Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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[X]
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QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 2010
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OR
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[ ]
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Commission File Number: 000-54166
MONAR INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of incorporation or organization)
Suite 1302, Sino Favour Centre
1 On Yip Street
Chaiwan
Hong Kong, China
(Address of principal executive offices, including zip code)
852-9738-1945
(Registrant’s telephone number, including area code)
Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days. YES [X] NO [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (SS 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES [X] NO [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer, “accelerated filer,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large Accelerated Filer
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[ ]
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Accelerated Filer
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Non-accelerated Filer
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Smaller Reporting Company
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[X]
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(Do not check if smaller reporting company)
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES [X] NO [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicated the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 5,760,000 as of December 12, 2010.
Monar International Inc
Form 10-Q for the Quarter Ended October 31, 2010
INDEX TO FINANCIAL STATEMENTS
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Page No.
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Financial statements
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3
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Balance Sheet as of October 31, 2010 and July 31, 2009 (Unaudited)
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3
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Statement of Operations for the three months ended October 31, 2010 and for the period from July 6, 2009 (inception) to October 31, 2010 (Unaudited)
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4
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Statement of Cash Flows for the three months ended October 31, 2010 and for the period from July 6, 2009 (inception) to October 31, 2010 (Unaudited)
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5
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Notes to the Financial Statements (Unaudited)
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6
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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8
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Quantitative and Qualitative Disclosure about Market Risk.
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10
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Controls and Procedures.
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10
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Risk Factors.
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11
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Changes in Securities and Use of Proceeds.
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11
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Exhibits.
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11
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12
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13
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-2-
(A Development Stage Company)
Balance Sheets
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October 31, 2010
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July 31, 2010
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Current Assets
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Cash
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$ | 46,736 | $ | 71,780 | ||||
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Prepaid Expenses
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725 | - | ||||||
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Total Current Assets
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47,461 | 71,780 | ||||||
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TOTAL ASSETS
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$ | 47,461 | $ | 71,780 | ||||
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LIABILITIES & STOCKHOLDERS' EQUITY
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Current Liabilities
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Accounts Payable
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$ | 5,023 | $ | 780 | ||||
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Advance from related party
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24,223 | 39,621 | ||||||
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Total Current Liabilities
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29,246 | 40,401 | ||||||
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Total Liabilities
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$ | 29,246 | $ | 40,401 | ||||
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Stockholders' Equity
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Preferred Stock, $0.0001 par value, 100,000,000 shares
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authorized, 0 issued and outstanding
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$ | - | $ | - | ||||
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Common Stock, $0.0001 par value, 100,000,000 shares
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authorized, 5,760,000 issued and outstanding
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58 | 58 | ||||||
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Additional Paid-in Capital
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75,992 | 75,992 | ||||||
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Cumulative Translation Adjustments
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51 | (20 | ) | |||||
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Deficit Accumulated During Development stage
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(57,886 | ) | (44,651 | ) | ||||
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Total Stockholders' Equity
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18,215 | 31,379 | ||||||
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Total Liabilities & Stockholders' Equity
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$ | 47,461 | $ | 71,780 | ||||
The accompanying notes are an integral part of these financial statements
F-1
-3-
(A Development Stage Company)
Statements of Expenses
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From
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Three Months
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Three Months
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July 6, 2009
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Ended
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Ended
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(Inception) to
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October 31, 2010
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October 31, 2009
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October 31, 2010
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Revenue
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- | - | - | |||||||||
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Expenses
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Professional Fees
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$ | 11,648 | $ | 13,188 | $ | 54,019 | ||||||
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Filing Fees
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1,392 | - | 2,892 | |||||||||
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Rent Expense
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195 | 195 | 975 | |||||||||
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Total Expenses
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13,235 | 13,383 | 57,886 | |||||||||
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Loss From Operations
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(13,235 | ) | (13,383 | ) | (57,886 | ) | ||||||
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Net Loss
