UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[X]          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2009

OR

[  ]           TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 000-52709

SINO FIBRE COMMUNICATIONS, INC.

(Exact name of registrant as specified in its charter)

Nevada

760616470

(State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)

The Chrysler Building
405 Lexington Ave, 26th Fl
New York NY

10174

(Address of principal executive offices)

(Zip Code)

+852-3101-7366

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filed,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [   ]

Accelerated filer [   ]

Non-accelerated filer [   ] (Do not check if a smaller reporting company)

Smaller reporting company [X]

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:  As of September 30, 2009, the issuer had 44,215,585 shares of common stock outstanding .

 

2296726.2

 

SINO FIBRE COMMUNICATIONS, INC.

Quarterly Report on Form 10-Q
For the Quarterly Period Ended September 30, 2009

FORWARD-LOOKING STATEMENTS

This Form 10-Q for the quarterly period ended September 30, 2009 contains forward-looking statements that involve risks and uncertainties.  Forward-looking statements in this document include, among others, statements regarding our capital needs, business plans and expectations.  Such forward-looking statements involve assumptions, risks and uncertainties regarding, among others, the success of our business plan, availability of funds, government regulations, operating costs, our ability to achieve significant revenues, our business model and products and other factors.  Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or “continue”, the negative of such terms or other comparable terminology.  In evaluating these statements, you should consider various factors, including the assumptions, risks and uncertainties set forth in reports and other documents we have filed with or furnished to the SEC.  These factors or any of them may cause our actual results to differ materially from any forward-looking statement made in this document.  While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding future events, our actual results will likely vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein.  The forward-looking statements in this document are made as of the date of this document and we do not intend or undertake to update any of the forward-looking statements to conform these statements to actual results, except as required by applicable law, including the securities laws of the United States.

 

 

 

 

 

 

 

 

 

 

 

 

                                                                                                      -2-

2296726.2

 

 

 

TABLE OF CONTENTS

 

FORM 10-Q

 

QUARTER ENDED SEPTEMBER 30, 2009

 

PART I

 

FINANCIAL INFORMATION

 

 

Item 1. Consolidated Financial Statements (Unaudited)

Page

 

 

 

 

Consolidated Balance Sheets as of September 30, 2009 and December 31, 2008

4

 

 

 

 

Consolidated Statements of Operations for the three-month and nine-month

periods ended September 30, 2009 and 2008 and for the period from inception through September 30, 3009

5

 

 

 

 

Consolidated Statements of Stockholders’ Deficit for the period from inception through September 30, 3009

7

 

 

 

 

Consolidated Statements of Cash Flows for the nine month periods ended September 30, 2009 and 2008 and for the period from inception through September 30, 3009

9

 

 

 

 

Selected notes to consolidated financial statements   

10

 

 

 

Item 2. Management's Discussion and Analysis of

        Financial Condition and Results of Operations

14

 

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

15

 

 

Item 4. Controls and Procedures

16

 

 

                                                                                                      -3-

2296726.2

 

 

Sino Fibre Communication, Inc.

 (A Development Stage Company)

 Balance Sheets

 

 

 

 

 

September 30,

 2009

 

 

December 31,

 2008

 

 

 

 

 

 

Assets

 Current:

 

 

 

 

 

 

Cash

$

238

 

$

137

 

 

 

 

 

 

 

Total Current Assets

 

238

 

 

137

 

 

 

 

 

 

Investment

 

   -

 

 

700,000

Deposit

 

                 -

 

 

      2,000,000

 

 

 

 

 

 

Total Assets

$

             238

 

$

      2,700,137

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Current:

 

 

 

 

 

     Accounts payable and accrued liabilities

$

548,600

 

$

574,900

     Interest payable

 

-

 

 

5,179

     Due to related parties

 

128,385

 

 

253,868

     Common stock to be issued for subscriptions funds received

 

-

 

 

-

     Common stock to be issued for consulting services rendered

 

-

 

 

-

    Convertible notes

 

                 -

 

 

      30,639 

 

 

 

 

 

 

Total Current Liabilities

 

     676,985

 

 

      864,586

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' Equity (Deficit)

 

 

 

 

 

 

 

 

 

 

 

Common Stock, $0.001 par value; 200,000,000 shares authorized;

 

 

 

 

 

 

44,215,585 and 35,125,660 common shares issued and outstanding

 

 

 

 

 

      at September 30, 2009 and December 31, 2008

 

44,359

 

 

35,126

Additional paid-in capital

 

6,609,630

 

 

5,806,914

Deficit accumulated during the development stage

 

  (7,300,736)

 

 

   (4,006,489)

Total Stockholders' Equity (Deficit)

 

     (676,747)

 

 

      1,835,551

 

 

 

 

 

 

Total Liabilities and Stockholders' Equity (Deficit)

$

               238

 

$

      2,700,137

 

 

 

See accompanying notes to the financial statements

 

                                                                                                      -4-

2296726.2

 

 

Sino Fibre Communications, Inc.

