China Domestica Bio-technology Holdings, Inc. - FORM 10-Q

Attached files

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EXCEL - IDEA: XBRL DOCUMENT - China Domestica Bio-technology Holdings, Inc.	Financial_Report.xls
EX-31.1 - EXHIBIT 31.1 - China Domestica Bio-technology Holdings, Inc.	v241297_ex31-1.htm
EX-32.2 - EXHIBIT 32.2 - China Domestica Bio-technology Holdings, Inc.	v241297_ex32-2.htm
EX-32.1 - EXHIBIT 32.1 - China Domestica Bio-technology Holdings, Inc.	v241297_ex32-1.htm
EX-31.2 - EXHIBIT 31.2 - China Domestica Bio-technology Holdings, Inc.	v241297_ex31-2.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2011

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File No. 000-53364

CHINA DOMESTICA BIO-TECHNOLOGY HOLDINGS, INC.

(Exact name of Registrant as Specified in its Charter)


Nevada		20-5432794
(State or other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

Room 2303, 2304 ShenFang Square, 3005 RenMing

Road South, LuFung District, Shenzhen, China 518001

(Address of Principal Executive Offices) (Zip Code)

(86) 13168096855

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¨ No x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ¨	Accelerated Filer ¨
Non-Accelerated Filer ¨	Smaller reporting company x

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

As of November 17, 2011, the registrant had 49,899 shares of common stock outstanding.

CHINA DOMESTICA BIO-TECHNOLOGY HOLDINGS, INC.

INDEX

		Page

PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements.	1

	Balance Sheet	1

	Statement of Operations	2

	Statement of Cash Flows	3

	Notes to Financial Statements	4

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	6

Item 3.	Quantitative And Qualitative Disclosures About Market Risk.	8

Item 4.	Controls and Procedures.	8

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings.	9

Item 1A.	Risk Factors.	9

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	9

Item 3.	Defaults Upon Senior Securities.	9

Item 5.	Other Information.	9

Item 6.	Exhibits.	10

	SIGNATURES	11

PART I.

FINANCIAL INFORMATION

Item 1. Financial Statements

CHINA DOMESTICA BIO-TECHNOLOGY HOLDINGS, INC.
(A Development Stage Company)
BALANCE SHEETS


	As of
	June 30, 2011			March 31, 2011
	(Unaudited)			(Audited)
Current assets	$	215		$	215
Cash and cash equivalents
Total current assets		215			215

Fixed assets
Computer equipment
Less: accumulated depreciation
Net fixed assets

Total assets	$	215		$	215

Liabilities
Accounts payable and accrued liabilities	$	200		$	200
Due to related parties		0			0
Other payables		66,285			65,988
Total liabilities		66,485			66,188

Stockholders' equity (deficit)
Common stock		51			51
Additional paid-in capital		428,874			428,874
Accumulated deficit during the development stage		(495,195	)		(494,898	)
Total stockholders' equity (deficit)		(66,270	)		(65,973	)

Total liabilities and stockholders' equity (deficit)	$	215		$	215

See Notes to Financial Statements

CHINA DOMESTICA BIO-TECHNOLOGY HOLDINGS, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)


	Three months ended June 30,						From inception (August 17, 2006) to June 30, 2011
	2011			2010			From inception (August 17, 2006) to June 30, 2011
Revenues	$	-		$	-		$	-

Operating expenses
Officer salaries								50,000
Professional fees		297			862			102,886
Professional fees related party								306,700
Depreciation expense								2,936
General & administrative expenses								35,970
Total operating expenses		297			862			498,492

Loss from operation		(297	)		(862	)		(498,492	)

Other income (expense)
Interest income								1,540
Cancellation of Debt								4,600
Loss on disposal of fixed assets								(1,516	)
Impairment expense								(1,327	)
Total other income (expense)		-			-			3,297

Loss before income taxes		(297	)		(862	)		(495,195	)

Provision (benefit) for income Taxes					-

Net loss	$	(297	)	$	(862	)	$	(495,195	)

