UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended January 31, 2013
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File Number 000-8299
COMJOYFUL INTERNATIONAL COMPANY
(Name of registrant as specified in its charter)
Nevada 84-0691531
(State or other jurisdiction (IRS Identification No.)
of incorporation or organization)
J4-2-12, Diplomatic Residence Compound,
No.1 Xiushui Street, Jianguomen Wai,
Chaoyang District, Beijing 100600, China
(Address of principal executive offices including Zip code)
0086 10 858 92903
(Registrant's telephone number)
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. [X] Yes No [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). [X] Yes [ ] 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 definition of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). [X] Yes [ ] No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distributions of securities under a plan
confirmed by a court. [ ] Yes [ ] No [X]
APPLICABLE TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. Class - Common Stock, 2,080,873
shares outstanding as of March 15, 2013.
COMJOYFUL INTERNATIONAL COMPANY
INDEX TO FORM 10-Q
Page No.
--------
PART I FINANCIAL INFORMATION
Item 1 Financial Statements (Unaudited) 3
Management's Discussion and Analysis of Financial
Item 2 Condition and Results of Operations 8
Quantitative and Qualitative Disclosures about Market
Item 3 Risk 11
Item 4 Controls and Procedures 11
PART II OTHER INFORMATION
Item 1 Legal Proceedings 13
Item 1A Risk Factors 13
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 13
Item 3 Defaults Upon Senior Securities 13
Item 4 Mine Safety Disclosures 13
Item 5 Other Information 13
Item 6 Exhibits 14
SIGNATURES 14
2
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
COMJOYFUL INTERNATIONAL COMPANY
Balance Sheets
January 31, 2013 April 30, 2012
---------------- --------------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 54 $ 2,131
------------ ------------
TOTAL CURRENT ASSETS 54 2,131
------------ ------------
TOTAL ASSETS $ 54 $ 2,131
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable - non related party $ -- $ 79,046
Accrued interest payable -- 23,232
Advances from related party -- 65,025
------------ ------------
TOTAL CURRENT LIABILITIES -- 167,303
Long-term note payable -- 117,000
------------ ------------
TOTAL LIABILITIES -- 284,303
------------ ------------
STOCKHOLDERS' DEFICIT
Preferred stock, $0.01 par value 100,000,000 shares
authorized; none issued -- --
Common stock, $0.01 par value 50,000,000 shares authorized;
2,080,873 and 2,006,528 shares issued and outstanding at
January 31, 2013 and April 30, 2012, respectively 20,808 20,065
Additional paid-in-capital 33,156,398 32,849,816
Accumulated deficit (33,177,152) (33,152,053)
------------ ------------
TOTAL STOCKHOLDERS'DEFICIT 54 (282,172)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'DEFICIT $ 54 $ 2,131
============ ============
The accompanying notes are an integral part of these financial statements
3
COMJOYFUL INTERNATIONAL COMPANY
Statements of Operations
Nine Months Nine Months Three Months Three Months
Ended Ended Ended Ended
January 31, January 31, January 31, January 31,
2013 2012 2013 2012
---------- ---------- ---------- ----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
REVENUE $ -- $ -- $ -- $ --
OPERATING EXPENSE
Professional fees 16,990 23,404 2,860 3,717
Other 985 924 345 110
---------- ---------- ---------- ----------
TOTAL OPERATING EXPENSE 17,975 24,328 3,205 3,827
---------- ---------- ---------- ----------
LOSS FROM OPERATIONS (17,975) (24,328) (3,205) (3,827)
---------- ---------- ---------- ----------
OTHER EXPENSE
Interest expense (7,124) (7,749) (1,671) (2,511)
Cancellation of Mineral Property -- (15,457) -- (15,457)
---------- ---------- ---------- ----------
TOTAL OTHER EXPENSE (7,124) (23,206) (1,671) (17,968)
---------- ---------- ---------- ----------
NET LOSS (25,099) (47,534) (4,876) (21,795)
========== ========== ========== ==========
LOSS PER SHARE BASIC AND DILUTED $ (0.01) $ (0.02) $ (0.00) $ (0.01)
========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING -
