NOVA LIFESTYLE, INC.
10-Ks and 10-Qs
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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
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x
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ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the fiscal year ended September 30, 2010
OR
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¨
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the transition period from
to
Commission
file number 333-163019
STEVENS
RESOURCES
,
INC.
(Exact
name of registrant as specified in its charter)
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Nevada
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75-3250686
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(State
or other jurisdiction of
incorporation
or organization)
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(I.R.S.
Employer
Identification
No.)
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No.
6 JieFangNan Lu, HeXi District
TianJin,
China
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300000
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(Address
of principal executive offices)
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(ZIP
Code)
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Registrant’s
telephone number, including area code:
(86)
22-25763415
Copies
to:
2360
Corporate Circle, Suite 400
Henderson,
NV 89074-7722
Tel (702)
866-2500 Fax (702) 866-2689
Securities
registered pursuant to Section 12(b) of the Act:
None
Securities
registered pursuant to Section 12(g) of the Act:
Common
stock, par value $.001 per share
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
Yes
¨
No
x
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.
Yes
¨
No
x
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
x
No
¨
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 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 if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer,” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
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Large
accelerated filer
o
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Accelerated
filer
o
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Non-accelerated
filer
o
(Do
not check if smaller reporting company)
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Smaller
reporting company
x
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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
aggregate market value of the voting common equity held by non-affiliates was
$0.00, based on the average bid and asked price of such common equity as of
March 31, 2010, the last business day of the registrant’s most recently
completed second fiscal quarter.
As of
December 27, 2010, there were 2,596,000 shares of the registrant’s common
stock, par value $.001 per share, issued and outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
None
TABLE
OF CONTENTS
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Page
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PART
I
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Item
1.
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Business
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1
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Item
1A.
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Risk
Factors
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3
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Item
1B.
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Unresolved
Staff Comments
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3
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Item
2.
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Property
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3
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Item
3.
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Legal
Proceedings
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3
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Item
4.
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(Removed
and Reserved)
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3
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PART
II
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Item
5.
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Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
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3
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Item
6.
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Selected
Financial Data
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4
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Item
7.
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
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4
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Item
7A.
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Quantitative
and Qualitative Disclosures About Market Risk
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6
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Item
8.
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Financial
Statements and Supplementary Data
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6
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Item
9.
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Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
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6
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Item
9A.
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Controls
and Procedures
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7
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Item
9B.
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Other
Information
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7
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PART
III
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Item
10.
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Directors,
Executive Officers and Corporate Governance
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8
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Item
11.
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Executive
Compensation
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9
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Item
12.
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Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
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10
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Item
13.
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Certain
Relationships and Related Transactions, and Director
Independence
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10
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Item
14.
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Principal
Accounting Fees and Services
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10
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PART
IV
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Item
15.
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Exhibits,
Financial Statement Schedules
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11
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Index
to Financial Statements
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F-1
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Signatures
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12
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Exhibit
Index
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Unless
otherwise indicated, the terms “Stevens Resources,” the “Company,” “we,” “us,”
and “our” refer to Stevens Resources, Inc.
General
Stevens
Resources, Inc. was incorporated in the State of Nevada on September 9, 2009. We
are an exploration stage company with no revenues and no operations. We intend
to commence operations to explore for mineral properties and exploit any mineral
deposits we discover. We do not hold any investments or interests in mineral
properties or real estate, nor have any current plans to acquire new investments
or interests in mineral properties, but we may consider such acquisitions in the
future. We are evaluating other business opportunities as well, which may
include a change in control of the Company or business combination with an
operating company.
Our
principal offices are located at No. 6, JieFangNan Lu, HeXi District, TianJin,
China 300000. Our telephone number is (86) 22-25763415.
Background
Mineral
exploration is essentially a research activity that does not produce a product.
Successful exploration often results in increased project value that can be
realized through the optioning or selling of the claimed site to larger
companies. As such, we intend to acquire properties we believe have the
potential to host economic concentrations of minerals. These acquisitions have
and may take the form of unpatented mining claims on federal land, leasing
claims or private property owned by others. An unpatented mining claim is an
interest in the mineral rights on open lands of the federally owned public
domain. Claims are staked in accordance with the Mining Law of 1872 and recorded
with the federal government pursuant to laws and regulations established by the
Bureau of Land Management, or the BLM, the federal agency tasked with
administering public lands. The claim holder receives a possessory interest in
the mineral rights, subject to the paramount title of the United
States.
We plan
to perform basic geological work to identify specific drill targets on any
acquired properties, and then collect subsurface samples by drilling to confirm
the presence of mineralization, which is the presence of economic minerals in a
specific area or geological formation. We may enter into joint venture
agreements with other companies to fund further exploration work. These
prospective properties may have been identified previously by third parties,
including prior owners such as exploration companies, as mineral prospects with
potential for economic mineralization. Often these properties have been sampled,
mapped and sometimes drilled, usually with indefinite results. Accordingly, such
acquired properties will either have some prior exploration history or will have
strong similarity to a recognized geologic ore deposit model. Our geographic
emphasis will be on the western United States. The focus of our activity will be
to acquire properties that we believe to be undervalued, including those that we
believe to hold previously unrecognized mineral potential.
Mineral
property exploration is typically conducted in phases. The first phase typically
consists of geochemical and soil grid sampling and prospecting. Geochemical
sampling involves gathering rock and soil samples from property areas with the
most potential to host economically significant mineralization. Prospecting
involves analyzing rocks on the property surface with a view to discovering
indications of potential mineralization. All samples gathered are sent to a
laboratory where they are crushed and analyzed for metal content. Each
subsequent phase of exploration work is recommended by a geologist based on the
results from the most recent phase of exploration. Once each phase of
exploration is completed, we will make a decision as to whether or not we
proceed with each successive phase based upon the analysis of the program
results. Our director will make this decision based upon the recommendations of
the independent geologist overseeing the program. Even if we complete our
proposed exploration programs on the claims and we are successful in identifying
a mineral deposit, we will need to spend substantial funds on further drilling
and engineering studies before we will know if we have a commercially viable
mineral deposit.
Our
strategy with properties deemed to be of higher risk or those that would require
very large exploration expenditures will be to present the properties to larger
companies for a potential joint venture. Our joint venture strategy is intended
to maximize the abilities and skills of our management group, conserve capital
and provide superior leverage for investors. If we present a property to a
company and they are not interested in forming a joint venture with us, we will
continue to seek an interested partner.
Underground
metal mines generally involve higher-grade ore bodies. Less tonnage is mined
underground, and generally the higher-grade ore is processed in a mill or other
refining facility. This process results in the accumulation of waste by-products
from the washing of the ground ore. Mills require associated tailings ponds to
capture waste by-products and treat water used in the milling process. Capital
costs for mine, mill and tailings pond construction can easily run into the
hundreds of millions of dollars. These costs are factored into the profitability
of a mining operation. Metal mining is sensitive to both cost considerations and
to the value of the metal produced. Metals prices are set on a worldwide market
and are not controlled by the operators of the mine. Changes in currency values
or exchange rates can also impact metals prices. Thus, changes in metals prices
or operating costs can have a large impact on the economic viability of a mining
operation.
1
Claims
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On
September 30, 2009, we acquired an option to purchase mineral prospects
that we call the Young American Claim Group, or the YACG, for exploration
in Stevens County, Washington State for target commodities of lead-zinc,
gold and silver. The option conveyed exploration and development rights to
us on the YACG mineral prospects, which are unpatented mining claims
identified as the Young American Lead-Zinc Mine Property 1-4 and owned by
the American Mining Corporation. Most of these prospects have had a prior
exploration history, which is typical in the mineral exploration industry.
Most mineral prospects go through several rounds of exploration before an
economic ore body is discovered and prior work often eliminates targets or
points to new ones. Also, prior operators may have explored under a
different commodity price structure or technological regime.
