.0137 per share, and the amount of $
6,967 was received. Also, additional 13,757,718 common shares at $ 0.0137 per
share were issued to 40 non U.S. shareholders for total proceeds of $
188,481.
On June
30, 2008, 198,000 common shares were issued to Williams Law Group at $ 0.01 per
share for the legal service value of $ 1,980.
We relied
upon Section 4(2) of the Securities Act of 1933, as amended for the above
issuances to US citizens or residents.
We
believed that Section 4(2) of the Securities Act of 1933 was available
because:
¨
|
None
of these issuances involved underwriters, underwriting discounts or
commissions.
|
¨
|
Restrictive
legends were and will be placed on all certificates issued as described
above.
|
46
¨
|
The
distribution did not involve general solicitation or
advertising.
|
¨
|
The
distributions were made only to investors who were sophisticated enough to
evaluate the risks of the
investment.
|
We relied
upon Regulation S of the Securities Act of 1933, as amended for the above
issuances to non US citizens or residents.
We
believed that Regulation S was available because:
¨
|
None
of these issuances involved underwriters, underwriting discounts or
commissions;
|
¨
|
We
placed Regulation S required restrictive legends on all certificates
issued;
|
¨
|
No
offers or sales of stock under the Regulation S offering were made to
persons in the United States;
|
¨
|
No
direct selling efforts of the Regulation S offering were made in the
United States.
|
In
connection with the above transactions, although some of the investors may have
also been accredited, we provided the following to all investors:
¨
|
Access
to all our books and records.
|
¨
|
Access
to all material contracts and documents relating to our
operations.
|
¨
|
The
opportunity to obtain any additional information, to the extent we
possessed such information, necessary to verify the accuracy of the
information to which the investors were given
access.
|
Prospective
investors were invited to review at our offices at any reasonable hour, after
reasonable advance notice, any materials available to us concerning our
business. Prospective Investors were also invited to visit our
offices.
EXHIBITS
Item
3
1
|
Articles
of Incorporation of CIS World, Inc.
|
2
|
Bylaws
of CIS World, Inc.
|
3
|
Organizational
Documents of CIS WORLD (HK) LTD
|
Item
4
1
|
Form
of common stock Certificate of CIS World, Inc.(1)
|
Item
5
1
|
Legal
Opinion of Williams Law Group,
P.A.
|
47
Item
10
1
|
Agreement
with Kangzhixin Technology (Shenzhen) Co.,
Ltd.
|
Item
21
One
subsidiary: CIS World Technologies (Beijing) Co., Limited,
Item
23
1
|
Consent
of Enterprise CPAs, Ltd.
|
2
|
Consent
of Williams Law Group, P.A. (included in Exhibit
5.1)
|
All other
Exhibits called for by Rule 601 of Regulation SB-2 or SK are not applicable to
this filing.
(1)
Information pertaining to our common stock is contained in our Articles of
Incorporation and Bylaws.
UNDERTAKINGS
The
undersigned registrant hereby undertakes:
1.
|
To
file, during any period in which offers or sales are being made, a
post-effective amendment to this registration
statement:
|
|
i.
|
To
include any prospectus required bysection
10(a)(3) of the Securities Act of
1933;
|
ii.
|
To
reflect in the prospectus any facts or events arising after the effective
date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation from
the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant
toRule
424(b) if, in the aggregate, the changes in volume and price
represent no more than 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the effective
registration statement.
|
iii.
|
To
include any material information with respect to the plan of distribution
not previously disclosed in the registration statement or any material
change to such information in the registration
statement;
|
48
2.
|
That,
for the purpose of determining any liability under the Securities Act of
1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
|
3.
|
To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
|
4.
That, for the purpose of determining liability under the Securities Act of 1933
to any purchaser: Each prospectus filed pursuant to Rule 424(b) as
part of a registration statement relating to an offering, other than
registration statements relying on Rule 430B or other than prospectuses filed in
reliance on Rule 430A, shall be deemed to be part of and included in the
registration statement as of the date it is first used after effectiveness.
Provided, however, that no statement made in a registration statement or
prospectus that is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the registration statement
or prospectus that is part of the registration statement will, as to a purchaser
with a time of contract of sale prior to such first use, supersede or modify any
statement that was made in the registration statement or prospectus that was
part of the registration statement or made in any such document immediately
prior to such date of first use.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to our directors, officers and controlling persons, we have been
advised that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by us of
expenses incurred or paid by a director, officer or controlling person of the
corporation in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, we will, unless in the opinion of our counsel the
matter has been settled by a controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by us is
against public policy as expressed in the Securities Act of 1933, as amended,
and will be governed by the final adjudication of such case.
49
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in Beijing China on February 12,
2010.
CIS
World, Inc.
Title
|
Name
|
Date
|
Signature
|
||||
Chairman
|
Rui Xia Yuan
|
February
12, 2010
|
/s/ Rui Xia Yuan
|
Pursuant
to the requirements of the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities and on the date
indicated.
SIGNATURE
|
NAME
|
TITLE
|
DATE
|
||||
/s/ Rui Xia Yuan
|
Rui Xia Yuan
|
Chairman, Director
|
February
12, 2010
|
||||
/s/ Honghui Wen
|
Honghui Wen
|
CFO, Director,
Principal Accounting Officer
|
February
12, 2010
|
||||
/s/ Lijun Wu
|
Lijun Wu
|
President, CEO, Director
|
February
12, 2010
|
||||
/s/ Cuixian Wu
|
Cuixian Wu
|
Secretary, Director
|
February
12, 2010
|
50