ITEM 1. BUSINESS.
Description of Business
Chindia, Inc. (“the “Company” or “Chindia”) is a development stage Nevada Corporation formed under the same name on December 20, 2006. It has a principal business objective designed to capitalize on the expansion of commerce between the United States and the entire Asian continent. This expansion pertains equally to the export of US products to the Asian geographical area as well as the importation of Asian goods. The Company can be characterized as a marketing/brokerage organization that intends on initially importing unique products from China, India and other Asian countries that have no competitive counterparts in the US. The Company’s goal is to take advantage of the ascension of this region in WTO status and the concurrent rapidly growing demand for western currencies on the part of all Asian nations. Based on increasing awareness of environmental issues and continuous improvements on the living standard in China since the opening of its economy in the early 1980’s, we believe that these import and export markets have a high growth potential for quality products.
The Company also intends to source environmental-friendly and technologically advanced healthcare and consumer products from the US and introduce them to the growing middle class in Asia at reasonable prices while identifying complementary products for distribution in the United States.
We are a small, start-up company that has not generated any revenues and that lacks a stable customer base. Since our inception to the present, we have not generated any revenues. On February 14, 2008 our Registration Statement filed on Form SB-2 was deemed effective by the Securities and Exchange Commission (“SEC”). We intend to raise $75,000 through this offering. To date we have not raised any proceeds through this offering and there can be no guarantee or assurance we will be able to raise any funds through the offering.
We believe that the funds expected to be received from the maximum sale of our common equity will be sufficient to finance our efforts to become operational and carry us through the next twelve (12) months. We believe that the recurring revenues from sales of services will be sufficient to support ongoing operations. Unfortunately, there can be no assurance that the actual expenses incurred will not materially exceed our estimates or that cash flows from sales of services will be adequate to maintain our business. As a result, our independent auditors have expressed substantial doubt about our ability to continue as a going concern. If we do not produce sufficient cash flow to support our operations over the next 12 months, we may need to raise additional capital by issuing capital stock in exchange for cash in order to continue as a going concern. There are no formal or informal agreements to attain such financing. We cannot assure you that any financing can be obtained or, if obtained, that it will be on reasonable terms. Without securing additional capital, it may be unlikely for us to stay in business.
Business of Issuer
To date, Chindia, Inc. has not implemented fully planned principal operations. Presently, Chindia is attempting to secure sufficient monetary assets to increase operations. Chindia cannot assure any investor that it will be able to enter into sufficient business operations adequate enough to insure continued operations.
Below is an illustration of the financing needs and anticipated sources of funds for the elements of Chindia’s business plan that constitute top priorities. Each material event or milestone listed below will be required until adequate revenues are generated.
1. Researching and strategically targeting potential customers, including government entities, to which Chindia can market its services. Chindia expects to use a portion of the funds allocated toward working capital to engage in this activity.
2. Canvas the identified and targeted potential customer base to ascertain, isolate and anticipate their present and future needs, ideals of customer service and amenities that are desirable by the customer. Chindia expects to use a portion of the funds allocated toward reaching the goals most immediately ascertainable.
3. Establish personal and business relationships with key individuals in government, businesses and community leadership positions. Part of the funds set aside for sales and marketing activities are expected to be utilized.
4. Establish and maintain a visible community presence.
Chindia, Inc.’s ability to fully commence operations is entirely dependent upon the proceeds to be raised in the offering of its common stock via its Registration Statement deemed effective February 14, 2008 by the SEC, whereby Chindia is offering for sale to the public 1,500,000 common shares at a price of $0.05 per share. Depending on the outcome of this offering, Chindia plans to choose one of the following courses:
Plan 1: Minimum offering. If $20,000 is raised in this offering, Chindia will immediately begin to implement the aforementioned plans to generate business sufficient enough to maintain ongoing operations. This entails establishment of a public awareness of Chindia, including name recognition and product identification. In order to initiate implementation of a public awareness program, Chindia intends to use approximately $500 to $1,000 of the monies allocated toward working capital.
Chindia has budgeted $1,000 for office equipment and furniture, which is expected to consist of administrative working spaces, computers, computer peripherals, software, storage cabinets, fax machine and telephone equipment.
Chindia has allocated $1,000 for office supplies, which is expected to consist of costs of mailings, copying expenses, paper, general desk supplies, etc.
Chindia has allocated $2,650 for sales and marketing, specifically for a frugal advertising campaign, with the intent to piggyback on larger programs as much as possible.
Chindia has allocated $4,000 for general working capital to cover any shortfalls in the categories listed above and to take advantage of any business opportunity that presents itself, including accumulation of inventory.