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(13,235 | ) | (13,383 | ) | (57,886 | ) | ||||||
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Basic and Diluted Net Loss
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Per Share
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$ | (0.00 | ) | $ | (0.00 | ) | ||||||
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Weighted Average Number of
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Common Shares Outstanding
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Basic and Diluted
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5,760,000 | 5,000,000 | ||||||||||
The accompanying notes are an integral part of these financial statements
F-2
-4-
(A Development Stage Company)
Statement of Cash Flows
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Three Months
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Three Months
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July 6, 2009
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Ended
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Ended
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(Inception) to
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October 31, 2010
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October 31, 2009
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October 31, 2010
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CASH FLOWS FROM OPERATING ACTIVITIES
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Net loss
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$
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(13,235)
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$
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(13,383)
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$
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(57,886)
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Adjustments to Reconcile Net Loss to Net Cash
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Used in Operating Activities:
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Changes in Operating Assets and Liabilities:
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Prepaid Expenses and Deposits
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(725)
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2,230
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(725)
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Accounts Payable
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4,243
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10,052
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5,023
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Net cash Used in Operating Activities
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$
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(9,717)
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$
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(1,101)
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$
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(53,588)
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CASH FLOWS FROM INVESTING ACTIVITIES
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-
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-
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-
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CASH FLOWS FROM FINANCING ACTIVITIES
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Proceeds from Sale of Stock to Founder
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-
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-
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50
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Proceeds (repayments) for Stockholder loans
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(15,398)
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1,101
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24,223
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Proceeds from Stock Subscription
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-
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-
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76,000
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Net Cash Provided by Financing Activities
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$
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(15,398)
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$
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1,101
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$
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100,273
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Effect of Exchange Rate on Cash
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71
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-
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51
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Net Increase (Decrease) in Cash
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(25,044)
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-
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46,736
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Cash at Beginning of Period
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71,780
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-
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-
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Cash at End of Year
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$
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46,736
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$
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-
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$
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46,736
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The accompanying notes are an integral part of these financial statements
F-3
-5-
(A DEVELOPMENT STAGE Company)
Notes to the Financial Statements
NOTE 1 – ORGANIZATION AND BUSINESS OPERATIONS
Monar International Inc was incorporated in Nevada, USA, on July 6, 2009. The Company has limited operations and in accordance with SFAS ASC 915-15, is considered a development stage company, and has had no revenues from operations to date.
Initial operations have included organization, capital formation, target market identification, and marketing plans. Management is planning to develop a website develop a website (www.monarinternational.com) that will offer to the public a tasteful traditional style Chinese furniture adapted to modern needs for Asian ethnic and high end markets in North America.
NOTE 2-BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s most recent Annual Financial Statements filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form 10-K, have been omitted.
NOTE 3 – GOING CONCERN
At October 31, 2010, the company had cash and cash equivalents of $46,736 and working capital of $18,215. The Company believes that its existing capital resources may not be adequate to enable it to execute its business plan. These conditions raise substantial doubt as to the Company's ability to continue as a going concern. The Company estimates that it will require additional cash resources during 2011 based on its current operating plan and condition.
The Company has net losses for the period from inception to October 31, 2010 of $57,886 The Company intends to fund operations through sales and equity financing arrangements.
F-4
-6-
Monar International Inc.
(A DEVELOPMENT STAGE Company)
Notes to the Financial Statements
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. The accompanying financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern. If we fail to generate positive cash flow or obtain additional financing, when required, we may have to modify, delay, or abandon some or all of our business and expansion plans.
The ability of the Company to emerge from the development stage is dependent upon the Company's successful efforts to raise sufficient capital and then attaining profitable operations. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 4 – RELATED PARTY TRANSACTIONS
As of July 31, 2010, $31,621 is due to the sole President and Director for cash advances. This advance is non-interest bearing, unsecured and due on demand.
During the three months ended October 31, 2010, the Company paid $15,398 to 7bridge Capital Partners Limited which is controlled by the sole President and Director. All the reimbursements owed to the President and Director of the Company will go to 7bridge Capital Partners Limited.
F-5
-7-
This section of this quarterly report includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.