Mineralization deemed uneconomic in the past may be ore grade at current
market prices when extracted and processed with modern
technology.
The
YACG is approximately 80 acres of 4 en bloc unpatented lode claims located
in northwestern Stevens County, which is located in northeastern
Washington State. The YACG was originally located in 1886 and is within
the Bossburg Mining District. In February 2008, the American Mining
Corporation of Osburn, Idaho staked the four original unpatented claims
that are located on land managed by the BLM. The four claims are in a
portion of the SW ¼ of Section 28, and NW ¼ of Section 33, both located
within Township 38N Range 38E, Willamette Meridian, Stevens County,
Washington, which is about 15 miles north of Kettle Falls, Washington.
Access is via a 2WD gravel road that crosses private property, leading
directly to the claims.
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Young
American Mine
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Prospectivity
is based on 15 diamond drill cores totaling 4590 feet taken between 1946-1948 by
the U.S. Bureau of Mines (USBM) (Hundhausen, 1949) on the cliff crest to the
north, east and south of the main ore body. The drilling discovered two zones of
low-grade highly disseminated lead-zinc mineralization southwest of the mine,
but failed to locate extensions of the two primary sulfide-mineralized zones of
the main mine workings. Accordingly, this report primarily concerns the
unexploited lead-zinc prospect discovered by the USBM drilling.
We let
our option to acquire an undivided 100% beneficial interest in the YACG expire
as of September 30, 2010. To maintain the YACG option, we would have needed to
incur exploration expenditures of at least $5,000 before September 30, 2010, and
then a further $25,000 in exploration expenditures prior to September 30, 2011.
Upon exercise of the option, the fee to maintain our interest in the YACG would
have been $25,000 per annum. We do not hold any other investments or interests
in mineral properties or real estate, nor have any current plans to acquire new
investments or interests in mineral properties, but we may consider such
acquisitions in the future. We are evaluating other business opportunities as
well, which may include a change in control of the Company or a business
combination with an operating company.
Governmental
and Environmental Regulation
Hard rock
mining and drilling in the United States is a closely regulated industrial
activity. The exploration, drilling and mining industries operate in a legal
environment requiring permits by local, state and federal government agencies to
conduct virtually all operations. Federal agencies that may be involved include
the BLM, U.S. Forest Service, Environmental Protection Agency, National
Institute for Occupational Safety and Health, Mine Safety and Health
Administration and Fish and Wildlife Service. Individual states may have
environmental regulatory bodies overseeing mining industries, such as
Departments of Ecology. Local authorities, usually counties, also have control
over mining activity. The various permits required for such activity address
prospecting, development, production, labor standards, taxes, occupational
health and safety, toxic substances, air quality, water use, water discharge,
water quality, noise, dust, wildlife impacts and other environmental and
socioeconomic issues.
Prior to
receiving the necessary permits to explore or mine, an operator must comply with
all regulatory requirements imposed by all governmental authorities having
jurisdiction over the project area. Very often, in order to obtain the requisite
permits, the operator must have its land reclamation, restoration or replacement
plans pre-approved, requiring the operator to present its environmental impact
plan describing how it intends to restore or replace the affected area. Any of
these requirements can cause delays or involve costly studies or alterations of
the proposed activity or time frame of operations in order to mitigate impacts.
All of these factors make it more difficult and costly to operate, and can have
a negative and sometimes fatal impact on the viability of the exploration or
mining operation. Finally, it is possible that future changes in these laws or
regulations could have a significant impact on our business, causing those
activities to be economically reevaluated at that time.
2
Mining
and exploration activities are subject to various laws and regulations governing
the protection of the environment. These laws and regulations are continually
changing and are generally becoming more restrictive. We conduct our operations
so as to protect the public health and environment and believe our operations
are in compliance with applicable laws and regulations in all material respects.
We have made, and expect to make in the future, expenditures to comply with such
laws and regulations, but cannot predict the full amount of such future
expenditures.
Environmental
protection and remediation is an increasingly important part of mineral
economics. Estimated future costs of reclamation or restoration of mined land
are based principally on legal and regulatory requirements. Reclamation of
affected areas after mining operations may cost millions of dollars. Often,
governmental permitting agencies require multi-million dollar bonds from mining
companies prior to granting permits, thereby insuring that reclamation takes
place. All environmental mitigation tends to decrease profitability of the
mining operation, but these expenses are recognized as a cost of doing business
by modern mining and exploration companies.
Competition
Both the
mineral exploration and drilling industries are intensely competitive in all
phases. In our mineral exploration activities, we will compete with many
companies possessing greater financial resources and technical facilities than
us for the acquisition of mineral concessions, claims, leases and other mineral
interests as well as for the recruitment and retention of qualified employees.
We must overcome significant barriers to entry in the business of mineral
exploration as a result of our limited operating history. Similarly, in our
drilling business, our competition includes many companies with significantly
greater experience, larger client bases and substantially greater financial
resources. There are significant barriers to entry in this business, including
large capital requirements and the recruitment and retention of qualified,
experienced employees. We cannot assure you that we will be able to compete in
any of our business areas effectively with current or future competitors or that
the competitive pressures faced by us will not have a material adverse effect on
our business, financial condition and operating results.
Employees
Other
than our director, we have no employees. Our director does not have an
employment agreement with us. We expect to hire additional staff and employees
as necessary to implement our business plan. We do not have pension, health,
annuity, insurance, stock options, profit sharing or similar benefit plans;
however, we may adopt such plans in the future.
Not
required.
None.
We do not
hold any investments or interests in mineral properties or real
estate.
We may
occasionally become involved in various lawsuits and legal proceedings arising
in the ordinary course of business. Litigation is subject to inherent
uncertainties and an adverse result in these or other matters that may arise
from time to time could have an adverse affect on our business, financial
condition or operating results. We are currently not aware of any such legal
proceedings or claims that will have, individually or in the aggregate, a
material adverse effect on our business, financial condition or operating
results.
Our
common stock, par value $.001 per share, qualified for quotation on the OTC
Bulletin Board on April 16, 2010, under the symbol “STVS.” As of September 30,
2010, no trades of our common stock have occurred through the facilities of the
OTC Bulletin Board.
As of
December 27, 2010, there were approximately 34 holders of record of our common
stock.
3
We have
not declared any cash dividends nor do we intend to pay dividends in the
foreseeable future; instead, we plan to reinvest earnings, if any, in our
business operations.
As of
September 30, 2010, we have no formal equity compensation plan in effect nor
have we granted any equity-based compensation awards.
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Issuer Purchases of Equity Securities
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Period
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Total Number of
Shares Purchased
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Average Price
Paid per Share
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Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs
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Maximum Number (or
Approximate Dollar
Value) of Shares that
May Yet Be Purchased
Under the Plans or
Programs
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July
1 through July 31, 2010
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18,000 |
(1)
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$ | 0.03 | - | $ | - | |||||||||
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August
1 through August 31, 2010
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- | - | - | - | ||||||||||||
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September 1 through September 30,
2010
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- | - | - | - | ||||||||||||
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Total
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18,000 | $ | 0.03 | - | ||||||||||||
(1)
Purchase consists of registered shares returned to the Company for cancellation
on July 7, 2010, by a non-U.S. stockholder in exchange for $540.00. The Company
authorized the cancellation of the shares on June 30, 2010.
Not
required.
This
Annual Report on Form 10-K includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). We have based these forward-looking statements on
our current expectations and projections about future events. These
forward-looking statements are subject to known and unknown risks, uncertainties
and assumptions about us that may cause our actual results, levels of activity,
performance or achievements to be materially different from any future results,
levels of activity, performance or achievements expressed or implied by such
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as “may,” “will,” “should,” “could,” “would,”
“expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the
negative of such terms or other similar expressions. The following discussion
should be read in conjunction with our Financial Statements and related Notes
thereto included elsewhere in this report.
