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

FORM 10-K

x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, 2008

OR

¨
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ____________

Commission File Number: 000-29219

SINOCUBATE, INC.
(Exact name of registrant as specified in its charter)
 
Nevada
99-0199508
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification Number)

65 Broadway, 7th Floor
New York, New York 10006
(Address of principal executive office and zip code)

(212) 359-4300
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: Common Stock, par value $0.001

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨        No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨        No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x        No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

 
 

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer o
Accelerated filer o
Non-accelerated filer o
Smaller reporting company x

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

Yes x        No ¨

As of December 31, 2008, the aggregate market value of the shares of the Registrant’s common stock held by non-affiliates was approximately $241,572. Shares of the Registrant’s common stock held by each executive officer and director and each by each person who owns 10 percent or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates of the Registrant. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

As of January 31, 2009, there were 995,655 shares of the Registrant’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:

None.

NOTE REGARDING FORWARD LOOKING STATEMENTS

This Annual Report on Form 10-K contains statements that constitute "forward-looking statements." These forward-looking statements can be identified by the use of predictive, future-tense or forward-looking terminology like "believes," "anticipates," "expects," "estimates," "may," or similar terms. These statements appear in a number of places in this annual report and include statements regarding our intent, belief or current expectations and those of our directors or officers with respect to, among other things:(i) trends affecting our financial condition or results of operations, (ii) our business and growth strategies, and (iii) our financing plans. You are cautioned that forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. Factors that could adversely affect actual results and performance include, among others, our need for additional capital, our history of losses, the intense competition we face in our business, the fact that our stock is a “penny stock” and the other material risks described under “Risk Factors”. The accompanying information contained in this annual report, including, without limitation, the information set forth under the heading "ITEM 1.  BUSINESS" identifies important additional factors that could materially adversely affect actual results and performance. You are urged to carefully consider these factors. All forward-looking statements attributable to us are expressly qualified in their entirety by the foregoing cautionary statement.

 
 

 

SINOCUBATE, INC.
(the “Company”)

FORM 10-K
Table of Contents
 
 
Page
   
PART I
2
Item 1.
Business
2
Item 1A.
Risk Factors
2
Item 1B.
Unresolved Staff Comments
7
Item 2.
Properties
8
Item 3.
Legal Proceedings
8
Item 4.
Submission of Matters to a Vote of Security Holders
8
   
PART II
8
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
8
Item 6.
Selected Financial Data
9
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
9
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
12
Item 8.
Financial Statements and Supplementary Data
F-1
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
13
Item 9A.
Controls and Procedures
14
   
PART III
14
Item 10.
Directors, Executive Officers and Corporate Governance
14
Item 11.
Executive Compensation
16
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
17
Item 13.
Certain Relationships and Related Transactions
18
Item 14.
Principal Accounting Fees and Services
19
   
PART IV
20
Item 15.
Exhibits, Financial Statement Schedules
20
   
SIGNATURES
21

 
1

 

PART I

Item 1.
Business

Overview

The Company was incorporated under the laws of the State of Florida on May 3, 1989 as Sparta Ventures Corp. and remained inactive until June 27, 1998.  The name of the Company was changed to Thermal Ablation Technologies Corporation on October 8, 1998 and then to Poker.com, Inc. on August 10, 1999.  On September 15, 2003, the Company changed its name to LegalPlay Entertainment Inc. and on November 8, 2006, the name of the Company was changed to Synthenol Inc.

Effective November 3, 2008, the Company merged with and into its wholly-owned subsidiary, SinoCubate, Inc., a newly formed Nevada corporation, which remains the surviving entity of the merger.  SinoCubate was formed in the State of Nevada on September 11, 2008.  The merger has resulted in a change of name of the Company from Synthenol, Inc. to SinoCubate, Inc. and a change in the state of incorporation of the Company from Florida to Nevada.

Change in Control

On August 15, 2008, pursuant to a stock purchase agreement, Viking Investments Group LLC or Viking acquired 366,520 shares of the Company’s common stock from certain of the Company’s stockholders for $350,000 in cash. In addition, certain promissory notes and debt in the aggregate principal amount of $243,500 owed to the selling stockholders by the Company were assigned by the stockholders to Viking as reported on a Current Report on Form 8-K filed with the SEC on August 21, 2008.  The shares acquired by Viking represented approximately 50.1% of the Company’s then issued and outstanding capital stock calculated on a fully-diluted basis and the sale of the shares represented a change of control of the Company.

Business

The Company’s business from 1999 through December 31, 2003 was primarily related to the operations of online gaming.  In 2004, the Company discontinued the online gaming operations and redirected its business strategy to acquisition and marketing of new poker software to on-line gaming websites worldwide.  The Company’s current business plan consists of exploring opportunities to enter into contractual arrangements with an entity that enables the Company to either purchase outright the assets and/or business operations of such entity or to enter into business arrangements, such as joint ventures or similar combinations with such entity to manage and operate such entity.

As of the date of this Report, the Company has not entered into an agreement with any entity and there can be no assurance that the Company will ever be able to identify and enter into an agreement with an entity or whether, if the Company successful enters into an agreement with a suitable entity, such combination may become successful and/or profitable.

Item 1A.  Risk Factors

There are several material risks associated with the Company. You should carefully consider the risks and uncertainties described below, which constitute all of the material risks relating to the Company. If any of the following risks are realized, our business, operating results and financial condition could be harmed. This means investors could lose all or a part of their investment.

