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EXCEL - IDEA: XBRL DOCUMENT - SICHUAN LEADERS PETROCHEMICAL CoFinancial_Report.xls

 


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A


(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2013

[ ] 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. 000-54820

[slpc10q033113a001.jpg]

SICHUAN LEADERS PETROCHEMICAL COMPANY

 (Exact name of small business issuer as specified in its charter)

 

 

FLORIDA

 

20-4138848

 

 

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Tax. I.D. No.)

 

 

6371 Business Blvd., Suite 200, Sarasota, Florida 34240

(Address of Principal Executive Offices)

 

(941) 907-6889

(Registrant’s Telephone Number, Including Area Code)

Quality WallBeds, Inc.

 (Registrant’s former name)

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  þ  No  o


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 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 þ  No o


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or 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.o

Accelerated filer.   o

Non-accelerated filer.  o

(Do not check if a smaller reporting company)

Smaller reporting company.  þ


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  o  No  þ


As of December 31, 2012, the last business day of the registrants most recently completed last quarter, the aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was $0.00 computed by reference to the last sale price on June 30, 2012 as reported on the OTC Bulletin Board and the OTC Markets QB of $0.00 per share (our common stock is currently not trading). For purposes of this response, the registrant has assumed that its directors, executive officers and beneficial owners of 5% or more of its Common Stock are deemed affiliates of the registrant.




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The number of shares outstanding of each of the issuer’s classes of common equity as of March 31, 2013 is as follows:

  


Class of Securities

 

Shares Outstanding

Common Stock, $0.01 par value

 

10,375,000

Documents incorporated by reference: N/A




EXPLANATORY NOTE


This amended quarterly report on Form 10-Q was filed to correct the date of the report on the cover page from March 31, 2012 to March 31, 2013.  No other changes were made.  The Interactive Data Files are unchanged but filed with this amendment for ease of reference.





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TABLE OF CONTENTS


Part I – Financial Information

Item 1.  Financial Statements

Item 2.  Management’s Discussion and Analysis and Results of Operation

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Item 4T.  Controls and Procedures

Part II – Other Information 

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

Item 6.  Exhibits

Signatures



XBRL EXPLANATORY NOTE


Pursuant to Rule 406T of Regulation S-T, the XBRL files contained in Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.




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PART I – FINANCIAL INFORMATION


SICHUAN LEADERS PETROCHEMICAL COMPANY

Balance Sheets

As of March 31, 2013 (unaudited) and December 31, 2012 (audited)


 

US Dollars

As of

As of

 

 

March 31, 2013

(unaudited)

December 31, 2012

(audited)

 

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

Cash and Cash Equivalents

14,468

9,040

 

Accounts Receivable

-

7,520

 

Inventory

1,250

1,250

 

Total Current Assets

15,718

17,810

 

 

 

 

Property and Equipment, net of accumulated depreciation

of $21,664 and $22,620, as of March 31, 2013 and December 31, 2012,respectively

2,255

3,535

 

 

 

 

Total Assets:

17,973

21,345

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current Liabilities:

 

 

 

Accounts Payable

2,968

4,764

 

Accrued Expenses

-

3,210

 

Loans from Shareholders

97,722

54,522

Total Current Liabilities

100,690

62,496

 

 

 

 

Stockholders' Equity:

 

 

 

Common Stock; $0.01 per share par value; 500,000,000 shares authorized; and 10,375,000 and 9,375,000 issued and outstanding

at March 31, 2013 and December 31, 2012, respectively

103,750

93,750

 

Additional Paid in Capital

(68,566)

(68,566)

 

Accumulated Deficit (Retained Earnings)

(117,901)

(66,335)

 

Total Stockholders’ Equity

(82,717)

(41,151)

 

 

 

Total Liabilities and Stockholders' Equity

17,973

21,345




The accompanying notes are an integral part of these statements.