(A Development Stage Company)

Consolidated Statements of Operations                                                                                                    

(Unaudited)

 

 

 

For The

Three Months

Ended

September 30,

2009

 

 

For The

Three Months

Ended

September 30,

2008

 

 

 

 

 

 

 

 

 

 

Revenue

$

     -

 

$

-

 

 

 

 

 

 

 

 

 

 

 Selling, general and administrative

 

 

 

 

 

 

 

  expenses

 

42,060

 

 

264,241

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

(42,060)

 

 

(264,241)

 

 

 

 

 

 

 

 

 

 

Interest and other income (expense), net

 

-

 

 

  (5,771)

 

 

Gain on settlement of debt

 

-

 

 

-

 

 

Loss on asset impairment

 

-

 

 

      -

 

 

 

 

 

 

 

 

 

 

Loss before discontinued operations

 

(42,060)

 

 

(270,012)

 

 

 

 

 

 

 

 

 

 

Loss from discontinued operations

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

Net loss

$

(42,060)

 

$

(270,012)

 

 

 

 

 

 

 

 

 

 

Weighted average number

 

 

 

 

 

 

 

 

of shares outstanding – basic and diluted

 

40,136,939

 

 

34,725,117

 

 

Net loss per share -

 

 

 

 

 

 

basic and diluted

$

(0.01)

 

$

(0.01)

 

 

 

 

 

 

 

 

 

 

                                         See accompanying notes to the unaudited consolidated financial statements.

                                                                                                      -5-

2296726.2

 

S

Sino Fibre Communications, Inc.

(A Development Stage Company)

Consolidated Statements of Operations                                                                                                    

(Unaudited)

 

 

 

For The

Nine Months

Ended

September 30,

2009

 

 

For The

Nine Months

Ended

September 30,

2008

 

 

For The Period From

August 19, 1999

(Inception) Through

September 30,

2009

 

 

 

 

 

 

 

 

 

Revenue

$

     -

 

$

-

 

$

    60

 

 

 

 

 

 

 

 

 

 Selling, general and administrative

 

 

 

 

 

 

 

 

  expenses

 

554,885

 

 

1,678,415

 

 

4,238,770

 

 

 

 

 

 

 

 

 

Loss from operations

 

(554,885)

 

 

(1,678,415)

 

 

(4,238,770)

 

 

 

 

 

 

 

 

 

Interest and other income (expense), net

 

(69,361)

 

 

  (303,747)

 

 

(386,450)

Gain on settlement of debt

 

-

 

 

-

 

 

4,500

Loss on asset impairment

 

(2,700,000)

 

 

      -

 

 

(2,705,500)

 

 

 

 

 

 

 

 

 

Loss before discontinued operations

 

(3,324,246)

 

 

(1,982,162)

 

 

(7,326,220)

 

 

 

 

 

 

 

 

 

Loss from discontinued operations

 

-

 

 

-

 

 

(4,575)

 

 

 

 

 

 

 

 

 

Net loss

$

(2,881,806)

 

$

(1,982,162)

 

$

(7,330,795)

 

 

 

 

 

 

 

 

 

Weighted average number

 

 

 

 

 

 

 

 

 

of shares outstanding – basic and diluted

 

40,136,939

 

 

28,126,415

 

 

 

Net loss per share -

 

 

 

 

 

 

 

basic and diluted

$

(0.08)

 

$

(0.07)

 

 

 

 

 

 

 

 

 

 

 

                                         See accompanying notes to the unaudited consolidated financial statements.

                                                                                                      -6-

2296726.2

 

 

ino Fibre Communications, Inc.

(A Development Stage Company)

Consolidated Statements of Stockholders’ Deficit

For the Period From August 19, 1999 (Inception) Through September 30, 2009

(Unaudited)

 

 

 

 

 

 

 

 

 

Deficit

 

 

 

 

 

 

  

 

 

Accumulated

 

 

 

Common Stock

Common Stock

To Be Issued

Additional

Paid-in

Stock Subscriptions

 

Deferred

During the

Development

 

 

   Shares  

   Amount  

Shares

Amount

Capital

Receivable

Compensation

Stage

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance – August 19, 1999 (Inception)                                                          

$

–

–

$

–

$

–

$

          –

$

–

$

–

$

–

 

 

 

 

 

 

 

 

 

 

Stock issued in August 1999 for organizational expenses at $0.001 per share

 

2,500,000

 

       2,500

 

–

       

  –

 

          –

 

         –

 

–

 

–

 

2,500

 

 

 

 

 

 

 

 

 

 

Organizational expenses incurred by a director on behalf of the Company

 

 

–

        

 –

         

      –

 

          75

 

          –

       

 –

                           

                 –

 

75

 

 

 

 

 

 

 

 

 

 

Stock issued in August 1999 for “The Biocatalyst License” at a fair value of $0.001 per share

 

2,000,000

 

2,000

 

–

 

–

 

   –

 

