Item 1. Financial Statements
SW CHINA IMPORTS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
ASSETS
|
|
|
|
3/31/14
(unaudited)
|
|
|
|
12/31/13
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
—
|
|
|
$
|
37
|
|
|
|
|
|
|
|
|
|
|
Total assets:
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ (DEFICIT)
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
2,882
|
|
|
$
|
20,198
|
|
Notes payable to stockholders
|
|
|
78,248
|
|
|
|
50,550
|
|
|
|
|
81,130
|
|
|
|
70,748
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
$
|
81,130
|
|
|
$
|
70,748
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ (deficit):
|
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value, 25,000,000 shares authorized;
no shares issued and outstanding
|
|
|
—
|
|
|
|
—
|
|
Common stock, $0.0001 par value, 250,000,000 shares authorized;
210,000,000 and 210,000,000 shares issued and outstanding, respectively
|
|
|
21,000
|
|
|
|
21,000
|
|
Additional paid-in capital
|
|
|
59,017,321
|
|
|
|
59,014,061
|
|
(Deficit) accumulated during the development stage
|
|
|
(59,119,451
|
)
|
|
|
(59,105,772
|
)
|
|
|
|
|
|
|
|
|
|
Total stockholders’ (deficit)
|
|
$
|
(81,130
|
)
|
|
$
|
(70,711
|
)
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ (deficit)
|
|
$
|
—
|
|
|
$
|
37
|
|
The accompanying notes to the financial statements
are an integral part of these statements.
SW CHINA IMPORTS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(unaudited)
|
|
For the three months ended
March 31,
|
|
Cumulative
from (inception)
|
|
|
2014
|
|
2013
|
|
to 3/31/14
|
|
|
|
|
|
|
|
Revenues, net
|
|
$
|
—
|
|
|
$
|
4,918
|
|
|
$
|
8,148
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues
|
|
|
—
|
|
|
|
178
|
|
|
|
178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
—
|
|
|
|
4,740
|
|
|
|
7,970
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
|
|
3,028
|
|
|
|
616
|
|
|
|
4,348
|
|
Consulting fees
|
|
|
250
|
|
|
|
—
|
|
|
|
23,540,625
|
|
Legal fees
|
|
|
7,575
|
|
|
|
7,575
|
|
|
|
146,938
|
|
Accounting fees
|
|
|
1,000
|
|
|
|
2,500
|
|
|
|
17,675
|
|
Director fees
|
|
|
—
|
|
|
|
—
|
|
|
|
35,400,000
|
|
Transfer agent fees
|
|
|
372
|
|
|
|
977
|
|
|
|
6,395
|
|
Total expenses
|
|
|
12,225
|
|
|
|
11,668
|
|
|
|
59,115,981
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) from operations
|
|
|
(12,225
|
)
|
|
|
(6,928
|
)
|
|
|
(59,108,011
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(1,454
|
)
|
|
|
(1,003
|
)
|
|
|
(11,440
|
)
|
Total other income (expense)
|
|
|
(1,454
|
)
|
|
|
(1,003
|
)
|
|
|
(11,440
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
|
|
$
|
(13,679
|
)
|
|
$
|
(7,931
|
)
|
|
$
|
(59,119,451
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) per common share,
basic and diluted
|
|
$
|
(0.00
|
)
|
|
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding,
basic and diluted
|
|
|
210,000,000
|
|
|
|
500,000,000
|
|
|
|
|
|
The accompanying notes to the financial statements
are an integral part of these statements.
SW CHINA IMPORTS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS’ (DEFICIT)
For the period from February 23, 2011 (inception)
to March 31, 2014
(unaudited)
|
|
|
Common Stock
|
|
|
|
Additional
Paid-In
|
|
|
|
Common
Stock
|
|
|
|
(Deficit)
Accumulated
During the
Development
|
|
|
|
|
|
Description
|
|
|
Shares
|
|
|
|
Amount
|
|
|
|
Capital
|
|
|
|
Subscribed
|
|
|
|
Stage
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
February 23, 2011
(inception)
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares to
directors (founder’s shares)
|
|
|
100,000,000
|
|
|
|
10,000
|
|
|
|
(10,000
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares to
consultants
|
|
|
10,000,000
|
|
|
|
1,000
|
|
|
|
99,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares for cash
|
|
|
1,570,000
|
|
|
|
157
|
|
|
|
15,543
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Imputed interest on related party loan
|
|
|
—
|
|
|
|
—
|
|
|
|
1,629
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,629
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) for the period
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(138,206
|
)
|
|
|
(138,206
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2011
|
|
|
111,570,000
|
|
|
$
|
11,157
|
|
|
$
|
106,172
|
|
|
$
|
—
|
|
|
$
|
(138,206
|
)
|
|
$
|
(20,877
|
)
|
The accompanying notes to the financial statements
are an integral part of these statements.