Company
History
We were
incorporated on September 9, 2009 in the State of Nevada, we have no
subsidiaries. We have not generated any revenue to date. We commenced our
operations as an exploration stage company. We will explore for mineral
properties with a view to exploiting any mineral deposits we discover. We do not
hold any investments or interests in mineral properties or real estate, nor have
any current plans to acquire new investments or interests in mineral properties,
but we may consider such acquisitions in the future. We are evaluating other
business opportunities as well, which may include a change in control of the
Company or business combination with an operating company.
Our
auditors have issued a going concern opinion. This means our auditors believe
there is substantial doubt we can continue as an on-going business for the next
12 months. Our auditors’ opinion is based on the uncertainty of our ability to
establish profitable operations. The opinion results from the fact that we have
not generated any revenues. Accordingly, we must raise cash from sources other
than operations. We must raise cash to implement our project and begin our
operations. If we do not produce sufficient cash flow to support our operations
over the next 12 months, the Company will 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 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 and any
investment made by an investor would be lost in its entirety.
4
Business
Development
To date,
our business activities have been limited to completing the registration of our
common stock on Form S-1, maintaining our reporting requirements, and securing
an option to acquire the YACG mineral prospects in Stevens County,
Washington. The option conveyed exploration and development rights to us on
the YACG mineral prospects, which are unpatented mining claims owned by the
American Mining Corporation, provided that we commence and incur certain
expenditures related to exploration on the prospects. We let the option
terminate as of September 30, 2010. We have qualified for the quotation of
our common stock on the OTCBB under the ticker symbol “STVS,” but no market
currently exists. Investors should be aware there can be no guarantee or
assurance that a market will ever develop for our common stock in the
future.
Results
of Operations from Inception through September 30, 2010
We have
not earned any revenues from our incorporation on September 9, 2009, to
September 30, 2010. We do not anticipate earning revenues unless we enter into
commercial production on a claim or we acquire other business or properties,
which is doubtful. We have not commenced the exploration stage of our business
and can provide no assurance that, should we commence the exploration stage on a
claim, we will discover economic mineralization on such claim, or if minerals
are discovered, that we will enter into commercial production.
We
incurred operating expenses of $28,260 for the period from our inception on
September 9, 2009, to September 30, 2010.
We have
not attained profitable operations and are dependent upon obtaining financing to
pursue exploration activities. For these reasons our auditors believe there is
substantial doubt we will be able to continue as a going concern.
Liquidity
and Capital Resources
On
September 28, 2009, the Company issued 2,000,000 shares of its $0.001 par value
common stock at $0.002 per share for $4,000 in cash. The Company also issued
100,000 shares at $0.02 per share for $2,000 in professional
services.
On
January 13, 2010, the Company filed a Prospectus pursuant to Rule 424(b)(3)
promulgated under the Securities Act of 1933, as amended, as part of the
Company’s Registration Statement on Form S-1 deemed effective by the Securities
and Exchange Commission on January 12, 2010. Pursuant to the prospectus, the
Company sold 514,000 shares at $0.02 per share for $10,280. In June 2010, the
Company purchased and cancelled 18,000 common shares at $0.03 per share for
$540.
As of
September 30, 2010, we had total cash of $0. We have a cumulative net loss of
$28,260 since inception. We have not generated any revenues and cannot provide
any assurance we will ever generate revenues. We are currently dependent upon
raising proceeds in order to continue as a going concern. There can be no
guarantee or assurance that the Company will be able to secure adequate
financing within the next three to six months and failure to do so would result
in a complete loss of any investment in the Company.
Research
and Development
The
Company has not incurred any expense for research and development since
inception and does not anticipate any costs or expenses to be incurred for
research and development within the next 12 months.
The
Company does not plan any purchase of significant equipment in the next 12
months.
Recently
Issued Accounting Pronouncements
On
September 9, 2009, the Company adopted 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” (“ASU No. 2009-01”). ASU No. 2009-01 re-defines
authoritative US GAAP for nongovernmental entities to be only comprised of the
FASB Accounting Standards Codification (“Codification”) and, for SEC
registrants, guidance issued by the SEC. The Codification is a reorganization
and compilation of all then-existing authoritative US GAAP for nongovernmental
entities, except for guidance issued by the SEC. The Codification is amended to
effect non-SEC changes to authoritative US GAAP. Adoption of ASU No. 2009-01
only changed the referencing convention of US GAAP in the Notes to the Financial
Statements.
On
February 25, 2010, the FASB issued ASU No. 2010-09 Subsequent Events Topic 855
“Amendments to Certain Recognition and Disclosure Requirements,” effective
immediately. The amendments in the ASU remove the requirement for an SEC filer
to disclose a date through which subsequent events have been evaluated in both
issued and revised financial statements. Revised financial statements include
financial statements revised as a result of either correction of an error or
retrospective application of US GAAP. The FASB believes these amendments remove
potential conflicts with the SEC’s literature. The adoption of this ASU did not
have a material impact on the Company’s financial
statements.
5
On March
5, 2010, the FASB issued ASU No. 2010-11 Derivatives and Hedging Topic 815
“Scope Exception Related to Embedded Credit Derivatives.” This ASU clarifies the
guidance within the derivative literature that exempts certain credit related
features from analysis as potential embedded derivatives requiring separate
accounting. The ASU specifies that an embedded credit derivative feature related
to the transfer of credit risk that is only in the form of subordination of one
financial instrument to another is not subject to bifurcation from a host
contract under ASC 815-15-25, Derivatives and Hedging – Embedded Derivatives –
Recognition. All other embedded credit derivative features should be analyzed to
determine whether their economic characteristics and risks are “clearly and
closely related” to the economic characteristics and risks of the host contract
and whether bifurcation is required. The ASU was effective for the Company in
its fiscal fourth quarter of 2010. The adoption of this ASU did not have a
material impact on the Company’s financial statements.
In April
2010, the FASB codified the consensus reached in Emerging Issues Task Force
Issue No. 08-09, “Milestone Method of Revenue Recognition.” FASB ASU No. 2010-17
provides guidance on defining a milestone and determining when it may be
appropriate to apply the milestone method of revenue recognition for research
and development transactions. FASB ASU No. 2010-17 is effective for fiscal years
beginning on or after June 15, 2010, and is effective on a prospective basis for
milestones achieved after the adoption date. The Company does not expect this
ASU will have a material impact on its financial position or results of
operations when it adopts this update on October 1, 2010.
Critical
Accounting Policies
Our
financial statements and related public financial information are based on the
application of accounting principles generally accepted in the United States
(“US GAAP”). US GAAP requires the use of estimates; assumptions, judgments and
subjective interpretations of accounting principles that have an impact on the
assets, liabilities, revenue and expense amounts reported. These estimates can
also affect supplemental information contained in our external disclosures
including information regarding contingencies, risk and financial condition. We
believe our use of estimates and underlying accounting assumptions adhere to US
GAAP and are consistently and conservatively applied. We base our estimates on
historical experience and on various other assumptions that we believe to be
reasonable under the circumstances. Actual results may differ materially from
these estimates under different assumptions or conditions. We continue to
monitor significant estimates made during the preparation of our financial
statements.
Our
significant accounting policies are summarized in Note 2 of our financial
statements. While all these significant accounting policies impact our financial
condition and results of operations, we view certain of these policies as
critical. Policies determined to be critical are those policies that have the
most significant impact on our financial statements and require management to
use a greater degree of judgment and estimates. Actual results may differ from
those estimates. Our management believes that given current facts and
circumstances, it is unlikely that applying any other reasonable judgments or
estimate methodologies would cause effect on our consolidated results of
operations, financial position or liquidity for the periods presented in this
report.
Off-Balance
Sheet Arrangements
As of the
date of this Annual 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.
Not
required.
The
information required for this Item is included in this Annual Report on Form
10-K on pages F-1 through F-11, inclusive, and is incorporated herein by
reference.
None.