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SICHUAN LEADERS PETROCHEMICAL COMPANY

STATEMENTS OF OPERATIONS

For the Three Months Ended March 31,


US Dollars

For the three months ended

 

March 31, 2013

(unaudited)

March 31, 2012

(unaudited)

Revenue:

 

 

     Sales

(4,247)

71,381

     Direct Costs

14,778

43,097

Total Revenue   

(19,025)

28,284

 

 

 

Operating Expenses:

 

 

     General and Administrative

31,933

14,207

     Depreciation Expenses

608

1,117

Total Operating Expenses

32,541

15,324

 

 

 

Net Income from Operations

(51,566)

12,960

 

 

 

Income Taxes

-

-

 

 

 

Net  Income  (Loss)

(51,566)

12,960

 

 

 

Basic and Diluted Earnings (Loss) per share

(0.00)

0.00

 

 

 

Weighted average number of shares outstanding

10,375,000

9,375,000




The accompanying notes are an integral part of these statements.



 



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SICHUAN LEADERS PETROCHEMICAL COMPANY

Statements Cash Flows

For the Three Months Ended March 31,



US Dollars

For the Three Months Ended March 31,

 

2013

(unaudited)

2012

(unaudited)

Cash Flows from Operating Activities:

 

 

    Net (Loss) Income

(51,566)

12,960

Adjustments to reconcile Net (loss) income to net cash (used in) provided by operations:

 

 

     Bad Debt Expense

450

-

     Depreciation Expense

608

1,117

     Gain on sale of fixed asset

(78)

-

Changes in assets and liabilities:

 

 

     Accounts Receivable

7,070

8,438

     Accounts Payable and Accrued Expenses

(5,006)

(3,232)

     Customer Deposits

-

(14,385)

Net Cash Flows (Used in) Provided by Operating Activities

(48,522)

4,898

 

 

 

Cash Flows from Investing Activities:

 

 

   Proceeds from sale of fixed asset

750

-

Net Cash Flows Provided by Investing Activities

750

-

 

 

 

Cash Flows from Financing Activities:

 

 

     Proceeds from sale of stock

10,000

-

     Advances from related parties

43,200

-

     Advances to related parties

-

(970)

Net Cash Provided by (Used in) Financing Activities

53,200

(970)

 

 

 

Net Increase in cash and cash equivalents

5,428

3,928

 

 

 

Cash and Cash Equivalents, Beginning of Period

9,040

2,628

Cash and Cash Equivalents, End of Period

14,468

6,556

 

 

 

Supplemental Cash Flow Information

 

 

     Cash paid for interest

$             -

$             -     

     Cash paid for taxes

$             -  

$             -  




The accompanying notes are an integral part of these statements.



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Sichuan Leaders Petrochemical Company

Notes to Financial Statements

For the Three Months Ended March 31, 2013

(Unaudited)




NOTE 1.

 NATURE OF BUSINESS


Organization


Sichuan Leaders Petrochemical Company, formally known as Quality Wallbeds, Inc. was incorporated on June 29, 2000 under the laws of the State of Florida. We are currently an operating company in the space saving custom home furniture and closet organizing systems business.


The company has a single retail location for the furniture and closet organizers in Saint Petersburg, Florida. The company faces competition from local and nationallyrecognized firms in the areas of personnel experience, capitalization, and reputation. The company has therefore concentrated its efforts on product quality, design technology, cost containment, customer relationships, and targeted advertising campaigns.


In December 2012, the Company changed its name in anticipation of new business opportunities.  Our Board of Directors believes that we can explore various emerging technology opportunities in the next twelve months. A change in the strategic business direction of the company may take years to complete and future cash flows, if any, are impossible to predict at this time.


The Company’s headquarters are located in Sarasota, Florida. The elected year end is December 31.




NOTE 2.  

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Basis of Presentation and Use of Estimates

The accompanying unaudited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. For further information regarding the Company’s significant accounting policies, refer to the audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 filed with the Securities and Exchange Commission on March 29, 2013.


In the opinion of management, all adjustments consisting of normal recurring adjustments necessary for a fair statement of (a) the result of operations for the three month periods ended March 31, 2013 and 2012; (b) the financial position at March 31, 2013; and (c) cash flows for the three month periods ended March 31, 2013 and 2012, have been made. Management believes that these estimates are reasonable and have been discussed with the Board of Directors; however, actual results could differ from those estimates


Our financial statements may not be comparable to companies that comply with public company effective dates.  Due to our election  not to opt out of the extended transition period that allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies.




Cash and Cash Equivalents  

The majority of cash is maintained with a major financial institution in the United States.  Deposits with this bank may exceed the amount of insurance provided on such deposits.  Generally, these deposits may be redeemed on demand and, therefore, bear minimal risk.  The Company considers all highly liquid investments purchased with an original maturity of six months or less to be cash equivalents.