BASIC AND DILUTED 2,042,084 2,006,528 2,080,873 2,006,528
========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements
4
COMJOYFUL INTERNATIONAL COMPANY
Statements of Cash Flows
(Unaudited)
Nine Months Ended Nine Months Ended
January 31, 2013 January 31, 2012
---------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITES:
Net loss $(25,099) $(47,534)
Adjustments to reconcile net loss to net
cash used in operating activities
Changes in operating assets and liabilities:
Mineral right- leased -- 15,457
Accrued interest payable -- 7,749
Accounts payable 23,022 6,597
-------- --------
NET CASH USED IN OPERATING ACTIVITIES (2,077) (17,731)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
NET CASH (USED IN) INVESTING ACTIVITIES -- --
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock -- --
Advances from related party -- 15,000
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES -- 15,000
-------- --------
Net (decrease)/increase in cash and cash equivalents (2,077) (2,731)
Cash and cash equivalents at beginning of period 2,131 7,317
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 54 $ 4,586
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for Interest Expenses $ -- $ --
======== ========
Cash paid for Income Taxes $ -- $ --
======== ========
SUPPLEMENTAL DISCLOSURES OF NON-CASH TRANSACTIONS
Liabilities repaid by shareholders $212,381 $ --
======== ========
Shares issued for a liability transferred to ashareholder $ 74,345 $ --
======== ========
The accompanying notes are an integral part of these financial statements
5
COMJOYFUL INTERNATIONAL COMPANY
Notes to the Financial Statements
NOTE 1. BASIS OF PRESENTATION
Camelot Corporation ("Camelot Colorado") was incorporated pursuant to the laws
of the State of Colorado on September 5, 1975, and completed a $500,000 public
offering of its common stock in March 1976. The Company made several
acquisitions and divestments of businesses. The Company was delisted from
NASDAQ's Small Cap Market on February 26, 1998. In July 1998 all employees of
Camelot Colorado were terminated. Its directors and officers have since provided
unpaid services on a part-time basis to the Company.
On April 28, 2011, at the special meeting, a majority of the shareholders of
Camelot Corporation approved the adoption of a proposed Agreement and Plan of
Merger, to reincorporate Camelot Corporation, a Colorado corporation in the
State of Nevada by merger with and into a Nevada corporation with the name
Camelot Corporation ("Camelot Nevada") (the "Migratory Merger"). Camelot
Colorado formed Camelot Nevada expressly for the purpose of the Migratory
Merger.
On September 21, 2012, Andrea Lucanto ("Ms. Lucanto"), the sole officer and
director of the company agreed to assume the debt of $74,345 owed by the company
to a third party. In exchange Ms. Lucanto was issued 74,345 shares of the
company's common stock. The stock was valued at $1.00 per share which was the
last price at which the stock was traded. Upon issuance of the shares Ms.
Lucanto owns 1,784,497 shares of Common Stock, or approximately 85.76% of the
issued and outstanding Common Stock.
On December 12, 2012, Comjoyful International Ltd., a company incorporated under
the laws of the British Virgin Islands (the "Purchaser") and Andrea Lucanto (the
"Seller" or "Ms. Lucanto") entered into a Stock Purchase Agreement (the "Stock
Purchase Agreement") pursuant to which the Seller sold to the Purchaser
1,784,497 shares of Camelot Nevada's common stock, par value $0.01 per share
(the "Common Stock"), representing approximately 85.76% of the total issued and
outstanding shares of Common Stock, for a total consideration of $300,000, of
which amount $212,381.21 was used to pay off certain liabilities of the Camelot
Nevada. The source of the purchase price was from personal funds of certain of
the shareholders of the Purchaser's parent company. We refer to the transaction
consummated under the Stock Purchase Agreement as the "Transaction". Upon the
closing of such Transaction, the Purchaser acquired 1,784,497 shares of Common
Stock, or approximately 85.76% of the issued and outstanding Common Stock and
attained voting control of Camelot Nevada.