SW CHINA IMPORTS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS’ (DEFICIT)
For the period from February 23, 2011 (inception)
to March 31, 2014
(continued)
(unaudited)
|
|
|
Common Stock
|
|
|
|
Additional
Paid-In
|
|
|
|
Common
Stock
|
|
|
|
(Deficit)
Accumulated
During the
Development
|
|
|
|
|
|
Description
|
|
|
Shares
|
|
|
|
Amount
|
|
|
|
Capital
|
|
|
|
Subscribed
|
|
|
|
Stage
|
|
|
|
Total
|
|
Balance, December 31, 2011
|
|
|
111,570,000
|
|
|
$
|
11,157
|
|
|
$
|
106,172
|
|
|
$
|
—
|
|
|
$
|
(138,206
|
)
|
|
$
|
(20,877
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares to officers
|
|
|
236,000,000
|
|
|
|
23,600
|
|
|
|
35,376,400
|
|
|
|
—
|
|
|
|
—
|
|
|
|
35,400,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares for retiring convertible note
|
|
|
1,007,500
|
|
|
|
101
|
|
|
|
20,049
|
|
|
|
—
|
|
|
|
—
|
|
|
|
20,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares to consultants
|
|
|
156,422,500
|
|
|
|
15,642
|
|
|
|
23,447,733
|
|
|
|
—
|
|
|
|
—
|
|
|
|
23,463,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rescinding of consulting agreement
|
|
|
(5,000,000
|
)
|
|
|
(500
|
)
|
|
|
500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Imputed interest on related party loan
|
|
|
—
|
|
|
|
—
|
|
|
|
3,909
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,909
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) for the period
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(58,906,066
|
)
|
|
|
(58,906,066
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2012
|
|
|
500,000,000
|
|
|
$
|
50,000
|
|
|
$
|
58,954,763
|
|
|
$
|
—
|
|
|
$
|
(59,044,272
|
)
|
|
$
|
(39,509
|
)
|
The accompanying notes to the financial statements
are an integral part of these statements.
SW CHINA IMPORTS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS’ (DEFICIT)
For the period from February 23, 2011 (inception)
to March 31, 2014
(continued)
(unaudited)
|
|
|
Common Stock
|
|
|
|
Additional
Paid-In
|
|
|
|
Common
Stock
|
|
|
|
(Deficit)
Accumulated
During the
Development
|
|
|
|
|
|
Description
|
|
|
Shares
|
|
|
|
Amount
|
|
|
|
Capital
|
|
|
|
Subscribed
|
|
|
|
Stage
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2012
|
|
|
500,000,000
|
|
|
$
|
50,000
|
|
|
$
|
58,954,763
|
|
|
$
|
—
|
|
|
$
|
(59,044,272
|
)
|
|
$
|
(39,509
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancellation of shares of common stock
|
|
|
(300,000,000
|
)
|
|
|
(30,000
|
)
|
|
|
30,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares of common stock to consultant
|
|
|
10,000,000
|
|
|
|
1,000
|
|
|
|
25,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
26,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Imputed interest on related party loan
|
|
|
—
|
|
|
|
—
|
|
|
|
4,298
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,298
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) for the period
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(61,500
|
)
|
|
|
(61,500
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2013
|
|
|
210,000,000
|
|
|
$
|
21,000
|
|
|
$
|
59,014,061
|
|
|
$
|
—
|
|
|
$
|
(59,105,772
|
)
|
|
$
|
(70,711
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forgiveness of debt
|
|
|
|
|
|
|
|
|
|
|
1,806
|
|
|
|
|
|
|
|
|
|
|
|
1,806
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Imputed interest on related party loan
|
|
|
|
|
|
|
|
|
|
|
1,454
|
|
|
|
|
|
|
|
|
|
|
|
1,454
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) for the period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13,679
|
)
|
|
|
(13,679
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2014
|
|
|
210,000,000
|
|
|
|
21,000
|
|
|
|
59,017,321
|
|
|
|
|
|
|
|
(59,119,451
|
)
|
|
|
(81,130
|
)
|
The accompanying notes to the financial statements
are an integral part of these statements.