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Impairment of Long-lived Assets  

The Company records long-lived assets at cost.  Long-lived assets and certain identifiable intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset.  If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.  Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.




Stock-Based Compensation

The Company accounts for stock-based instruments issued to employees in accordance with ASC Topic 718.  ASC Topic 718 requires companies to recognize in the statement of operations the grant-date fair value of stock options and other equity based compensation issued to employees.  The value of the portion of an award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line attribution method. The Company accounts for non-employee share-based awards in accordance with the measurement and recognition provisions ASC Topic 505-50.  The Company estimates the fair value of stock options at the grant date by using the Black-Scholes option-pricing model.




Income Taxes

Beginning September 1, 2009, the Company adopted the provisions of ASC 740-10, “Accounting for Uncertain Income Tax Positions.” When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained.  In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any.  Tax positions taken are not offset or aggregated with other positions.  Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority.  The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.  


The Company believes its tax positions are all highly certain of being upheld upon examination.  As such, the Company has not recorded a liability for unrecognized tax benefits.  As of December 31, 2012, tax years 2012, 2011 and 2010 remain open for IRS audit.  The Company has received no notice of audit from the IRS for any of the open tax years.


Effective September 1, 2009, the Company adopted ASC 740-10,Definition of Settlement in FASB Interpretation No. 48”, (“ASC 740-10”), which was issued on May 2, 2007.  ASC 740-10 amends FIN 48 to provide guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits.  The term “effectively settled” replaces the term “ultimately settled” when used to describe recognition, and the terms “settlement” or “settled” replace the terms “ultimate settlement” or “ultimately settled” when used to describe measurement of a tax position under ASC 740-10.  ASC 740-10 clarifies that a tax position can be effectively settled upon the completion of an examination by a taxing authority without being legally extinguished.  For tax positions considered effectively settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open.  The adoption of ASC 740-10 did not have an impact on the accompanying consolidated financial statements.




Net Earnings (Loss) Per Share

In accordance with ASC 260-10, “Earnings Per Share,” basic net earnings (loss) per common share is computed by dividing the net earnings (loss) for the period by the weighted average number of common shares outstanding during the period.  Diluted earnings

(loss) per share are computed using the weighted average number of common and dilutive common stock equivalent shares outstanding during the period.   At March 31, 2013 and December 31, 2012 there were no potentially dilutive securities.




Revenue Recognition



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The Company recognizes revenue when it is realized or realizable and estimable in accordance with ASC 605, “Revenue Recognition”.  


We recognize a sale when the product has been delivered and installed at which time risk of loss has passed to the customer, collection of the resulting receivable is reasonably assured, persuasive evidence of an arrangement exists, and the fee is fixed or determinable.  If we determine that the fee is not fixed or determinable, we recognize revenue to the extent of which substantial work has been performed in fulfillment of the order, at which time the fee becomes due, provided that all other revenue recognition criteria have been met. Also, sales arrangements may contain customer-specific acceptance requirements for both products and services. In such cases, revenue is deferred at the time of delivery of the product or service and is recognized upon receipt of customer acceptance.   


Our services require that we order product based on our customers selection.  At the time of order our normal terms require a deposit on those products ordered.  The collections on orders not yet received or installed are recorded as a customer deposit and revenue is deferred until order completion




Advertising

Advertising costs are expensed as incurred.




Fair Value of Financial Instruments

FASB ASC “Fair Value Measurements and Disclosures” defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This ASC also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).


The three levels of the fair value hierarchy are described below:


Level 1

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2

Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable data by correlation or other means.

Level 3

Inputs that are both significant to the fair value measurement and unobservable.




Accounts Receivable, Trade

We follow ASC 310-10, Receivables. Our sales offerings are customer specific and require an initial deposit ranging between 35 and 50% at time of contract signing.  Accounts receivable are balances due from customers upon completion of the design, construction, and installation of our products.  These trade accounts receivable have a contractual maturity of one year or less. Receivables are determined to be past due based on payment terms of original invoices.  We do not typically charge interest on past due receivables.  