On December 13, 2012, our sole director and officer, Ms. Lucanto resigned from
her officer positions, and Mr. Yazhong Liao ("Mr. Liao") was appointed as Chief
Executive Officer, President and Chief Financial Officer of the Company and as a
director.
On December 28, 2012, Camelot Nevada set up a subsidiary, Comjoyful
International Company, which is incorporated pursuant to the laws of the State
of Nevada. On the same day, Camelot Nevada and its wholly-owned subsidiary,
Comjoyful International Company entered into an Agreement and Plan of Merger
(the "Merger") and on January 2, 2013 filed with the Secretary of State of
Nevada Articles of Merger, pursuant to which the Comjoyful International Company
was merged with and into Camelot Nevada. The legal existence of the Comjoyful
6
International Company, which had no assets or operations on the date of the
Merger, was terminated effectively as of the consummation of the Merger. Under
Nevada law (NRS Section 92A.180), Camelot Nevada may merge Comjoyful
International Company into itself without stockholder approval and effectuate a
name change without stockholders' approval. As a result, Camelot Nevada was the
survivor of the Merger and changed its name to Comjoyful International Company
(the "Company").
In November 2011, the Company determined it was in its best interests to
terminate the mineral lease entered into with Timberwolf Minerals, Ltd on June
11, 2010. The Company is now seeking an operating company to acquire.
The accompanying financial statements have been presented in accordance with
accounting principles generally accepted in the United States of America ("U.S.
GAAP"). 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 at January 31, 2013, and for all periods
presented herein, have been made.
It is suggested that these financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's April 30, 2012
audited financial statements. The results of operations for the period ended
January 31, 2013 is not necessarily indicative of the operating results for the
full year.
NOTE 2. GOING CONCERN
The Company's financial statements are prepared on a going concern basis, which
contemplates the realization of assets and the satisfaction of obligations in
the normal course of business. However, the Company has recurring losses and an
accumulated deficit of $33,177,152 as of January 31, 2013 and $33,152,053 as of
April 30, 2012. The Company currently does not have any revenue generating
operations. These conditions raise substantial doubt about the ability of the
Company to continue as a going concern.
In view of these matters, continuation as a going concern is dependent upon
continued operations of the Company, which in turn is dependent upon the
Company's ability to, meets its financial requirements, raise additional
capital, and the success of its future operations. The financial statements do
not include any adjustments to the amount and classification of assets and
liabilities that may be necessary should the Company not continue as a going
concern.
Management plans to fund the operations of the Company through advances from
existing shareholders. There are no written agreements in place for such funding
or issuance of securities and there can be no assurance that such will be
available in the future. Management believes that this plan provides an
opportunity for the Company to continue as a going concern.
NOTE 3. RECENT ACCOUNTING PRONOUNCEMENTS
There were various accounting standards and updates recently issued, none of
which are expected to have a material impact on the Company's financial
position, operations, or cash flows.
7
NOTE 4. BASIC EARNINGS/(LOSS) PER SHARE
ASC No. 260, "Earnings (loss) Per Share", specifies the computation,
presentation and disclosure requirements for earnings (loss) per share for
entities with publicly held common stock. The Company has adopted the provisions
of ASC No. 260.
Basic earnings (loss) per share are computed by dividing the net income or loss
by the weighted average number of common shares outstanding during the period.
Diluted earnings (loss) per share were the same as basic earnings per share due
to the lack of dilutive items in the Company and the fact that Company is in net
loss.
NOTE 5. RELATED PARTY TRANSACTIONS
The Company uses the office of its President for its minimal office facility
needs for no consideration. No provision for these costs has been provided since
it has been determined to be immaterial.
Through April 30, 2012, the Company's former President has advanced the Company
$65,025. The advances bear an annual interest rate of six percent and have no
specific repayment terms. During the nine months ended January 31, 2013 and
2012, the Company recorded interest of $2,395 and $2,484, respectively. During
the three months ended January 31, 2013 and 2012, the Company recorded interest
of $453 and $756, respectively.
On December 12, 2012, advances from related party and related accrued interest
payable have been paid off by the Purchaser in accordance with the Stock
Purchase Agreement.