SW CHINA IMPORTS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(unaudited)
|
|
|
For
the three months ended
March 31,
|
|
|
|
Cumulative from
2/23/11 (inception) to
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
3/31/14
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
|
|
$
|
(13,679
|
)
|
|
$
|
(7,931
|
)
|
|
$
|
(59,119,451
|
)
|
Adjustments to reconcile net (loss) to net cash (provided by) operating
activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued in connection with services provided by consultants
|
|
|
—
|
|
|
|
—
|
|
|
|
23,589,375
|
|
Common stock issued to officers
|
|
|
—
|
|
|
|
—
|
|
|
|
35,400,000
|
|
Imputed interest on related party loan
|
|
|
1,454
|
|
|
|
1,003
|
|
|
|
11,440
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
(Increase) decrease in accounts receivable
|
|
|
—
|
|
|
|
(293
|
)
|
|
|
—
|
|
Increase (decrease) in accounts payable
|
|
|
(12,188
|
)
|
|
|
7,524
|
|
|
|
32,386
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided (used) by operating activities
|
|
|
(37
|
)
|
|
|
303
|
|
|
|
(86,250
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in notes payable to a stockholder
|
|
|
—
|
|
|
|
3,800
|
|
|
|
70,550
|
|
Decrease in notes payable to a stockholder
|
|
|
—
|
|
|
|
(3,950
|
)
|
|
|
(20,000
|
)
|
Borrowings on debt
|
|
|
—
|
|
|
|
—
|
|
|
|
20,000
|
|
Proceeds from issuance of common stock
|
|
|
—
|
|
|
|
—
|
|
|
|
15,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided (used) by financing activities
|
|
|
—
|
|
|
|
(150)
|
|
|
|
86,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash
|
|
|
(37
|
)
|
|
|
153
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash – beginning of period
|
|
|
37
|
|
|
|
600
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash – end of period
|
|
$
|
—
|
|
|
$
|
753
|
|
|
$
|
—
|
|
The accompanying notes to the financial statements
are an integral part of these statements.
SW CHINA IMPORTS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(unaudited)
(continued)
|
|
|
For
the three months ended
March 31,
|
|
|
|
Cumulative From
2/23/11 (inception) to
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
3/31/14
|
|
Non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Foregiveness of debt
|
|
$
|
1,806
|
|
|
$
|
—
|
|
|
$
|
1,806
|
|
Assumption of accounts payable
|
|
|
(29,502
|
)
|
|
|
—
|
|
|
|
(29,502
|
)
|
Issuance of common shares to directors (founder’s shares)
|
|
|
—
|
|
|
|
—
|
|
|
|
10,000
|
|
Conversion of note payable into common stock
|
|
|
—
|
|
|
|
—
|
|
|
|
20,150
|
|
Rescinding of common shares
|
|
|
—
|
|
|
|
—
|
|
|
|
500
|
|
Cancellation of common shares
|
|
|
—
|
|
|
|
—
|
|
|
|
30,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the period for:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
The accompanying notes to the financial statements
are an integral part of these statements.
SW CHINA IMPORTS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
March 31, 2014
(unaudited)
NOTE 1 – Summary of Significant Accounting
Policies
Unaudited Interim Financial Information
The accompanying Balance Sheet as of March
31, 2014, Statements of Operations for the three months ended March 31, 2014 and 2013, and cumulative from February 23, 2011 (Inception)
to March 31, 2014, Statement of Stockholder’s (Deficit) for the cumulative period from February 23, 2011 (Inception) to March
31, 2014, and the Statements of Cash Flows for the three months ended March 31, 2014 and 2013, and cumulative from February 23,
2011 (Inception) to March 31, 2014, are unaudited. These unaudited interim financial statements have been prepared in accordance
with accounting principles accepted in the United States of America (“
GAAP
”). In the opinion of the company’s
management, the unaudited interim financial statements have been prepared on the same basis as the audited financial statements
and included all adjustments necessary for the fair presentation of the Company’s statement of financial position at March
31, 2014 and its results of operations and its cash flows for the period ended March 31, 2014 and cumulative from February 23,
2011 (inception) to March 31, 2014. The results for the period ended March 31, 2014 are not necessarily indicative of the results
to be expected for the fiscal year ending December 31, 2014.