An allowance for doubtful accounts is established for amounts that may not be recoverable and is based on an analysis of individual customer credit worthiness and an assessment of current economic trends. Based on management’s review of accounts receivable no allowance for doubtful accounts was considered necessary at March 31, 2013 and December 31, 2012. An account determined to be fully non-collectable is expensed as bad debt using the direct write off method in the period determined noncollectable.  Bad debt expense was $450 for the three months ended March 31, 2013. There was no bad debt expense for the three months ended March 31, 2012.




Recent Accounting Pronouncements  



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The Company reviews new accounting standards as issued. No new standards had any material effect on these financial statements. The accounting pronouncements issued subsequent to the date of these financial statements that were considered significant by management were evaluated for the potential effect on these consolidated financial statements. Management does not believe any of the subsequent pronouncements will have a material effect on these consolidated financial statements as presented and does not anticipate the need for any future restatement of these consolidated financial statements because of the retro-active application of any accounting pronouncements issued subsequent to March 31, 2013 through the date these financial statements were issued.





NOTE 3.

RELATED PARTY TRANSACTIONS


The shareholders borrow and loan money to the Company as needed.   During the period ended March 31, 2013, shareholders advanced the Company $43,200.  During 2012, a shareholder advanced the Company $54,522.  These loans are payable on demand and are non-interest bearing.




NOTE 4.

GOING CONCERN


The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has a decreasing gross profits, increasing general expenses and negative working capital. The Company is currently evaluating acquisitions and other business opportunities. These factors raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time. The Company’s continuation as a going concern is dependent upon its ability to generate revenues through its existing or new business directions and its ability to find additional funding.




NOTE 5.

INVENTORY


Our inventory consists of commonly used and ordinary supplies, parts, and small tools used during the assembly process.  All supplies, parts, and small tools are ordered per job along with raw materials.  And as such are consumable during normal operations.  The disclosed amounts represent net realizable value as the inventory is held solely to ensure timely order fulfillment and may or may not be used during the normal course of operations. Management conducts annual physical counts of supplies.




NOTE 6.  

PROPERTY AND EQUIPMENT


Property consists of equipment purchased for the production of revenues:


 

 

 

March 31, 2013

 (unaudited)

 

December 31, 2012

 (audited)

Property and equipment

$  23,919

 

$  26,155

Less accumulated depreciation

21,664

 

22,260

Property and equipment, net

  $    2,255

 

  $    3,535


Assets are depreciated over their useful lives when placed in service.  Depreciation expense was $608; and $559 for the three months ended March 31, 2013 and 2012 (unaudited), respectively.




NOTE 7.  

INCOME TAXES




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As of March 31, 2013, the Company has net operating loss carry forwards of approximately $117,901.  The carry forward expires through the year 2033.  The Company’s net operating loss carry forward may be subject to annual limitations, which could reduce or defer the utilization of the losses as a result of an ownership change as defined in Section 382 of the Internal Revenue Code.




NOTE 8.  

COMMITMENTS AND CONTINGENCIES



Related Party

The controlling shareholders have pledged support to fund continuing operations, as necessary.  From time to time, the Company is dependent upon the continued support of these parties, through temporary advances or through arrangements of their personal credit.  However there is no written commitment to this effect.


The amounts and terms of the above transactions may not necessarily be indicative of the amounts and terms that would have been incurred had comparable transactions been entered into with independent third parties.


The Company does not have employment contracts with its key employees, including the officers of the Company.




Leases And Facility

The Company leases its facilities on a month to month lease.




Product Warranties

The Company has no history of warranty costs and expenditures.  The Company purchases products directly from manufacturers and relies upon warranties provided by the product manufacturer.  Any costs are to be expensed as incurred until such time that potential future costs may be estimated.  As of March 31, 2013 and December 31, 2012, no such costs have been incurred and no such costs are anticipated; therefore, no liability reserve has been established.   




Legal Matters

From time to time the Company may become a party to litigation matters involving claims against the Company.  Management believes that there are no current matters that would have a material effect on the Company’s financial position or results of operations.





NOTE 9.

STOCKHOLDERS’ EQUITY


As of March 31, 2013 and December 31, 2012, the Company had 10,375,000 and 9,375,000 shares of common stock issued and outstanding, respectively. In January 2013, the Company issued 1,000,000 shares of common stock at par value for $10,000 cash to an officer.