Earnings (loss) per common share
Common shares outstanding		(0.01	)		(0.02	)
Basic and fully diluted weighted average
Common shares outstanding
(after effect of 1 for 46 share reverse stock split occurring June 29, 2010)		49,896			49,896

See Notes to Financial Statements

China Domestica Bio-technology Holdings, Inc.
(A Development Stage Company)
Statement of Cash Flows
(Unaudited)
	For three months ended June 30,				From Inception (August 17, 2006) to June 30, 2011
	2011		2010		From Inception (August 17, 2006) to June 30, 2011
Cash Flows Provided By (Used In) Operating Activities
Net income (loss)	$	-297	$	-862	$	-495,195

Adjustments to reconcile net income (loss) to net cash provided from (used by) operating activities:
Common stock issued for services						257,000
Cancellation of Debt						-4,600
Depreciation and amortization						2,936
Impairment of fixed assets						1,327
Loss on disposal of fixed assets						1,516
Changes in operating assets and liabilities:
Prepaid officer's salaries
Increase (decrease) in accounts payable		297		862		66,485
Net cash provided by (used in) operating activities		0		0		-170,531

Cash Flows Provided By (Used In) Investing Activities
Purchase of fixed assets						-7,179
Sale of fixed assets						1400
Net cash provided by (used in) investing activities				0		-5,779

Cash Flows Provided By (Used In) Financing Activities
Proceeds from loan by related party						9,100
Common stock purchased and retired						-7,000
Issuance of common stock for cash						174,425
Net cash provided by (used in) financing activities				0		176,525

Net increase (decrease) in cash and cash equivalents						0
Cash and cash equivalents, beginning of period		215		215		215
Cash and cash equivalents, end of period	$	215	$	215	$	215

Supplemental disclosure of Cash Flow Information
Interest paid
Income taxes paid

Schedule of Non Cash investing and financing activities
Common stock issued for services						257,000
Cancellation of Debt						4,600
Impairment of fixed assets						1,327
Loss on disposal of fixed assets						1,516
Forgiveness of debt from related party						4,500
See Notes to Financial Statements

CHINA DOMESTICA BIO-TECHNOLOGY HOLDINGS, INC.

(A Development Stage Company)

(Notes to the Interim Financial Statements)

June 30, 2011

(Unaudited)

Note 1. Interim Unaudited Financial Statements

The consolidated balance sheet of CHINA DOMESTICA BIO-TECHNOLOGY HOLDINGS, INC. (the “Company”) as of June 30, 2011, and the statements of operations and cash flows for the three-month period ended June 30, 2011, have not been audited. However, in the opinion of management, such information includes all adjustments (consisting only of normal recurring adjustments) which are necessary to properly reflect the financial position of the Company as of June 30, 2011, and the results of operations for the three-months ended June 30, 2011.

Certain information and notes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted, although management believes that the disclosures are adequate to make the information presented not misleading. Interim period results are not necessarily indicative of the results to be achieved for an entire year. These financial statements should be read in conjunction with the financial statements and notes to financial statements included in the Company’s financial statements as filed on Form 10-K for the fiscal year ended March 31, 2011.

Note 2. Going-concern

We incurred a net loss of approximately $297 and $61,388 for the 3-months ended June 30, 2011 and for the fiscal year ended March 31, 2011, respectively, and a cumulative net loss of approximately $495,195 since inception (August 17, 2006) through June 30, 2011, and there is substantial doubt about our ability to continue as a going concern. As of June 30, 2011, we had approximately $215 in cash and cash equivalents. In order to continue to operate we need to develop additional sources of capital and to ultimately achieve profitable operations. We do not have sufficient resources to fund our operations for the next twelve months.

We estimate that we will require minimum funding in fiscal year 2012 of approximately $30,000 in order to fund our operations. Although we are actively seeking new sources of equity and to reduce our expenses while seeking a suitable merger candidate, there can be no assurances that we will be able to raise additional capital on terms that are acceptable to us or at all. Additionally, there can be no assurance that we will be able to find a suitable merger candidate.

