UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
FORM 10-Q
 
 x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended:  March 31, 2009
 
 o
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
 
98-0199508
(State or other jurisdiction of incorporation or organization)
 
(IRS Employer Identification No.)

65 Broadway, 7th Floor
New York, New York
 
10006
(Address of principal executive offices)
 
(Zip Code)

Issuer’s telephone number
 
(212) 359 4300

 
(Former name, former address and former fiscal year, if changed since last report)
 
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
  o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
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 Exchange Act).
 
Yes
  x
No   o
 
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 distribution of securities under a plan confirmed by a court.
 
Yes
  o
No           o    Not Applicable
 
APPLICABLE ONLY TO CORPORATE ISSUERS
 
The number of shares of common stock outstanding as of March 31, 2009 was 995,655.

 
 

 
 
SINOCUBATE, INC.
 
FORM 10-Q
 
PART I – FINANCIAL INFORMATION
 
   
ITEM 1. FINANCIAL STATEMENTS
 
   
Balance Sheets
F-2
   
Statement of Operations and Comprehensive Loss
F-3
   
Statement of Cash Flows
F-4
   
Statement of Stockholders’ Deficiency
F-5 - F-7
   
Notes to Financial Statements
F-8

 
F-1

 

PART I – FINANCIAL INFORMATION
 
ITEM 1.
FINANCIAL STATEMENTS
 
 
SINOCUBATE, INC.
 (A Development Stage Company)
BALANCE SHEETS
(Unaudited)
 
   
March 31,
   
December 31,
 
   
2009(unaudited)
   
2008(audited)
 
             
ASSETS
 
$
   
$
 
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
   
     
 
                 
Capital stock
               
Preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued or outstanding as of 03/31/2009
               
Common stock, $0.001 par value, 100,000,000 shares authorized, 995,655 shares issued and outstanding as of 03/31/2009
   
996
     
996
 
Additional paid-in capital
   
2,288,443
     
2,282,641
 
Deficit
   
(1,305,454
)
   
(1,305,454
)
Deficit accumulated during the development stage
   
(983,985
)
   
(978,183
)
                 
   
$
   
$
 
SEE ACCOMPANYING NOTES

 
F-2

 

SINOCUBATE, INC.
 (A Development Stage Company)
STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
   
Three months ended
   
January 1, 2004 (Date of
Inception of the
Development Stage) to
 
   
March 31,
   
March 31,
 
   
2009
   
2008
   
2009
 
General and administrative expenses
                 
Amortization
 
$
-
   
$
-
   
$
27,077
 
Bad debt
   
-
     
-
     
525
 
Corporate promotion
   
-
     
-
     
13,920
 
Finance charges
   
-
     
4,051
     
27,397
 
Insurance
   
-
     
-
     
15,901
 
Interest on notes payable
   
-
     
   4,907
     
34,648
 
Management and consultant fees
   
-
     
24,356
     
290,354
 
Office supplies and services
   
-
     
709
     
43,240
 
Professional fees
   
5,802
     
6,000
     
291,819
 
Rent
   
                   -
     
-
     
16,311
 
Wages
   
                   -
     
-
     
84,258
 
                         
Loss before other items
   
(5,802
)
   
(40,022
)
   
(845,450
                         
Other items
                       
Loss on disposition of equipment
   
-
     
-
     
(15,028
Write-down of intangible assets
   
-
     
-
     
(50,001
Write-off of payables
   
-
     
-
     
73,607
 
Write-off of notes payable
   
-
     
-
     
14,823
 
Gain on settlement of lawsuit
   
-
     
-
     
44,445
 
Gain on sale of investment
   
-
             
31,874
 
Other income
   
-
     
        
     
42,530
 
                         
Income (loss) from continuing operations
   
(5,802
)
   
(40,022
)
   
(703,200
)
                         
Operating loss from discontinued operations
   
-
     
-
     
(388,905
                         
Gain on sales of discontinued operations
   
-
     
-
     
108,120
 
                         
Net income (loss)
 
$
(5,802
)
 
$
(40,022
)
 
$
(983,985
                         
Basic and diluted income (loss) per
                       
 Common share – continuing operations
   
 (0.01
   
 (0.05
       
                         
Weighted average number of common share outstanding – basic and diluted
   
995,655
     
731,522
         
                         
Comprehensive income (loss)
                       
Net income (loss)
 
$
(5,802
)
 
$
(40,022
)
 
$
(983,985
Foreign currency translation adjustment
   
-
     
(622
)
   
-
 
Total comprehensive income (loss)
 
$
(5,802
)
 
$
(40,644
)
 
$
(983,985
SEE ACCOMPANYING NOTES

 
F-3

 

SINOCUBATE, INC.
 (A Development Stage Company)
STATEMENT OF CASH FLOWS
(Unaudited)
 
   
Three months ended
   
January 1, 2004 (Date
of Inception of the
Development Stage) to
 
   
March 31,
   
March 31,
 
   
2009
   
2008
   
2009
 
Cash flows from operating activities
                 
Net income (loss)
 
