The accompanying notes are an integral part of these unaudited condensed financial statements.
HAN LOGISTICS, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
September 30, 2011
CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS September 30, 2011
NOTE A - PRESENTATION
The balance sheets of the Company as of September 30, 2011 and December 31, 2010, the related statements of operations for the three months ended September 30, 2011 and 2010 and the nine months ended September 30, 2011 and 2010 and from the date of inception (July 1, 1999) of the development stage period through September 30, 2011, and the statements of cash flows for the nine months ended September 30, 2011 and 2010 and from the date of inception (July 1, 1999) of the development stage period through September 30, 2011, (the financial statements) include all adjustments (consisting of normal recurring adjustments) necessary to summarize fairly the Company's financial position and results of operations. The results of operations for the three months ended September 30, 2011 are not necessarily indicative of the results of operations for the full year or any other interim period. The information included in this Form 10-Q should be read in conjunction with Management's Discussion and Analysis and Financial Statements and notes thereto included in the Company's December 31, 2010, Form 10-K.
NOTE B - REVENUE RECOGNITION
The Company currently has no significant source of revenues. Revenue from the sale of goods or services is recognized when the significant risks and rewards of ownership are transferred to the buyer.
NOTE C - DEVELOPMENT STAGE COMPANY
Han Logistics, Inc. is a development stage company as of July 1, 1999(Inception). The Company is subject to risks and uncertainties, including new product development, actions of competitors, reliance on the knowledge and skills of its employees to be able to service customers, and availability of sufficient capital and a limited operating history. Accordingly, the Company presents its financial statements in accordance with the accounting principles generally accepted in the United States of America that apply in establishing new operating enterprises. As a development stage enterprise, the Company discloses the deficit accumulated during the development stage and the accumulated statement of operations and cash flows from inception of the development stage to the date on the current balance sheet. Contingencies exist with respect to this matter, the ultimate resolution of which cannot presently be determined.
NOTE D - RELATED PARTY TRANSACTIONS
The Company currently utilizes office space on a rent-free basis from a shareholder, and shall do so until substantial revenue-producing operations commence. Management deemed the rent-free space to be of nominal value.
Shareholders and other related parties had loaned $13,787 to the Company as of December 31, 2004, which is convertible to common stock at a rate of $0.10 per share. The effect of conversion on the loss per share calculation would be anti-dilutive, as the Company incurred losses in each of the periods presented in the financial statements.
Shareholders and other related parties loaned $23,800 to the Company during 2005, which is convertible to common stock at a rate of $0.10 per share. The effect of conversion on the loss per share calculation would be anti-dilutive, as the Company incurred losses in each of the periods presented in the financial statements.
Shareholders and other related parties loaned $17,100 to the Company during 2007, which is convertible to common stock at a rate of $0.10 per share. The effect of conversion on the loss per share calculation would be anti-dilutive, as the Company incurred losses in each of the periods presented in the financial statements. Additionally, the Company recorded an interest expense of $17,100 for the conversion feature of the loans made during 2007.
Shareholders and other related parties loaned $8,700 and $2,500 during 2008 and 2007, respectively, to the Company. These loans are demand notes and carry an interest rate of 24% per annum.
Shareholders and other related parties loaned $8,917 during 2009 to the Company. These loans are demand notes and carry an interest rate of 9-18% per annum.
Shareholders and other related parties loaned $5,000 during 2010 to the Company. These loans are demand notes and carry an interest rate of 10% per annum.
Shareholders and other related parties loaned $7,650 during the first quarter of 2011 to the Company. These loans are demand notes and carry an interest rate of 9% per annum.
The Company recorded an interest expense of $7,157 on the related party notes listed above for the nine months ended September 30, 2011. As of September 30, 2011, the Company owed $47,839 in accrued interest on these notes.
NOTE E NOTES PAYABLE
An independent party loaned $ 9,700 to the Company on March 12, 2008. The note is unsecured, due upon demand and has an interest rate of 9%.
During 2010, an individual loaned $7,300 to the Company. The note is a demand note and carries an interest rate of 9%. The note is unsecured.
During the second quarter of 2011, an individual loaned $6,000 to the Company. The note is a demand note and carries an interest rate of 9%. The note is unsecured.
The Company recorded an interest expense of $1,347 on the notes listed above for the nine months ended September 30, 2011. As of September 30, 2011, the Company owed $4,051 in accrued interest on these notes.