 
2

 

Conflicts of Interest

Certain conflicts of interest may exist between the Company and its sole officer and director and its principal shareholder, Viking. The Company’s sole officer and director, Tom Simeo, has other business interests to which he devotes his attention, and he may devote only limited time to the business of the Company. As a result, conflicts of interest may arise that can be resolved only through exercise of such judgment as is consistent with fiduciary duties to the Company. See “Certain Relationships and Related Transactions.”

Need for Additional Financing

The Company currently has little or no funds and the lack of funds may negatively impact the Company’s ability to pursue it business strategy of seeking to acquire or enter into contractual arrangements with an entity to either acquire such entity or to enter into a contract arrangement that will enable the Company to manage such an entity. Even if the Company’s funds prove to be sufficient to acquire an interest in, or complete a transaction with, a business opportunity, the Company may not have enough capital to exploit the opportunity. The ultimate success of the Company may depend upon its ability to raise additional capital. The Company has not investigated the availability, source, or terms that might govern the acquisition of additional capital and will not do so until it determines a need for additional financing. If additional capital is needed, there is no assurance that funds will be available from any source or, if available, that they can be obtained on terms acceptable to the Company. If not available, the Company’s operations will be limited to those that can be financed with its modest capital.

Regulation of Penny Stocks

The Company’s securities may be subject to a SEC rule that imposes special sales practice requirements upon broker-dealers who sell such securities to persons other than established customers or accredited investors. For purposes of the rule, the phrase “accredited investors” means, in general terms, institutions with assets in excess of $5,000,000, or individuals having a net worth in excess of $1,000,000 or having an annual income that exceeds $200,000 (or that, when combined with a spouse’s income, exceeds $300,000). For transactions covered by the rule, the broker-dealer must make a special suitability determination for the purchaser and receive the purchaser’s written agreement to the transaction prior to the sale. Consequently, the rule may affect the ability of broker-dealers to sell the Company’s securities and also may affect the ability of purchasers in this offering to sell their securities in any market that might develop.

In addition, the SEC has adopted a number of rules to regulate “penny stocks.” Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities Exchange Act of 1934, as amended. Because the securities of the Company may constitute “penny stocks” within the meaning of the rules, the rules would apply to the Company and to its securities. The rules may further affect the ability of owners of shares to sell the securities of the Company in any market that might develop for them.

Shareholders should be aware that, according to SEC, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) “boiler room” practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses.

Lack of Operating History

The majority interest in the Company was purchased in August 2008 for the purpose of seeking a business opportunity. Due to the special risks inherent in the investigation, acquisition, or involvement in a new business opportunity, the Company must be regarded as a new or start-up venture with all of the unforeseen costs, expenses, problems, and difficulties to which such ventures are subject.

 
3

 

No Assurance of Success or Profitability

There is no assurance that the Company will be able to acquire or consummate a favorable business opportunity. Even if the Company should become involved in a business opportunity, there is no assurance that it will generate revenues or profits, or that the market price of the Company’s common stock will be increased thereby.

Possible Business – Not Identified and Highly Risky

The Company has not identified and has no commitments to enter into or acquire a specific business opportunity and therefore can only disclose the risks and hazards of a business or opportunity that it may enter into in only a general manner, and cannot disclose the risks and hazards of any specific business or opportunity that it may enter into. An investor can expect a potential business opportunity to be quite risky. The Company’s acquisition of or participation in a business opportunity will likely be highly illiquid and could result in a total loss of investment to the Company and its stockholders if the business or opportunity proves to be unsuccessful. See Item 1 “Business.”

Type of Business Acquired

The type of business to be acquired may be one that desires to avoid effecting its own public offering and the accompanying expense, delays, uncertainties, and federal and state requirements which purport to protect investors. Because of the Company’s limited capital, it is more likely than not that any acquisition by the Company will involve other parties whose primary interest is the acquisition of control of a publicly traded company. Moreover, any business opportunity acquired may be currently unprofitable or present other negative factors.

Impracticality of Exhaustive Investigation

The Company has limited or no funds and, this, coupled with the lack of full-time management will likely make it impracticable to conduct a complete and exhaustive investigation and analysis of a business opportunity before the Company commits its capital or other resources to such venture. Decisions will therefore likely be made without detailed feasibility studies, independent analysis, market surveys and the like which, if the Company had more funds available to it, would be desirable. The Company will be particularly dependent in making decisions upon information provided by the promoter, owner, sponsor, or others associated with the business opportunity seeking the Company’s participation. A significant portion of the Company’s available funds may be expended for investigative expenses and other expenses related to preliminary aspects of completing an acquisition transaction, whether or not any business opportunity investigated is eventually acquired.

Lack of Diversification

Because of the limited financial resources that the Company has, it is unlikely that the Company will be able to diversify its acquisitions or operations. The Company’s probable inability to diversify its activities into more than one area will subject the Company to economic fluctuations within a particular business or industry and therefore increase the risks associated with the Company’s operations.

Reliance upon Financial Statements

The Company generally will require audited financial statements from companies that it proposes to acquire or to which it seeks to enter into a contractual arrangement.  In cases where no audited financials are available, the Company will have to rely upon interim period unaudited information received from target companies’ management that has not been verified by outside auditors. The lack of the type of independent verification which audited financial statements would provide increases the risk that the Company, in evaluating an acquisition or contractual arrangement with such a target company, will not have the benefit of full and accurate information about the financial condition and recent interim operating history of the target company. This risk increases the prospect that the acquisition of or the contractual arrangement with such a company might prove to be an unfavorable one for the Company or the holders of the Company’s securities.

