Attached files
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] Quarterly Report Pursuant to Section 13 or 15(d) Securities
Exchange Act of 1934 for Quarterly Period Ended March 31, 2011
-OR-
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities And Exchange Act of 1934 for the transaction period from
_________ to________
Commission file number: 0-49819
CHINA STATIONERY AND OFFICE SUPPLY, INC.
(Exact name of registrant as specified in its charter)
Delaware 33-0931599
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
708 Third Avenue
New York, NY 10017
(address of principal executive offices) (Zip Code)
Issuer's telephone number: 212-508-4700
Indicate by check mark whether the issuer (1) 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 [x] No [ ]
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to
Rule 405 of Regulation S-T (section 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 [ ]
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerate filer, or a small
reporting company as defined by Rule 12b-2 of the Exchange Act):
Large accelerated filer [ ] Non-accelerated filer [ ]
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 [ ]
The number of outstanding shares of the registrant's common stock, May
13, 2011: Common Stock - 11,987,427
2
CHINA STATIONERY AND OFFICE SUPPLY, INC.
FORM 10-Q
INDEX
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Balance Sheets at March 31, 2011
and December 31, 2010 3
Statements of Operations for the three months
ended March 31, 2011 and 2010 4
Statements of Cash Flows for the three months
ended March 31, 2011 and 2010 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosure About
Market Risk 12
Item 4. Controls and Procedures 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 1A. Risk Factors 13
Item 2. Unregistered Sales of Equity Securities and Use
of Proceeds 13
Item 3. Defaults Upon Senior Securities 13
Item 4. (Removed and Reserved) 13
Item 5. Other Information 13
Item 6. Exhibits 13
SIGNATURES 13
3
CHINA STATIONERY AND OFFICE SUPPLY, INC.
BALANCE SHEET
(UNAUDITED)
ASSETS As of March 31, 2011
--------------------
Current Assets:
Cash and Cash equivalents $ -
----------
Total Current Assets -
Plant & Equipment, net -
Patent and Other Intangibles, net -
Other Assets -
----------
Total Assets $ -
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ -
----------
Total Current Liabilities -
----------
Total Liabilities -
----------
Stockholders' Equity:
Common Stock, par value $0.001, 50,000,000
shares authorized; 11,987,427 shares issued
and outstanding as of March 31, 2011 11,987
Additional Paid-in Capital 1,198,013
Accumulated Deficit (1,210,000)
----------
Total Stockholders' Equity -
----------
Total Liabilities and Stockholders' Equity $ -
==========
The accompanying notes are an integral
part of these financial statements
4
CHINA STATIONERY AND OFFICE SUPPLY, INC.
STATEMENT OF OPERATIONS
(UNAUDITED)
Three Months Ended March 31,
2011 2010
---- ----
Revenue $ - $ -
Cost of Goods Sold - -
----------- -----------
Gross Profit - -
----------- -----------
Operating Expenses:
General and Administrative
Expenses - -
----------- -----------
Total Operating Expenses - -
----------- -----------
Income from Operations before
other Income and (expenses) - -
----------- -----------
Income (Loss) from Continuing
Operations - -
Provision For Income Taxes - -
----------- -----------
Net Income (Loss) - -
Earnings Per Common Share
-Basic and Diluted $ - $ -
=========== ===========
Weighted Average Common Shares
-Basic and Diluted 11,987,427 11,987,427
=========== ===========
The accompanying notes are an integral
part of these financial statements
5
CHINA STATIONERY AND OFFICE SUPPLY, INC.
STATEMENT OF CASH FLOWS
(UNAUDITED)
Three Months Ended March 31,
2011 2010
---- ----
Cash Flows From Operating Activities:
Net Income (Loss) $ - $ -
-------- --------
Net Cash Provided (Used) by
Operating Activities - -
Cash Flows From Investing Activities:
Net Cash Provided (Used) in
Investing Activities - -
-------- --------
Cash Flows From Financing Activities:
Common Stock Issued - -
Net Cash Provided (Used) by
Financing Activities - -
-------- --------
Increase in Cash and Cash Equivalents - -
Cash and Cash Equivalents
-Beginning Balance - -
-------- --------
Cash and Cash Equivalents
- Ending Balance $ - $ -
======== ========
Supplemental Disclosures of Cash Flow Information:
Cash Paid During The Years for:
Interest Paid $ - $ -
======== ========
Income Taxes $ - $ -
======== ========
6
CHINA STATIONERY AND OFFICE SUPPLY, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1- ORGANIZATION AND DESCRIPTION OF BUSINESS
China Stationery and Office Supply, Inc. (the "Company") was
incorporated in the state of Delaware in February 2002. In early
November 2010, the board of directors of the Company changed its
business plan to pursue global wealth strategy and asset management for
high net-worth individuals, families and institutional clients.