 –

 

–

 

–

 

2,000

 

 

 

 

 

 

 

 

 

 

Net loss

–

–

  –

     –

         –

         –

–

(4,575)

(4,575)

 

 

 

 

 

 

 

 

 

 

Balance – December 31, 1999

4,500,000

4,500

  –

–

        75

–

              –

(4,575)

–

 

 

 

 

 

 

 

 

 

 

Net loss

 

–

  –

–

        –

–

–

–

–

 

 

 

 

 

 

 

 

 

 

Balance – December 31, 2000

4,500,000

4,500

  –

–

        75

–

–

(4,575)

–

 

 

 

 

 

 

 

 

 

 

Net loss

 

–

  –

–

         –

–

–

(4,610)

(4,610)

 

 

 

 

 

 

 

 

 

 

Balance – December 31, 2001

4,500,000

4,500

  –

–

        75

–

–

(9,185)

(4,610)

 

 

 

 

 

 

 

 

 

 

Stock issued in January 2002 for expenses at $0.001 per Share

 

4,610,000

 

4,610

 

  –

 

–

      

  –

 

–

 

–

 

–

 

4,610

 

 

 

 

 

 

 

 

 

 

Stock issued in July 2002 for debt settlement at $0.001 per Share

 

500,000

 

500

 

  –

 

–

    

    –

 

–

 

–

 

–

 

500

 

 

 

 

 

 

 

 

 

 

Donated rent

 

–

  –

–

        500

–

–

–

500

 

 

 

 

 

 

 

 

 

 

Net loss

 

–

  –

–

          –

–

–

(525)

(525)

 

 

 

 

 

 

 

 

 

 

 

Balance – December 31, 2002

9,610,000

9,610

–

          –

575

–

–

(9,710)

475

 

 

 

 

 

 

 

 

 

 

Stock issued in January and September 3003 for expenses at $0.001 per share

 

3,859,000

 

3,859

 

–

      

   –

 

        –

 

–

 

–

 

–

 

3,859

 

 

 

 

 

 

 

 

 

 

Donated rent

–

–

–

–

        500

–

–

–

500

 

 

 

 

 

 

 

 

 

 

Net loss

–

–

–

–

          –

–

–

(5,644)

(5,644)

 

 

 

 

 

 

 

 

 

 

Balance – December 31, 2003

13,469,000

13,469

–

      –

1,075

–

–

(15,354)

(810)

 

 

 

 

 

 

 

 

 

 

Stock issued in January, July, and August 2004 for expenses at $0.01 per share

 

416,000

 

416

 

–

         

–

 

3,744

 

–

 

–

 

–

 

4,160

 

 

 

 

 

 

 

 

 

 

Stock issued in September 2004 for expenses at $0.10 per Share

 

5,000

 

5

 

–

         

–

 

495

 

–

 

–

 

–

 

500

 

 

 

 

 

 

 

 

 

 

Stock issued in July 2004 for cash at $0.01 per share

1,000,000

1,000

  –

–

        9,000

–

–

-

10,000

 

 

 

 

 

 

 

 

 

 

Stock issued in September and December 2004 for cash at $0.10 per share

 

200,100

 

200

 

–

        

 –

 

19,810

 

–

 

–

 

–

 

20,010

 

 

 

 

 

 

 

 

 

 

Donated rent

–

–

–

–

500

–

–

–

500

 

 

 

 

 

 

 

 

 

 

Deferred compensation

–

–

–

–

–

–

(167)

–

(167)

 

 

 

 

 

 

 

 

 

 

Net loss

–

–

–

–

–

–

–

(38,768)

(38,768)

 

 

 

 

 

 

 

 

 

 

Balance – December 31, 2004

15,090,100

15,090

–

     –

34,624

–

(167)

(54,122)

(4,575)

 

See accompanying notes to the unaudited consolidated financial statements.

 

                                                                                                      -7-

2296726.2

 

Sino Fibre Communications, Inc.

(A Development Stage Company)

Consolidated Statements of Stockholders’ Deficiency

For the Period From August 19, 1999 (Inception) Through September 30,2009

(Unaudited)

 

 

 

 

 

 

 

 

 

Deficit Accumulated

 

 

Common Stock

Common Stock

To Be Issued

Additional Paid-in

Stock Subscriptions

Deferred

During the Development

 

 

   Shares  

Amount

Shares

Amount

Capital

Receivable

Compensation

Stage

Total

Stock issued in January and March 2005 for cash at $0.10 per share

 

11,300

 

$

 

11

 

 

–

 

$

 

–

 

$

 

1,119

 

$

 

–

 

$

 

–

 

$

 

–

 

$

 

1,130

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock subscriptions received in cash in November 2004

 

–

 

 

–

 

 

40,000

 

 

40

 

 

9,960

 

 

–

 

 

–

 

 

–

 

 

10,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock subscribed in December 2005

–

 

–

 

1,040,000

 

1,040

 

258,960

 

    (260,000)