Chindia believes it will be able to execute the business plan adequately and commence operations as a going concern if the minimum proceeds of this offering are realized. Chindia does not, however, expect to generate revenue in the first six months of operation from the date the first funds are received from this offering.
Any line item amounts not expended to their fullest extent shall be held in reserve as working capital, subject to reallocation to other line items expenditures as required for ongoing operations.
Plan 2: 75% of the maximum offering. In the event 75% of the maximum offering is raised, management will supplement its activities addressed in Plan 1, as delineated above. Chindia does not believe it will generate revenues in the first six months of operation from the date the first funds are received. Chindia expects to continue to substantially increase consumer awareness by utilizing the increased allocation for sales and marketing, a key factor in developing new business revenues.
The allocation for office equipment increases to $3,000.
The allocation for office supplies increases to $2,000, mostly in anticipation of increasing postage and mailing costs.
The allocation for sales and marketing increases to $8,900 allowing for the possibility of a more rapid growth.
The allocation for working capital increases under this scenario to $18,000 in anticipation of being more pro-active through accumulation of inventory that prospective customers would desire.
The allocation for salaries first appears for $12,000. It is anticipated that such expenditure will be directed toward hiring part time clerical assistance and customer service personnel. .
Any line item amounts not expended to their fullest extent shall be held in reserve as working capital, subject to reallocation to other line items expenditures as required for ongoing operations.
Plan 3: Maximum offering. In the event the maximum amount of $75,000 is raised, Chindia still does not expect to generate revenue in the first six months of operation from the date the first funds are received from trust. Under Plan 3, management will supplement the activities addressed in Plan 2, as delineated above.
The allocation for office equipment remains constant.
The allocation for office supplies remains constant.
The allocation for sales and marketing increases to $12,650 allowing for the possible development of greater revenue.
The allocation for working capital increases to $21,000 allowing for greater flexibility in meeting potential customer needs.
Any line item amounts not expended to their fullest extent shall be held in reserve as working capital, subject to reallocation to other line items expenditures as required for ongoing operations.
The allocation for salaries increases to $24,000 allowing for the hiring of a full time licensed mechanic assistant.
Any line item amounts not expended to their fullest extent shall be held in reserve as working capital, subject to reallocation to other line items expenditures as required for ongoing operation.
Regardless of the ultimate outcome and subsequent plan to be implemented, Chindia has budgeted for certain expenditures that it expects to remain constant. Chindia expects accounting fees to be $4,800 for the full year 2008, which includes reviewed financial statements for quarterly reports and audited financial statements for the year ended December 31, 2008. All statements are to be filed in applicable periodic reports with the SEC in accordance with Item 310 of Regulation S-B. Legal and professional fees are expected to aggregate $2,250, and are expected to consist mainly of legal fees, as well as ongoing Edgar conversion costs and various other professional services performed in relation to the anticipated ongoing reporting requirements of a public reporting company. All use of proceeds figures represent management's best estimates and are not expected to vary significantly.
Chindia’s ability to commence operations is entirely dependent upon the proceeds to be raised through its registered offering. If Chindia does not raise at least the minimum offering amount as described above, it will be unable to establish a base of operations, without which it will be unable to begin to generate any revenues. The realization of sales revenues in the next 12 months is important in the execution of the plan of operations. However, Chindia cannot guarantee that it will generate such growth. There are no formal or informal agreements to attain financing. Chindia can not assure any investor that, if needed, sufficient financing can be obtained or, if obtained, that it will be on reasonable terms. Without realization of additional capital, it would be unlikely for operations to continue.
Chindia management does not expect to incur research and development costs. Chindia currently does not own any significant plant or equipment that it would seek to sell in the near future.
Chindia management does not anticipate the need to hire employees over the next 12 months, with the possible exception of telemarketing and customer service telephone support should business develop of a sufficient nature to necessitate such expenditure. Currently, Chindia believes the services provided by its officer and director appears sufficient at this time. Chindia believes that its operations are currently on a small scale that is manageable by one individual at the present time.
Chindia has not paid for expenses on behalf of any director. Additionally, Chindia believes that this policy shall not materially change.
Chindia has no plans to seek a business combination with another entity in the foreseeable future.
Liquidity and Capital Resources
As of June 30, 2008, we have $0 cash available. We have current liabilities of $8,375. From the date of inception (December 20, 2006) to June 30, 2008 the Company has recorded a net loss of $28,275 of which were expenses relating to the initial development of the Company, filing its Registration Statement on Form SB-2, and expenses relating to maintaining reporting company status with the Securities and Exchange Commission. As of March 31, 2008 we had raised no money from the sale of our common stock registered under the Form SB-2 that was deemed effective on February 14, 2008 and as of May 9, 2008 we had sold approximately 20,000,000 common shares to our founding shareholders for total proceeds of $20,000 to four (4) individual shareholders. We will require additional capital investments or borrowed funds to meet cash flow projections and carry forward our business objectives. There can be no guarantee or assurance that we can raise adequate capital from outside sources to fund the proposed business.