 
4

 

Moreover, the Company will be subject to the reporting provisions of the Securities Exchange Act of 1934, as amended or the Exchange Act, and thus will be required to furnish certain information about significant acquisitions or contractual arrangements, including audited financial statements for any business that it acquires or with which it enters into a contractual arrangement for control. Consequently, prospects that do not have, or are unable to provide reasonable assurances that they will be able to obtain, the required audited statements would not be considered by the Company to be appropriate for acquisition so long as the reporting requirements of the Exchange Act are applicable. Should the Company, during the time it remains subject to the reporting provisions of the Exchange Act, complete an acquisition or enters into a contract for control of an entity for which audited financial statements prove to be unobtainable, the Company would be exposed to enforcement actions by the SEC and to corresponding administrative sanctions, including permanent injunctions against the Company and its management. The legal and other costs of defending an SEC enforcement action would have material, adverse consequences for the Company and its business. The imposition of administrative sanctions would subject the Company to further adverse consequences. In addition, the lack of audited financial statements would prevent the securities of the Company from becoming eligible for listing on NASDAQ, or on any existing stock exchange.

Moreover, the lack of such financial statements is likely to discourage broker-dealers from becoming or continuing to serve as market makers in the securities of the Company. Without audited financial statements, the Company would almost certainly be unable to offer securities under a registration statement pursuant to the Securities Act of 1933 or the Securities Act, and the ability of the Company to raise capital would be significantly limited until such financial statements were to become available.

Other Regulation

An acquisition or a contractual arrangement for control of an entity made by the Company may be of a business that is subject to rules and regulation by federal, state, local or foreign authorities. Compliance with such rules and regulations can be expected to be a time-consuming, expensive process and may limit other opportunities of the Company.

Limited Participation of Management

The Company is heavily dependent upon the skills, talents, and abilities of its sole officer and director, Tom Simeo, who currently serves on a very limited-time basis, to manage and implement its business plan.

Lack of Continuity in Management

The Company does not have any employment agreements with its sole officer, Mr. Simeo, and as a result, there is no assurance Mr. Simeo will continue to be associated with the Company in the future. In connection with acquisition of a business opportunity, it is likely that Mr. Simeo may resign as an officer and director of the Company subject to compliance with Section 14f of the Exchange Act. A decision to resign will be based upon the identity of the business opportunity and the nature of the transaction, and is likely to occur without the vote or consent of the stockholders of the Company.

 
5

 

No Independent Audit Committee

The Company does not have an independent Audit Committee of its Board of Directors. The entire Board of Directors functions as the Company’s Audit Committee. The Sarbanes-Oxley Act of 2002 or the SOX and rules and regulations adopted by the SEC to implement the SOX impose certain standards on listed companies relative to the maintenance and operations of Board of Directors Audit Committees, including but not limited to the requirement that Audit Committees be appointed, that membership of such committees comprise only independent directors, that a financial professional be among the membership of such committee and that such committee be afforded an adequate operating budget and be able to employ independent professional advisors. The SOX also requires that the Audit Committee oversee the work of a company’s outside auditors and that the outside auditors be responsible to the Audit Committee. At this time, the Company is not in compliance with the requirements of the Sarbanes-Oxley Act as they relate to independent Board of Directors Audit Committees. The Company believes that under rules and regulations adopted by the SEC to implement these provisions of the SOX it is not required to comply with its requirements relating to the appointment of an Audit Committee of its Board of Directors and conforming with the enumerated standards and guidelines because the Company is not a “Listed Company” as defined therein. Notwithstanding, the Company may ultimately be determined not to be in compliance therewith and may therefore face penalties and restrictions on its operations until it comes into full compliance. Additionally, the Company’s failure to comply with the provisions of the SOX could preclude it from being listed on NASDAQ or any other stock exchanges until it can show that it is in compliance. The Company’s failure to be in compliance with the SOX could also present an impediment to a potential business combination where the target company intends that the Company apply for listing on NASDAQ or any other applicable stock exchanges.

Indemnification of Officers and Directors

Nevada Statutes provide for the indemnification of the Company’s directors, officers, employees, and agents, under certain circumstances, against attorney’s fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on behalf of the Company. The Company will also bear the expenses of such litigation for any of its directors, officers, employees, or agents, upon such person’s promise to repay the Company if it is ultimately determined that any such person shall not have been entitled to indemnification. This indemnification policy could result in substantial expenditures by the Company which it may be unable to recoup.

Dependence upon Outside Advisors

To supplement the Company’s officers, directors and principal shareholders, the Company may be required to employ accountants, technical experts, appraisers, attorneys, or other consultants or advisors. The selection of any such advisors will be made by the Company without any input from stockholders. Furthermore, it is anticipated that such persons may be engaged on an “as needed” basis without a continuing fiduciary or other obligation to the Company. In the event the Company considers it necessary to hire outside advisors, such persons may be affiliates of the Company, if they are able to provide the required services.

Competition

The search for potentially profitable business opportunities of the type sought by the Company is intensely competitive. The Company expects to be at a disadvantage when competing with many firms that have substantially greater financial and management resources and capabilities than the Company. These competitive conditions will exist in any industry in which the Company may become interested.

No Foreseeable Dividends

The Company has not paid dividends on its common stock and does not anticipate paying such dividends in the foreseeable future.

Loss of Control by Present Management and Shareholders

The Company may consider an acquisition in which the Company would issue as consideration for the business opportunity to be acquired an amount of the Company’s authorized but unissued common stock that would, upon issuance, represent the great majority of the voting power and equity of the Company. The result of such an acquisition would be that the acquired company’s stockholders and management would control the Company, and the Company’s Board of Directors and management could be replaced by persons unknown at this time. Such a merger would result in a greatly reduced percentage of ownership of the Company by its current shareholders.