 

–

 

–

 

–

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Donated rent

–

 

–

 

–

 

–

 

500

 

–

 

–

 

–

 

500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred compensation

–

 

–

 

–

 

–

 

–

 

–

 

167

 

–

 

167

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

–

 

–

 

–

 

–

 

–

 

–

 

–

 

(43,889)

 

(43,889)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance – December 31, 2005

15,101,400

$

15,101

 

1,080,000

$

1,080

$

305,163

$

(260,000)

$

–

$

 (98,011)

$

(36,667)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued in March 2006 for cash at $0.25 per share (net)

 

1,380,000

 

 

1,380

 

 

(1,080,000)

 

 

(1,080)

 

 

74,680

 

 

260,000

 

 

           –

 

 

–

 

 

334,980

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Donated accounting fee

-

 

–

 

–

 

–

 

1,000

 

–

 

–

 

–

 

1,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

–

 

–

 

–

 

–

 

–

 

       –

 

           –

 

(673,255)

 

(673,255)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance – December 31, 2006

16,481,400

$

16,481

 

–

$

–

$

380,843

$

 –

$

–

$

(771,266)

$

(373,942)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation

-

 

-

 

-

 

-

 

526,055

 

-

 

-

 

-

 

526,055

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discount on benefit conversion factor

-

 

-

 

-

 

-

 

375,104

 

-

 

-

 

-

 

375,104

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(928,610)

 

(928,610)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance – December 31, 2007

16,481,400

$

16,481

 

–

$

–

$

1,282,002

$

 –

$

–

$

(1,699,876)

$

(401,393)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued for cash

2,499,431

 

2,500

 

 

 

 

 

778,122

 

 

 

 

 

 

 

807,622

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares for convertible notes

10,123,690

 

10,124

 

-

 

-

 

496,061

 

-

 

-

 

-

 

506,185

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation

 

Shares issued for deposit on  fiber optic network

4,108,500

 

5,000,000

 

4,108

 

5,000

 

 

 

 

 

 

 

1,362,341

 

1,795,000

 

 

 

 

 

 

 

1,366,450

 

1,800,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares cancelled

(3,087,361)

 

(3,087)

 

 

 

 

 

3,087

 

 

 

 

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options granted September 3006

 

 

 

 

 

 

 

 

90,301

 

 

 

 

 

 

 

90,301

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,306,613)

 

(2,306,613)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance- December 31, 2008

35,125,660

 

35,126

 

 

 

 

 

5,806,914

 

 

 

 

 

(4,006,489)

 

1,835,551

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued for services

2,100,000

 

2,100

 

 

 

 

 

336,041

 

 

 

 

 

 

 

368,141

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued for settlement of loans

6,710,000

 

6,710

 

 

 

 

 

331,469

 

 

 

 

 

 

 

338,179

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued for elated party debt forgiveness

422,512

 

423

 

 

 

 

 

105,206

 

 

 

 

 

 

 

105,628

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(3,324,246)

 

(3,324 ,246 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance – September 30, 2009

44,358,172

 

44,359

 

-

$

-

$

6,609,630

$

-

$

-

$

(7,330,735)

$

(676,747 )

 

See accompanying notes to the unaudited consolidated financial statements.

                                                                                                      -8-

2296726.2

 

Sino Fibre Communication, Inc.

 (A Development Stage Company)

 Statements of Cash Flows

 

 

 

For the

 Nine Months

 Ended

 September 30,

 2009

 

 

For the

 Nine Months

 Ended

 September 30,

 2008

 

 

For the Period From August 19, 1999 (Inception) Through

 September 30,

 2009

Cash Flows Used in Operating Activities

 

 

 

 

 

 

 

 

Net loss

$

(3,324,246)

 

$

(1,982,162 )

 

$

(7,330,735 )

Adjustments to reconcile net loss to net cash used in operating activities

 

 

 

 

 

 

 

 

 

Discontinued operations

 

-

 

 

-

 

 

4,575

 

Common stock to be issued for consulting services

 

-

 

 

-

 

 

87,500

 

Gain on settlement of debt

 

-

 

 

-

 

 

(4,500)

 

Bad debts

 

-

 

 

-

 

 

60

 

Loss on asset impairment

 

2,700,000

 

 

-

 

 

2,705,500

 

Donated rent and accounting fee

 

-

 

 

-

 

 

3,000

 

Expense settled with issuance of common stock

 

-

 

 

-

 

 

11,319

 

Stock based compensation

 

473,769

 

 

1,210,055

 

 

2,369,074

 

Common stock issued for interest on convertible debt

 

5,179

 

 

6,185

 

 

11,364

 

Amortization of debt discount

 

69,361

 

 

297,899

 

 

392,063

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

Due to related parties

 

107,517

 

 

-

 

 

330,903

 

Accounts receivable

 

-

 

 

-

 

 

(60)

 

Interest payable

 

(5,179)

 

 

(272)

 

 