During the past three years, Chindia, Inc. issued the following unregistered securities in private transactions without registering the securities under the Securities Act:
On or about December 20, 2006, Steven Kunkle, the sole officer, director and employee, paid for expenses involved with the incorporation of Chindia, Inc. with his personal funds on Chindia’s behalf in the amount of $20,000, in exchange for 17,150,000 shares of common stock, par value $0.001 per share, which issuance was exempt from the registration provisions of Section 5 of the Securities Act under Section 4(2) of such same said act.
On or about December 30, 2006, pursuant to a contract with Nevada Business Development Corporation, a Nevada corporation, the Company issued 950,000 shares of common stock to Nevada Business Development, for services valued at $0.001 per share for $950.00 in the aggregate, which issuance was exempt from the registration provisions of Section 5 of the Securities Act under Section 4(2) of such same said act.
On or about December 30, 2006, pursuant to a contract with Public Company Compliance, Inc., a Nevada corporation, the Company issued 950,000 shares of common stock to Public Company Compliance, Inc., for services valued at $0.001 per share for $950.00 in the aggregate, which issuance was exempt from the registration provisions of Section 5 of the Securities Act under Section 4(2) of such same said act.
On or about December 30, 2006, pursuant to a contract with Ramsgate Group, Inc., a Nevada corporation, the Company issued 950,000 shares of common stock to Ramsgate Group, Inc., for services valued at $0.001 per share for $950.00 in the aggregate, which issuance was exempt from the registration provisions of Section 5 of the Securities Act under Section 4(2) of such same said act.
To date there is no public market for the Company’s common stock. Management plans to focus efforts on raising proceeds from its registered offering. There can be no guarantee or assurance that they will be successful in accomplishing this task. Failure to raise adequate proceeds form the offering would result in business failure and a complete loss of any investment made into the Company.
Off-Balance Sheet Arrangements
As of the date of this Quarterly Report the Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term "off-balance sheet arrangement" generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with the Company is a party, under which the Company has (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.
ITEM 1A.
ITEM 1A. RISK FACTORS
We are subject to various risks that may materially harm our business, financial condition and results of operations. You should carefully consider the risks and uncertainties described below and the other information in this filing before deciding to purchase our common stock. If any of these risks or uncertainties actually occurs, our business, financial condition or operating results could be materially harmed. In that case, you could lose all or part of your investment.
Our operations depend solely on the efforts of Steven Kunkle, our sole officer and director. Mr. Kunkle has no experience related to public company management, nor as a principal accounting officer. Because of this, Mr. Kunkle may be unable to offer and sell the shares in this offering, develop our business adequately, and manage our public reporting requirements. We cannot guarantee that it will be able overcome any such obstacles.
Mr. Kunkle is involved in other employment opportunities and may periodically face a conflict in selecting between our business and his other personal and professional interests. We have not formulated a policy for the resolution of such conflicts should they occur. If we lose Mr. Kunkle to other pursuits without a sufficient warning, we may, consequently, go out of business.
PURCHASERS IN THIS OFFERING WILL HAVE LIMITED CONTROL OVER DECISION MAKING BECAUSE STEVEN KUNKLE, CI’S SOLE OFFICER AND DIRECTOR CONTROL A MAJORITY OF CI ISSUED AND OUTSTANDING COMMON STOCK.
Steven Kunkle, CI’s sole director and executive officer beneficially owns 85.75% of the outstanding common stock at the present time. As a result of such ownership, investors in this offering will have limited control over matters requiring approval by CI security holders, including the election of directors. Assuming the minimum amount of shares of this offering is sold Mr. Kunkle would retain 84.07% ownership in CI common stock. In the event the maximum offering is attained, Mr. Kunkle will own 79.77% of CI outstanding common stock. Such concentrated control may also make it difficult for CI stockholders to receive a premium for their shares of CI common stock in the event CI enters into transactions which require stockholder approval. In addition, certain provisions of Nevada law could have the effect of making it more difficult or more expensive for a third party to acquire, or of discouraging a third party from attempting to acquire, control of CI. For example, Nevada law provides that not less than two-thirds vote of the stockholders is required to remove a director for cause, which could make it more difficult for a third party to gain control of the Board of Directors. This concentration of ownership limits the power to exercise control by the minority shareholders.
INVESTORS MAY LOSE THEIR ENTIRE INVESTMENT IF CI FAILS TO IMPLEMENT ITS BUSINESS PLAN.