Organization
SW China Imports, Inc. (“
Company
”
or “
SW China Imports
”) is a development stage company with minimal operations. SW China Imports was incorporated
under the laws of the State of Nevada on February 23, 2011.
Basis of Presentation
The accompanying financial statements have
been prepared in accordance with United States Generally Accepted Accounting Principles (US GAAP) for financial information and
in accordance with the Securities and Exchange Commission’s (SEC) Regulation S-X. They reflect all adjustments which are,
in the opinion of the Company’s management, necessary for a fair presentation of the financial position and operating results
as of and for the period ended March 31, 2014 and for the period February 23, 2011 (inception) to March 31, 2014.
Use of Estimates
The accompanying financial statements of the
Company have been prepared in accordance with generally accepted accounting principles in the United States of America. Because
a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements
for a period necessarily involves the use of estimates which have been made using careful judgment. Actual results may vary from
these estimates.
Cash and Cash Equivalents
For purposes of the statement of cash flows,
the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents.
As of March 31, 2014, the Company had $0 in cash and equivalents and $37 at December 31, 2013.
Investments
The Company accounts for its marketable securities,
which are classified as trading securities, in accordance with generally accepted accounting principles for certain investments
in debt and equity securities, which requires that trading securities be carried at fair value. Unrealized gains and losses due
to changes in fair value as well as realized gains and losses resulting from sales of securities are reported as Other Income/Expenses
in the statement of operations. Fair value of the securities is based upon quoted market prices in active markets or estimated
fair value when quoted market prices are not available. The cost basis for realized gains and losses is determined on a specific
identification basis. As of March 31, 2014 the Company had no investments.
Fair Value of Financial Instruments
ASC 820, “Fair Value Measurements”
and ASC 825, Financial Instruments, requires an entity to maximize the use of observable inputs and minimize the use of unobservable
inputs when measuring fair value. It establishes a fair value hierarchy based on the level of independent, objective evidence surrounding
the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon
the lowest level of input that is significant to the fair value measurement. It prioritizes the inputs into three levels that may
be used to measure fair value:
Level
|
|
Description
|
|
|
|
Level 1
|
|
Applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
|
Level 2
|
|
Applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
|
Level 3
|
|
Applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
|
The estimated fair values of the Company’s
financial instruments are as follows:
|
Fair Value Measurement at March 31, 2014 Using:
|
|
|
|
|
|
|
|
|
|
Description
|
|
3/31/14
|
|
Quoted
Prices In
Active
Markets For
Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
Assets
|
|
|
|
|
|
|
|
|
|
Cash and equivalents
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
$
|
2,882
|
$
|
2,882
|
$
|
-
|
$
|
-
|
|
Note payable to stockholder
|
|
78,248
|
|
78,248
|
|
-
|
|
-
|
|
$
|
81,130
|
$
|
81,130
|
$
|
-
|
$
|
-
|
|
Fair Value Measurement at December 31, 2013 Using:
|
|
|
|
|
|
|
|
|
|
Description
|
|
12/31/13
|
|
Quoted
Prices In
Active
Markets For
Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
Assets
|
|
|
|
|
|
|
|
|
|
Cash and equivalents
|
$
|
37
|
$
|
37
|
$
|
-
|
$
|
-
|
|
$
|
37
|
$
|
37
|
$
|
-
|
$
|
-
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
$
|
20,198
|
$
|
20,198
|
$
|
-
|
$
|
-
|
|
Note payable to stockholder
|
|
50,550
|
|
50,550
|
|
-
|
|
-
|
|
$
|
70,748
|
$
|
70,748
|
$
|
-
|
$
|
-
|
Net Loss per Share Calculation
Basic net loss per common share is computed
by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding for the
period. Diluted earnings per shares is computed similar to basic 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. During the period ended March 31, 2014 and cumulative
from February 23, 2011 (inception) to March 31, 2014 the Company had no dilutive financial instruments issued or outstanding.
Income Taxes
The Company accounts for income taxes pursuant
to FASB ASC 740, Income Taxes. Under FASB ASC 740-10-25, deferred tax assets and liabilities are determined based on temporary
differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax
assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating
the differences.
The Company maintains a valuation allowance
with respect to deferred tax assets. SW China Imports establishes a valuation allowance based upon the potential likelihood of
realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations
for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within
the carryforward period under the Federal tax laws.
Changes in circumstances, such as the Company
generating taxable income, could cause a change in judgment about its ability to realize the related deferred tax asset. Any change
in the valuation allowance will be included in income in the year of the change in estimate.