-

 

Prepaid expenses and deposits

 

-

 

 

-

 

 

-

 

Accrued liabilities

 

      (26,300)

 

 

       246,216

 

 

     548,600

Net cash used in operating activities

 

              101

 

 

    (222,079)

 

 

  (871,337)

 

 

 

 

 

 

 

 

 

Cash Flows Used in Investing Activities

 

 

 

 

 

 

 

 

Restricted Cash

 

-

 

 

-

 

 

10,000

Purchase of certificate of deposit

 

-

 

 

-

 

 

 

Investment in Joint Venture

 

-

 

 

-

 

 

(700,000)

Prepayment  of license agreement

 

                -

 

 

                 -

 

 

      (200,000)

Net cash  provided by (used in) investing activities

 

                - 

 

 

                 -

 

 

      (890,000)

 

 

 

 

 

 

 

 

 

Cash Flows From Financing Activities

 

 

 

 

 

 

 

 

 

Repayment of short term borrowings

 

-

 

 

-

 

 

(16,959)

 

Proceeds from convertible notes

 

-

 

 

-

 

 

600,000

 

Proceeds from stock subscriptions

 

-

 

 

-

 

 

50,000

 

Borrowing from related parties

 

-

 

 

-

 

 

31,792

 

Payments to related parties

 

-

 

 

(178,823)

 

 

-

 

Common stock issued for cash, net

 

                -

 

 

    730,621

 

 

    1,096,742

Net cash provided by financing activities

 

                -

 

 

    551,798

 

 

    1,761,575

 

 

 

 

 

 

 

 

 

Net increase/(decrease) in cash

 

101

 

 

329,719

 

 

238

Cash, beginning of year

 

          137 

 

 

     378,732

 

 

                  -

Cash, end of year

$

           2 38

 

$

     708,451

 

$

             238

 

 

 

 

 

 

 

 

 

Non-cash Investing and Financing Activities:

 

 

 

 

 

 

 

 

2,000,000 shares were issued at a fair value of $0.001 per share for the acquisition of a License

 

-

 

 

-

 

 

2,000

Debt issued for website domain name

 

-

 

 

-

 

 

5,000

500,000 shares were issued at a fair value of $0.001 per share in settlement of debt

 

-

 

 

-

 

 

500

136,000 shares were issued to settle prior period expenses

 

-

 

 

-

 

 

1,810

Restricted cash received for stock subscriptions and held in escrow

 

Shares

 

-

 

 

-

 

 

10,000

-9-

2296726.2

 

Conversion of debt to common stock                                                                                                                500,000                                                                 500,00                                                                 500, 000

Stock issued for deposit on purchase of fiber optic network                                                   2,000,000                                                        1,800,000                                                       2,000,000

Shares retired previously issued as contributed capital                                                                  3,087                                                                                                                                          3,087
  
Change from stock payable to equity                                                                                          137.500                                                                                                                                      137,500   

 

See accompanying notes to the unaudited consolidated financial statements.

-10-

2296726.2

 

Sino Fibre Communications, Inc.

(A Development Stage Company)

Notes to the Consolidated Financial Statements

September 30, 2009

(Unaudited)

 

 

1.

Basis of Presentation

 

The accompanying unaudited interim financial statements of Sino Fibre Communications, Inc., have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in Sino’s Annual Report filed with the SEC on Form 10-KSB.  In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein.  The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.  Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for fiscal 2008 as reported in the form 10-KSB have been omitted.

 

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of Sino Fibre and its 85% owned subsidiary, China Business Online, after elimination of all significant inter-company accounts and transactions. Minority interests reflecting the 15% equity interest of outside owners has not been reflected as the only transaction has been an equity investment of $700,000 by Sino Fibre and operations have not commenced. After impairment assessment, the $700,000 investment hwas written off during the current period.

 

2 .

Going Concern

 

Sino Fibre is a development stage company. In a development stage company, management devotes most of its activities to developing a market for its products and services. Planned principal activities have begun but Sino Fibre has not generated significant revenues to date. Sino Fibre had a net loss of $3,324,246 and had a working capital and stockholders’ deficit of $676,747 at September 30, 2009. These matters raise substantial doubt about Sino Fibre’s ability to continue as a going concern. Continuation of Sino Fibre's existence is dependent upon its ability to obtain additional capital. Management’s plans in regards to this matter include receiving continued financial support from directors and officers and raising additional equity financing in 2009. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

3.            Deposit on Fiber Optic Network

               

A deposit of $2,000,000 was paid by Sino in 2007 and 2008 to Sino-Con Management Company Limited for the exclusive right to sales and leasing of Sino Con’s 32,000 km China nationwide fiber optic backbone. After impairment assessment, the $2,000,000 deposit was written off during the current period.

 

4.

Related Party Transactions

 

a)        As of September 30, 2009, Sino Fibre owes $128,385 to related parties.

b)        For the three months ended September 30, 2009, Sino Fibre paid $36,000 salary to the Company’s CEO.  As of September 30, 2009, Sino Fibre owed its CEO  $68,603 in expense reimbursements and unpaid salary.