As a development-stage company, CI expects to face substantial risks, uncertainties, expenses and difficulties. CI was formed in Nevada on December 20, 2006 and thus has no demonstrable operations record of substance upon which you can evaluate CI business and prospects. CI prospects must be considered in light of the risks, uncertainties, expenses and difficulties frequently encountered by companies in their early stages of development. CI cannot guarantee that it will be successful in accomplishing its objectives.
As of the date of this prospectus, CI has had only limited start-up operations and has generated minimal revenues. Taking these facts into account, independent auditors have expressed substantial doubt about CI’s ability to continue as a going concern. See the independent auditors' report to the financial statements which is included in this registration statement, of which this prospectus is a part. In addition, CI’s lack of operating capital could negatively impact the value of its common shares and could result in the loss of your entire investment.
THE COSTS, EXPENSES AND COMPLEXITY OF SEC REPORTING AND COMPLIANCE MAY INHIBIT OUR OPERATIONS.
After the effectiveness of this registration statement, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended. The costs of complying with these complex requirements may be substantial and require retaining expensive specialists in this area. In the event we are unable to establish a base of operations that generates sufficient cash flows or cannot obtain additional equity or debt financing, the costs of maintaining our status as a reporting entity may inhibit our ability to continue our operations.
COMPETITORS WITH MORE RESOURCES MAY FORCE US OUT OF BUSINESS.
The import/export industry is highly competitive. Many CI competitors are significantly larger and have substantially greater financial, marketing and other resources and have achieved public awareness of their products and services. Competition by existing and future competitors could result in an inability to secure adequate consumer relationships sufficient enough to support CI endeavors. CI cannot be assured that it will be able to compete successfully against present or future competitors or that the competitive pressure it may face will not force it to cease operations.
CI MAY NOT BE ABLE TO ATTAIN PROFITABILITY WITHOUT ADDITIONAL FUNDING, WHICH MAY BE UNAVAILABLE.
We have limited capital resources. To date, we have funded our operations with limited initial capital and have not generated funds from operations to be profitable or to maintain consistent operations. Unless we begin to generate sufficient revenues to finance operations as a going concern on a consistent basis, we may experience liquidity and solvency problems. Such liquidity and solvency problems may force us to cease operations if additional financing is not available. In the event our cash resources are insufficient to continue operations, we intend to consider raising additional capital through offerings and sales of equity or debt securities. In the event we are unable to raise sufficient funds, we will be forced to terminate business operations. The possibility of such an outcome presents a risk of a complete loss of your investment in our common stock.
YOU MAY NOT BE ABLE TO SELL YOUR SHARES IN CI BECAUSE THERE IS NO PUBLIC MARKET FOR CI STOCK.
There is no public market for our common stock. The majority of our issued and outstanding common stock is currently held by Steven M. Kunkle, our sole officer and director. Therefore, the current and potential market for our common stock is limited. In the absence of being listed, no market is available for investors in our common stock to sell their shares. We cannot guarantee that a meaningful trading market will develop or that we will be successful in attaining listing on the OTCBB® or any other market.
If our stock ever becomes tradable, the trading price of our common stock could be subject to wide fluctuations in response to various events or factors, many of which are or will be beyond our control. In addition, the stock market may experience extreme price and volume fluctuations without a direct relationship to the operating performance.
INVESTORS MAY HAVE DIFFICULTY LIQUIDATING THEIR INVESTMENT BECAUSE CI'S STOCK WILL BE SUBJECT TO PENNY STOCK REGULATION.
The SEC has adopted rules that regulate broker/dealer practices in connection with transactions in penny stocks. The rules, in part, require broker/dealers to provide penny stock investors with increased risk disclosure documents and make a special written determination that a penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These heightened disclosure requirements may have the effect of reducing the number of broker/dealers willing to make a market in CI shares, thereby reducing the level of trading activity in any secondary market that may develop for CI shares. Consequently, customers in CI securities may find it difficult to sell their securities, if at all.
INVESTORS IN THIS OFFERING WILL BEAR A SUBSTANTIAL RISK OF LOSS DUE TO IMMEDIATE AND SUBSTANTIAL DILUTION
"Dilution" represents the difference between the offering price of the shares of common stock and the net book value per share of common stock immediately after completion of the offering. "Net book value" is the amount that results from subtracting total liabilities from total assets. In this offering, the level of dilution is increased as a result of the relatively low book value of our issued and outstanding stock. Assuming all shares offered herein are sold, giving effect to the receipt of the maximum estimated proceeds of this offering from shareholders net of the offering expenses, our net book value will be $69,700 or $0.00297 per share. Therefore, the purchasers of the common stock in this offering will incur an immediate and substantial dilution of approximately $0.04703 per share while our present stockholders will receive an increase of $0.00397 per share in the net tangible book value of the shares they hold. This will result in a 94.07% dilution for purchasers of stock in this offering.