6
Disclosure
Controls and Procedures
Our
management, including the participation of our principal executive officer and
principal financial officer, positions held currently by the same officer, has
assessed the effectiveness of our disclosure controls and procedures (as defined
under Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as
amended, or Exchange Act). Our management concluded that, as of the end of the
period covered by this report, our disclosure controls and procedures were not
effective. Our management identified the following material weaknesses in the
design and operation of our disclosure controls and procedures:
|
|
·
|
We
have inadequate segregation of duties and effective risk assessment
because we have only one officer and
director;
|
|
|
·
|
We
have insufficient written policies and procedures outlining the duties and
accounting and financial reporting requirements with respect to the
requirements and application of both US GAAP and SEC
guidelines;
|
|
|
·
|
We
have insufficient disaster recovery plans and inadequate security and
restricted access for our computer systems;
and
|
|
|
·
|
We
have no written whistleblower
policy.
|
Our
management plans to implement appropriate disclosure controls and procedures to
remedy these material weakness, including (i) appointing and hiring additional
qualified personnel to address the inadequate segregation of duties and
ineffective risk management; (ii) adopting appropriate written policies and
procedures outlining the duties and accounting and financial reporting
requirements; (iii) implementing appropriate disaster recovery plans and
security measures for our computer systems; and (iv) adopting an appropriate
whistleblower policy.
Internal
Control over Financial Reporting
Our
principal executive officer and principal financial officer, positions held
currently by the same officer, are responsible for establishing and maintaining
adequate internal control over financial reporting (as defined in Rule 13a-15(f)
and Rule 15d-15(f) under the Exchange Act) for the Company. As of the end of the
period covered by this report, our officer assessed the effectiveness of our
internal control over financial reporting based on the criteria for effective
internal control over financial reporting established in the “Internal
Control-Integrated Framework” issued by the Committee of Sponsoring
Organizations of the Treadway Commission, or COSO. Based on that evaluation, our
officer concluded that, during the period covered by this report, such internal
controls and procedures were not effective to detect the inappropriate
application of US GAAP rules because of deficiencies that existed in the design
or operation of our internal control over financial reporting, which adversely
affected our internal controls. These deficiencies, which may be considered to
be material weaknesses, were:
|
|
·
|
Our
lack of a functioning audit committee and independent directors on our
Board of Directors;
|
|
|
·
|
Our
inadequate segregation of duties consistent with internal control
objectives;
|
|
|
·
|
We
have insufficient written policies and procedures for accounting and
financial reporting with respect to the requirements and application of US
GAAP and SEC disclosure requirements;
and
|
|
|
·
|
Our
lack of effective controls over period-end financial disclosure and
reporting processes.
|
Our
officer believes that the material weaknesses identified above did not have an
effect on our financial results, but that the lack of a functioning audit
committee and independent directors did result in ineffective oversight of the
establishment and monitoring of required internal controls and procedures.
Accordingly, as part of our commitment to improve our financial organization, we
plan to remedy these material weaknesses when funds allow by (i) appointing one
or more independent directors to our Board of Directors and establishing an
audit committee with such independent directors to undertake the oversight in
the establishment and monitoring of required internal controls and procedures;
(ii) implementing appropriate written policies and procedures for accounting and
financial reporting with respect to the requirements and application of US GAAP
and SEC disclosure requirements and to address the lack of effective controls
over period-end financial disclosure and reporting processes; and (iii)
appointing and hiring additional qualified personnel to address the inadequate
segregation of duties and to provide additional checks and balances within the
Company.
There was
no change in our internal control over financial reporting (as defined in Rules
13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our fourth
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
Our
management will continue to monitor and evaluate the effectiveness of our
disclosure controls and procedures and our internal control over financial
reporting on an ongoing basis and remains committed to taking further action and
implementing additional enhancements or improvements as necessary and as funds
allow.
As a
“smaller reporting company” and pursuant to Item 308(a)(4) of Regulation S-K,
this Annual Report does not include an attestation report of our independent
registered public accounting firm regarding internal control over financial
reporting.
None.
7
Management
Our sole
director serves until his successor is elected and qualified. Our sole officer
is elected by the Board of Directors to a term of one year and serves until his
successor is duly elected and qualified, or until he is removed from office. We
do not have an audit committee, compensation committee or nominating
committee.
Alex Li,
age 30, serves currently as our sole director and President, Chief Executive
Officer, Chief Financial Officer, Treasurer and Secretary. Mr. Li has held his
positions with us since July 13, 2010. Prior to joining us, Mr. Li was an
independent financial analyst who has been advising companies since 2009. From
2007 to 2009, Mr. Li was an Accounting Clerk for the Resort Golden Palm in
HaiNan, China. From 2005 to 2007, Mr. Li was a Project Manager for Lianhe Credit
Rating Co., Ltd., in Beijing, one of the primary rating agencies in China. From
2002 to 2005, Mr. Li was a Research Analyst for the local government of Anyang,
Henan Province, China. Mr. Li received his bachelor’s degree in Economics from
Renmin University in 2002.
There
were no arrangements or understandings between Mr. Li and any other persons
pursuant to which Mr. Li was elected as director or officer, nor are there any
transactions between Mr. Li and us in which he has a direct or indirect material
interest that we are required to report pursuant to the rules and regulations of
the SEC. There are no family relationships between Mr. Li and any director,
officer or key personnel.
Involvement
in certain legal proceedings
During
the past ten years, none of the Company’s directors and executive officers and,
during the past five years, none of the Company’s promoters and control persons,
has been:
|
|
·
|
the
subject of any bankruptcy petition filed by or against any business of
which such person was a general partner or executive officer either at the
time of the bankruptcy or within two years prior to that
time;
|
|
|
·
|
convicted
in a criminal proceeding or is subject to a pending criminal proceeding
(excluding traffic violations and other minor
offenses);
|
|
|
·
|
subject
to any order, judgment or decree, not subsequently reversed, 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;
|
|
|
·
|
found
by a court of competent jurisdiction (in a civil action), the SEC or the
Commodity Futures Trading Commission to have violated a federal or state
securities or commodities law, that has not been reversed, suspended, or
vacated;
|
|
|
·
|
subject
of, or a party to, any order, judgment, decree or finding, not
subsequently reversed, suspended or vacated, relating to an alleged
violation of a federal or state securities or commodities law or
regulation, law or regulation respecting financial institutions or
insurance companies, law or regulation prohibiting mail or wire fraud or
fraud in connection with any business entity;
or
|
|
|
·
|
subject
of, or a party to, any sanction or order, not subsequently reversed,
suspended or vacated, of any self-regulatory organization, any registered
entity or any equivalent exchange, association, entity or organization
that has disciplinary authority over its members or persons associated
with a member.
|
No
director, officer or affiliate of the Company, or any beneficial owner of 5% or
more of the Company’s common stock, or any associate of such persons, is an
adverse party in any material proceeding to, or has a material interest adverse
to, the Company or any of its subsidiaries.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act requires our executive officers and directors and
persons who own more than 10% of our common stock to file reports regarding
ownership of, and transactions in, our securities with the SEC and to provide us
with copies of those filings. Based solely on our review of such filings (and
any amendments thereof) received by us and on the written representations of
certain reporting persons, we believe that during our fiscal year ended
September 30, 2010, the following reporting person failed to file such reports
on a timely basis:
|
Name
and
principal
position
|
Number of
late
reports
|
Transactions not
timely
reported
|
Known failures to
file
a
required
form
|
|||
|
Justin
Miller, former President and Director
(1)
|
|
0
|
|
0
|
|
2
|
(1)
Justin Miller, our former President, Chief Executive Officer, Chief Financial
Officer, Treasurer and director, resigned from the Company on July 13,
2010.
8
Code
of Ethics
We
adopted a Code of Ethics on September 30, 2009, a copy of which is included as
an exhibit to this Annual Report on Form 10-K.