Fiscal Year
The Company elected December 31st for its fiscal
year end.
NOTE 2 – Development Stage Activities
and Going Concern
The Company is
in the development stage and has minimal operations,
and as such has devoted most of its efforts
since its inception to developing its business plan, issuing common stock, attempting to raise capital, establishing its accounting
systems and other administrative functions. The Company plans on importing high-end handmade lace wigs and hairpieces manufactured
in China and South Korea into the United States. After import, the Company intends to sell its products in bulk to beauty supply
stores, hair salons, and independent hair stylists. The Company also intends to sell its products directly to the retail consumer
via the Internet. Additionally, the Company intends to conduct additional capital formation activities through the issuance of
its common stock to achieve these long-term business growth strategies.
While management of the Company believes that
SW China Imports will be successful in its planned operating activities under its business plan and capital formation activities,
there can be no assurance that it will be able to successfully execute on either of these or that it will be able to generate adequate
revenues to earn a profit or sustain its operations.
The accompanying financial statements have
been prepared in conformity with accounting principles generally accepted in the United State of America, which contemplate continuation
of the Company as a going concern. The Company has not established a source of revenues sufficient to cover its operating costs,
and as such, has incurred an operating loss since its inception. Further, as of March 31, 2014, the Company had a working capital
deficiency of ($81,130). These and other factors raise substantial doubt about the Company’s ability to continue as a
going concern. The accompanying financial statements do not include any adjustments or classifications that may result from the
possible inability of the Company to continue as a going concern.
NOTE 3 – Common Stock
The total number of common shares authorized
that may be issued by the Company is 250,000,000 shares with a par value of $0.0001 per share.
During
the period February 23, 2011 (inception) to March 31, 2014 the Company issued an aggregate of 516,000,000 shares as follows:
During the period February 23, 2011 (inception)
to March 31, 2014 the Company cancelled an aggregate of 306,000,000 split adjusted shares of its common stock as follows:
As of March 31, 2014, the Company had 210,000,000
shares of its common stock issued and outstanding.
NOTE 4 – Preferred Stock
The total number of preferred shares authorized
that may be issued by the Company is 25,000,000 shares with a par value of $0.0001 per share.
As of March 31, 2014, the Company had no shares
of its preferred stock issued and outstanding.
NOTE 5 – Income Taxes
The provision (benefit) for income taxes for
the period from February 23, 2011 (inception) to March 31, 2014 was as follows, assuming a 35 percent effective tax rate:
|
|
For the three
months ended
3/31/14
|
|
For the period
February 23, 2011
(inception) to
3/31/14
|
Current tax provision:
|
|
|
|
|
|
|
|
|
Federal
|
|
|
|
|
|
|
|
|
Taxable income
|
|
$
|
—
|
|
|
|
|
|
Total current tax provision
|
|
$
|
—
|
|
|
|
|
|
Deferred tax provision:
|
|
|
|
|
|
|
|
|
Federal
|
|
|
|
|
|
|
|
|
Loss carryforwards
|
|
$
|
42,004
|
|
|
$
|
37,296
|
|
Change in valuation allowance
|
|
|
(42,004
|
)
|
|
|
(37,296
|
)
|
Total deferred tax provision
|
|
$
|
—
|
|
|
$
|
—
|
|
As of March 31, 2014, the Company had approximately
$171,284 in tax loss carryforwards that can be utilized in future periods to reduce taxable income through 2032.
The Company provided a valuation allowance
equal to the deferred income tax assets for the period from February 23, 2011 (inception) to March 31, 2014 because it is not presently
known whether future taxable income will be sufficient to utilize the tax loss carryforwards.
The Company has no uncertain tax positions.
NOTE 6 – Change of Control
On March 27, 2014 the shareholders of SW China
Imports, Inc. sold their shares, 210,000,000, to Big Sky Oil, Inc. and another investor, resulting in a change of control.
NOTE 7 – Related Party Transactions
For the period February 23, 2011 (inception)
to March 31, 2014 the Company’s rent expense was zero. This is because of the short time period and the minimal level of
operating activities that have transpired during this period of time.
As of March 31, 2014, the Company had
notes payable to a related party stockholder in the amount of $78,248. These notes were assumed during the change of control
transaction and are payable on demand and do not bear interest. During the three months ended March 31, 2014 the
imputed interest expense on the notes was $1,454.