Therefore, the investors in this offering will bear a substantial portion of the risk of loss. Additional sales of CI common stock in the future could result in further dilution. Please refer to the section titled "Dilution" herein.
ALL OF CI’S ISSUED AND OUTSTANDING COMMON SHARES ARE RESTRICTED UNDER RULE 144 OF THE SECURITIES ACT, AS AMENDED. WHEN THE RESTRICTION ON THESE SHARES IS LIFTED, AND THE SHARES ARE SOLD IN THE OPEN MARKET, THE PRICE OF CI COMMON STOCK COULD BE ADVERSELY AFFECTED.
All of the presently outstanding shares of common stock (20,000,000) are "restricted securities" as defined under Rule 144 promulgated under the Securities Act and may only be sold pursuant to an effective registration statement or an exemption from registration, if available. The SEC has adopted final rules amending Rule 144 which shall become effective on February 15, 2008. Pursuant to the new Rule 144, one year must elapse from the time a “shell company”, as defined in Rule 405, ceases to be a “shell company” and files Form 10 information with the SEC, before a restricted shareholder can resell their holdings in reliance on Rule 144. Form 10 information is equivalent to information that a company would be required to file if it were registering a class of securities on Form 10 under the Securities and Exchange Act of 1934 (the “Exchange Act”). Under the amended Rule 144, restricted or unrestricted securities, that were initially issued by a reporting or non-reporting shell company or an Issuer that has at anytime previously a reporting or non-reporting shell company as defined in Rule 405, can only be resold in reliance on Rule 144 if the following conditions are met: (1) the issuer of the securities that was formerly a reporting or non-reporting shell company has ceased to be a shell company; (2) the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; (3) the issuer of the securities has filed all reports and material required to be filed under Section 13 or 15(d) of the Exchange Act, as applicable, during the preceding twelve months (or shorter period that the Issuer was required to file such reports and materials), other than Form 8-K reports; and (4) at least one year has elapsed from the time the issuer filed the current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company.
At the present time, the Company is classified as a “shell company” under Rule 405 of the Securities Act. As such, all restricted securities presently held by the founders of the Company may not be resold in reliance on Rule 144 until: (1) the Company files Form 10 information with the SEC when it ceases to be a “shell company”; (2) the Company has filed all reports as required by Section 13 and 15(d) of the Securities Act for twelve consecutive months; and (3) one year has elapsed from the time the Company files the current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company.
CI IS SELLING THE SHARES OFFERED IN THIS PROSPECTUS WITHOUT AN UNDERWRITER AND MAY NOT BE ABLE TO SELL ANY OF THE SHARES OFFERED HEREIN.
The common shares are being offered on CI’s behalf by Steven Kunkle, CI’s sole officer and director, on a best-efforts basis. No broker-dealer has been retained as an underwriter and no broker-dealer is under any obligation to purchase any common shares. There are no firm commitments to purchase any of the shares in this offering. Consequently, there is no guarantee that CI is capable of selling all, or any, of the common shares offered hereby.
Forward-Looking Statements
This annual report contains forward-looking statements that involve risks and uncertainties. Chindia uses words such as anticipate, believe, plan, expect, future, intend and similar expressions to identify such forward-looking statements. You should not place too much reliance on these forward-looking statements. Actual results are most likely to differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced as described in this Risk Factors section above.
ITEM 1B.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2.
ITEM 2. PROPERTIES.
Chindia, Inc.’s current address is 2065 Lanihuli Drive, Honolulu, Hawaii 96822. The Company currently owns no property and has no plans to purchase any property within the next twelve months.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS.
Chindia, Inc. is not currently a party to any legal proceedings. The Company’s agent for service of process in Nevada is: Genesis Corporate Development, LLC - Phone (702) 301-7333
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
As of date of this 10K the Company has 20,000,000 common shares issued and outstanding. 15,150,000 of these shares are held by the sole officer and director all of these shares are Restricted under Rule 144. The remaining 5,000,000 shares are held by 3 shareholders which are Restricted under Rule 144 and held by a non-affiliated third-parties with an additional 1,500,000 shares being offered and sold through the Company’s registered offering. As of the date of this annual report the registered offering has not been fully subscribed and is still open. There is currently no market for the Company’s common stock. The Company plans seek quotation of its common stock on the OTC bulletin Board for its Common Stock, as such; investors in our common stock would experience difficulty in selling their shares. Please see, “RISK FACTORS” contained herein.
Sales of Unregistered Securities. We have sold securities within the past three years without registering the securities under the Securities Act of 1933 on two separate occasions.