Corporate
Governance
We
currently have no standing audit, compensation or nominating committees or
committees performing similar functions, nor do we have written audit,
compensation or nominating committee charters. Our director believes it
unnecessary to have such committees at this time because we have only one
director and the Board of Directors can perform the functions of such committees
adequately.
We do not
have any defined policy or procedural requirements for shareholders to submit
recommendations or nominations for directors. The Board of Directors believes
that, given the stage of our development, a specific nominating policy would be
premature until our business operations develop to a more advanced level. We
currently do not have any specific or minimum criteria for the election of
nominees to the Board of Directors and we do not have any specific process or
procedure for evaluating such nominees. The Board of Directors will assess all
candidates, whether submitted by management or shareholders, and make
recommendations for election or appointment. A shareholder who wishes to
communicate with our Board of Directors may do so by directing a written request
addressed to our director at the address on the cover of this
report.
As a
“smaller reporting company,” we have elected to follow the scaled disclosure
requirements for smaller reporting companies with respect to the disclosures
required by Item 402 of Regulation S-K. Under the scaled disclosure obligations,
we are not required to provide a Compensation Discussion and Analysis,
Compensation Committee Report and certain other tabular and narrative
disclosures relating to executive compensation.
Summary
Compensation Table
The
following table sets forth information concerning the compensation for the
fiscal years ended September 30, 2010 and 2009, of certain of our executive
officers.
|
Summary Compensation Table
|
||||||||||||||||||||||||||||||||||
|
Name and
|
|
Salary
|
Bonus
|
Stock
Awards
|
Option
Awards
|
Nonequity
Incentive Plan
Compensation
|
Nonqualified
Deferred
Compensation
Earnings
|
All Other
Compensation
|
Total
|
|||||||||||||||||||||||||
|
Principal Position
|
Year
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
|||||||||||||||||||||||||
|
Alex
Li
|
2010
(1)
|
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||
|
President
|
2009
|
- | - | - | - | - | - | - | - | |||||||||||||||||||||||||
|
Justin
Miller
|
2010
(2)
|
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||
|
Former
President
|
2009
|
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||
(1) Alex
Li, our current President, Chief Executive Officer, Chief Financial Officer,
Treasurer and Secretary, was appointed to such offices on July 13,
2010.
(2)
Justin Miller, our former President, Chief Executive Officer, Chief Financial
Officer and Treasurer, resigned from such offices on July 13, 2010.
Narrative
Disclosure to Summary Compensation Table
We have
not nor plan to pay any salaries at this time, and we will not begin paying
salaries until we have adequate funds to do so. We have not entered into any
employment agreements with our officers. We do not have any existing
arrangements providing for payments or benefits in connection with the
resignation, retirement or other termination of our officers, or a change in
control of the Company or a change in the officers’ responsibilities following a
change in control. We have no equity incentive plan.
Outstanding
Equity Awards at Fiscal Year-End
As of
September 30, 2010, we have no formal equity compensation plan in effect nor
have we granted any equity-based awards.
Compensation
of Directors
As of
September 30, 2010, none of our directors has received any compensation from us
for serving as our director, nor do we have any plans to compensate our
directors until we have adequate funds to do so.
9
The
following table sets forth information as of December 27, 2010, regarding the
number of shares of common stock beneficially owned by (i) each person that we
know beneficially owns more than 5% of our outstanding common stock, (ii) each
of our named executive officers, (iii) each of our directors and (iv) all of our
named executive officers and directors as a group. The amounts and percentages
of common stock beneficially owned are reported on the basis of SEC rules
governing the determination of beneficial ownership of securities. Under the SEC
rules, a person is deemed to be a “beneficial owner” of a security if that
person has or shares “voting power,” which includes the power to vote or to
direct the voting of such security, or “investment power,” which includes the
power to dispose of or to direct the disposition of such security. A person is
also deemed to be a beneficial owner of any securities of which that person has
the right to acquire beneficial ownership within 60 days through the exercise of
any stock option, warrant or other right. Under these rules, more than one
person may be deemed a beneficial owner of the same securities and a person may
be deemed to be a beneficial owner of securities as to which such person has no
economic interest. Unless otherwise indicated, each of the shareholders named in
the table below, or his or her family members, has sole voting and investment
power with respect to such shares of common stock. As of December 27, 2010,
there were 2,596,000 shares of our common stock issued and
outstanding.
|
Name
of
beneficial
owner
|
Number
of
shares
|
Percent
of
class
|
||||||
|
Alex
Li, President and Director
|
2,000,000 | 77.04 | % | |||||
|
All
Directors and Officers as a Group (1 Person)
|
2,000,000 | 77.04 | % | |||||
We are
not aware of any arrangements that could result in a change in control of the
Company.
As of
September 30, 2010, we have no formal equity compensation plan in effect nor
have we granted any equity-based awards.
There
were no transactions with any related persons (as that term is defined in Item
404 in Regulation S-K) during our fiscal year ended September 30, 2009, or any
currently proposed transaction, in which we were or are to be a participant and
the amount involved exceeds $120,000 and in which any related person had a
direct or indirect material interest.
Our
current and former directors are not deemed independent for the purposes of the
listed company standards of The NASDAQ Stock Market LLC currently in effect and
approved by the SEC and all applicable rules and regulations of the
SEC.
Audit
Fees
Our Board
of Directors has selected Goldman Kurland and Mohidin, LLP (“GKM”) as the
independent registered public accounting firm to audit our books and accounts
for the fiscal year ending September 30, 2010. GKM has served as our independent
accountant since July 13, 2010. Prior to July 13, 2010, we had engaged Kyle L.
Tingle, CPA, LLC (“Tingle”) as our independent accountant since September 9,
2009 (inception). The aggregate fees billed for the last two fiscal years ended
September 30, 2010 and 2009, for professional services rendered by GKM and
Tingle were as follows:
|
Year ended
September 30, 2010
|
Year ended
September 30, 2009
|
|||||||||||||||
|
GKM
|
Tingle
|
GKM
|
Tingle
|
|||||||||||||
|
Audit Fees
|
$ | 7,000 | $ | 3,275 | $ | - | $ | 2,675 | ||||||||
|
Audit-Related
Fees
|
0 | 0 | - | 0 | ||||||||||||
|
Tax
Fees
|
0 | 0 | - | 0 | ||||||||||||
|
All
Other Fees
|
0 | 0 | - | 0 | ||||||||||||
In the
above table, “audit fees” are fees billed for services provided related to the
audit of our annual financial statements, quarterly reviews of our interim
financial statements and services normally provided by the independent
accountant in connection with statutory and regulatory filings or engagements
for those fiscal periods. “Audit-related fees” are fees not included in audit
fees that are billed by the independent accountant for assurance and related
services that are reasonably related to the performance of the audit or review
of our financial statements. “Tax fees” are fees billed by the independent
accountant for professional services rendered for tax compliance, tax advice and
tax planning. “All other fees” are fees billed by the independent accountant for
products and services not included in the foregoing categories.
Our Board
of Directors pre-approves all services provided by our independent accountants.
Our Board of Directors reviewed and approved all of the above services and
fees.
10
The
following documents are filed as part of or are included in this Annual Report
on Form 10-K:
|
|
1.
|
Financial
statements listed in the Index to Financial Statements, filed as part of
this Annual Report on Form 10-K;
and
|
|
|
2.
|
Exhibits
listed in the Exhibit Index filed as part of this Annual Report on Form
10-K.
|
11
INDEX
TO FINANCIAL STATEMENTS
|
Page
|
||
|
Reports
of Independent Registered Public Accounting Firms
|
F-2
|
|
|
Balance
Sheets as of September 30, 2010 and 2009
|
F-4
|
|
|
Statements
of Expenses for the year ended September 30, 2010 and from Inception
through September 30, 2010
|
F-5
|
|
|
Statement
of Stockholders’ Equity (Deficit) from Inception through September 30,
2010
|
F-6
|
|
|
Statements
of Cash Flows for the year ended September 30, 2010 and from Inception
through September 30, 2010
|
F-7
|
|
|
Notes
to Financial Statements
|
F-8
|
F-1
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors
Stevens
Resources, Inc.