NOTE 10.

 FINANCIAL INSTRUMENTS AND RISK CONCENTRATION



Financial Instruments

The Company’s financial assets are comprised of cash and cash equivalents, accounts receivable, and inventory.  Our liabilities consist of accounts payable, customer deposits, and other current liabilities.


Our financial assets and liabilities are carried at fair value, which is described in Note 2. The carrying values for other current financial assets and liabilities, such as accounts receivable and accounts payable, approximate fair value due to the short maturity of such instruments.




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Financial instruments that could subject us to concentrations of credit risk are primarily cash and cash equivalents and accounts receivable. Our cash and cash equivalents are within FDIC limits.

  

No single customer represents a significant portion of revenues or accounts receivable for the three months ended March 31, 2013, or the year ended December 31, 2012.



Liquidity Risk

The Company’s objective in managing liquidity risk is to maintain sufficient available reserves to meet its liquidity requirements at any point in time.  The Company achieves this by managing capital and operating expenditures and maintaining sufficient funds for anticipated short-term spending in our cash and cash equivalent accounts




NOTE 11.

SUBSEQUENT EVENTS


The Company has evaluated subsequent events through the date the financial statements were issued to assess the need for potential recognition or disclosure in this report.  Based upon this evaluation, management determined that all subsequent events that require recognition in the financial statements have been included.





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ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATION


The following discussion should be read in conjunction with our financial statements and the notes thereto.


Forward-Looking Statements


This quarterly report contains forward-looking statements relating to us that are based on the beliefs of our management as well as assumptions made by, and information currently available to, our management. When used in this Report, the words “anticipate”, “believe”, “estimate”, “expect”, “intend”, “plan” and similar expressions, as they relate to us or our management, are intended to identify forward-looking statements. These statements reflect management’s current view of us concerning future events and are subject to certain risks, uncertainties and assumptions, including among many others: our potential inability to raise additional capital, the possibility that third parties hold proprietary rights that preclude us from marketing our products, the emergence of additional competing technologies, changes in domestic and foreign laws, regulations and taxes, changes in economic conditions, a general economic downturn, a downturn in the securities markets, Securities and Exchange Commission regulations which affect trading in the securities of “penny stocks,” and other risks and uncertainties. Should any of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this Report as anticipated, estimated or expected.


Use of Certain Defined Terms


Except as otherwise indicated by the context, references in this report to "Quality WallBeds" "we," "us," or "our" and the "Company" are references to the business of SICHUAN LEADERS PETROCHEMICAL COMPANY   


Use of GAAP Financial Measures


We use GAAP financial measures in the section of this quarterly report captioned “Management’s Discussion and Analysis and Results of Operation.” All of the GAAP financial measures used by us in this report relate to the inclusion of financial information.


Overview


This subsection of MD&A is an overview of the important factors that management focuses on in evaluating our businesses, financial condition and operating performance, our overall business strategy and our earnings for the periods covered.


General


We are an operating company that provides Quality space saving custom home furniture and closet organizing systems to the general public.  We currently offer our services to people and corporations needing the assistance in the organization of their living/work space. We have an operating history and have generated revenues that have produced both net incomes and losses in the periods in which we have been fully operational.

 

Current management believes a change in the current business model would have no direct increase to the revenues of the company. Future cash flows, if any, are impossible to predict at this time. The realization value from any additional services to be offered is largely dependent on factors beyond our control such as the market for our services.   Management is proposing the addition of offering our services to sole practitioners and small law firms.  We believe that by outsourcing these types of firms can save money.  

We may raise cash from sources other than our operations. Our only other source for cash at this time is investment by others in the Company.


Subsequent Events


Our Board of Directors believes that there are no Subsequent Events at this time. And a change in the strategic business direction of the company may take years to complete and future cash flows, if any, are impossible to predict at this time.


Employees


As of March 31, 2013, we have one (1) part-time sub-contractor who is working as our installer and our former President,

Catherine A Bradaick is continuing to devote approximately 30 hours per week (without pay) at the request of the current Board of

Directors. Accordingly, we have no paid employees as of March 31, 2013. This includes the four (4) officers and directors who run the corporation.