In the change of control agreements dated March
27, 2014, $1,806 of related party debt was forgiven by a former shareholder.
NOTE 8 – Recent Accounting Pronouncements
The Company does not expect the impact of recent
accounting pronouncements to have a material effect on the Company’s financial statemetns.
NOTE 9 – Subsequent Events
No other material events or transactions have
occurred during this subsequent event reporting period which required recognition or disclosure in the financial statements.
Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations
We are a development stage corporation with
limited operations. Our independent registered public accounting firm has issued a going concern opinion in their audit report
dated March 25, 2014, which can be found in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“
SEC
”)
on March 25, 2014. This means that our auditors believe there is substantial doubt that we can continue as an on-going business
for the next 12 months. Accordingly, we must raise additional cash to sustain our limited operations.
We presently are exploring other such sources
of funding, including raising funds through a second public offering, a private placement of securities, or loans. If we are unable
to raise this additional funding, we will either have to suspend operations until we do raise the cash or cease operations entirely.
The following discussion should be read in
conjunction with our Financial Statements and the notes thereto and the other information included in this Quarterly Report as
filed with the SEC on Form 10-Q.
Limited Operating History; Need for Additional
Capital
There is limited historical financial information
about us upon which to base an evaluation of our performance. We remain in the start-up stage of operations and have only begun
to generate nominal revenue. We cannot guarantee that 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,
such as increases in marketing costs, increases in administration expenditures associated with daily operations, increases in accounting
and audit fees, and increases in legal fees related to filings and regulatory compliance.
Currently, we do not have any arrangements
for additional financing. We have no assurance that future financing will be available to us on acceptable terms. If financing
is not available on satisfactory terms, we may be unable to continue, develop, or expand our operations. Equity financing could
result in additional dilution to existing shareholders.
Status as a Shell Company
As of March 31, 2014, because we have nominal
operations and minimal assets, we are considered to be a shell company under the Securities Exchange Act of 1934, as amended. Because
we are considered a shell company, the securities sold in previous offerings can only be resold through (i) registration under
the Securities Act of 1933, as amended (“
Securities Act
”), (ii) Section 4(1) of the Securities Act, if available,
for non-affiliates, or (iii) by meeting the conditions of Rule 144(i) of the Securities Act.
Plan of Operations
The Company plans to acquire medical
marijuana collectives and or medical marijuana dispensaries, which are currently in operations legally within the states that medical
marijuana has been approved and is legal. Currently the Company has been actively negotiating with existing collectives in the
states of Washington and Oregon.
The company intends to further expand
by opening new medical marijuana collectives and medical marijuana dispensaries in locations where an acquisition is not readily
available such as states where medical marijuana has been newly legalized. The new locations will be based on medicinal demand
and location analysis to support maximum potential of success.
The Company currently has offices in Dallas,
Texas and Port Townsend Washington.
Results of Operations
Three Months Ended March 31, 2014 and 2013
Revenues
. We generated $0 in revenue
during the three months ended March 31, 2014 and $4,918 for the same period a year ago. This revenue was derived solely from design
consulting services.
Gross Profit
. Our gross profit was $0
during the three months ended March 31, 2014 and $4,740 for the same period a year ago.
Operating Expenses
. Our total operating
expenses for the three months ended March 31, 2014 were $12,225, which is a $557, or 4.8%, increase compared to operating expenses
of $11,668 for the same period a year ago. Our operating expenses were primarily attributable to costs related to our ongoing SEC
reporting requirements, which have consisted primarily of legal, accounting and outside consulting fees.
Income (Loss) From Operations
. We had
a loss from operations of ($12,225) for the three months ended March 31, 2014 compared to an operating loss of ($6,928) for the
same period a year ago, which represented a $5,297, or 76.5%, increase in operating loss.
Other income (expenses)
. During the
three months ended March 31, 2014 we recorded ($1,454) interest expense compared to ($1,003) for the same period a year ago, which
represents an increase of $454, or 45.1%. These interest expense in 2013 comprised entirely of imputed interest expenses related
to notes outstanding payable to a related party. The imputed interest was recorded in our financial statements under additional
paid-in capital.
Net Income (Loss)
. We had a net loss
of ($13,679) for the three months ended March 31, 2014 compared to a net loss of ($7,931) for the same period a year ago, which
represented an increase of $5,748, or 72.5%, in net loss. The increase in net loss was the result of increases in expenses directly
related to maintaining our financial reporting compliance with the SEC.