Note 3. Summary of Significant Accounting Policies

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates which have been made using careful judgments. Actual results may vary from these estimates. The financial statements have, in management's opinion, been properly prepared within reasonable limits of materiality and within the framework of the significant accounting policies summarized below:

Development Stage Company

The Company is a development stage company as defined by ASC 915-10-05, "Development Stage Entity". The Company is still devoting substantially all of its efforts to establishing the business and its planned principal operations have not commenced. All losses accumulated since inception have been considered as part of the Company's development stage activities.

Revenue Recognition

Presently, the Company is in the development stage and as such, has no revenues. Upon emerging from the development stage the Company will adopt a policy of recognizing revenue when a definitive agreement with a determinable price exists, product delivery and/or invoicing (in each case where there is reasonable assurance of meeting customer-specified criteria) has occurred, and the collectability of the invoice is reasonably assured.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Recent Accounting Pronouncements

The Company’s management has evaluated recently issued accounting standards through the filing date of these financial statements and believes that the recently issued accounting standards will not have a material impact on the Company’s financial position, operations, or cash flows.

Note 4. Commitments and Contingencies

There are no commitments or contingencies to disclose during the three-months ended June 30, 2011.

Note 5. Subsequent Events

Management has evaluated subsequent events and their impact on the reported results and disclosures and determined that there have not been any events that would be required to be reflected in the financial statements or the notes.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following should be read in conjunction with the financial statements of the Company included elsewhere herein.

FORWARD-LOOKING STATEMENTS

When used in this report, the words “may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “intend,” “plans”, and similar expressions are intended to identify forward-looking statements regarding events, conditions and financial trends which may affect our future plans of operations, business strategy, operating results and financial position. Forward looking statements in this report include without limitation statements relating to trends affecting our financial condition or results of operations, our business and growth strategies and our financing plans.

Such statements are not guarantees of future performance and are subject to risks and uncertainties and actual results may differ materially from those included within the forward-looking statements as a result of various factors. Such factors include statements other than historical information or statements of current conditions and may relate to our future plans, operations and objectives and results, among other things, our plans to consider possible acquisitions, statements with respect to our expectations or beliefs with respect to future competition and statements concerning our need for and ability to attract additional capital, and other risks and factors set forth from time to time in our filings with the Securities and Exchange Commission.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made. We undertake no obligation to publicly release the result of any revision of these forward-looking statements to reflect events or circumstances after the date they are made or to reflect the occurrence of unanticipated events.

Overview and Recent History

China Domestica Bio-technology Holdings, Inc. was incorporated in the State of Nevada on August 17, 2006 under the name “Cienega Creek Holdings, Inc.” The Company was previously engaged in the computer software business. On March 16, 2010, the Company entered into a material definitive agreement (the “Belmont Stock Purchase Agreement”) with Michael Klinicki and Belmont Partners, LLC (“Belmont”) whereby Belmont purchased a controlling interest of the Company’s common stock (the “Belmont Purchase Transaction”) from Michael Klinicki on March 18, 2010. Pursuant to the Belmont Stock Purchase Agreement, Joseph Meuse, a managing member of Belmont, was appointed as a member of the Company’s Board of Directors and to the office of President and all other Directors and officers of the Company resigned. Concurrent with this change of management, the Company moved its principal executive offices to 360 Main Street, Washington, VA 22747. Contemporaneously with the Belmont Purchase Transaction, the Company changed its plan of business from the development and marketing of computer software to seeking to acquire or merge with a revenue-producing company.