NOTE 6. NOTE PAYABLE
Effective October 20, 2009, the Company gave a demand promissory note, in
exchange for payables, to Daniel Wettreich, its former CEO and majority
shareholder, for $116,511 without interest. On November 20, 2009, Mr. Wettreich
sold the demand promissory note to an unrelated third party. On July 20, 2010,
the demand promissory note was cancelled and a new interest-bearing promissory
note was issued as a substitute. The July 20, 2010 Promissory Note is in the
principal amount of $117,000, bears an annual interest rate of six percent, is
due and payable on November 30, 2015 and is collateralized by all the assets of
the Company. During the nine months ended January 31, 2013 and 2012, the Company
recorded interest of $4,729 and $5,265, respectively. During the three months
ended January 31, 2013 and 2012, the Company recorded interest of $1,218 and
$1,755, respectively.
On December 12, 2012, note payable and related accrued interest payable have
been paid off by the Purchaser in accordance with the Stock Purchase Agreement.
NOTE 7. SUBSEQUENT EVENTS
Management has considered all events occurring through the date the financial
statements have been issued, and has determined that there are no such events
that are material to the financial statements.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD LOOKING STATEMENTS
The information in this report contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
These forward-looking statements involve risks and uncertainties, including
statements regarding the Company's capital needs, business strategy and
expectations. Any statements contained herein that are not statements of
historical facts may be deemed to be forward-looking statements. In some cases,
you can identify forward-looking statements by terminology such as "may,"
"will," "should," "expect," "plan," "intend," "anticipate," "believe,"
"estimate," "predict," "potential" or "continue," the negative of such terms or
other comparable terminology. Actual events or results may differ materially. In
evaluating these statements, you should consider various factors, including the
risks outlined from time to time, in other reports we file with the Securities
and Exchange Commission (the "SEC"). These factors may cause our actual results
to differ materially from any forward-looking statement. We disclaim any
obligation to publicly update these statements, or disclose any difference
between its actual results and those reflected in these statements. The
information constitutes forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995.
THE COMPANY
Camelot Corporation ("Camelot Colorado") was incorporated pursuant to the laws
of the State of Colorado on September 5, 1975, and completed a $500,000 public
offering of its common stock in March 1976. The Company made several
acquisitions and divestments of businesses. The Company was delisted from
NASDAQ's Small Cap Market on February 26, 1998. In July 1998 all employees of
Camelot Colorado were terminated. Its directors and officers have since provided
unpaid services on a part-time basis to the Company.
On April 28, 2011, at the special meeting, a majority of the shareholders of
Camelot Corporation approved the adoption of a proposed Agreement and Plan of
Merger, to reincorporate Camelot Corporation, a Colorado corporation in the
State of Nevada by merger with and into a Nevada corporation with the name
Camelot Corporation ("Camelot Nevada") (the "Migratory Merger"). Camelot
Colorado formed Camelot Nevada expressly for the purpose of the Migratory
Merger.
On September 21, 2012, Andrea Lucanto ("Ms. Lucanto"), the sole officer and
director of the company agreed to assume the debt of $74,345 owed by the company
to a third party. In exchange Ms. Lucanto was issued 74,345 shares of the
company's common stock. The stock was valued at $1.00 per share which was the
last price at which the stock was traded. Upon issuance of the shares Ms.
Lucanto owns 1,784,497 shares of Common Stock, or approximately 85.76% of the
issued and outstanding Common Stock.
On December 12, 2012, Comjoyful International Ltd., a company incorporated under
the laws of the British Virgin Islands (the "Purchaser") and Andrea Lucanto (the
"Seller" or "Ms. Lucanto") entered into a Stock Purchase Agreement (the "Stock
Purchase Agreement") pursuant to which the Seller sold to the Purchaser
1,784,497 shares of Camelot Nevada's common stock, par value $0.01 per share
(the "Common Stock"), representing approximately 85.76% of the total issued and
9
outstanding shares of Common Stock, for a total consideration of $300,000, of
which amount $212,381.21 was used to pay off certain liabilities of the Camelot
Nevada. The source of the purchase price was from personal funds of certain of
the shareholders of the Purchaser's parent company. We refer to the transaction
consummated under the Stock Purchase Agreement as the "Transaction". Upon the
closing of such Transaction, the Purchaser acquired 1,784,497 shares of Common
Stock, or approximately 85.76% of the issued and outstanding Common Stock and
attained voting control of Camelot Nevada.