Critical Accounting Policies




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The preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the 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.  Our actual results could differ from those estimates.  To be as accurate with our estimates as possible, we use our historical data to forecast our future results.  Deviations from our projections are addressed when our financials are reviewed on a monthly basis.  This allows us to be proactive in our approach to managing our business.  It also allows us to rely on proven data rather than having to make assumptions regarding our estimates.


Management does not believe that our actual results are related to any sensitivity in estimates made by management.  The year-end consistency of our results has shown that our prior year’s historical data is the best projector of our future results.


Income Taxes


We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.


We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. In the event we were to determine that we would be able to realize our deferred income tax assets in the future in excess of their net recorded amount, we would make an adjustment to the valuation allowance, which would reduce the provision for income taxes.


Impairment of Long-Lived Assets


FASB ASC 360 requires that long-lived assets and certain identifiable intangibles held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  We assess the potential impairment of long-lived assets, principally property and equipment, whenever events or changes in circumstances indicate that the carrying value may not be recoverable. We determine if there is impairment by comparing undiscounted future cash flows from the related long-lived assets with their respective carrying values. In determining future cash flows, significant estimates are made by us with respect to future operating results of the restaurant over its remaining lease term. If assets are determined to be impaired, the impairment charge is measured by calculating the amount by which the asset carrying amount exceeds its fair value. This process of assessing fair values requires the use of estimates and assumptions, which are subject to a high degree of judgment. If these assumptions change in the future, we may be required to record impairment charges for these assets. The adoption of ASC 360 has not materially affected the Company’s reported earnings, financial condition or cash flows.  


Results of Operations


The following table provides a summary of the results of operations for the three month period ended March 31, 2013 and 2012 as well as our last two full fiscal years.


Table 2.0 Summary of Results of Operations


Period ended:

 

Revenue

 

Expenses

 

Net Income (Loss)

March 31, 2013

$

(19,025)

$

32,541

$

(51,566)

March 31, 2012

$

28,284

$

15,324

$

12,960

December 31, 2012

$

53,565

$

117,023

$

(63,458)

December 31, 2011

$

84,157

$

76,528

$

7,629


Liquidity and Capital Resources


As of March 31, 2013 we had cash and cash equivalents of $14,468.  


The Company concentrated its efforts in the sales and installation of Wallbeds, closets and shelving.  At the time, our management believed we could capitalize on the quality of the services offered by the company to increase business.


In the event we are unable to generate sufficient funds to continue our business efforts or if the company is pursued by a larger company for a business combination we will analyze all strategies to continue the company and maintain or increase shareholder value.  Under these circumstances we would consider a merger, acquisition, joint venture, strategic alliance, a roll-up, or other



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business combination for the purposes of continuing the business and maintaining or increasing shareholder value.  Management believes its responsibility to maintain shareholder value is of paramount importance, which means the Company should consider the aforementioned alternatives in the event funding is not available on favorable terms to the Company when needed.


Results of Operations for the three months ended March 31, 2013 and 2012


The following tables set forth key components of our results of operations and revenue for the periods indicated in dollars.


Table 3.0 Comparison of our Statement of Operations for the Three Months Ended March 31, 2013 and 2012


 

 

2013

 

2012

 

%Change

Sales

$

(4,247)

$

71,381

 

106%

Cost of Sales

$

14,778

$

43,097

 

66%

General and administrative expense

$

31,933

$

14,207

 

125%

Depreciation expense

$

608

$

1,117

 

46%

(Loss) income from operations

$

(51,566)

$

12,960

 

498%

Net (loss) income

$

(51,566)

$

12,960

 

498%

(Loss) income per share: basic and diluted

$

(0.00)

$

0.00

 

-


Revenue from Operations. For the three months ended March 31, 2013, total sales were ($4,247) compared to $71,381 for the three months ended March 31, 2012. Management believes that the decrease in revenue for the period ending March 31, 2013 can be attributed to the loss of the experienced selling staff.  Although the previous President was working on a part-time basis to maintain the operations of the company.  The primary focus was on completing the previous sales and managing the installs along with customer service.  Sales were handled when phone calls came into the company or through the company website.  There was no focus on acquiring new sales leads which the management believes is the primary reason attributing to the loss of revenues.  


Operating Expenses. Expenses were $32,541 for the three months ended March 31, 2013 and for the three months ended March 31, 2012 the expenses were $15,324, which is a 112% percentage increase.  Our operating expenses are directly related to several factors.