We have
audited the accompanying balance sheet of Steven Resources, Inc. (an exploration
stage company) (the “Company”) as of September 30, 2010, and the related
statements of expenses, stockholders’ equity (deficit) and cash flows for the
year then ended. The statements of expenses, stockholders’ equity (deficit)
and cash flows included in the cumulative information from inception (September
9, 2009) to September 30, 2010, have been audited by other auditors whose report
is presented separately in the Company’s 10-K filing. 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
audit.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit 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 audit provides a reasonable basis for our opinion.
In our
opinion, based on our audit, the financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
September 30, 2010, and the results of its operations and its cash flows for the
year then ended. Further, in our opinion, based on our audit and the report of
other auditors’ as referred to above, the financial statements fairly present in
all material respects, the results of the Company’s operations and cash flows
for the period from inception (September 9, 2009) to September 30, 2010, in
conformity with the U.S. generally accepted accounting principles.
The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern. As discussed in Note 2 to the financial statements,
the Company has incurred losses from operations and has an accumulated deficit
of $28,260 as of September 30, 2010. These conditions raise substantial doubt
about the Company’s ability to continue as a going concern. These financial
statements do not include any adjustments that might result from such
uncertainty.
Goldman
Kurland and Mohidin, LLP
Encino,
California
December
28, 2010
F-2
F-3
Stevens
Resources, Inc.
(An
Exploration Stage Company)
Balance
Sheets
|
September 30, 2010
|
September 30, 2009
|
|||||||
|
ASSETS
|
||||||||
|
CURRENT
ASSETS
|
||||||||
|
Cash
|
$ | - | $ | 4,000 | ||||
|
Prepaid
expenses
|
- | 2,000 | ||||||
|
TOTAL
ASSETS
|
$ | - | $ | 6,000 | ||||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIT)
|
||||||||
|
CURRENT
LIABILITIES
|
||||||||
|
Accounts
payable & accrued liabilities
|
$ | 12,520 | $ | 525 | ||||
|
Total
current liabilities
|
12,520 | 525 | ||||||
|
COMMITMENTS
|
||||||||
|
STOCKHOLDERS'
EQUITY (DEFICIT)
|
||||||||
|
Common
stock, $0.001 par value; 75,000,000 shares authorized; 2,596,000 and
2,100,000 issued and outstanding at September 30, 2010
and
September 30, 2009, respectively
|
2,596 | 2,100 | ||||||
|
Additional
paid in capital
|
13,144 | 3,900 | ||||||
|
Deficit
accumulated during the exploration stage
|
(28,260 | ) | (525 | ) | ||||
|
Total
stockholders' equity (deficit)
|
(12,520 | ) | 5,475 | |||||
|
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
$ | - | $ | 6,000 | ||||
The
accompanying notes are an integral part of these financial
statements.
F-4
Stevens
Resources, Inc.
(An
Exploration Stage Company)
Statements
of Expenses
|
From September 9, 2009
|
||||||||
|
Year Ended
|
(inception) through
|
|||||||
|
September 30, 2010
|
September 30, 2010
|
|||||||
|
Expenses
|
||||||||
|
General
and administrative expenses
|
$ | 4,141 | $ | 4,141 | ||||
|
Professional
fees
|
23,594 | 24,119 | ||||||
|
Total
Expenses
|
27,735 | 28,260 | ||||||
|
Net
loss
|
$ | 27,735 | $ | 28,260 | ||||
|
Weighted
average number of shares outstanding
|
2,461,033 | 2,338,341 | ||||||
|
Basic
and diluted net loss per share
|
$ | 0.00 | $ | 0.00 | ||||
The
accompanying notes are an integral part of these financial
statements.
F-5
Stevens
Resources, Inc.
(An
Exploration Stage Company)
Statement
of Changes in Stockholders’ Equity (Deficit)
From
September 9, 2009 (Inception) to September 30, 2010
|
Additional
|
Deficit Accumulated
|
|||||||||||||||||||
|
Common stock
|
Paid in capital
|
During the exploration stage
|
Total
|
|||||||||||||||||
|
Numbers of shares
|
Amount
|
|||||||||||||||||||
|
Balance,
September 9, 2009 (Inception)
|
- | $ | - | $ | - | $ | - | $ | - | |||||||||||
|
Common
stock issued for cash, September 28, 2009, $0.002 per
share
|
2,000,000 | 2,000 | 2,000 | - | 4,000 | |||||||||||||||
|
Common
stock issued for services, September 28, 2009, $0.002 per
share
|
100,000 | 100 | 1,900 | - | 2,000 | |||||||||||||||
|
Net
loss
|
- | - | - | (525 | ) | (525 | ) | |||||||||||||
|
Balance at September 30,
2009
|
2,100,000 | 2,100 | 3,900 | (525 | ) | 5,475 | ||||||||||||||
|
Common
stock issued for cash at $0.02, January 13, 2010
|
514,000 | 514 | 9,766 | - | 10,280 | |||||||||||||||
|
Purchase
and cancellation of common stock at $0.03 per share
|
(18,000 | ) | (18 | ) | (522 | ) | - | (540 | ) | |||||||||||
|
Net
loss for the year
|
- | - | - | (27,735 | ) | (27,735 | ) | |||||||||||||
|
Balance at September 30,
2010
|
2,596,000 | $ | 2,596 | $ | 13,144 | $ | (28,260 | ) | $ | (12,520 | ) | |||||||||
The
accompanying notes are an integral part of these financial
statements.
F-6
Stevens
Resources, Inc.
(An
Exploration Stage Company)
Statements
of Cash Flows
|
Period from September 9, 2009
|
||||||||
|
Year ended
|
(inception) through
|
|||||||
|
September 30, 2010
|
September 30, 2010
|
|||||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
|
Net
loss
|
$ | (27,735 | ) | $ | (28,260 | ) | ||
|
Adjustments
to reconcile net loss to net cash used in operating
activities
|
||||||||
|
Common
stock issued for services
|
- | 2,000 | ||||||
|
Changes
in
|
||||||||
|
Prepaid
Expenses
|
2,000 | - | ||||||
|
Accounts
payable and accrued liabilities
|
11,995 | 12,520 | ||||||
|
Net
cash used in operating activities
|
(13,740 | ) | (13,740 | ) | ||||
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
|
Purchase
and cancellation of treasury stock
|
(540 | ) | (540 | ) | ||||
|
Proceeds
from issuance of common stock
|
10,280 | 14,280 | ||||||
|
Net
cash provided by financing activities
|
9,740 | 13,740 | ||||||
|
(DECREASE)
IN CASH
|
(4,000 | ) | - | |||||
|
CASH,
BEGINNING OF PERIOD
|
4,000 | - | ||||||
|
CASH,
END OF PERIOD
|
$ | - | $ | - | ||||
|
Supplemental
Cash flow data:
|
||||||||
|
Income
tax paid
|
$ | - | $ | - | ||||
|
Interest
paid
|
$ | - | $ | - | ||||
The
accompanying notes are an integral part of these financial
statements.
F-7
Stevens
Resources, Inc.
(An
Exploration Stage Company)
Notes
to Financial Statements
September
30, 2010
Stevens
Resources, Inc. (the “Company” or “Stevens Resources”) was incorporated in the
State of Nevada on September 9, 2009. The Company currently has no operations
and, in accordance with ASC 915 “Development Stage Entities,” is considered an
Exploration Stage Enterprise. The Company has been in the exploration stage
since its formation and has not yet realized any revenues from its planned
operations.
In the
opinion of management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position, results of
operations and cash flows as of and for the year ended September 30, 2010, and
for all periods presented were made.
Cash
For the
Statements of Cash Flows, all highly liquid investments with maturity of three
months or less are considered cash equivalents.