 

-11-

2296726.2

 

 

5.

Shareholders’ Equity

 

Sino issues shares of common stock for services received by certain vendors and consultants. 

 

The following table summarizes common stock issuances and retirements as of September 30, 2009:

 

 

 

 

 

Common Stock

 

 

 

Number of Shares

 

 

Amount

 

Balance as of December 31,,2007

 

16,481,400

 

$

 16,481

 

   Shares issued for cash:

 

 

 

 

 

 

               Private placement at $0.35 per share

 

142,587

 

 

143

 

               Private placement at $0.31 per share

 

2,356,844

 

 

2,357

 

   Total shares issued for cash

 

2,499,431

 

 

2,500

 

 

 

 

 

 

 

 

   Shares issued for Convertible Notes at $0.05, March 2008

 

10,000,000

 

 

10,000

 

   Shares issued for interest on Convertible notes, March 2008

 

123,690

 

 

124

 

   Shares issued for deposit on fiber optic network

 

5,000,000

 

 

5,000

 

   Shares cancelled

 

(3,087,361

)

 

(3,087

)

   Shares issued for stock based compensation, May 2008

 

2,976,000

 

 

2,976

 

   Shares issued for stock based compensation, October 2008

 

600,000

 

 

600

 

   Shares issued for consulting fees:

 

 

 

 

 

 

               Shares issued at $0.135, July 2008

 

300,000

 

 

300

 

               Shares issued at $0.40, August 2008

 

25,000

 

 

25

 

               Shares issued at $0.40, September 2008

 

80,000

 

 

80

 

               Shares issued at $0.078, October 2008

 

127,500

 

 

127

 

   Total shares issued for consulting fees

 

982,500

 

 

982

 

Balance as of December 31, 2008

 

35,125,660

 

 

35,126

 

  Shares issued for settlement f loans, January 2009

 

2,050,000

 

 

2,050

 

  Shares issued for services, March 2009

 

2,100,000

 

 

2,100

 

  Shares issued for related party debt forgiveness, March 2009

 

422,512

 

 

423

 

  Shares issued for settlement of loans, May 2009

 

4,660,000

 

 

4,660

 

Balance as of September 30, 2009

 

44,358,172

 

$

 44,359

 

 

 

In May 2009, Sino issued 4,660,000 shares at $0.05 per share in settlement of amounts owed to its CEO.

 

In March 2009, Sino issued 422,512 shares at $0.25 per share in settlement of amounts owed to two former officers and a consultant and

another 2,000,000 shares fore services valued at $229,000.

 

In May 2008, Sino cancelled 3,087,361 shares per board minutes. The Shares were retired back into the Company treasury.

 

On March 28, 2006, Sino sold 1,380,000 common shares at $0.25 per share for $334,980.

 

During 2005 and 2004, Sino sold 11,300 and 100,100 common shares, respectively, at $0.10 per share for cash of $1,130 and $10,100.

 

In December 2005, 1,040,000 shares were sold for $260,000. The cash was collected March 2006.

 

In September 2004, Sino established a stock option plan for issuance of up to 2,000,000 common shares.

 

During September 2004, Sino issued 5,000 common shares for services valued at $0.10 per share to a consultant related to website development and maintenance.

 

During 2004, Sino sold 1,100,000 common shares for $20,000 with a private company whose president became a former director.

 

During August 2004, Sino issued 100,000 common shares at $0.01 per share for consulting services.

 

During September 3003, Sino issued 2,000,000 common shares at $0.001 per share to a consultant in settlement of consulting fees of $2,000.

 

During 2004, 2003, 2002 and prior years, management fees and related expenses of $4,660, $3,859 and $4,610, respectively, were charged to operations pursuant to an executive services agreement with the former president. Sino issued 416,000 at $0.01 and 5,000 at $0.10 per share for 2004, and 3,859,000 and 4,610,000 at $0.001 per share during 2003, and 2002, respectively, for these charges.

 

During July 2002, 500,000 shares were issued at $0.001 per share to settle debt.

 

On August 21, 1999, Sino purchased a license to market and distribute an oxygen enriched water product called Biocatalyst in British Columbia, Canada for 2,000,000 common shares with a fair value of $2,000.

 

During August 1999, Sino issued 1,250,000 common shares at inception and valued at $0.001 per share to each of two individuals in payment of organizational expenses.

 

-12-

2296726.2

 

SUMMARY OF STOCK OPTIONS

 

 

In October 2008, Sino established the 2008 Stock Incentive Plan (“2008 Plan”), which authorized the issuance of 4,000,000 shares of common stock to certain employees and consultants of the Company.  The 2008 Plan includes awards of shares of common stock and options for shares of the Company’s common stock. Most of the stock options vest and become exercisable immediately and have a contractual life of two years. As of September 30, 2009, 2,250,000 options or shares were available for issuance under the 2008 Plan. Certain options under the Option Plans are intended to qualify as incentive stock options pursuant to Section 422A of the Internal Revenue Code.   Sino issues new shares of common stock to satisfy the issuance of shares under this stock-based compensation plan.