 
6

 

Rule 144 Sales

The majority of the outstanding shares of common stock held by present stockholders are “restricted securities” within the meaning of Rule 144 under the Securities Act. As restricted shares, these shares may be resold only pursuant to an effective registration statement or under the requirements of Rule 144 or other applicable exemptions from registration under the Securities Act and as required under applicable state securities laws. Rule 144 in general requires restricted securities to be held for a particular length of time, and prescribes the conditions which must be satisfied prior to the sale of the securities.  Under new amendments to Rule 144, if an issuer of securities, such as the Company, has been subject to reporting requirements of Section 13 or 15(d) of the Exchange Act for at least 90 days, then the restricted securities of such issuer are subject to a six-month holding period.  Under the amendments, a non-affiliate that has held restricted securities of a reporting issuer for more than six months but less than one year can resell the securities in reliance on Rule 144, if current information is available for the issuer.  After one year, the non-affiliate may freely resell the restricted securities without regard to any Rule 144 condition.  A non-affiliate of a non-reporting issuer must hold the securities for one year before any public resale.  After one year, a non-affiliate may freely resell such securities without regard to Rule 144 conditions.  Under the new amendments, Rule 144 is not available for the resale of securities initially issued by a shell company (reporting or non-reporting) or a former shell company unless certain conditions detailed under Rule 144 are met.  A sale under Rule 144 or under any exemption from the Securities Act, if available, or pursuant to subsequent registration of shares of common stock of present stockholders, may have a depressive effect upon the price of the Company’s common stock.

Other Information

Neither the Company nor any of its subsidiaries engaged in any research and development activities during 2008.  The Company does not manufacture any products or engage in any activity that requires compliance with environmental laws.

Employees

The Company currently does not have any employees other than the Company’s sole officer, Mr. Simeo.

Reports to Securities Holders

The Company provides an annual report that includes its audited financial information to its shareholders upon written request.  The Company also makes its financial information equally available to any interested parties or investors through compliance with the disclosure rules of the Securities Exchange Act of 1934. The Company is subject to disclosure filing requirements including filing a Form 10-K annually and Form 10-Q quarterly. In addition, the Company will file Form 8-K and other proxy and information statements from time to time as required.

The public may read and copy any materials that we file with the SEC at the SEC's Public Reference Room at 100 F Street NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

Item 1B.  Unresolved Staff Comments

None.

 
7

 

Item 2.
Properties

In 2008, the Company moved its principal executive office to 65 Broadway, New York, New York 10006 where it shares an office provided by its officers.  The Company does not pay rent for the use of the offices.


Item 3.
Legal Proceedings

As of December 31, 2008, the Company was not a party to any pending or threatened legal proceedings.


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

No matters were submitted to a vote or for the written consent of the Company’s security shareholders, through the solicitation of proxies or otherwise, during the fourth quarter of the fiscal year ended December 31, 2008.

PART II

Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

There is no "established trading market" for shares of the Company’s common stock. As of December 31, 2008, the Company’s common stock was quoted on the NASD OTC Bulletin Board under the symbol "SBAT.OB". No assurance can be given that any "established trading market" for the Company’s common stock will develop or be maintained.

The range of high and low closing bid quotations for the Company’s common stock during each quarter of the calendar years ended December 31 2008 and 2007, is shown below, as quoted by http://finance.yahoo.com ..   Prices are inter-dealer quotations, without retail mark-up, markdown or commissions and may not represent actual transactions.

Stock Quotations
Quarter Ended
 
High Bid
   
Low Bid
 
March 31, 2007
    0.30       0.30  
June 30, 2007
    0.30       0.30  
September 30, 2007
    0.25       0.25  
December 31, 2007
    0.16       0.16  
March 31, 2008
    0.18       0.18  
June 30, 2008
    0.21       0.21  
September 30, 2008
    0.25       0.25  
December 31, 2008
    0.65       0.65  

The future sale of the Company’s presently outstanding "unregistered" and "restricted" common stock by present members of management and persons who own more than five percent of the Company’s outstanding voting securities may have an adverse effect on any "established trading market" that may develop in the shares of the Company’s common stock.

 
8

 

Holders

As of December 31, 2008, the Company had 34 shareholders of record of common stock, including shares held by brokerage clearing houses, depositories or otherwise in unregistered form. We do not know the beneficial owners of such shares.

Item 6.
Selected Financial Data

The Company, as a smaller reporting company (as defined by Rule 12b-2 of the Exchange Act), is not required to furnish information required by this item.

Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis in conjunction with the audited consolidated financial statements and notes thereto appearing elsewhere in this annual report on Form 10-K.

In preparing the management’s discussion and analysis, the registrant presumes that you have read or have access to the discussion and analysis for the proceeding fiscal year.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This document includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 or the Reform Act.   All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earning, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions of performance; and statements of belief; and any statements of assumptions underlying any of the foregoing.  Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: our ability to raise capital and the terms thereof; ability to gain an adequate player base to generate the expected revenue; competition with established gaming websites; adverse changes in government regulations or polices; and other factors referenced in the Form 10-K.

The use in this Form 10-K of such words as “believes”, “plans”, “anticipates”, “expects”, “intends”, and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. These forward-looking statements present the Company’s estimates and assumptions only as of the date of this report.  Except for the Company’s ongoing obligation to disclose material information as required by the federal securities laws, the Company does not intend, and undertakes no obligation, to update any forward-looking statements.