NOTE F - GOING CONCERN
The accompanying financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplates continuation of the Company as a going concern. However, the Company was in default on its notes and various accounts payable, has not generated any operating revenue, has incurred significant operating losses to date, has a negative cash flow from operations and has working capital and stockholders' deficits, which raises substantial doubt about its ability to continue as a going concern.
Management intends to raise additional operating funds through equity and/or debt offerings. However, there can be no assurance management will be successful in its endeavors. Ultimately, the Company will need to achieve profitable operations in order to continue as a going concern.
There are no assurances that Han Logistics, Inc. will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placement, public offerings and/or bank financing necessary to support its working capital requirements. To the extent that funds generated from operations and any private placements, public offerings and/or bank financing are insufficient, the Company will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to Han Logistics, Inc. If adequate working capital is not available Han Logistics, Inc. may be required to curtail its operations.
NOTE G RECENT ACCOUNTING PRONOUNCEMENTS
In September 2011, the Financial Accounting Standards Board (FASB) issued an accounting pronouncement to simplify how an entity tests goodwill for impairment by permitting an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. Under previous guidance an entity was required to test goodwill for impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value was less than its carrying amount, then the second step of the test was performed to measure the amount of the impairment loss. Under the new accounting pronouncement an entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount. The pronouncement is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted. The adoption of this pronouncement is not expected to have a material impact on Hans financial statements.
In June 2011, the FASB issued an accounting pronouncement that requires all non-owner changes in stockholders equity to be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. Under the two-statement approach, the first statement should present total net income and its components followed consecutively by a second statement that should present total other comprehensive income, the components of other comprehensive income, and the total of comprehensive income. The pronouncement should be applied retrospectively effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. Early adoption is permitted. The adoption of this pronouncement is not expected to have a material impact on Hans financial statements.
In May 2011, the FASB issued an accounting pronouncement which amends the fair value measurement and disclosure requirements to achieve common disclosure requirements between U.S. GAAP and International Financial Reporting Standards (IFRS). The accounting pronouncement requires certain disclosures about transfers between level 1 and level 2 of the fair value hierarchy, sensitivity of fair value measurements categorized within Level 3 of the fair value hierarchy, and categorization by level of items that are reported at cost but are required to be disclosed at fair value. The disclosures are to be applied prospectively effective in the first interim and annual periods beginning after December 15, 2011. The adoption of this pronouncement is not expected to have a material impact on Hans financial statements.
In April 2011, the FASB issued an accounting pronouncement which clarifies when a loan modification or restructuring is considered a troubled debt restructuring. The new pronouncement also requires new disclosures relating to troubled debt restructurings (TDRs). The guidance is effective for the first interim period beginning on or after June 15, 2011, and should be applied retrospectively to the beginning of the annual period of adoption. For purposes of measuring impairment on newly-considered impaired receivables an entity should apply the guidance prospectively. The adoption of this pronouncement did not have a material impact on Hans financial condition and results of operations.
NOTE H EQUITY
On or about June 15, 2011, the Company effected a stock dividend of five for one of our outstanding common stock. The stock dividend was treated as a stock split due to the accumulated deficit. These financials have been retrospectively adjusted for the stock dividend.
Item 2. Managements Discussions and Analysis of Financial Condition and Results of Operations.
This Report contains forward-looking statements. All forward-looking statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future performance of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. Forward-looking statements usually contain the words "estimate," "anticipate," "believe," "expect," or similar expressions, and are subject to numerous known and unknown risks and uncertainties. In evaluating such statements, prospective investors should carefully review various risks and uncertainties identified in this Report, including the matters set forth in the Company's other SEC filings. These risks and uncertainties could cause the Company's actual results to differ materially from those indicated in the forward-looking statements. The Company undertakes no obligation to update or publicly announce revisions to any forward-looking statements to reflect future events or developments.
Although forward-looking statements in this Quarterly Report on Form 10-Q reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. We file reports with the Securities and Exchange Commission ("SEC"). We shall make available, free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports as soon as reasonably practicable after we electronically file such materials with or furnish them to the SEC. You can read and copy any materials we file with the SEC at the SEC's Public Reference Room at 450 Fifth Street, NW, Washington, D.C. 20549. You can obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us.
We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Quarterly Report on Form 10-Q. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this quarterly report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations, and prospects.
Han is currently a development stage company under the provisions of ASC Topic 915. The Company was incorporated under the laws of the State of Nevada on July 1, 1999.