 

Stock Options

 

The following table summarizes the stock option activity under the 2008 Plan:

 

 

 

 

 

 

 

 

Weighted

 

 

 

Outstanding and

 

 

Weighted

 

 

Average

 

 

 

Exercisable

 

 

Average

 

 

Remaining

 

 

 

Options

 

 

Exercise Price

 

 

Contractual Life

 

Balance, December 31, 2006

 

700,000

 

$

 0.27

 

 

 -

 

   Options granted

 

1,350,000

 

 

0.25

 

 

 1 year

 

   Options expired

 

(200,000

)

 

0.25

 

 

 -

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2007

 

1,850,000

 

 

0.26

 

 

1 year

 

   Options cancelled and expired

 

(700,000

)

 

0.27

 

 

 -

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2008

 

1,150,000

 

 

0.25

 

 

1 year

 

   Options expired

 

(250,000)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, September 30, 2009

 

900,000

 

$

 0.25

 

 

1 year

 

 

               

 

 

SUMMARY OF STOCK WARRANTS

A summary of the change in common stock purchase warrants is as follows:

 

 

 

 

 

Weighted

 

 

Weighted Average

 

 

 

Outstanding

 

 

Average

 

 

Remaining

 

 

 

Warrants

 

 

Exercise Price

 

 

Contractual Life

 

Balance, December 31, 2006

 

0

 

$

 -

 

 

-

 

   Warrants issued

 

12,571,428

 

 

0.22

 

 

 1 year

 

   Warrants exercised

 

0

 

 

-

 

 

 

 

   Warrants expired

 

0

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2007

 

12,571,428

 

 

0.22

 

 

1 year

 

   Warrants issued

 

2,356,844

 

 

0.31

 

 

 

 

   Warrants exercised

 

-

 

 

-

 

 

 

 

   Warrants expired

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2008

 

14,928,272

 

 

0.24

 

 

1 year

 

   Warrants issued

 

1,000,000

 

 

0.50

 

 

5 years

 

   Warrants exercised

 

-

 

 

 

 

 

 

 

   Warrants expired

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, September 30, 2009

 

15,928,272

 

$

 0.26

 

 

3 years

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-13-

2296726.2

 

 

 

 

6.

Commitments

 

 

 

In September 3008, Sino signed a month to month lease agreement for its shared service office in New York at a monthly rental of $325.

 

 

 

In May 2008, Sino entered into an agreement with consultant for services performed at a monthly compensation of $5,000 for 24 months.

 

 

 

In May 2008, Sino entered into an agreement with Shenzhen Union pay EPS Financial Service Co. Ltd. to develop online ecommerce in China.

 

 

 

On April 29, 2008, Sino Fibre entered into an agreement to receive capital raising and financial advisory services free of charge.

 

 

 

In April 2008, Sino signed a lease agreement for its shared service office space in Hong Kong at a monthly rental of $231.

 

 

 

In March 2008, Sino committed to set up two separate business units to pursuit business development projects with Sino-Con/SCRC and joint venture with CAMSE.

 

 

 

 

7.

Subsequent Events

 

 

 

There were no material subsequent events.

 

 

 

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

We are a development stage company and have not yet generated or realized any revenues from our current business operations.  We currently do not intend to buy or sell any plant or significant equipment during the next twelve months.  We currently do not intend to conduct any product research or development other than as set out below.  Further, we do not expect significant changes in the number of employees.

One of our specific goals is to promote Sino-Con Telecomm Group, Ltd., to promote and sell Sino-Con’s fiber optic backbone services to foreign telecommunications carriers and corporate users and to assemble a client database.  We intend to do this by completing an exclusive services agreement with Sino Con Telecomm Group and to determine the demand for such services by international companies and telecom carriers and to market these services directly to such companies and carriers. 

Our other specific goal is to devote resources and continue our joint venture with China Association of Small and Medium Enterprises (“CASME”).  The joint venture company, China Business Online Company Limited, will explore the Chinese market and introduce e-business and provide barter trade services to Chinese small and medium sized enterprises.  CASME is administered by the Chinese National Development and Reform Commission.  Sino Fibre intends to invest $6 million dollars to own 85% and will manage the joint venture company business, and CASME intends to bring in Chinese central government sanction, assistance and support, as well as its 4.5 million medium and small private business members to begin the business-to-business and Barter Exchange will own the remaining 15% of the joint venture.

However, due to the present difficulty in securing funds, we are deferring our plans until the global economy recovers.

 

-14-

2296726.2

 

Limited Operating History; Need for Additional Capital

There is no historical financial information about us upon which to base an evaluation of our performance.  We have not generated any revenues from operations.  We cannot guarantee we will be successful in our business operations.  Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns due to price and cost increases in services.