$
(5,802
)
 
$
(40,022
)
 
$
(983,985
Adjustments to reconcile net loss to net cash used in operating activities:
                       
Finance charges
   
     
     4,051
     
27,387
 
Accrued interest on notes payable
   
     
 4,907
     
31,414
 
Amortization
   
     
     
27,077
 
Accrued expenses
   
5,802
             
55,108
 
Foreign exchange effect on notes payable
   
     
(2,056
   
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
Write-off of notes payable
   
     
     
(18,729
)
Gain on settlement of lawsuit
   
     
     
(44,445
Gain on sales of discontinued operations
   
     
     
(108,121
)
    Gain on sale of investments
   
     
     
(31,874
)
    Other income
   
     
                 —
     
(42,530
)
Changes in non-cash working capital items:
                       
Accounts payable and accrued liabilities
   
     
  6,054
     
143,521
 
Cash used in continuing operations
   
     
(118,798
)
   
(422,836
Discontinued operations
   
     
-
     
(171,213
                         
Net cash used in operating activities
   
     
(27,066
)
   
(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
   
     
-
     
398,614
 
Proceeds from issuance of common stock
   
     
-
     
1,000
 
Net cash provided by financing activities
   
     
-
     
399,614
 
                         
Effect of exchange rate changes on cash
   
     
(622
)
   
(14,734
)
Change in cash
   
     
(27,688
   
(209,518
Cash, beginning of period
   
     
13,462
     
209,518
 
Cash, ending of period
 
$
   
$
2,907
   
$
 

 
F-4

 

SINOCUBATE, INC.
 (A Development Stage Company)
STATEMENT OF STOCKHOLDERS’ DEFICIENCY
                           
Accumulated
         
Deficit
       
               
Additional
         
Other
         
Accumulated
       
   
Common Shares
   
Treasury
   
Paid-in
   
Subscriptions
   
Comprehensive
         
During the
       
   
Number
   
Amount
   
Stock
   
Capital
   
Received
   
Income
   
Deficit
   
Development 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-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
 
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
)
   
(36,575
)
Foreign currency translation adjustment
   
-
     
-
     
-
     
-
     
-
     
563
     
-
     
-
     
563
 
Share issues for debt
   
50,000
     
500
     
-
     
24,500
     
-
     
-
     
-
     
-
     
25,000
 
Balance at December 31, 2006
   
731,522
   
$
7,315
   
$
(270
)
 
$
1,953,614
   
$
-
   
$
18,604
   
$
(1,305,454
)
 
$
(886,355
)
 
$
(212,546
)
SEE ACCOMPANYING NOTES

 
F-6

 

SINOCUBATE, INC.
 (A Development Stage Company)
CONSOLIDATED 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, 2006
   
731,522
   
$
7,315
   
$
(270
)
 
$
1,953,614
   
$
-
   
$
18,604
   
$
(1,305,454
)
 
$
(886,355
)
 
$
(212,546
)
Net loss
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(170,950
)
   
(170,950
)
Discount on notes payable
   
-
     
-
     
-
     
20,573
     
-
     
-
     
-
     
-
     
20,573
 
Foreign currency translation adjustment
   
-
     
-
     
-
     
-
     
-
     
(13,391
)
   
-
     
-
     
(13,391
)
Balance at December 31, 2007
   
731,522
     
7,315
     
(270
)
   
1,974,187
     
-
     
5,213
     
(1,305,454
)
   
(1,057,305
)
   
(376,314
)
Issuance of new shares
   
284,637
     
2,846
             
267,559
                                     
  270,405
 
Cancellation of shares
   
(20,504)
     
(205)
     
270
     
(65)
                                     
-
 
Donation from majority stockholder
                           
32,000
                                     
32,000
 
Change in par value of common share from $0.01 per share to $0.001 per share
           
(8,960)
             
8,960
                                         
Net income
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
79,122
     
79,122
 
Foreign currency translation adjustment
   
-
     
-
     
-
     
-
     
-
     
(5,213
)
   
-
             
(5,213
)
Balance at December 31, 2008 (audited)
   
995,655
   
$
996
   
$
   
$
2,282,641
   
$
   
$
   
$
(1,305,454
)
 
$
(978,183
)
 
$
 
Donation from majority shareholders
                           
5,802
                                     
5,802
 
Net loss
                                                           
(5,802
)
   
(5,802
)
Balance at March 31, 2009(unaudited)
   
995,655
   
$
996
     
   
$
2,288,443
     
     
     
(1,305,454
)
   
(983,985
)
   
 
 
SEE ACCOMPANYING NOTES

 
F-7

 

SINOCUBATE, INC.
 (A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2009
(Unaudited)
 
Note 1
Interim Financial Statements
 
The foregoing unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles or GAAP for interim financial information and with the instructions to Form 10-Q as promulgated by the Securities and Exchange Commission or the SEC.  Accordingly, these financial statements do not include all of the disclosures required by generally accepted accounting principles for complete financial statements. The accompanying unaudited financial statements and related notes should be read in conjunction with the audited financial statements and the Form 10-K of the Company for the year ended December 31, 2008.  In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim period presented.