Use of
Estimates
The
preparation of financial statements in conformity with United States Generally
Accepted Accounting Principles (“US GAAP”) 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.
Income
Taxes
The
Company utilizes Financial Accounting Standards Board (“FASB”) Accounting
Standards Codification (“ASC”) Topic 740, which requires recognition of deferred
tax assets and liabilities for the expected future tax consequences of events
that were included in the financial statements or tax returns. Under this
method, deferred income taxes are recognized for the tax consequences in future
years of differences between the tax bases of assets and liabilities and their
financial reporting amounts at each period end based on enacted tax laws and
statutory tax rates applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are established, when
necessary, to reduce deferred tax assets to the amount expected to be
realized.
The
Company adopted the provisions of FASB Interpretation No. 48, “Accounting for
Uncertainty in Income Taxes,” (“FIN 48”), codified in FASB ASC Topic 740, on
September 9, 2009. As a result of the implementation of FIN 48, the Company made
a comprehensive review of its portfolio of tax positions in accordance with
recognition standards established by FIN 48. As a result of the implementation
of FIN 48, the Company recognized no material adjustments to liabilities or
stockholders’ equity. 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. 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 is 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. Interest
associated with unrecognized tax benefits are classified as interest expense and
penalties are classified in selling, general and administrative expenses in the
statements of income. At September 30, 2010, the Company did not take any
uncertain positions that would necessitate recording of tax related
liability.
Statement of Cash
Flows
In
accordance with SFAS No. 95, “Statement of Cash Flows,” (codified in FASB ASC
Topic 230), cash flows from the Company's operations are calculated based upon
the local currencies. As a result, amounts related to assets and liabilities
reported on the statement of cash flows may not necessarily agree with changes
in the corresponding balances on the balance sheet.
F-8
Stevens
Resources, Inc.
(An
Exploration Stage Company)
Notes
to Financial Statements
September
30, 2010
Basic and Diluted Loss per
Share (EPS)
Basic EPS
(Loss) is computed by dividing income (loss) available to common shareholders by
the weighted average number of common shares outstanding for the period. Diluted
EPS is computed similarly to basic net income (loss) per share except that the
denominator is increased to include the number of additional common shares that
would have been outstanding if the potential common shares had been issued and
if the additional common shares were dilutive. Diluted EPS is based on the
assumption that all dilutive convertible shares and stock options
were converted or exercised. Dilution is computed by applying the treasury
stock method. Under this method, options and warrants are assumed to be
exercised at the beginning of the period (or at the time of issuance, if later),
and as if funds obtained thereby were used to purchase common stock at the
average market price during the period.
Fair Value of Financial
Instruments
SFAS No.
107, “Disclosures about Fair Value of Financial Instruments,” codified in FASB
ASC Financial Instruments, Topic 825, requires that the Company disclose
estimated fair values of financial instruments. The carrying amounts reported in
the statements of financial position for current assets and current liabilities
qualifying as financial instruments are a reasonable estimate of fair
value.
Fair Value
Measurements
On
September 9, 2009, the Company adopted SFAS No. 157, “Fair Value Measurements,”
codified in FASB ASC Financial Instruments, Topic 820. SFAS 157 defines fair
value, establishes a three-level valuation hierarchy for disclosures of fair
value measurement and enhances disclosures requirements for fair value measures.
The three levels are defined as follows:
|
|
·
|
Level
1 inputs to the valuation methodology are quoted prices (unadjusted) for
identical assets or liabilities in active
markets.
|
|
|
·
|
Level
2 inputs to the valuation methodology include quoted prices for similar
assets and liabilities in active markets, and inputs that are observable
for the asset or liability, either directly or indirectly, for
substantially the full term of the financial
instrument.
|
|
|
·
|
Level
3 inputs to the valuation methodology are unobservable and significant to
the fair value measurement.
|
As of
September 30, 2010, the Company did not identify any assets and liabilities that
are required to be presented on the balance sheet at fair value.
Share-Based
Expenses
ASC 718
"Compensation - Stock Compensation," codified in SFAS No. 123, prescribes
accounting and reporting standards for all stock-based payments awarded to
employees, including employee stock options, restricted stock, employee stock
purchase plans and stock appreciation rights, which may be classified as either
equity or liabilities. The Company should determine if a present obligation to
settle the share-based payment transaction in cash or other assets exists. A
present obligation to settle in cash or other assets exists if: (a) the option
to settle by issuing equity instruments lacks commercial substance or (b) the
present obligation is implied because of an entity's past practices or stated
policies. If a present obligation exists, the transaction should be recognized
as a liability; otherwise, the transaction should be recognized as
equity.
The
Company accounts for stock-based compensation issued to non-employees and
consultants in accordance with the provisions of ASC 505-50 "Equity - Based
Payments to Non-Employees," which codified SFAS 123 and the Emerging Issues Task
Force consensus in Issue No. 96-18 ("EITF 96-18"), "Accounting for Equity
Instruments that are Issued to Other Than Employees for Acquiring or in
Conjunction with Selling, Goods or Services." Measurement of share-based payment
transactions with non-employees shall be based on the fair value of whichever is
more reliably measurable: (a) the goods or services received; or (b) the equity
instruments issued. The fair value of the share-based payment transaction should
be determined at the earlier of performance commitment date or performance
completion date.
Going
Concern
The
Company's financial statements are prepared using US GAAP applicable to a going
concern, which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. The Company has not yet
established an ongoing source of revenues sufficient to cover its operating
costs and allow it to continue as a going concern. The ability of the Company to
continue as a going concern is dependent on the Company obtaining adequate
capital to fund operating losses until it becomes profitable. If the Company is
unable to obtain adequate capital, it could be forced to cease
operations.
F-9
Stevens
Resources, Inc.
(An
Exploration Stage Company)
Notes
to Financial Statements
September
30, 2010
In order
to continue as a going concern, the Company will need, among other things,
additional capital resources. Management's plans to obtain such resources for
the Company include (1) obtaining capital from management and significant
stockholders sufficient to meet its minimal operating expenses, and (2) as a
last resort, seeking out and completing a merger with an existing operating
company. However, management cannot provide any assurances that the Company will
be successful in accomplishing any of its plans.
The
ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sources of financing and 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.
Recent Accounting
Pronouncements
The
Company adopted all recently issued accounting pronouncements. The adoption of
the accounting pronouncements, including those not yet effective, is not
anticipated to have a material effect on our financial position or results of
operations.
On
September 9, 2009, the Company adopted 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” (“ASU No. 2009-01”). ASU No. 2009-01 re-defines
authoritative US GAAP for nongovernmental entities to be only comprised of the
FASB Accounting Standards Codification (“Codification”) and, for SEC
registrants, guidance issued by the SEC. The Codification is a
reorganization and compilation of all then-existing authoritative US GAAP for
nongovernmental entities, except for guidance issued by the SEC. The
Codification is amended to effect non-SEC changes to authoritative US GAAP.
Adoption of ASU No. 2009-01 only changed the referencing convention of US GAAP
in the Notes to the Financial Statements.
On
February 25, 2010, the FASB issued ASU No. 2010-09 Subsequent Events Topic 855
“Amendments to Certain Recognition and Disclosure Requirements,” effective
immediately. The amendments in the ASU remove the requirement for an SEC filer
to disclose a date through which subsequent events have been evaluated in both
issued and revised financial statements. Revised financial statements include
financial statements revised as a result of either correction of an error or
retrospective application of US GAAP. The FASB believes these amendments remove
potential conflicts with the SEC’s literature. The adoption of this ASU did not
have a material impact on the Company’s financial statements.