Cumulative During the Development Stage
– February 23, 2011 (inception) through March 31, 2014
For ease of reading we refer to the period
of February 23, 2011 (inception) through March 31, 2014 as the “
Developmental Period
”.
Revenues
. We have generated $8,148 in
revenue during the Developmental Period. This revenue was derived from selling $260 in products and $7,888 in design consulting
services.
Cost of Revenues
. Our cost of revenues
was $178 during the Developmental Period.
Gross Profit
. Our gross profit was $7,970
during the Developmental Period. Excluding revenue and gross profits generated from design consulting services, our gross profit
for product sales was $82, which represents a gross profit margin of 46.1%.
Operating Expenses
. Our total operating
expenses for the Developmental Period were $59,115,981. These operating expenses were primarily attributable to organizational
costs related to our formation, an early offering of our common stock, complying with our ongoing SEC reporting requirements, obtaining
a listing on the OTC Bulletin Board, applying for DTC Eligibility, and issuing shares of our common stock to our officers –
current and former – and outside consultants. These expenses have consisted primarily of legal, accounting, and outside consulting
fees.
Loss From Operations
. We have incurred
an operating loss of ($59,108,011) during the Developmental Period. The operating loss was primarily attributable to organizational
costs related to our formation, an early offering of our common stock, complying with our ongoing SEC reporting requirements, obtaining
a listing on the OTC Bulletin Board, applying for DTC Eligibility, and issuing shares of our common stock to our officers –
current and former – and outside consultants. These expenses have consisted primarily of legal, accounting, and outside consulting
fees.
Other income (expenses)
. During the
Developmental Period we recorded ($11,440) in other expenses, which was comprised of interest expense and imputed interest expenses
related to notes outstanding payable to a related party. The imputed interest was recorded in our financial statements under additional
paid-in capital.
Net Loss
. We have incurred a net loss
of ($59,119,451) during the Developmental Period. The net loss was primarily attributable to organizational costs related to our
formation, an early offering of our common stock, complying with our ongoing SEC reporting requirements, obtaining a listing on
the OTC Bulletin Board, applying for DTC Eligibility, and issuing shares of our common stock to our officers – current and
former – and outside consultants. These expenses have consisted primarily of legal, accounting, and outside consulting fees.
Total Stockholders’ Deficit
. Our
stockholders’ deficit was ($80,130) as of March 31, 2014.
Liquidity and Capital Resources
As of March 31, 2014, we had $0 of assets.
Our total liabilities were $81,130, which consisted of accounts payable of $2,882 and notes payable aggregating $78,248 to a related
party. These are demand notes do not interest. Further, we had no external credit facilities (i.e. bank loans, revolving lines
of credit, etc.).
We expect to incur continued losses over the
next 12 months, possibly even longer. We believe that we need at least $125,000 in additional funding to commence operations and
meet our minimal working capital requirements over the next 12 months.
We are presently exploring various sources
of funding, including raising funds through a secondary public offering, a private placement of our securities, or loans. Without
limiting our available options, future equity financings will most likely be through the sale of additional shares of our common
stock. It is possible that we could also offer warrants, options and/or rights in conjunction with any future issuances of our
common stock. However, we can give no assurance that financing will be made available to us, and if made available to us, in amounts
or on terms acceptable to us. If we cannot secure adequate financing, we may be forced to cease operations and you will lose your
entire investment.
Going Concern Consideration
Our independent registered public accounting
firm has issued a going concern opinion in their audit report dated March 25, 2014, which can be found in our Annual Report on
Form 10-K filed with the Securities and Exchange Commission (“
SEC
”) on February 11, 2014. This means that our
auditors believe there is substantial doubt that we can continue as an on-going business for the next 12 months. Our financial
statements found within this Quarterly Report on Form 10-Q and the aforementioned Annual Report on Form 10-K contain additional
note disclosures describing the circumstances that lead to this disclosure by our independent auditors.
Off –Balance Sheet Operations
As of March 31, 2014, we had no off-balance sheet activities or
operations.
CRITICAL ACCOUNTING POLICIES
The accompanying financial statements have
been prepared in accordance with United States Generally Accepted Accounting Principles (“
US GAAP
”) for financial
information and in accordance with the Securities and Exchange Commission’s (“
SEC
”) Regulation S-X. They
reflect all adjustments which are, in the opinion of SW China’s management, necessary for a fair presentation of the financial
position and operating results as of and for the three months ended March 31, 2014 and 2013, and cumulative from March 3, 2011
(inception) to March 31, 2014.