To become profitable and competitive, we will have to attract customers who will enter into agreements with Sino-Con Telecomm Group., Ltd. to use Sino-Con’s fiber optic backbone service or we will have to generate revenues from China Business Online Company Limited, our joint venture company with CASME.

We will require additional financing to cover our costs that we expect to incur over the next twelve months.  We believe that debt financing will not be an alternative for funding our operations as we do not have tangible assets to secure any debt financing.  We anticipate that additional funding will be in the form of equity financing from the sale of our common stock.  However, we cannot provide any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund our plan of operations.  In the absence of such financing, we will not be able to continue and our business plan will fail.

Results of Operations

Revenues

We have not generated any revenues from our operations during the three-month period ended September 30, 2009 or during last two years.

Expenses

We incurred general and administrative expenses of $6,060 for the three-month period ended September 30, 2009, as compared to $29,525 for the same period in 2008, a decrease of $23,465 or 79%.  

Our management fees were $36,000 for the three-months ended September 30, 2009 compared with $60,000 for the same period last year due to a change of management. 

During the three months ended September 30, 2009 we did not incur any professional fees or consulting fees compared with fees of $50,476 and $112,823 respectively for the three months ended September 30, 2008. 

Liquidity and Capital Resources

As at September 30, 2009, we had cash of $238.

Cash Used in Operating Activities

Net cash generated from operating activities was $101 for the nine-month period ended September 30, 2009.  For the same period in 2008, there was net cash used of $222,079.  For the period from August 19, 1999 (inception) to September 30, 2009, net cash used in operating activities was $871,337.

Cash Used in Investing Activities

We did not have any investing activities during the nine months ended September 30, 2009 or during the same period last year. Net cash used in investing activities was  $890,000 for the period from August 19, 1999 (inception) to September 30, 2009.

Cash from Financing Activities

We have funded our business to date primarily from sales of our common stock but did not sell any common stock during the nine months ended September 30, 2009. There are no assurances that we will be able to achieve further sales of our common stock or any other form of additional financing.  If we are unable to achieve the financing necessary to continue our plan of operations, then we will not be able to continue our operations and our business will fail.

-15-

2296726.2

 

Going Concern

We are a development stage company.  In a development stage company, management devotes most of its activities to developing a market for its products and services.  Planned principal activities have begun, but we have not generated revenues to date.  For these reasons, our auditors stated in their report for the period from August 19, 1999 (inception) through December 31, 2008 that they have doubt we will be able to continue as a going concern.

Future Financing

We anticipate continuing to rely on equity sales of our common stock in order to continue to fund our business operations.  Issuances of additional shares will result in dilution to our existing shareholders.  There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned operations.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4.  Controls and Procedures.

 

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) that are designed to ensure that information required to be disclosed by us in reports we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including the our Chief Executive Officer (as our chief executive officer and chief financial officer), to allow timely decisions regarding required disclosures.  In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.  As of the end of the period covered by this report, and under the supervision and with the participation of management, including our Chief Executive Officer, who is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act, such persons conducted an evaluation of the effectiveness of the design and operation of these disclosure controls and procedures.  Based on this evaluation and subject to the foregoing, our Chief Executive Officer concluded that these controls are not effective because there are material weaknesses in our internal controls over financial reporting.  A material weakness is a deficiency, or a combination of control deficiencies, in internal control over reporting such that there is a reasonable possibility that that a material misstatement our annual or interim financial statements will not be prevented or detected on a timely basis.

 

-16-

2296726.2

 

Changes in Internal Control Over Financial Reporting

During the period covered by this report, there have not been any changes in our internal controls that have materially affected or are reasonably likely to materially affect, the our internal control over financial reporting.  However, please note the discussion above.

 

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.

We are not presently a party to any legal proceedings and, to our knowledge, no such proceedings are threatened or pending.

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

 

No stock was sold for valuable consideration during the nine months ended September 30, 2009.

 

Item 3.  Defaults Upon Senior Securities.

None.

Item 4.  Submission of Matters to a Vote of Security Holders.

No matters were submitted to our security holders for a vote during the nine months ended September 30, 2009.

Item 5.  Other Information.

None.

Item 6.  Exhibits.

The following exhibits are attached hereto:

Exhibit No.

Description of Exhibit

31.1

Certification of principal executive officer pursuant to Rule 13a-15(e) and 15d-15(e), promulgated under the Securities and Exchange Act of 1934, as amended, filed herewith

31.2

Certification of principal accounting officer pursuant to Rule 13a-15(e) and 15d-15(e), promulgated under the Securities and Exchange Act of 1934, as amended, filed herewith

32.1

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith

 

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2296726.2

 

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SINO FIBRE COMMUNICATIONS, INC.

By:

 

 

/s/ Daniel Mckinney

______________________________________
Daniel Mckinney
Chief Executive Officer
(Principal Executive Officer and
Principal Financial Officer)

July 14, 2011

 

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2296726.2

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