On December 13, 2012, our sole director and officer, Ms. Lucanto resigned from
her officer positions, and Mr. Yazhong Liao ("Mr. Liao") was appointed as Chief
Executive Officer, President and Chief Financial Officer of the Company and as a
director.
On December 28, 2012, Camelot Nevada set up a subsidiary, Comjoyful
International Company, which is incorporated pursuant to the laws of the State
of Nevada. On the same day, Camelot Nevada and its wholly-owned subsidiary,
Comjoyful International Company entered into an Agreement and Plan of Merger
(the "Merger") and on January 2, 2013 filed with the Secretary of State of
Nevada Articles of Merger, pursuant to which the Comjoyful International Company
was merged with and into Camelot Nevada. The legal existence of the Comjoyful
International Company, which had no assets or operations on the date of the
Merger, was terminated effectively as of the consummation of the Merger. Under
Nevada law (NRS Section 92A.180), Camelot Nevada may merge Comjoyful
International Company into itself without stockholder approval and effectuate a
name change without stockholders' approval. As a result, Camelot Nevada was the
survivor of the Merger and changed its name to Comjoyful International Company
(the "Company").
In November 2011, the Company determined it was in its best interests to
terminate the mineral lease entered into with Timberwolf Minerals, Ltd on June
11, 2010. The Company is now seeking an operating company to acquire.
LIQUIDITY AND CAPITAL RESOURCES
The financial statements have been prepared on the basis that the Company will
continue to operate throughout the next twelve months as a going concern. The
Company has recurring losses and an accumulated deficit of $33,177,152 as of
January 31, 2013 and $33,152,053 as of April 30, 2012. The Company currently
does not have any revenue generating operations. These factors raise substantial
doubt about the Company's ability to continue as a going concern. In order to
continue as a going concern, the Company will need, among other things,
additional capital resources. Management's plan is to obtain such resources for
the Company through advances from existing shareholders. However management
cannot provide any assurances that the Company will be successful in
accomplishing any of its plans. In the event that the Company is not able to
obtain funding, it will not be able to implement or may be required to delay all
or part of the business plan, and the ability to attain profitable operations,
generate positive cash flows from operating and investing activities and
materially expand the business will be materially adversely affected. The
accompany financial statements do not include any adjustments relating to the
classification of recorded asset amounts or amounts and classification of
liabilities that might be necessary should the company be unable to continue in
existence.
Net cash used by operating activities for the nine months period ended January
31, 2013 was $2,077 compared with $ 17,731 in the comparable period of 2012.
This was mainly attributable to the decrease of net loss. Net cash used in
10
investing activities for the nine months period ended January 31, 2013 was nil
compared with nil in the comparable period of 2012. Net cash provided by
financing activities for the nine months period ended January 31, 2013 was nil
compared with $15,000 provided in the comparable period of 2012. This was mainly
due to advance from related party only occurred for the nine months ended
January 31, 2012.
The Company does not have any plans for capital expenditures. The Company has
negligible cash resources and will experience liquidity problems over the next
twelve months due to its lack of revenue unless it is able to raise funds from
outside sources. There are no known trends, demands, commitments or events that
would result in or that are reasonably likely to result in the Company's
liquidity increasing or decreasing in a material way.
RESULTS OF OPERATIONS
The Company's revenue for the nine months ended January 31, 2013 was nil
compared with nil for the nine months ended January 31, 2012. For the nine
months ended January 31, 2013 the Company incurred a net loss from operations of
$17,975, and a net loss of $25,099. For the nine months ended January 31, 2012
the Company incurred a net loss from operations of $24,328 and a net loss of
$47,534. The decrease of net loss is due to the expense of cancellation of
mineral property only occurred for the nine months ended January 31, 2012. .