Plan of Operation
We propose to develop, market and deliver logistical analysis, problem solving and other logistics services to business customers. Han is in the development stage and, to date, management has devoted substantially all of its time and effort to organizational and financing matters. Through the date hereof, we have not yet generated material service revenue and we have realized a net loss from operations. We did not generate revenues during the quarter ended September 30, 2011, and our net loss during that quarter was $9,402. For the period from inception on July 1, 1999, through September 30, 2011, we had total revenues of $12,007 and a net loss of $463,606.
There can be no assurance that we will achieve commercial acceptance for any of our proposed logistics services in the future; that future service revenue will materialize or be significant; that any sales will be profitable; or that we will have sufficient funds available for further development of our proposed services. The likelihood of our success will also depend upon our ability to raise additional capital from equity and/or debt financing; to absorb the expenses and delays frequently encountered in the operation of a new business; and to succeed in the competitive environment in which we will operate. Although management intends to explore all available alternatives for equity and/or debt financing, including, but not limited to, private and public securities offerings, there can be no assurance that we will be able to generate additional capital. Our continuation as a going concern is dependent on our ability to generate sufficient cash flow to meet our obligations on a timely basis and, ultimately, to achieve profitability.
Results of Operations
Three Months Ended September 30, 2011 Compared to Three Months Ended September 30, 2010
We had no revenues for the three months ended September 30, 2011 and 2010. Our operating expenses for the quarter ended September 30, 2011, were $6,393, as compared to $11,345 during the three months ended September 30, 2010. This decrease was due to the decrease of professional services related to our reporting requirements. We had total other expenses for the three months ended September 30, 2011 of $3,009 compared to $2,627 for the same period a year ago. During both periods, approximately 80-90% of this expense was interest expense payable to related parties.
We had a net loss of $9,402 for the quarter ended September 30, 2011, as compared to $13,972 for the comparable period in 2010.
Additional funds will be needed to continue the Companys limited operations.
As of September 30, 2011, we had total cash assets of $182. We had total current liabilities of $342,886 and working capital deficiency and stockholders' deficit of $342,704 as of September 30, 2011. Deficits accumulated during the development stage totaled $463,606. Our financial statements are presented on the basis that Han is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable length of time. However, our independent accountants have noted that the Company has accumulated losses from operations and has the need to raise additional financing in order to satisfy its vendors and other creditors and execute its business plan. These factors raise substantial doubt about our ability to continue as a going concern. Our future success will be dependent upon our ability to provide effective and competitive logistical analysis, problem-solving and other logistics services that meet customers' changing requirements. Amee Han Lombardi, our President/Secretary/Treasurer, may, but is not required to, provide the necessary working capital so as to permit Han to continue as a going concern.
An individual loaned the Company $6,000 during the nine months ended September 30, 2011 and additional funds will be needed to continue the Companys limited operations.
At September 30, 2011, the Company had no material operations and through the date of this filing, it has yet to obtain any other commitments for additional funding or to commence material business operations. Until the Company obtains the capital required to develop its proposed business and obtains the necessary revenues from future operations, the Company will depend on sources other than operating revenues to meet its operating and capital needs. Operating revenues may never satisfy these needs.
Off-Balance Sheet Arrangements
We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.
Evaluation of disclosure controls and procedures
Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. The design of any disclosure
controls and procedures also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Based on that evaluation, our chief executive officer and chief financial officer concluded that, as of September 30, 2011, our disclosure controls and procedures were not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules, regulations and forms, and (ii) that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in internal control over financial reporting
Our management, with the participation of the chief executive officer and chief financial officer, has concluded there were no significant changes in our internal controls over financial reporting that occurred during this quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None; not applicable.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None; not applicable.
Item 3. Defaults Upon Senior Securities.
None; not applicable.
Item 4. (Removed and Reserved).
Item 5. Other Information.
None; not applicable.
Item 6. Exhibits.
Exhibit No. Identification of Exhibit
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Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of Amee Han Lombardi.
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Amee Han Lombardi.
XBRL Instance Document*
XBRL Taxonomy Extension Presentation Linkbase*
XBRL Taxonomy Extension Label Linkbase*
XBRL Taxonomy Extension Definition Linkbase*
XBRL Taxonomy Extension Calculation Linkbase*
XBRL Taxonomy Extension Schema*
*Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed furnished and not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, or deemed furnished and not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise is not subject to liability under these sections.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized
HAN LOGISTICS, INC.
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November 14, 2011
/s/Amee Han Lombardi
Amee Han Lombardi, President, Secretary/Treasurer and Director
November 14, 2011
Mike Vardakis, Director