Although the Company believes that the expectations reflected in any of the forward-looking statements are reasonable, actual results could differ materially from those projected or assumed or any of the Company’s forward-looking statements.  The Company’s future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties.

PLAN OF OPERATIONS

Overview

The Company’s current business plan is to seek, investigate, and, if warranted, enter into contractual arrangements with entities that enables the Company to either purchase outright the assets and and/or business operations of such entities or to enter into business arrangements, such as joint ventures or similar combinations with such entities to manage and operate such entities as affiliated entities of the Company.

 
9

 

As of the date of this Report, the Company has not entered into an agreement with any such entity and there can be no assurance that the Company will ever be able to identify and enter into an agreement with an entity or whether, if the Company successful enters into an agreement with an entity, such combination may become successful and/or profitable.

The Company is in immediate need of further working capital and options are being explored with respect to financing in the form of debt, equity or a combination thereof.

Investigation and Selection of Business Opportunities

To a large extent, a decision to participate in a specific contractual arrangement may be made upon the principal shareholders’ analysis of the quality of the other company’s management and personnel, the anticipated acceptability of new products or marketing concepts, the merit of technological changes, the perceived benefit the Company will derive from entering into such an arrangement, and numerous other factors which are difficult, if not impossible, to analyze through the application of any objective criteria. In many instances, it is anticipated that the historical operations of a specific business opportunity may not necessarily be indicative of the potential for the future because of the possible need to access capital, shift marketing approaches substantially, expand significantly, change product emphasis, change or substantially augment management, or make other changes. The Company will be dependent upon the owners of a business opportunity to identify any such problems which may exist and to implement, or be primarily responsible for the implementation of, required changes. Because the Company may participate in a business opportunity with a newly organized firm or with a firm which is entering a new phase of growth, it should be emphasized that the Company will incur further risks, because management in many instances will not have proved its abilities or effectiveness, the eventual market for such company’s products or services will likely not be established, and such company may not be profitable when acquired.

It is emphasized that the Company may effect transactions having a potentially adverse impact upon the Company’s shareholders pursuant to the authority and discretion of the Company’s management and board of directors without submitting any proposal to the stockholders for their consideration. Holders of the Company’s securities should not anticipate that the Company will necessarily furnish such holders, prior to any contractual arrangement or combination, with financial statements, or any other documentation, concerning a target company or its business. In some instances, however, a proposed arrangement may be submitted to the stockholders for their consideration, either voluntarily by such directors to seek the stockholders’ advice and consent or because federal and/or state law so requires.

The Company is unable to predict when it may participate in a business opportunity. Prior to making a decision to participate in a business opportunity, the Company will generally request that it be provided with written materials regarding the business opportunity containing such items as a description of products, services and company history; management resumes; financial information; available projections, with related assumptions upon which they are based; an explanation of proprietary products and services; evidence of existing patents, trademarks, or services marks, or rights thereto; present and proposed forms of compensation to management; a description of transactions between such company and its affiliates during relevant periods; a description of present and required facilities; an analysis of risks and competitive conditions; a financial plan of operation and estimated capital requirements; audited financial statements, or if they are not available, unaudited financial statements, together with reasonable assurances that audited financial statements would be able to be produced within a reasonable period of time following completion of a merger transaction; and other information deemed relevant.

As part of the Company’s investigation, the Company’s officers may meet personally with management and key personnel of the target entity, may visit and inspect material facilities, obtain independent analysis or verification of certain information provided, check references of management and key personnel, and take other reasonable investigative measures, to the extent of the Company’s limited financial resources.

There are no loan arrangements or arrangements for any financing whatsoever relating to any business opportunities is currently available.

 
10

 
 
Note1

Going Concern Qualification

The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.  Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances; however there is no assurance of additional funding being available.

Results of Operations

Year ended December 31, 2008 Compared to Year ended December 31, 2007

General Description

Our current focus on a new business strategy of the Company is to seek to enter into contractual arrangements with entities that enables the Company to either purchase outright the assets and/or business operations of such entities or to enter into business arrangements, such as joint ventures or similar combinations with such entities to manage and operate such entities.

General and Administrative Operating Expenses

The total general and administrative operating expenses for the Company were $147,325 in fiscal 2008, compared to $169,531 in fiscal 2007. The decrease is primarily due to lower management and consultant fees in relation to the Company’s operations and SEC filings and lower interest on notes payment.

Net Income

The Company incurred a net income of $79,122 for the fiscal year ended December 31, 2008 as compared with net income loss of $170,950 for the fiscal year ended December 31, 2007. This increase of $250,072 was mainly due to the disposal of certain assets and discharge of certain debt obligations.

Liquidity and Capital Resources

On December 31, 2008, the Company had no working capital compared to a working capital deficit of $376,314 at December 31, 2007. At December 31, 2008, the Company had no cash holding compared to $66,273 at December 31, 2007.  We are in immediate need of further working capital and the Company may consider options with respect to financing in the form of debt, equity or a combination thereof.

Net cash decrease for the year ended December 31, 2008 was $66,273.  The decrease in cash was mainly due to payments of current year’s G&A expenses and the discharge of prior year’s liabilities.

 
11

 

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 or capital expenditures or capital resources that is material to an investor in our securities.
 
Seasonality
 
Our operating results are not affected by seasonality.
 
Inflation
 
Our business and operating results are not affected in any material way by inflation.
 
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk.