The increase to our general and administrative expenses is directly related to the increased professional fees due to the accounting, auditors and transfer agent fees occurred while we pursue a different of the direction of the company. Our direct costs increased due to incorrect items being ordered on some of some customer contracts as we continued to repair units previously installed by former employees resulting in additional expenses.


Net Income (Loss). As a result of the factors described above, there was a net loss of ($51,566) for the three months ended March 31, 2013. Management believes that the loss is directly attributable to the change in employees, the cancellation of customer contracts, the replacement of incorrectly ordered parts, as well as the increase in professional fees while we pursued the pursue opportunities in the petrochemical industry in the People’s Republic of China.  


Liquidity and Capital Resources


General. At March 31, 2013, we had cash and cash equivalents of $14,468. We have historically met our cash needs through a combination of cash flows from operating activities. Our cash requirements are generally for general and administrative activities. We believe that our cash balance is sufficient to finance our cash requirements for expected operational activities, capital improvements, and partial repayment of debt through the next 12 months.


Our operating activities used cash of ($48,522) and provided cash of $4,898 for the three months ended March 31, 2013 and 2012, respectively. Our operations received additional funding through loans from the majority shareholder.


Cash generated in our financing activities was $53,200 for the three months ended March 31, 2013, compared to ($970) during the comparable period in 2012. The Company received a total of $43,200 in non-interesting bearing loans prior to March 31, 2013.  The loan shall be convertible into Common Stock at the election of the lender within one (1) year from March 31, 2013 or within one (1) week from notice by the Company that the loan shall be repaid.  The loan was to facilitate expenses directly related to the change of direction of our company.  The Company received proceeds of $10,000 from the sale of 1,000,000 shares of common stock during the three months ended March 31, 2013.

As of March 31, 2013, our current liabilities exceeded our current assets.  We believe that the additional capital from our financing activities will allow us to pursue opportunities in the petrochemical industry in the People’s Republic of China.  Management believes that it current cash and cash equivalents will allow the Company to continue to operate with no further financing activities.


Going Concern




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The Company had total revenue of ($19,025) and net loss of ($51,566) for the three months ended March 31, 2013 compared to total revenue of $28,284 and net profit of $12,960 for the three months ended March 31, 2012. These factors do raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time.


Inflation  


Inflation does not materially affect our business or the results of our operations.


Recent Accounting Pronouncements


The Company has carefully considered the new pronouncements that altered generally accepted accounting principles.  The Company does not believe that any new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term, other than the following as reported in our financial statements:


In June 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-01, Topic 105 — Generally Accepted Accounting Principles — amendments based on Statement of Financial Accounting Standards No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles.  This ASU reflected the issuance of FASB Statement No. 168.  This Accounting Standards Update amends the FASB Accounting Standards Codification for the issuance of FASB Statement No. 168, The FASB Accounting Standards Codification TM and the Hierarchy of Generally Accepted Accounting Principles.  This Accounting Standards Update includes Statement 168 in its entirety, including the accounting standards update instructions contained in Appendix B of the Statement.  The Codification does not change current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all the authoritative literature related to a particular topic in one place.  The Codification is effective for interim and annual periods ending after September 15, 2009, and as of the effective date, all existing accounting standard documents will be superseded.   

In February 2010, the FASB issued authoritative guidance on subsequent events. The guidance requires an SEC filer to evaluate subsequent events through the date the financial statements are issued but no longer requires an SEC filer to disclose the date through which the subsequent event evaluation occurred. The guidance became effective for the Company upon issuance and had no impact on the Company’s results of operations or financial position.


Off-Balance Sheet Arrangements


We do not have any off-balance arrangements.


ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


The following discussion about the Company’s market rate risk involves forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements.


In general, business enterprises can be exposed to market risks, including fluctuation in the unemployment rate, foreign currency exchange rates, and interest rates that can adversely affect the cost and results of operating, investing, and financing. In seeking to minimize the risks and/or costs associated with such activities, the Company manages exposure to changes in the unemployment rate, interest rates and foreign currency exchange rates through its regular operating and financing activities. The Company does not utilize financial instruments for trading or other speculative purposes, nor does the Company utilize leveraged financial instruments or other derivatives.