The Company's revenue for the three months ended January 31, 2013 was nil
compared with nil for the three months ended January 31, 2012. For the three
months ended January 31, 2013 the Company incurred a net loss from operations of
$3,205, and a net loss of $4,876. For the three months ended January 31, 2012
the Company incurred a net loss from operations of $3,827 and a net loss of
$21,795. The decrease of net loss is due to the expense of cancellation of
mineral property only occurred for the three months ended January 31, 2012.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to investors.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable
ITEM 4. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
As of the end of the period covered by this Report, our sole officer performed
an evaluation of the effectiveness of our disclosure controls and procedures as
defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based on the
evaluation and the identification of the material weaknesses in internal control
over financial reporting described below, our sole officer concluded that, as of
January 31, 2013, the Company's disclosure controls and procedures were not
effective.
11
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for establishing and maintaining adequate internal
control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of
the Exchange Act. Internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements in accordance with GAAP.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projection of any evaluation of
effectiveness to future periods is subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
A material weakness is a deficiency, or a combination of deficiencies, in
internal control over financial reporting, such that there is a reasonable
possibility that a material misstatement of the Company's annual or interim
financial statements will not be prevented or detected on a timely basis. In
connection with management's assessment of our internal control over financial
reporting as required under Section 404 of the Sarbanes-Oxley Act of 2002, we
identified the following material weaknesses in our internal control over
financial reporting as of January 31, 2012:
1. The Company has not established adequate financial reporting monitoring
procedures to mitigate the risk of management override, specifically because
there are no employees and only one officer and director with management
functions and therefore there is lack of segregation of duties. In addition, the
Company does not have accounting software to prevent erroneous or unauthorized
changes to previous reporting periods. The lack of effective controls resulted
in deficient financial reporting which was corrected in the audit process.
2. In addition, there is insufficient oversight of accounting principles
implementation and insufficient oversight of external audit functions.
3. There is a strong reliance on the external attorneys to review and edit
the annual and quarterly filings and to ensure compliance with SEC disclosure
requirements.
REMEDIATION OF MATERIAL WEAKNESSES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
As a small business, without a viable business and revenues, the Company does
not have the resources to install a dedicated staff with deep expertise in all
facets of SEC disclosure and GAAP compliance. As is the case with many small
businesses, the Company will continue to work with its external consultants as
it relates to new accounting principles and changes to SEC disclosure
requirements. The Company has found this approach worked well in the past and
believes it to be the most cost effective solution available for the foreseeable
future.
The Company will conduct a review of existing sign-off and review procedures as
well as document control protocols for critical accounting spreadsheets. The
Company will also increase management's review of key financial documents and
records.
12
As a small business, the Company does not have the resources to fund sufficient
staff to ensure a complete segregation of responsibilities within the accounting
function. However, Company management does review, and will increase the review
of, financial statements on a monthly basis. These actions, in addition to the
improvements identified above, will minimize any risk of a potential material
misstatement occurring.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no significant changes in our internal control over financial
reporting during the quarter ended January 31, 2013, that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We know of no material, active or pending legal proceedings against the Company,
nor are we involved as a plaintiff in any material proceeding or pending
litigation. There are no proceedings in which any of our directors, officers or
affiliates, or any registered or beneficial shareholder, is an adverse party or
has a material interest adverse to our interest.
ITEM 1A. RISKS FACTORS
Not applicable.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
13
ITEM 6. EXHIBITS
Exhibit No. Description
----------- -----------
31 Certification of Principal Executive Officer and Principal
Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
32 Certification of Principal Executive Officer and Principal
Financial Officer to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
101 Interactive data files pursuant to Rule 405 of Regulation S-T
SIGNATURE
In accordance with Section 13 or 15(d) of the Securities Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Date: April 8, 2013 COMJOYFUL INTERNATIONAL COMPANY
By: /s/ Yazhong Liao
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Yazhong Liao
Principal Executive Officer
Principal Financial Officer and Director
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