On January 1, 2011, Wei Chenghui, as manager of Ningbo Binbin
Stationery Co., Ltd., exercised the call option pursuant to the
exercise provisions of an Assignment and Assumption and Management
Agreement.
Pursuant to an Assignment and Assumption and Management Agreement dated
October 27, 2010, the registrant granted the manager an irrevocable
call option to acquire all of the registered capital of the Ningbo
Binbin. The manager also granted to the registrant an irrevocable put
option to cause the manager to purchase all of the registered capital
of Ningbo Binbin. Either the put option or the call option could be
exercised at any time when Ningbo Binbin does not represent
substantially all of the assets of the registrant. The call option was
exercised by the manager on January 1, 2011.
On January 19, 2011, the Company entered into an Agreement and Plan of
Merger with Global Arena Holding Subsidiary Corp., a Delaware
corporation. Upon the terms and subject to the conditions of the
Merger Agreement, at the effective date of the Merger, Global Arena
will merge with and into the Company, with the Company as the surviving
corporation.
At the effective date of the Merger, each share of Global Arena's
common stock, will be cancelled and converted automatically into the
right to receive 1.5 common shares of the Company for an aggregate of
18,000,000 common shares of the Company and will be recorded as a
recapitalization of the Company.
Among other things, for the conversion and exchange of all outstanding
shares of $.0001 par value common stock of Global Arena into eighteen
million (18,000,000) shares of voting $.0001 par value common stock of
China Stationery (together, the "Merger Consideration"). The parties
intend the merger to qualify as a tax-free reorganization under Section
368 of the Internal Revenue Code of 1986, as amended.
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Unaudited Financial Statements
The balance sheet as of March 31, 2011, the statements of operations
and the statements of cash flows for the three months ended March 31,
2011 and 2010 have been prepared by China Stationery and Office Supply,
Inc. (the "Company") without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures, normally included in the
financial statements prepared in accordance with accounting principles
generally accepted in the United States of America, have been condensed
or omitted as allowed by such rules and regulations, and the Company
believes that the disclosures are adequate to make the information
presented not misleading. In the opinion of management, all adjustments
7
CHINA STATIONERY AND OFFICE SUPPLY, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(which include only normal recurring adjustments) necessary to present
fairly the financial position, results of operations and changes in
financial position at March 31, 2011 and for all periods presented,
have been made.
It is suggested that these statements be read in conjunction with the
December 31, 2010 audited financial statements and the accompanying
notes included in the Company's Registration on Form 10-K, filed with
the Securities and Exchange Commission.
Basis of Presentation
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 has no working capital and stockholders'
deficits and no active business operations, which raises substantial
doubt about its ability to continue as a going concern.
In view of these matters, realization of certain of the assets in the
accompanying balance sheet is dependent upon continued operations of
the Company, which in turn is dependent upon the Company's ability to
meet its financial requirements, raise additional capital, and the
success of its future operations.
Management has opted to resume the filing of Securities and Exchange
Commission (SEC) reporting documentation and then to seek a business
combination. Management believes that this plan provides an opportunity
for the Company to continue as a going concern.
Use of estimates
In preparing the financial statements in conformity with accounting
principles generally accepted in the United States of America,
management makes estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets
and liabilities at the dates of the financial statements, as well as
the reported amounts of revenues and expenses during the reporting
year. Actual results could differ from those estimates.
Statement of cash flows
In accordance with Accounting Standards Codification ASC 230,
"Statement of Cash Flows," cash flows from the Company's operations is
calculated based upon the local currencies. As a result, amounts
related to assets and liabilities reported on the statement of cash
flows will not necessarily agree with changes in the corresponding
balances on the balance sheet.
New accounting pronouncements
In January 2010, FASB issued ASU No. 2010-01- Accounting for
Distributions to Shareholders with Components of Stock and Cash. The
amendments in this Update clarify that the stock portion of a
distribution to shareholders that allows them to elect to receive cash
8
CHINA STATIONERY AND OFFICE SUPPLY, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
or stock with a potential limitation on the total amount of cash that
all shareholders can elect to receive in the aggregate is considered a
share issuance that is reflected in EPS prospectively and is not a
stock dividend for purposes of applying Topics 505 and 260 (Equity and
Earnings Per Share). The amendments in this update are effective for
interim and annual periods ending on or after December 15, 2009, and
should be applied on a retrospective basis. The adoption of this
ASU did not have a material impact on its consolidated financial
statements.