The Company, as a smaller reporting company (as defined by Rule 12b-2 of the Exchange Act), is not required to furnish information required by this item.

12

Item 8.  Financial Statements and Supplementary Data
 
 
SINOCUBATE INC.
 
(A Development Stage Company)
 
FINANCIAL STATEMENTS
 
December 31, 2008
 
F-1

 
Schwartz Levitsky Feldman llp
CHARTERED ACCOUNTANTS
LICENSED PUBLIC ACCOUNTANTS
TORONTO · MONTREAL
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
SinoCubate, Inc.

We have audited the accompanying balance sheet of SinoCubate, Inc. (the “Company”) as at December 31, 2008 and the related statements of operations, comprehensive loss, cash flows and changes in stockholders’ deficiency for the year then ended.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audit.  We did not audit the statement of operations of the Company from the date of inception of the development stage on January 1, 2004 to December 31, 2007, which statement reflects cumulative expenses of $1,057,305.  That period was audited by another auditing firm whose report has been furnished to us, and our opinion, insofar as it relates to the cumulative financial information from inception of the development stage on January 1, 2004 to December 31, 2007, is based solely on the report of the other auditing firm.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provide a reasonable basis for our opinion.

In our opinion, based on our audit and the report of the other auditing firm, these financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2008 and the results of its operations and its cash flows for the year then ended and for the period from inception of the development stage on January 1, 2004 to December 31, 2008 in conformity with generally accepted accounting principles in the United states of America.

The Company is not required to have nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audits procedures that were appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal controls over financial reporting.  Accordingly, we express no such opinion.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern.  As discussed in note 1 to the financial statements, the Company is a development stage company and has no established source of revenues.  These conditions raise substantial doubt about its ability to continue as going concern.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The financial statements of the Company as at December 31, 2007 were audited by other auditing firm whose report dated March 17, 2008 expressed an opinion without reservation.
 
  “SCHWARTZ LEVITSKY FELDMAN LLP”
   
Toronto, Ontario, Canada
Chartered Accountants
April 14, 2009
Licensed Public Accountants
 
1167 Caledonia Road
Toronto, Ontario M6A 2X1
Tel:  416 785 5353
Fax:  416 785 5663
 
F-2

 
SINOCUBATE INC.
 (A Development Stage Company)
BALANCE SHEETS
 
   
December 31,
   
December 31,
 
ASSETS
 
2008
   
2007
 
             
Current
           
Cash
 
$
--
   
$
66,273
 
                 
LIABILITIES AND STOCKHOLDERS DEFICIENCY
               
                 
Current
               
Accounts payable and accrued liabilities
 
$
--
   
$
84,935
 
Notes payable
   
--
     
276,163
 
Liabilities of discontinued operations (note 5)
            81,489  
Related party transactions (note 4) 
   
--
     
442,587
 
                 
Capital stock
               
Preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued or outstanding as of 12/31/2008
               
(2007-Preferred stock, $0.01 par value, 5,000,000 shares authorized, no shares issued or outstanding as of 12/31/2007)
               
Common stock, $0.001 par value, 100,000,000 shares authorized, 995,655 shares issued and outstanding as of 12/31/2008
   
996
     
7,315
 
(2007-Common stock, $0.01 par value, 100,000,000 shares authorized, 731,522 shares issued and outstanding as of 12/31/2007)
               
Treasury stock, nil at December 31, 2008 at cost, 540 shares as of 12/31/2007
   
--
     
(270
)
Additional paid-in capital
   
2,282,641
     
1,974,187
 
Accumulated other comprehensive income
   
0
     
5,213
 
Deficit
   
(1,305,454
)
   
(1,305,454
)
Deficit accumulated during the development stage
   
(978,183
)
   
(1,057,305
)
                 
     
--
     
(376,314
)
                 
   
$
--
   
$
66,273
 
 
SEE ACCOMPANYING NOTES

F-3

 
SINOCUBATE INC.
 (A Development Stage Company)
STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS
 
   
Twelve months ended
   
January 1, 2004
(Date of Inception
of the Development Stage) to
 
   
December 31,
   
December 31,
 
   
2008
   
2007
   
2008
 
General and administrative expenses
                 
Amortization
 
$
-
   
$
-
   
$
27,077
 
Bad debt
   
-
     
-
     
525
 
Corporate promotion
   
-
     
-
     
13,920
 
Finance charges
   
16,112
     
9,866
     
27,397
 
Insurance
   
-
     
-
     
15,901
 
Interest on notes payable (Note 3)
   
11,220
     
18,276
     
34,648
 
Management and consultant fees
   
65,755
     
109,741
     
290,354
 
Office supplies and services
   
3,428
     
4,160
     
43,240
 
Professional fees
   
50,810
     
27,488
     
286,017
 
Rent
           
-
     
16,311
 
Wages
              
-
     
84,258
 
                         
Loss before other items
   
(147,325
)
   
(169,531
)
   
(839,648
                         
Other items
                       
Loss on disposition of equipment
   
-
     
-
     
(15,028
Write-down of intangible assets
   
-
     
-
     
(50,001
Write-off of payables
   
73,607
     
-
     
73,607
 
Write-off of notes payable
   
-
     
-
     
14,823
 
Gain on settlement of lawsuit
   
-
     
-
     
44,445
 
Gain on sale of investment
   
31,874
             
31,874
 
Other income
   
42,530
                    
42,530
 
                         
Income (loss) from continuing operations
   
686
     
(169,531
)
   
(697,398
)
                         
Operating loss from discontinued operations
           
(1,419
)
   