During the past three years, Chindia, Inc. issued the following unregistered securities in private transactions without registering the securities under the Securities Act:
On or about December 20, 2006, Steven Kunkle, the sole officer, director and employee, paid for expenses involved with the incorporation of Chindia, Inc. with his personal funds on CI behalf in the amount of $20,000, in exchange for 17,150,000 shares of common stock, par value $0.001 per share, which issuance was exempt from the registration provisions of Section 5 of the Securities Act under Section 4(2) of such same said act.
On or about December 30, 2006, pursuant to a contract with Nevada Business Development Corporation, a Nevada corporation, the Company issued 950,000 shares of common stock to Nevada Business Development, for services valued at $0.001 per share for $950.00 in the aggregate, which issuance was exempt from the registration provisions of Section 5 of the Securities Act under Section 4(2) of such same said act.
On or about December 30, 2006, pursuant to a contract with Public Company Compliance, Inc., a Nevada corporation, the Company issued 950,000 shares of common stock to Public Company Compliance, Inc., for services valued at $0.001 per share for $950.00 in the aggregate, which issuance was exempt from the registration provisions of Section 5 of the Securities Act under Section 4(2) of such same said act.
On or about December 30, 2006, pursuant to a contract with Ramsgate Group, Inc., a Nevada corporation, the Company issued 950,000 shares of common stock to Ramsgate Group, Inc., for services valued at $0.001 per share for $950.00 in the aggregate, which issuance was exempt from the registration provisions of Section 5 of the Securities Act under Section 4(2) of such same said act.
Sales of Registered Securities. The Company’s registration statement filed on Form SB-2 was deemed effective on August 17, 2007 and subsequent Post Effective Amendment was deemed affective on February 8, 2008 relating to the registration of 5,000,000 common shares to be sold to the public at a price of $0.02 per share. As of the date of this report all 5,000,000 common shares have been sold to approximately 53 individual investors and the offering is fully subscribed and closed.
Issuer Purchases of Equity Securities. None during the Fiscal Year Ended June 30, 2008.
Dividends. We did not declare or pay dividends during the Fiscal Year Ended June 30, 2008.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA.
Summary of Financial Data
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion is intended to assist in the understanding and assessment of significant changes and trends related to the results of operations and financial condition of Chindia, Inc. This discussion and analysis should be read in conjunction with our consolidated financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K for the fiscal year ended June 30, 2008.
Cautionary Statement
This notice is intended to take advantage of the "safe harbor" provided by the Private Securities Litigation Reform Act of 1995 with respect to forward-looking statements. Except for the historical information contained herein, the matters discussed should be considered forward-looking statements and readers are cautioned not to place undue reliance on those statements. The forward-looking statements in this discussion are made based on information available as of the date hereof and are subject to a number of risks and uncertainties that could cause the Company's actual results and financial position to differ materially from those expressed or implied in the forward-looking statements and to be below the expectations of public market analysts and investors. These risks and uncertainties include, but are not limited to, those discussed in "Item 1A.-Risk Factors" under the heading "Factors Affecting Future Operating Results". The Company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by applicable laws and regulations.
Critical Accounting Policies
The preparation of our consolidated financial statements and notes thereto requires management to make estimates and assumptions that affect the amounts and disclosures reported within those financial statements. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, workers' compensation costs, collectability of accounts receivable, and impairment of goodwill and intangible assets, contingencies, litigation and income taxes. Management bases its estimates and judgments on historical experiences and on various other factors believed to be reasonable under the circumstances. Actual results under circumstances and conditions different than those assumed could result in differences from the estimated amounts in the financial statements. There have been no material changes to these policies during fiscal year.
Executive Overview
Fiscal year focus of the Company was primarily on preparing and filing the registration statement on Form SB-2 in order to register 1,500,000 common shares to be sold as a direct offering to the public at a price of $0.05 per share to fund the anticipated business development activities and costs associated with maintaining a reporting company status.
The registration of the shares was deemed effective on August 8, 2007 and the subsequent Post-Effective Amendment thereto was deemed effective on February 8, 2008. As of the date of this report the Company has sold all 5,000,000 common shares it registered and offered to the public at a price of $0.02 per share. As such this offering is closed.
Shareholder Transaction
During the fiscal year, 15,150,000 shares of our Common Stock was purchased by our Chief Executive Officer/Director, Steven M. Kunkle, Nevada Business Development, Inc. received 950,000 shares in lieu of services rendered in December 2006 Public Company Compliance, Inc. received 950,000 shares in lieu of services rendered in December 2006 and Ramsgate Group, Inc. received 950,000 shares in lieu of services rendered in December 2006.
·
The size of the Company's Board of Directors was determined to be one; and
·
Mr. Kunkle was elected as the sole member of the Board of Directors.