In February 2010, FASB issued ASU No. 2010-9 Subsequent Events (Topic
855) - "Amendments to Certain Recognition and Disclosure Requirements".
This update addresses certain implementation issues related to an
entity's requirement to perform and disclose subsequent-events
procedures, removes the requirement that public companies disclose the
date of their financial statements in both issued and revised financial
statements. According to the FASB, the revised statements include those
that have been changed to correct an error or conform to a
retrospective application of U.S. GAAP. The amendments were effective
upon issuance of the update, except for the use of the issued date for
conduit debt obligors. That amendment is effective for interim or
annual periods ending after June 15, 2010. The adoption of this ASU
did not have a material impact on the Company's consolidated financial
statements.
NOTE 3- STOCKHOLDERS' EQUITY
Pursuant to the Articles of Incorporation, the Company is authorized to
issue 50,000,000 common shares with $0.001 par value. As of March 31,
2011, there were 11,987,427 shares of common stock issued and
outstanding.
Prior to the closing of the merger, the Company shall effectuate a 1
for 20 reverse stock split of its common shares. As a result, after
the reverse stock split, the Company shall have a total of 409,524
common shares issued and outstanding. This assumes the cancellation of
189,847 post split common shares.
Our board of directors has approved the reverse stock split.
Stockholders holding a majority of the outstanding common shares have
approved the reverse split by written consent. The par value of our
common stock will remain $0.001 per share and the number of shares of
common stock authorized to be issued will remain at 50,000,000. Our
board of directors believes that the reverse split is in our best
interests, principally because it may increase the bid price of our
common shares. Our board of directors agreed to the reverse stock split
as a condition of the merger with Global Arena.
NOTE 4- GOING CONCERN
The accompanying financial statements have been prepared in conformity
with accounting principles generally accepted in the United States of
America, which contemplate continuation of the Company as a going
9
CHINA STATIONERY AND OFFICE SUPPLY, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 5- REVERSE MERGER TRANSACTION (continued)
concern. As of March 31, 2011, the Company had no assets and no
operations. Through the merger with Global Arena, there was substantial
doubt of ability to continue as a going concern.
NOTE 5- REVERSE MERGER TRANSACTION
The Merger is being effected pursuant to an Agreement and Plan of
Reorganization and the related Agreement and Plan of Merger dated as of
January 19, 2011, among the Company and Global Arena Holding, Inc. The
effect of the Merger is such that a reorganization of the entities has
occurred for accounting purposes and is deemed to be a reverse merge
recapitalization. Pursuant to the Merger Agreement, upon the filing of
the Articles of Merger with the state of Delaware, Global Arena will be
merged with and into the Company with the Company continuing on as the
surviving corporation.
Wei Chenghui, the then sole officer and director, through his business
associates, contacted potential investors and acquirers to solicit
interest in an investment in or acquisition of the Company. After
negotiations with an advisor to and officers of Global Arena, Wei
Chenghui resigned all held corporate offices in anticipation of a
subsequent change in control of the registrant. On October 27, 2010,
John Matthews and Josh Winkler, current officers and directors of
Global Arena, were appointed to the board of directors of the Company.
Note 6- SUBSEQUENT EVENTS
Global Arena and the Company are obligated to complete the Merger under
the terms of the Merger Agreement subject to the conditions set forth
therein, all of which we expect to be satisfied by May 18, 2011.
10
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
------------------------
In early November 2010, the board of directors of the registrant
changed its business plan to pursue global wealth strategy and asset
management for high net-worth individuals, families and institutional
clients. The registrant intends to offer services including
separately-managed accounts, sub-advisory relationships, structured
products, mutual funds, and other investment vehicles to unaffiliated
corporate and public employee pension funds, endowment funds, domestic
and foreign institutions, and governments and affiliates around the
world. The registrant will also offer in-depth portfolio strategy,
trading and brokerage services to institutional and individual
investors. Prior to the change in its business plan, China
Stationery's primary business, through Ningbo Binbin Stationery Co.,
Ltd., its then operating subsidiary based in China, was to develop,
manufacture and market office supplies including stationery, hole
punchers, staplers, pens and pencils, rubber stamps, felt markers and
numerous other items, which are sold through a worldwide network of
distributors in China.
Since November 2010, our main activities have been developing our
business strategies, creating strategic alliances within the global
wealth strategy and asset management industry, seeking equity financing
and preparing for the merger with Global Arena.