On April 26, 2010, the Company entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) by and among China Sheng Yong Bio-Pharmaceutical Holding Company Limited, or the “Buyer,” Belmont, or the Seller, and the Company. Pursuant to the terms of the Purchase Agreement, on April 26, 2010, the Buyer acquired from the Seller a controlling interest in the Company’s common stock. Pursuant to the terms of the Purchase Agreement, the Company agreed to issue to the Seller shares of its common stock such that the Seller will own 5% of the issued and outstanding capital stock of the Company after the closing of a merger transaction with an as of yet unidentified target corporation contemplated by the Purchase Agreement. Pursuant to the terms of the Purchase Agreement, Joseph J. Meuse resigned on the Closing Date and Qingyu Meng was named President and Director of the Company and Yung Kong Chin was named Secretary and Director of the Company. Such resignation and appointments were effective as of the Closing Date with respect to the officers of the Company. The resignation of Joseph J. Meuse as a director and the naming of Messrs. Meng and Chin as directors took effect on May 22, 2010. Concurrent with this change of management, the Company moved its principal executive offices to Room 2303, 2304 ShenFang Square, 3005 RenMing Road South, LuFung District, Shenzhen, China. The Company’s telephone number is (86) 13168096855. The Company’s fiscal year end is March 31.

On June 29, 2010, the Company amended its articles of incorporation to change its name to “China Domestica Bio-technology Holdings, Inc.,” to authorize the issuance of up to 10,000,000 shares of “blank check” preferred stock and to effect a 46-for-1 reverse stock split of its outstanding shares of common stock. The reverse stock split reduced the number of issued and outstanding shares of our Common Stock from 2,294,250 shares outstanding prior to the split to 49,896 shares outstanding after the split. The reverse stock split became effective on June 29, 2010.

Plan of Operations

We are a start-up, exploration-stage corporation and have not yet generated or realized any revenues from our business operations.

Whereas sales and marketing activities were our focus during fiscal 2009, we were unable to realize any revenues as a result of these activities. As a result of our lack of revenues and inability to secure additional funding to allow business operations to continue, our Board of Directors determined that it was necessary to terminate the execution of our prior business plan, and that a change in business focus was needed and in the best interests of the Company and its shareholders. The goal of the new business plan is to merge with or acquire a revenue-producing business or a development stage business with a high potential for growth.

We will need additional capital in fiscal 2012. As of June 30, 2011, we had $215 in cash and cash equivalents. During recent fiscal years, we made certain cost reductions. We have no remaining employees. Our former CEO Michael Klinicki agreed to terminate his employment agreement effective as of January 1, 2010. In addition, during the quarter ended September 30, 2010, Mr. Klinicki agreed to the cancellation of $4,600 in debts payable to him by the Company.

Although we continue to look for ways to raise additional capital, we recognize that it is not likely this will be successful. As an alternative strategy, we have decided to focus on identifying suitable candidates to merge with or acquire. We believe that our ability to continue to operate depends on finding a suitable merger target with the ability to raise additional needed capital. Notwithstanding the elimination of most of our remaining expenses, we may need additional cash during the next twelve months. As a result of our current limited cash availability we do not anticipate hiring any employees for the foreseeable future.

Results of Operations

Comparison of Three Months Ended June 30, 2011 and June 30, 2010 (Unaudited)

We did not earn any revenues during the three-month periods ending June 30, 2011 and 2010. During the three-month period ended June 30, 2011, we incurred operating expenses in the amount of $297, compared to operating expenses of $862 incurred during the same period in 2010. These operating expenses were comprised solely of professional fees.

Liquidity and Capital Resources

At its current level of operations, the Company will need to begin profitable operations and/or raise additional capital during the next fiscal year. As of June 30, 2011, the Company had not generated any revenue and had $215 in cash and cash equivalents and owed accounts payable and accrued liabilities of $200 and other payables of $66,285. Despite the reductions in expenses mentioned above, we will not have enough capital resources available to continue operating through the end of our next fiscal year. We estimate that we will require minimum additional funding in fiscal year 2012 of approximately $30,000 to fund our operations. Our ability to continue operating depends on our ability to locate and merge with a business generating revenues. If the Company is successful in finding a suitable merger target, it may result in significant dilution to existing shareholders.