Fiscal Year Ended June 30, 2008
Revenue. The Company has not generated any revenues. As of the June 30, 2008 the only proceeds received by the Company have been $20,000 through the sale of its common stock to its sole director and officer.
Liquidity and Capital Resources
We will require significant amounts of working capital to take our company to the next level of operations and to pay expenses relating to maintaining the status of a reporting company including legal, accounting and filing fees. As of June 30, 2008, we no cash available. The Company believes it must raise additional proceeds in order to survive as a going concern within the next six months or become operational in order to survive as a going concern. If we are unable to accomplish raising adequate funds, it would be likely that any investment made into the Company would be lost in its entirety.
Off-Balance Sheet Arrangements
None.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We currently do not have a market for our common stock. We do not currently hold any market risk sensitive instruments entered into for hedging transaction risks related to foreign currencies. In addition, we have not entered into any transactions with derivative financial instruments for trading purposes.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
MOORE & ASSOCIATES, CHARTERED
ACCOUNTANTS AND ADVISORS
PCAOB REGISTERED
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Chindia, Inc.
(A Development Stage Company)
We have audited the accompanying balance sheet of Chindia, Inc. (A Development Stage Company) as of June 30, 2008 and June 30, 2007, and the related statements of operations, stockholders’ equity and cash flows for the year ended June 30, 2008, from inception on May 3, 2007 through June 30, 2007 and from inception on May 3, 2007 through June 30, 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 audits.
We conduct our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Chindia, Inc. (A Development Stage Company) as of June 30, 2008 and June 30, 2007, and the related statements of operations, stockholders’ equity and cash flows for the year ended June 30, 2008, from inception on May 3, 2007 through June 30, 2007 and from inception on May 3, 2007 through June 30, 2008, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has had no revenues and has generated losses from operations, which raises substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Moore & Associates, Chartered
Moore & Associates Chartered
Las Vegas, Nevada
August 26, 2008
2675 S. Jones Blvd. Suite 109, Las Vegas, NV 89146 (702) 253-7499 Fax (702) 253-7501
CHINDIA, INC.
(A Development Stage Company)
Balance Sheet
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.
CHINDIA, INC.
(A Development Stage Company)
Statements of Shareholders' Equity (Deficit)
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.
Notes to the Financial Statements
June 30, 2008 and 2007
NOTE 1 - NATURE OF ORGANIZATION
a. Organization and Business Activities
The Company was incorporated under the laws of the State of Nevada on December 20, 2006 with a principal business objective of investing in and developing all types of businesses related to the publication industry. The Company has not realized any revenues to date and therefore classified as a development stage company.
b. Depreciation
The cost of the property and equipment will be depreciated over the estimated useful life of 5 years. Depreciation is computed using the straight-line method when the assets are placed in service.
c. Accounting Method
The Company’s financial statements are prepared using the accrual method of accounting. The Company has elected a June 30 year-end.
d. Cash and Cash Equivalents
For the purpose of the statement of cash flows, the Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents.
e. 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.
f. Revenue Recognition
The Company recognizes when products are fully delivered or services have been provided and collection is reasonably assured.
g. Organization Costs
The Company has expensed the costs of its incorporation.
h. Advertising
The Company follows the policy of charging the costs of advertising to expense as incurred. The Company incurred no advertising during the years ended June 30, 2008 and 2007.
CHINDIA, INC.
Notes to the Financial Statements
June 30, 2008 and 2007
NOTE 1 -NATURE OF ORGANIZATION (Continued)
i. Concentrations of Risk
The Company’s bank accounts are deposited in insured institutions. The funds are insured up to $100,000. At June 30, 2008, the Company’s bank deposits did not exceed the insured amounts.
j.
Basic Loss Per Share
The Computation of basic loss per share of common stock is based on the weighted average number of shares outstanding during the period.
k.
Income Taxes
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will to be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Net deferred tax assets consist of the following components as of June 30:
CHINDIA, INC.
Notes to the Financial Statements
June 30, 2008 and 2007
NOTE 1 -NATURE OF ORGANIZATION (Continued)
k. Income Taxes (continued)
The income tax provision differs from the amount of income tax determined by applying the U.S. federal and state income tax rates of 34% to pretax income from continuing operations for the period ended June 30 due to the following:
At June 30, 2008, the Company had net operating loss carryforwards of approximately $8,275 that may be offset against future taxable income through 2028. No tax benefit has been reported in the June 30, 2008 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carryforwards may be limited as to use in future years.
NOTE 2 -GOING CONCERN
The Company’s financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has had no revenues and has generated losses from operations.