(388,905
                         
Gain on sales of discontinued operations (Note 5)
   
78,436
     
-
     
108,120
 
                         
Net income (loss)
 
$
79,122
   
$
(170,950
)
 
$
(978,183
                         
Basic and diluted income (loss) per                        
                         
 Common share – continuing operations      -        (0.23        
 – discontinued operations
 
   0.10       -          
 – total 
 
  0.10       (0.23          
                         
Weighted average number of common share outstanding  basic and diluted
   
783,703
     
731,522
         
                         
Comprehensive income (loss)
                       
Net income (loss)
 
$
79,122
   
$
(170,950
)
 
$
(978,183
Foreign currency translation adjustment
   
(5,213
   
(13,391
)
   
0
 
Total comprehensive income (loss)
 
$
73,909
   
$
(184,341
)
 
$
(978,183
) 
 
SEE ACCOMPANYING NOTES
 
F-4


SINOCUBATE INC.
 (A Development Stage Company)
STATEMENT OF CASH FLOWS
 
   
Twelve months ended
   
January 1, 2004 (Date of Inception of the Development Stage) to
 
 
 
 
   
December 31,
   
December 31,
 
   
2008
   
2007
   
2008
 
Cash flows from operating activities
                 
Net income (loss)
 
$
79,122
   
$
(170,950
)
 
$
(978,183
Adjustments to reconcile net loss to net cash used in operating activities:
                       
Finance charges
   
16,102
     
11,285
     
27,387
 
Accrued interest on notes payable
   
7,986
     
18,276
     
31,414
 
Amortization
   
-
     
-
     
27,077
 
Accrued expenses
   
49,306
             
49,306
 
Foreign exchange effect on notes payable
   
(2,798)
     
7,660
     
5,303
 
Issuance of common stock for services
           
-
     
1,000
 
Stock-based compensation
           
-
     
4,460
 
Loss on disposition of equipment
           
-
     
225,184
 
Write-down of intangible assets
           
-
     
360,001
 
Write-off of payables
   
(73,607)
     
-
     
(73,607
Write-off of notes payable
           
-
     
(18,729
)
Gain on settlement of lawsuit
           
-
     
(44,445
Gain on sales of discontinued operations
   
(78,436)
             
(108,121
)
    Gain on sale of investments
   
(31,874)
             
(31,874
)
    Other income
   
(42,530)
             
(42,530
)
Changes in non-cash working capital items:
                       
Accounts payable and accrued liabilities
   
10,013
     
14,931
     
143,521
 
Cash used in continuing operations
   
(66,716)
     
(118,798
)
   
(422,836
Discontinued operations
   
(362)
     
-
     
(171,213
                         
Net cash used in operating activities
   
(67,078)
     
(118,798
)
   
(594,049
)
                         
Cash flows from investing activities
                       
Proceeds from sale of subsidiary
           
-
     
1
 
Proceeds from assets disposition
   
-
     
-
     
5,458
 
Purchase of equipment
           
-
     
(5,808
Net cash used in investing activities
   
-
     
-
     
(349
)
                         
Cash flows from financing activities
                       
Settlement of notes payable
   
-
     
185,000
     
398,614
 
Proceeds from issuance of common stock
   
-
     
-
     
1,000
 
                         
Net cash provided by financing activities
   
-
     
185,000
     
399,614
 
                         
Effect of exchange rate changes on cash
   
805
     
(13,391
)
   
(14,734
)
                         
Change in cash
   
(66,273)
     
52,811
     
(209,518
                         
Cash, beginning of period
   
66,273
     
13,462
     
209,518
 
                         
Cash, ending of period
 
$
--
   
$
66,273
   
$
--
 
 
SEE ACCOMPANYING NOTES
 
F-5


SINOCUBATE INC.
 (A Development Stage Company)
STATEMENT OF STOCKHOLDERS DEFICIENCY
                                       
Deficit
       
                           
Accumulated
         
Accumulated
       
               
Additional
         
Other
         
During the
       
   
Common Shares
   
Treasury
   
Paid-in
   
Subscriptions
   
Comprehensive
         
Development
       
   
Number
   
Amount
   
Stock
   
Capital
   
Received
   
Income
   
Deficit
   
Stage
   
Total
 
May 3, 1989 (Inception) through December 31, 1997
   
60,022
   
$
600
   
$
-
   
$
9,400
   
$
-
   
$
-
   
$
(10,000
)
 
$
-
   
$
-
 
Net loss
   
-
     
-
     
-
     
-
     
-
     
-
     
(148,931
)
   
-
     
(148,931
)
Shares issued for cash
   
180,000
     
1,800
     
-
     
148,200
     
2,000
     
-
     
-
     
-
     
152,000
 
Balance at December 31, 1998
   
240,022
     
2,400
     
-
     
157,600
     
2,000
     
-
     
(158,931
)
   
-
     
3,069
 
Net loss
   
-
     
-
     
-
     
-
     
-
     
-
     
(511,587
)
   
-
     
(511,587
)
Foreign currency translation adjustment
   
-
     
-
     
-
     
-
     
-
     
(14,130
)
   
-
     
-
     
(14,130
)
Share issued for services
   
15,000
     
150
     
-
     
124,850
     
-
     
-
     
-
     
-
     
125,000
 
Subscription receivable
   
12,000
     
120
     
-
     
99,880
     
8,000
     
-
     
-
     
-
     
108,000
 
Share issued for intangible assets
   
15,000
     
150
     
-
     
124,850
     
-
     
-
     
-
     
-
     
125,000
 
Balance at December 31, 1999
   
282,022
     
2,820
     
-
     
507,180
     
10,000
     
(14,130
)
   