Plan of Operation
We completed our public offering on July 8, 2010 and our specific goal is to profitably sell products on our Internet website to the public. We intend to accomplish the foregoing by the following steps.
1. Completion of our public offering on July 8, 2010 provided us with sufficient capital to begin our operations. We are currently implementing our business plan to begin operations and are following our plan to spend the funds as described in the Use of Proceeds section of this of our prospectus, which was filed with the SEC on December 3, 2009.
2. Prior to completing our public offering, we operated with a minimum amount of office space, but are now negotiating for expanded premises to establish our office and acquire the equipment for our operations. Earlier we had expected to have expanded office premises in place by Nov. 1, 2010, but we have delayed this as we do expect we need these until January 2011. We have allocated $10,000 for the initial setup of the office and do not expect to exceed that amount. We do not intend to hire employees for the foreseeable future. Our sole officer and director will handle our administrative duties and he will also contract for such other personnel as we may require on a short term basis.
3. To date we have spent nominal time designing the website and have encountered a short term delay because, based on the advice of experienced web designers, as we have decided to re-design our website. We are in the process of interviewing and evaluating several website developers to create a state of the art website to promote our products. We do not expect to exceed our original budget of $10,000 for the website which will include graphics and links from our site. We intend to locate smaller, new manufacturers to offer their products on a more exclusive basis and are currently evaluating several Chinese manufacturers.
4. Marketing and advertising will be focused on promoting our website and products. The advertising campaign may also include the design and printing of various sales materials. Once our website is fully operational we intend to market our products and website through traditional sources. Advertising and promotion will be an ongoing effort but the initial cost of developing the campaign is estimated to cost between $15,000 to $35,000.
5. To facilitate our operations in Hong Kong we have decided to incorporate a company in Hong Kong under the name Monar Hong Kong Limited. We expect the incorporation to be completed by Dec. 31, 2010.
-8-
6. Once the website is fully functional and we have located and negotiated agreements with a suitable number of suppliers to offer their products for sale, we intend to hire 1 or 2 part-time salesperson(s) to fill Internet orders from customers.
7. We anticipate that we will generate revenues as soon as we are able to offer products for sale on our website. This will happen once we negotiated agreements with one or two suppliers of products and we are currently identifying Chinese suppliers the products we wish to offer.
8. We will not be conducting any research. We are not going to buy or sell any plant or significant equipment during the next twelve months.
9. If we cannot generate sufficient revenues to continue operations, we will suspend or cease operations. If we cease operations, we do not know what we will do and we do not have any plans to do anything.
Limited operating history and need for additional capital
There is no historical financial information about us upon which to base an evaluation of our performance. We are in a start-up stage operations and have not generated any revenues. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns due to price and cost increases in services and products.
To become profitable and competitive, we have to locate and negotiate agreements with manufacturers to offer their products for sale to us at pricing that will enable us to establish and sell the products to our clientele at a profit. We are seeking equity financing to provide for the capital required to implement our operations.
We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. Equity financing could result in additional dilution to existing shareholders.
Results of operations
From Inception on July 6, 2009 to October 31, 2010
We have had a loss from operation for the three months ended October 31, 2010 of $13,235 of which $2,944 was for legal fees, $4,535 was for audit fees, $3,940 for accounting services, and $195 for rent expense, and $229 for bank service charges. We are in the start-up of our proposed business operations.
From inception on July 6, 2009 to October 31, 2010, we incorporated the company, hired the attorney, hired an auditor and our registration statement was declared effective by the SEC. We have prepared an internal business plan. We have reserved the domain name“www.monarinc.com” and commenced construction of our web site. We have had loss from operations from inception on July 6, 2009 to October 31, 2010 of $57,886, of which $31,098 was for legal fees, $10,365 was for audit fees, $9,627 for accounting services, $975 for rent expense, and $5,733 for filing fees and other professional services.
-9-
Since inception, we sold 5,000,000 shares of common stock to our sole officer and director for $50 and have collected gross proceeds under our public offering of $76,000 to October 31, 2010. Shares totaling 760,000 shares of common stock were issued to the subscribers to our public offering on August 17, 2010.