In order to continue as a going concern and achieve a profitable level of operations, the Company will need, among other things, additional capital resources and to develop a consistent source of revenues. Management’s plans include of investing in and developing all types of businesses related to the restaurant industry.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plan described in the preceding paragraph and eventually attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 3 -RELATED PARTY TRANSACTIONS
The Company has received advances from related parties to pay its minimal operating expenses. The advances are non interest bearing, unsecured and due upon demand. The Company owes $6,350 for such advances as of June 30, 2008.
ITEM 9B.
ITEM 9B. OTHER INFORMATION.
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
Chindia, Inc.’s executive officer and director and his respective age as of June 30, 2008 are as follows:
Directors:
Executive Officers:
The term of office for each director is one year, or until the next annual meeting of the shareholders.
Biographical Information
Set forth below is a brief description of the background and business experience of our executive officer and director for the past year.
Steven M. Kunkle, President, Member of the Board of Directors, age 40.
Steven Kunkle is currently the President, Secretary, Treasurer, Chief Executive Officer and sole Director of the Company. Mr. Kunkle has limited business experience; however he has been in the workforce for over 13 years. His experience includes managing and supervising the employees of multi drive-thru espresso shops. While working as a manager for Caffe Diva, a drive-thru espresso business, he helped develop a very detailed employee handbook. In addition, he managed the purchase of supplies as well as the distribution network. Mr. Kunkle entered college in 2001 and while pursuing a degree in economics he worked in the hospitality industry assisting in developing two ethnic food concepts. He took time immediately following high school to travel to Europe and visit Germany, Switzerland, Italy and upon return toured the Caribbean and Mexico. His interest in travel is the impetus for Chindia. He will devote full time to developing Chindia.
Chindia’s sole Officer and Director has not been involved, during the past five years, in any bankruptcy proceeding, conviction or criminal proceedings; has not been subject to any order, judgment, or decree, not subsequently reversed or 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 has not been found by a court of competent jurisdiction, the Commission or the Commodity Futures trading Commission to have violated a federal or state securities or commodities law.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION.
Summary Compensation Table
There has been no cash payment paid to the executive officer for services rendered in all capacities to us for the period ended June 30, 2008. There has been no compensation awarded to, earned by, or paid to the executive officer by any person for services rendered in all capacities to us for the fiscal period ended June 30, 2008. No compensation is anticipated within the next six months to any officer or director of the Company.
Stock Option Grants
Chindia did not grant any stock options to the executive officer during the most recent fiscal period ended June 30, 2008. The Company has also not granted any stock options to the executive officer since incorporation, December 20, 2006.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following table provides the names and addresses of each person known to Chindia to own more than 5% of the outstanding common stock as of June 5, 2008 and by the officers and directors, individually and as a group. Except as otherwise indicated, all shares are owned directly.
The percent of class is based on 20,000,000 shares of common stock issued and outstanding as of August 20, 2008.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
During Fiscal Year, there were no material transactions between the Company and any Officer, Director or related party none of the following parties has, since the date of incorporation, had any material interest, direct or indirect, in any transaction with us or in any presently proposed transaction that has or will materially affect us:
-The sole Officer and Director;
-Any person proposed as a nominee for election as a director;
-Any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to the outstanding shares of common stock;
-Any relative or spouse of any of the foregoing persons who have the same house as such person.
On December 30, 2006, the Company issued 950,000 restricted shares of common stock to Nevada Business Development, Inc. for $950 of services. Value was determined as an arms length transaction between non-related parties.
On December 30, 2006, the Company issued 950,000 restricted shares of common stock to Public Company Compliance, Inc. for $950 of services. Value was determined as an arms length transaction between non-related parties.
On December 30, 2006, the Company issued 950,000 restricted shares of common stock to Ramsgate, Inc. for $950 of services. Value was determined as an arms length transaction between non-related parties.
Any future transactions between us and our Officers, Directors, and Affiliates will be on terms no less favorable to us than can be obtained from unaffiliated third parties. Such transactions with such persons will be subject to approval of our Board of Directors.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
As of June 30, 2008 the Company has incurred auditing expenses (accounting and bookkeeping) of $6,450. We have incurred filing and consulting fees relating to our reporting requirements of $10,350. Moreover, the Company anticipates being billed $3,450 for audit services relating to this annual report and an additional $2,950 in filing and consulting fees. The Company’s auditor is, Moore & Associates, Chartered.
PART IV
ITEM 15.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The following documents have been filed as a part of this Annual Report on Form 10-K.
1.
Financial Statements
Report of Independent Registered Public Accounting Firm
Balance Sheets
Statements of Operations
Statements of Stockholders' Equity
Statements of Cash Flows
Notes to Financial Statements
2. Financial Statement Schedules.
All schedules are omitted because they are not applicable or not required or because the required information is included in the Financial Statements or the Notes thereto.
3. Exhibits.
The following exhibits are filed as part of, or incorporated by reference into, this Annual Report:
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.