We are currently not aware of any other known material trends, demands,
commitments, events or uncertainties that will have, or are reasonable
likely to have, a material impact on our financial condition, operating
performance, revenues and/or income, or results in our liquidity
decreasing or increasing in any material way.
Discontinued Operations
-----------------------
On January 1, 2011, Wei Chenghui, as manager of Ningbo Binbin
Stationery Co., Ltd., exercised the call option pursuant to the
exercise provisions of an Assignment and Assumption and Management
Agreement.
Pursuant to an Assignment and Assumption and Management Agreement dated
October 27, 2010, the registrant granted the manager an irrevocable
call option to acquire all of the registered capital of the Ningbo
Binbin. The manager also granted to the registrant an irrevocable put
option to cause the manager to purchase all of the registered capital
of Ningbo Binbin. Either the put option or the call option could be
exercised at any time when Ningbo Binbin does not represent
substantially all of the assets of the registrant. In addition, the
call option could be exercised by the manager at any time on or after
January 1, 2011.
Upon exercise of the call option, the manager delivered to the
registrant, duly endorsed for transfer to the registrant, one or more
certificates representing in aggregate three million seven hundred
ninety six thousand nine hundred thirty eight (3,796,938) shares of the
registrant's common stock and a written personal and unconditional
guarantee of the obligations of Ningbo Binbin. The registrant will
provide any reasonable assistance required by the manager to affect the
registration with the government of China of the transfer of the
registered capital of Ningbo Binbin.
11
Results of Operations
---------------------
Due to the change of business focus and the sale of the subsidiary, a
discussion of the results of operations for the last two years is not
provided as the information is not relevant and does not provide an
understanding of our current financial condition.
Liquidity and Capital Resources
-------------------------------
We have not received any revenues relating to our new business focus.
Until we are able to complete the merger with Global Arena and raise
funds to pursue our business plan, our activities will be restricted.
We are subject to ongoing expenses associated with professional fees
for accounting, legal and a host of other expenses for annual reports
and proxy statements. These costs range up to $75,000 per year and,
although initially lower due to the sale of our subsidiary, will be
higher subsequent to the merger and as our business volume and activity
increases.
Plan of Operations
------------------
Over the next twelve months, we intend to:
Step Timeframe Estimated Cost
---- --------- --------------
1. Raise funds for working capital 1-2 months $10,000
2. Complete SEC and corporate filings
relating to merger and other
corporate actions 1-2 months $60,000
3. Complete merger with Global Arena 1 month $10,000
4. Integrate operations of Global Arena 6-9 months $100,000
5. Expand operations 9-12 months not yet
determined
The main uncertainties or obstacles involved before planned operations
can commence include
- raising sufficient funds
- completing the merger in a timely fashion and
- integrating and creating control and procedures.
Our current cash balance is estimated not to be sufficient to fund our
current operations. If we are unable to complete the merger and raise
sufficient funds or obtain alternate financing, we may never move
sufficiently forward with our business plan and become profitable.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial
condition or results of operations.
Critical Accounting Policies and Estimates
We have made no material changes to our critical accounting policies in
connection with the preparation of financial statements for 2009.
12
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable for a smaller reporting company.
Item 4. Controls and Procedures.
During the three months ended March 31, 2011, there were no changes in
our internal controls over financial reporting (as defined in Rule 13a-
15(f) and 15d-15(f) under the Exchange Act) that have materially
affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management,
including our chief executive officer and chief financial officer, we
conducted an evaluation of our disclosure controls and procedures, as
such term is defined under Rule 13a-15(e) and Rule 15d-15(e)
promulgated under the Securities Exchange Act of 1934, as amended, as
of March 31, 2011. Based on this evaluation, our chief executive
officer and chief principal financial officers have concluded such
controls and procedures to be effective as of March 31, 2011 to ensure
that information required to be disclosed by the issuer in the reports
that it files or submits under the Act is recorded, processed,
summarized and reported, within the time periods specified in the
Commission's rules and forms and to ensure that information required to
be disclosed by an issuer in the reports that it files or submits under
the Act is accumulated and communicated to the issuer's management,
including its principal executive and principal financial officers, or
persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure.
13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 1A. Risk Factors
Not applicable for smaller reporting company
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None
Item 4. (Removed and Reserved)
Item 5. Other Information
None
Item 6. Exhibits
Exhibit 31 - Certifications pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
Exhibit 32 - Certifications pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
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: May 13, 2011
CHINA STATIONERY AND OFFICE SUPPLY, INC.
By: /s/ John S. Matthews
---------------------------
John S. Matthews, Chief Executive Officer
/s/Joshua Winkler
-----------------------------
Joshua Winkler, Chief Financial Officer