Use of Estimates
The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities
at the date of the financial statements and the reported revenues and expenses during the reporting periods. Because of the use
of estimates inherent in the financial reporting process, actual results may differ significantly from those estimates.
Cash and Cash Equivalents
For purposes of the statement of cash flows,
SW China considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents.
As of March 31, 2014, we had $2,743 in cash and equivalents.
Fair Value of Financial Instruments
ASC 820, “Fair Value Measurements”
and ASC 825, Financial Instruments, requires an entity to maximize the use of observable inputs and minimize the use of unobservable
inputs when measuring fair value. It establishes a fair value hierarchy based on the level of independent, objective evidence surrounding
the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon
the lowest level of input that is significant to the fair value measurement. It prioritizes the inputs into three levels that may
be used to measure fair value:
Level
|
|
Description
|
|
|
|
Level 1
|
|
Applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
|
Level 2
|
|
Applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
|
Level 3
|
|
Applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
|
[This space intentionally left blank.]
The estimated fair values of the Company’s
financial instruments are as follows:
|
Fair Value Measurement at March 31, 2014 Using:
|
|
|
|
|
|
|
|
|
|
Description
|
|
3/31/14
|
|
Quoted
Prices In
Active
Markets For
Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
Assets
|
|
|
|
|
|
|
|
|
|
Cash and equivalents
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
$
|
2,882
|
$
|
2,882
|
$
|
-
|
$
|
-
|
|
Note payable to stockholder
|
|
78,248
|
|
78,248
|
|
-
|
|
-
|
|
$
|
81,130
|
$
|
81,130
|
$
|
-
|
$
|
-
|
|
Fair Value Measurement at December 31, 2013 Using:
|
|
|
|
|
|
|
|
|
|
Description
|
|
12/31/13
|
|
Quoted
Prices In
Active
Markets For
Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
Assets
|
|
|
|
|
|
|
|
|
|
Cash and equivalents
|
$
|
37
|
$
|
37
|
$
|
-
|
$
|
-
|
|
$
|
37
|
$
|
37
|
$
|
-
|
$
|
-
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
$
|
20,198
|
$
|
20,198
|
$
|
-
|
$
|
-
|
|
Note payable to stockholder
|
|
50,550
|
|
50,550
|
|
-
|
|
-
|
|
$
|
70,748
|
$
|
70,748
|
$
|
-
|
$
|
-
|
Net Loss per Share Calculation
Basic net loss per common share is computed
by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding for the
period. Diluted earnings per shares is computed similar to basic 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. During the three and nine months ended September, 2014 and the period February 23, 2011
(inception) to March 31, 2014 we had no dilutive financial instruments issued or outstanding.
Revenue Recognition
SW China follows the guidance of FASB ASC Topic
605 for revenue recognition. In general, SW China recognizes revenue when (1) the price is fixed and determinable, (2) persuasive
evidence of an arrangement exists, (3) the service has been provided, and (4) collectability is reasonably assured.
SW China generates revenue from two sources:
(i) sales of its high-end handmade lace wigs and hairpieces and other beauty supplies to beauty supply stores, hair salons, independent
hair stylists, and retail customers via the Internet and (ii) consulting services consisting of product and retail channel development
for beauty and fashion products. Revenue from sales of its high-end handmade lace wigs, hairpieces and other beauty supplies is
recognized at the time of the sale and revenues from consulting services are recognized when the services are performed, evidence
of an arrangement exists, the fee is fixed and determinable, and collectability is probable.
Income Taxes
We account for income taxes pursuant to FASB
ASC 740, Income Taxes. Under FASB ASC 740-10-25, deferred tax assets and liabilities are determined based on temporary differences
between the bases of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax assets and
liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.
We maintain a valuation allowance with respect
to deferred tax assets. SW China establishes a valuation allowance based upon the potential likelihood of realizing the deferred
tax asset and taking into consideration SW China’s financial position and results of operations for the current period. Future
realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carryforward period under
the Federal tax laws.
Changes in circumstances, such as SW China
generating taxable income, could cause a change in judgment about its ability to realize the related deferred tax asset. Any change
in the valuation allowance will be included in income in the year of the change in estimate.
Recently Issued Accounting Pronouncements
The Company does not expect the impact of recent
accounting pronouncements to have a material effect on the Company’s financial statements.
Contractual Obligations
As of March 31, 2014, SW China no contractual
obligations.