On March
5, 2010, the FASB issued ASU No. 2010-11 Derivatives and Hedging Topic 815
“Scope Exception Related to Embedded Credit Derivatives.” This ASU clarifies the
guidance within the derivative literature that exempts certain credit related
features from analysis as potential embedded derivatives requiring separate
accounting. The ASU specifies that an embedded credit derivative feature related
to the transfer of credit risk that is only in the form of subordination of one
financial instrument to another is not subject to bifurcation from a host
contract under ASC 815-15-25, Derivatives and Hedging – Embedded Derivatives –
Recognition. All other embedded credit derivative features should be analyzed to
determine whether their economic characteristics and risks are “clearly and
closely related” to the economic characteristics and risks of the host contract
and whether bifurcation is required. The ASU was effective for the Company in
its fiscal fourth quarter of 2010. The adoption of this ASU did not have a
material impact on the Company’s financial statements.
In April
2010, the FASB codified the consensus reached in Emerging Issues Task Force
Issue No. 08-09, “Milestone Method of Revenue Recognition.” FASB ASU No. 2010-17
provides guidance on defining a milestone and determining when it may be
appropriate to apply the milestone method of revenue recognition for research
and development transactions. FASB ASU No. 2010-17 is effective for fiscal years
beginning on or after June 15, 2010, and is effective on a prospective
basis for milestones achieved after the adoption date. The Company does not
expect this ASU will have a material impact on its financial position or results
of operations when it adopts this update on October 1, 2010.
Accounts
payable and accrued liabilities mainly represented payable and accrued expenses
for accounting and audit fees.
F-10
Stevens
Resources, Inc.
(An
Exploration Stage Company)
Notes
to Financial Statements
September
30, 2010
Common
stock
The
authorized common stock of the Company consists of 75,000,000 shares with par
value of $0.001. On September 28, 2009, the Company issued 2,000,000 shares of
its common stock at $0.002 per share for $4,000 in cash. The Company also issued
100,000 shares of its common stock at $0.02 per share for $2,000 in professional
services. As of September 30, 2009, the Company had 2,100,000 shares of its
common stock issued and outstanding.
On
January 13, 2010, the Company filed a prospectus pursuant to Rule 424(b)(3)
promulgated under the Securities Act of 1933, as amended, as part of the
Company’s registration statement on Form S-1 deemed effective by the Securities
and Exchange Commission on January 12, 2010. Pursuant to the prospectus, the
Company sold 514,000 shares of its common stock at $0.02 per share for $10,280.
In June 2010, the Company purchased and cancelled 18,000 shares of its common
stock at $0.03 per share for $540. As of September 30, 2010, the Company had
2,596,000 shares issued and outstanding.
Share
exchange
Effective
July 13, 2010, Mr. Justin Miller, the Company’s former President, Chief
Executive Officer, Chief Financial Officer, Treasurer and director, entered into
an agreement for the sale and purchase of securities of the Company (the
“Agreement”) with Mr. Alex Li. In accordance with the terms and provisions of
the Agreement, Mr. Miller sold 2,000,000 shares of the Company’s common
stock, held of record, representing approximately 77.04% of the issued and
outstanding common stock of the Company, to Mr. Li in a private transaction
intended to be exempt from registration under the Securities Act of 1933, as
amended, for $40,000. The shares of common stock are restricted securities. The
source of funds used by Mr. Li was personal funds. After giving effect to the
Agreement, there was a change in control of the Company.
The
Company does not provide any current or deferred U.S. federal income tax
provision or benefit for any of the periods presented because the Company has
experienced operating losses since inception. Under ACS 740 “Income Taxes,” when
it is more likely than not that a tax asset cannot be realized through future
income the Company must allow for this future tax benefit. The Company provided
a full valuation allowance on the net deferred tax asset, consisting of net
operating loss carryforwards, because management has determined that it is more
likely than not that we will not earn income sufficient to realize the deferred
tax assets during the carryforward period.
The
Company has not taken a tax position that, if challenged, would have a material
effect on the financial statements for the year ended September 30, 2010,
applicable under ACS 740. As a result of the adoption of ACS 740, we did not
recognize any adjustment to the liability for uncertain tax position and
therefore did not record any adjustment to the beginning balance of accumulated
deficit on the balance sheet.
The
component of the Company’s deferred tax asset as of September 30, 2010, is as
follows:
|
Net
operating loss carry forward
|
$ | 26,260 | ||
|
Valuation
allowance
|
(26,260 | ) | ||
|
Net
deferred tax asset
|
$ | 0 |
A
reconciliation of income taxes computed at the 34% statutory rate to the income
tax recorded for the year ended September 30, 2010, is as follows:
|
Net
operating loss carry forward
|
$
|
8,900
|
||
|
Valuation
allowance
|
(8,900
|
)
|
||
|
Net
deferred tax asset
|
$
|
0
|
The
Company did not pay any income taxes during the year ended September 30,
2010.
The net
federal operating loss carry forward will expire in 2030. This carry forward may
be limited upon the consummation of a business combination under IRC Section
381.
F-11
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.
|
STEVENS
RESOURCES, INC.
(Registrant)
|
||
|
Date:
December 29, 2010
|
By:
|
/s/
Alex Li
|
|
Alex
Li
|
||
|
President,
Chief Executive Officer, Chief Financial Officer,
|
||
|
Treasurer,
Secretary and sole Director
|
||
|
(Principal
Executive Officer, Principal Financial Officer and
|
||
|
Principal
Accounting Officer)
|
||
12
EXHIBIT
INDEX
|
Exhibit No.
|
Description
|
|
|
3.1
|
Articles
of Incorporation (Incorporated herein by reference to Exhibit 3.1 to the
Company’s Registration Statement on Form S-1 (File No. 333-163019) filed
on November 10, 2009)
|
|
|
3.2
|
Bylaws
(Incorporated herein by reference to Exhibit 3.2 to the Company’s
Registration Statement on Form S-1 (File No. 333-163019) filed on November
10, 2009)
|
|
|
10.1
|
Option
to Purchase Agreement, dated September 30, 2009 (Incorporated herein by
reference to Exhibit 10.1 to the Company’s Registration Statement on Form
S-1 (File No. 333-163019) filed on November 10, 2009)
|
|
|
14.1
|
Code
of Ethics (Incorporated herein by reference to Exhibit 14.1 to the
Company’s Registration Statement on Form S-1 (File No. 333-163019) filed
on November 10, 2009)
|
|
|
16.1
|
Letter
of Kyle L. Tingle, CPA, LLC, dated July 15, 2010 (Incorporated herein by
reference to Exhibit 16.1 to the Company’s Current Report on Form 8-K
(File No. 333-163019) filed on July 16, 2010)
|
|
|
31.1
|
Certification
of Principal Executive Officer and Principal Financial Officer pursuant to
Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
|
|
|
32.1
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, as signed by the Chief Executive Officer
and Chief Financial Officer
|
13
TABLE OF CONTENTS
Part IItem 1. BusinessItem 1A. Risk FactorsItem 1B. Unresolved Staff CommentsItem 2. PropertiesItem 3. Legal ProceedingsItem 4. (removed and Reserved)Part IIItem 5. Market For Registrant S Common Equity, Related Stockholder Matters and Issuer Purchases Of Equity SecuritiesItem 6. Selected Financial DataItem 7. Management S Discussion and Analysis Of Financial Condition and Results Of OperationItem 7A. Quantitative and Qualitative Disclosures About Market RiskItem 8. Financial Statements and Supplementary DataItem 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureItem 9A. Controls and ProceduresItem 9B. Other InformationPart IIIItem 10. Directors, Executive Officers and Corporate GovernanceItem 11. Executive CompensationItem 12. Security Ownership Of Certain Beneficial Owners and Management and Related Stockholder MattersItem 13. Certain Relationships and Related Transactions, and Director IndependenceItem 14. Principal Accounting Fees and ServicesPart IVItem 15. Exhibits, Financial Statement SchedulesNote 1 Financial StatementsNote 2 Significant Accounting PoliciesNote 3 Accounts Payable and Accrued LiabilitiesNote 4 Shareholders EquityNote 5 Income Tax