(670,518
)
   
-
     
(164,648
)
Net loss
   
-
     
-
     
-
     
-
     
-
     
-
     
(339,063
)
   
-
     
(339,063
)
Foreign currency translation adjustment
   
-
     
-
     
-
     
-
     
-
     
18,885
     
-
     
-
     
18,885
 
Shares issued for cash
   
21,600
     
216
     
-
     
259,784
     
-
     
-
     
-
     
-
     
260,000
 
Shares issued for settlement of debt
   
4,500
     
45
     
-
     
174,955
     
-
     
-
     
-
     
-
     
175,000
 
Subscription receivable
   
600
     
6
     
-
     
9,994
     
(200
)
   
-
     
-
     
-
     
9,800
 
Subscription received
   
30,000
     
300
     
-
     
499,700
     
(9,350
)
   
-
     
-
     
-
     
490,650
 
Stock option benefit
   
-
     
-
     
-
     
14,235
     
-
     
-
     
-
     
-
     
14,235
 
Balance at December 31, 2000
   
338,722
     
3,387
     
-
     
1,465,848
     
450
     
4,755
     
(1,009,581
)
   
-
     
464,859
 
Net loss
   
-
     
-
     
-
     
-
     
-
     
-
     
375,621
     
-
     
375,621
 
Foreign currency translation adjustment
   
-
     
-
     
-
     
-
     
-
     
13,629
     
-
     
-
     
13,629
 
Shares issued for cash
   
300
     
3
     
-
     
2,247
     
-
     
-
     
-
     
-
     
2,250
 
Subscription received
   
-
     
-
     
-
     
-
     
200
     
-
     
-
     
-
     
200
 
Stock option benefit
   
-
     
-
     
-
     
118,920
     
-
     
-
     
-
     
-
     
118,920
 
Repurchase of common stock for treasury
   
-
     
-
     
(270
)
   
(6,611
)
   
-
     
-
     
-
     
-
     
(6,881
)
Balance at December 31, 2001
   
339,022
     
3,390
     
(270
)
   
1,580,404
     
650
     
18,384
     
(633,960
)
   
-
     
968,598
 
Net loss
   
-
     
-
     
-
     
-
     
-
             
(63,864
)
   
-
     
(63,864
)
Foreign currency translation adjustment
   
-
     
-
     
-
     
-
             
(1,155
)
           
-
     
(1,155
)
Shares issued for cash
   
4,500
     
45
     
-
     
33,705
     
-
     
-
     
-
     
-
     
33,750
 
Balance at December 31, 2002
   
343,522
   
$
3,435
   
$
(270
)
 
$
1,614,109
   
$
650
   
$
17,229
   
$
(697,824
)
 
$
-
   
$
937,329
 
 
SEE ACCOMPANYING NOTES
 
F-6

 
SINOCUBATE INC.
 (A Development Stage Company)
STATEMENT OF STOCKHOLDERS DEFICIENCY
 
                                             
Deficit
       
                                 
Accumulated
         
Accumulated
       
                     
Additional
         
Other
         
During the
       
   
Common Shares
   
Treasury
   
Paid-in
   
Subscriptions
   
Comprehensive
         
Development
       
   
Number
   
Amount
   
Stock
   
Capital
   
Received
   
Income
   
Deficit
   
Stage
   
Total
 
Balance at December 31, 2002
    343,522       3,435       (270 )     1,614,109       650       17,229       (697,824 )     -       937,329  
Net loss
    -       -       -       -       -       -       (607,630 )     -       (607,630 )
Foreign currency translation adjustment
    -       -       -       -       -       1,752       -       -       1,752  
Stock option benefit
    -       -       -       11,800               -       -       -       11,800  
Cancellation of agreement
    -       -       -               (650 )     -       -       -       (650 )
Share issues for cash on exercise of options
    12,000       120       -       11,880       -       -       -       -       12,000  
Share issues for consulting services
    45,000       450       -       49,675       -       -       -       -       50,125  
Share issues for intangible assets
    60,000       600       -       104,400       -       -       -       -       105,000  
Share issued for software
    60,000       600       -       53,400       -       -       -       -       54,000  
Balance at December 31, 2003
    520,522       5,205       (270 )     1,845,264       -       18,981       (1,305,454 )     -       563,726  
Net loss
    -       -       -       -       -       -       -       (795,364 )     (795,364 )
Foreign currency translation adjustment
    -       -       -       -       -       (238 )     -       -       (238 )
Stock-based compensation
    -       -       -       4,460       -       -       -       -       4,460  
Shares issued for cash on exercise of options
    1,000       10       -       990       -       -       -       -       1,000  
Share issued for debt
    140,000       1,400       -       68,600       -       -       -       -       70,000  
Share issued for consulting services
    2,000       20       -       980       -       -       -       -       1,000  
Balance at December 31, 2004
    663,522       6,635       (270 )     1,920,294       -       18,743       (1,305,454 )     (795,364 )     (155,416 )
Net loss
    -       -       -       -       -       -       -       (54,416 )     (54,416 )
Foreign currency translation adjustment
    -       -       -       -       -       (702 )     -       -       (702 )
Share issues for consulting services
    18,000       180       -       8,820       -       -       -       -       9,000  
Balance at December 31, 2005
    681,522       6,815       (270 )     1,929,114       -       18,041       (1,305,454 )     (849,780 )     (201,534 )
Net loss
    -       -       -       -       -       -       -       (36,575