Going Concern

We incurred a net loss of approximately $297 for the three months ended June 30, 2011, and a cumulative net loss of approximately $495,195 since inception (August 17, 2006) through June 30, 2011, and there is substantial doubt about our ability to continue as a going concern. As of June 30, 2011, we had approximately $215 in cash and cash equivalents. In order to continue to operate we need to develop additional sources of capital and to ultimately achieve profitable operations. We do not have sufficient resources to fund our operations for the next twelve months.

We estimate that we will require minimum funding in fiscal year 2012 of approximately $30,000 in order to fund our operations. Although we are actively seeking new sources of equity and reduce our expenses while seeking a suitable merger candidate, there can be no assurances that we will be able to raise additional capital on terms that are acceptable to us or at all. Additionally, there can be no assurance that we will be able to find a suitable merger candidate.

Off-Balance Sheet Arrangements

At June 30, 2011, we did not have any transactions, obligations or relationships that could be considered off-balance sheet arrangements.

Critical Accounting Policies

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. Preparing financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the balance sheet dates, and the recognition of revenues and expenses for the reporting periods. These estimates and assumptions are affected by management's application of accounting policies.

Revenue Recognition

Recent Accounting Pronouncements

Item 3. Quantitative and Qualitative Disclosure About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed pursuant to the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules, regulations and related forms, and that such information is accumulated and communicated to our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

As of June 30, 2011, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and our principal financial officer of the effectiveness of the design and operation of our disclosure controls and procedures. During this evaluation, several material weaknesses were identified. As a result of the material weaknesses, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were ineffective as of the end of the period covered by this report.

A material weakness is a deficiency, or combination of deficiencies, in disclosure controls and procedures, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Based on management’s assessment over financial reporting, management believes as of June 30, 2011, the Company’s disclosure controls and procedures were not effective due to the following material weaknesses:

Insufficient Resources: We have an inadequate number of personnel with requisite expertise in the key functional areas of finance and accounting.

Inadequate Segregation of Duties: We have an inadequate number of personnel to properly implement control procedures.

Lack of Audit Committee and Outside Directors on the Company’s Board of Directors: We do not have a functioning audit committee or outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures.

Insufficient Written Policies: We have insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.

(b) Changes in Internal Control Over Financial Reporting.

There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter, which were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 or Rule 15d-15 under the Exchange Act, 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.

We are not currently involved in any material pending legal proceeding.

Item 1A. Risk Factors.

As a smaller reporting company, we are not required to provide risk factors.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibits:

31.1* Certification of Principal Executive Officer pursuant to Section 302 of Sarbanes Oxley Act of 2002.

31.2* Certification of Principal Financial Officer pursuant to Section 302 of Sarbanes Oxley Act of 2002.

32.1* Certification of Principal Executive Officer pursuant to Section 906 of Sarbanes Oxley Act of 2002.

32.2* Certification of Principal Financial Officer pursuant to Section 906 of Sarbanes Oxley Act of 2002.

101.INS*	XBRL Instance Document

101.SCH*	XBRL Taxonomy Extension Schema

101.CAL*	XBRL Taxonomy Extension Calculation Linkbase

101.DEF*	XBRL Taxonomy Extension Definition Linkbase

101.LAB*	XBRL Taxonomy Extension Label Linkbase

101.PRE*	XBRL Taxonomy Extension Presentation Linkbase

*Filed herewith.

SIGNATURES

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.

Dated: November 22, 2011

	CHINA DOMESTICA BIO-TECHNOLOGY HOLDINGS, INC.

	By:	/s/ Qingyu Meng
		Qingyu Meng
		President
		(Principal Executive Officer)

	By:	/s/ Yung Kong Chin
		Yung Kong Chin
		Secretary
		(Principal Financial and Accounting Officer)

China Domestica Bio-technology Holdings, Inc. - FORM 10-Q - November 30, 2011

Attached files

China Domestica Bio-technology Holdings, Inc. Reports