Our operations are conducted primarily in the United States and are not subject to foreign currency exchange rate risk.


ITEM 4.

CONTROLS AND PROCEDURES

 

Disclosure Controls and Procedures.

 

The management of the Corporation is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system is a process designed to provide reasonable assurance to management and to the board of directors regarding the preparation and fair presentation of published financial statements.


Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles and that receipts and expenditures are being made only in accordance with authorizations of management and the directors



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of the Corporation; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Corporation’s assets that could have a material effect on our financial statements.


All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.


Management assessed the effectiveness of the Corporation’s internal control over financial reporting as of September 30, 2012. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. Based on our assessment management believes that, as of March 31, 2013, the Corporation’s internal control over financial reporting is effective based on those criteria.


Changes in Internal Controls over Financial Reporting.

 

We had no significant changes in our internal controls during the three months ended March 31, 2013.  Management concluded that there has been no change in our internal control over financial reporting during the period ended March 31, 2013, that has materially affected or is reasonably likely to affect our internal control over financial reporting.




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PART II – OTHER INFORMATION

 

ITEM 2

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 

There have been no sales of SICHUAN LEADERS PETROCHEMICAL COMPANY's common stock without registration during the last three years.   



ITEM 6

EXHIBITS

Exhibit No.

Description

3.1

Articles of Incorporation

Filed on May 9, 2012 as Exhibit 3.1 to the issuer’s Registration Statement on Form S-1 (File No. 333-181276) and incorporated herein by reference.

3.2

Amended and Restated Articles of Incorporation

Filed on May 9, 2012 as Exhibit 3.2 to the issuer’s Registration Statement on Form S-1 (File No. 333-181276) and incorporated herein by reference.

3.3

By-Laws

Filed on May 9, 2012 as Exhibit 3.3 to the issuer’s Registration Statement on Form S-1 (File No. 333-181276) and incorporated herein by reference.

5

Opinion Regarding Legality and Consent of Counsel by Harrison Law, P.A.

Filed on May 9, 2012 as Exhibit 5 to the issuer’s Registration Statement on Form S-1 (File No. 333-181276) and incorporated herein by reference.

14

Code of Ethics

Filed on May 9, 2012 as Exhibit 14 to the issuer’s Registration Statement on Form S-1 (File No. 333-181276) and incorporated herein by reference.

23.1

Consent of Experts and Counsel: Independent Auditor's Consent by Drake & Klein, C.P.A.

Filed on May 9, 2012 as Exhibit 23.1 to the issuer’s Registration Statement on Form S-1 (File No. 333-181276) and incorporated herein by reference.

23.2

Consent of Experts and Counsel:  Counsel’s Consent, by Harrison Law, P.A., included in Exhibit 5

Filed on May 9, 2012 as Exhibit 23.2 to the issuer’s Registration Statement on Form S-1 (File No. 333-181276) and incorporated herein by reference.

31.1

Certification of Chief Executive Officer  filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Filed herewith

31.2

Certification of Chief Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Filed herewith

32

Certification of Chief Executive Officer and Chief Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Filed herewith

101

Financial statements from the quarterly report on Form 10-Q of SICHUAN LEADERS PETROCHEMICAL COMPANY for the quarter ended September 30, 2012, formatted in XBRL: (i) the Balance Sheet, (ii) the Statement of Income, (iii) the Statement of Cash Flows and (iv) the Notes to the Financial Statements.

Filed herewith




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SIGNATURES


 

Pursuant to the requirements of section 13 or 15(d) 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.

 

 

 

 

 

SICHUAN LEADERS PETROCHEMICAL COMPANY

 

 

 

 

Dated: May 15, 2013

/s/GARY MACLEOD

 

Gary Macleod

 

Chief Executive Officer, Director

 

 


Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

 

 

 

 

SICHUAN LEADERS PETROCHEMICAL COMPANY

 

 

 

 

Dated: May 15, 2013

/s/ANDY Z. FAN

 

Andy Z. Fan

 

Chairman of the Board, Director

 

 

Dated: May 15, 2013

/s/GARY MACLEOD

 

Gary Macleod

 

Chief Executive Officer, Director

 

 

Dated: May 15, 2013

/s/ DIANE J. HARRISON

 

Diane J. Harrison

 

Secretary, Treasurer, and Director

 

 




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