Liquidity and capital resources
As of the date of this report, we have yet to generate any revenues from our business operations.
We issued 5,000,000 shares of common stock pursuant to the exemption from registration contained in Regulation S of the Securities Act of 1933 and raised $50. This was accounted for as a sale of common stock. On July 8, 2010, we completed our public offering by selling 760,000 shares of common stock and raised $76,000. This was accounted for as a sale of common stock.
As of October 31, 2010, our total assets were $47,460 and our total liabilities were $29,246 of which $24,223 was from 7bridge Capital Partners Limited for payments made to our attorney, auditor and accountant, and for filing fees to the Nevada Secretary of State.
Critical Accounting Policy
The preparation of financial statements in accordance with generally accepted accounting principles requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses. We base our estimates on historical experience and various other assumptions that we believe are reasonable under the circumstances. Our estimates form the basis for making judgments about amounts and timing of revenue and expenses, the carrying values of assets and the recorded amounts of liabilities that are not readily apparent from other sources. Actual results may differ from these estimates and such estimates may change if the underlying conditions or assumptions change. We believe that at July 31, 2010, there has been no material change to critical accounting policy.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Under the supervision and with the participation of our management, including the Principal Executive Officer and Principal Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, the Principal Executive Officer and Principal Financial Officer have concluded that these disclosure controls and procedures are effective.
There were no changes in our internal control over financial reporting during the quarter ended October 31, 2010 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
-10-
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
On November 30, 2009, our Form S-1 registration statement (SEC file no. 333-161566) was declared effective by the SEC. Pursuant to the Form S-1, we offered 750,000 shares minimum, 1,500,000 shares maximum at an offering price of $0.10 per share in a direct public offering, without any involvement of underwriters or broker-dealers. On July 8, 2010, we completed our public offering and sold 760,000 shares of common stock at an offering price of $0.10 per share and raised $76,000. Since then, we have paid the following amounts from the proceeds of our public offering:
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Website development
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$
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1,000
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Database
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$
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1,500
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Marketing and advertising
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$
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500
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Establishing an office
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$
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1,000
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Salaries
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$
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0
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Working capital
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$
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250
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TOTAL
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$
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4,250
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Incorporated by reference
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Exhibit
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Document Description
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Form
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Date
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Number
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Filed herewith
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3.1
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Articles of Incorporation.
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S-1
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8/26/09
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3.1
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3.2
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Bylaws.
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S-1
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8/62/09
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3.2
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4.1
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Specimen Stock Certificate.
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S-1
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8/26/09
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4.1
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10.1
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Memorandum of Lease.
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S-1/A-1
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10/08/09
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10.1
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14.1
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Code of Ethics.
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10-K
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10/27/10
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14.1
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31.1
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Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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X
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32.1
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Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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X
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99.2
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Audit Committee Charter.
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10-K
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10/27/10
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99.2
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99.3
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Disclosure Committee Charter.
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10-K
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10/27/10
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99.3
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-11-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the Registrant and in the capacities on this 13th day of December, 2010.
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MONAR INTERNATIONAL INC.
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(the “Registrant”)
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BY:
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ROBERT G. CLARKE
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Robert G. Clarke
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President, President, Principal Executive Officer, Principal Accounting Officer, Principal Financial Officer, Secretary/Treasurer and sole member of the Board of Directors
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-12-
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Incorporated by reference
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Exhibit
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Document Description
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Form
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Date
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Number
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Filed herewith
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3.1
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Articles of Incorporation.
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S-1
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8/26/09
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3.1
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3.2
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Bylaws.
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S-1
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8/62/09
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3.2
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4.1
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Specimen Stock Certificate.
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S-1
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8/26/09
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4.1
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10.1
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Memorandum of Lease.
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S-1/A-1
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10/08/09
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10.1
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14.1
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Code of Ethics.
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10-K
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10/27/10
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14.1
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31.1
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Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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X
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32.1
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Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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X
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99.2
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Audit Committee Charter.
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10-K
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10/27/10
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99.2
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99.3
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Disclosure Committee Charter.
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10-K
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10/27/10
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99.3
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-13-