The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period.

Note 2
Nature of business and going concern
 
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 November 8, 2006, the name of the Company was changed to Synthenol Inc.  The Company’s business 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 is a development stage company as defined by Statement of Financial Accounting Standards or SFAS No. 7, “Development Stage Enterprises.”

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 connection with the acquisition of the shares, 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 diluted basis and the sale of the shares represented a change of control of the Company.

On September 29, 2008, the Board of Directors of the Company ratified the cancellation of shares previously held by the Company in its treasury under certificate numbers 2057 (5,000 shares) and 2075 (15,504 shares) under the names of LegalPlay Entertainment and Poker.Com Corp., respectively, the two predecessor entities of the Company.  The cancellation of the shares, which were effective on September 23, 2008, has reduced the number of issued and outstanding shares of common stock of the Company from 1,016,159 to 995,655 shares as of the date of this Report.

 
F-8

 

SINOCUBATE, INC.
 (A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2009
(Unaudited)

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.  Pursuant to the terms of an agreement and plan of merger dated September 29, 2008 (attached as exhibit to a Definitive Information Statement on Schedule 14C filed with the SEC on October 14, 2008) and effective as of November 3, 2008, SinoCubate possesses all the rights, privileges, powers of the Company, and the Company’s debts and liabilities are now debts and liabilities of SinoCubate.  In addition, all the issued and outstanding shares of common stock of the Company will be automatically converted into shares of SinoCubate common stock at the rate of one share of SinoCubate common stock, par value $0.001 per share, for one share of common stock, par value $0.01 per share, of the Company.  The articles of incorporation and bylaws of SinoCubate now govern the Company.

Prior to August 15, 2008, the Company disposed of its subsidiaries and made settlements with its creditors, leaving the company with no significant assets and liabilities. The new management of the Company decided to focus on a new business strategy pursuant to which the Company will 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.

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.

Note 3
Summary of Significant Accounting Policies
 
 
a)
Basis of Presentation and Going Concern Assumption

The financial statements of the Company have been prepared in accordance with GAAP and are expressed in U.S. dollars. The Company’s fiscal year-end is December 31.

These financial statements have been prepared in accordance with GAAP applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year.  Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern.  At March 31, 2009, the Company has accumulated losses of $2,289,439 since its inception and expects to incur further losses in the development of its business, both of which casts substantial doubt about the Company’s ability to continue as a going concern.  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. 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.

 
F-9

 

SINOCUBATE, INC.
 (A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2009
(Unaudited)

 
b)
Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts and timing of revenues and expenses, the reported amounts and classification of assets and liabilities, and disclosure of contingent assets and liabilities. The Company’s actual results could vary materially from management’s estimates and assumptions. Significant areas requiring the use of management estimates relate to the determination expected tax rates for future income tax recoveries and determining the fair values of financial instruments.

 
c)
Foreign Currency Translation
 
For the year ended December 31, 2008 and the quarter ended March 31, 2009, the Company’s functional currency and the reporting currency are the United States dollar. Monetary assets and liabilities denominated in foreign currencies are translated into United States dollar equivalents at rates of exchange in effect at the balance sheet date. Non-Monetary items are translated at historical rates. Average rates for the year are used to translate revenues and expenses. The gains and losses arising from foreign currency translations are included in results of operations.

 
d)
Other Comprehensive Income

SFAS No. 130 “Reporting Comprehensive Income,” establishes standards for the reporting and display of comprehensive income and its components in the financial statements. For the quarters ended March 31, 2008 and 2009, comprehensive loss was $40,644 and $5,802, respectively.

 
e)
Income Taxes

The Company uses the asset and liability method of accounting for income taxes pursuant to SFAS No. 109 "Accounting for Income Taxes".  Under this method, deferred income tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Note 4 
Related Party Transactions

During Q1 2009, Viking, the majority stockholder of the Company, would pay the professional fee in the amount of $5,802, for the Company and assumed the expenses on its own.
 
Note 5
Supplemental Cash Flow Information
 
   
Three months ended
March 31,
   
January 1,
2004 (Date of
Inception of
the
Development
Stage) to
March 31,
 
   
2009
   
2008
   
2009
 
                   
Cash paid for:
                 
Interest
 
$
-
   
$
-
   
$
-
 
Income taxes (recovery)
 
$
-
   
$
-
   
$
(3,934
)
                         
Common shares issued to settle notes payable
 
$
-
   
$
-
   
$
295,405
 
Expenses assumed by principal stockholders
 
$
5,802
   
$
-
   
$
37,802
 
  
 
F-10

 
 
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
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 this Form 10-Q.
 
The use in this Form 10-Q 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.
 
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.

 
1

 

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