UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
DC 20549









Form 10-K








(Mark
One)


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




For the fiscal year ended March 31,
2009









 ̈
            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: 333-145211
  Charleston
Basics, Inc.
 (Exact name of registrant as
specified in its charter)







Delaware
                (State
      or Other Jurisdiction of Incorporation or Organization)
              20-4748555
                (IRS
      Employer Identification No.)1701
      Avenue I, Brooklyn, NY
                (Address
      of Principal Executive Offices)
              11230
                (Zip
      Code)(800) 975-8204
                (Registrant's
      Telephone Number, Including Area
Code)




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




Securities
registered pursuant to Section 12(g) of the Act: Common Stock, $0.0001 par
value




Indicate by check mark if
the registrant is a well-known seasoned issuer, as defined in Rule 405 of
the Securities Act. Yes o    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. Yesx Noo




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 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 the 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. x




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a small reporting company. 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
                      (Do
      not check if a smaller reporting company)
                    Smaller
      reporting company x




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





As of
June 29th, 2009, the aggregate market value of the voting and non-voting common
equity held by non-affiliates of the registrant was; N/A.




As of
June 29th, 2009, the registrant had 6,043,720 , shares of common stock
outstanding.






Table of Contents








TABLE OF CONTENTS




PagePART
      IItem 1.
                    Business
                    3Item 1A.
                    Risk Factors
                    5Item 1B.
                    Unresolved Staff Comments
                    8Item 2.
                    Properties
                    9Item 3.
                    Legal Proceedings
                    9Item 4.
                    Submission of Matters to a Vote of Security
      Holders
                    9Item
      5.
                    Other Information
                    9PART
      IIItem 5.
                    Market for Registrant's Common Equity, Related Stockholder
      Matters and Issuer Purchases of Equity Securities
                    10Item 6.
                    Selected Financial Data
                    10Item 7.
                    Management's Discussion and Analysis of Financial Condition
      and Results of Operations
                    10Item 7A.
                    Quantitative and Qualitative Disclosures About Market
      Risk
                    11Item 8.
                    Financial Statements and Supplementary
    Data
                    12Item 9.
                    Changes in and Disagreements With Accountants on Accounting
      and Financial Disclosure
                    12Item 9A(T).
                    Controls and Procedures
                    12PART
      IIIItem 10.
                    Directors, Executive Officers and Corporate
      Governance
                    13Item 11.
                    Executive Compensation
                    13Item 12.
                    Security Ownership of Certain Beneficial Owners and
      Management and Related Stockholder Matters
                    15Item 13.
                    Certain Relationships and Related Transactions, and Director
      Independence
                    15Item 14.
                    Principal Accounting Fees and Services
                    16PART
      IVItem 15.
                    Exhibits, Financial Statement Schedules
                    17





Table of Contents




Forward-Looking
Statements


From time
to time, we may provide information, whether orally or in writing, including
certain statements in this Annual Report on Form 10-K, which are deemed to
be "forward-looking" within the meaning of the Private Securities Litigation
Reform Act of 1995 (the "Litigation Reform Act"). These forward-looking
statements and other information are based on our beliefs as well as assumptions
made by us using information currently available.





The words
"believe," "plan," "expect," "intend," "anticipate," "estimate," "may," "will,"
"should" and similar expressions are intended to identify forward-looking
statements. Such statements reflect our current views with respect to future
events and are subject to certain risks, uncertainties and assumptions. Should
one or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
described herein as anticipated, believed, estimated, expected or intended or
using other similar expressions. We do not intend to update these
forward-looking statements, except as required by law. In accordance with the
provisions of the Litigation Reform Act, we are making investors aware that such
forward-looking statements, because they relate to future events, are by their
very nature subject to many important factors that could cause actual results to
differ materially from those contemplated by the forward-looking statements
contained in this Annual Report on Form 10-K, any exhibits to this
Form 10-K and other public statementswe make. Such factors are discussed in
the "Risk Factors" section of this Annual Report on Form 10-K.







PART I


ITEM 1.
  BUSINESS





We were
incorporated under the laws of the State of Delaware on April 4,
2006.  We are engaged in the sale of outdoor camping and survival
products as identified below.





Target
Markets and Marketing Strategy





Our
operational activities since our incorporation on April 4, 2006 consist
primarily of direct telephone sales of our products mainly to commercial
resellers and governmental agencies involved in emergency management and public
safety.  We mainly sell outdoor gear with a special emphasis on
outdoor clothing and camping and survival goods. Our clothing line consists
primarily of rugged outdoor wear used by military, security or EMT personnel.
These items include shirts, pants, hats, coats, jackets, gloves and
footwear.  Our camping and survival product lines include tents,
sleeping bags, hammocks, blankets, cots, chairs, stools, ropes, duffle bags,
hydropacks, knives, flashlights, canteens, and cookware.  More
recently, we have been engaged in online sale of our products at our website
www.procurementhub.com.
We will continue our marketing efforts toward executing our strategy of building
a network of relationships with commercial resellers of outdoor and survival
products, and


governmental
agencies. We also hope to target private institutional end-users, such as
private security companies, oil drilling and mineral mining firms, which could
use our clothing to outfit their employees and our tents and other gear for use
in their temporary sleeping quarters and to satisfy their shelter
requirements.





Our other
marketing initiatives will include the following: placement of print
advertisements in small business, entrepreneurial, and special interest
magazines; placement of advertisements and links to our website in industry
focused websites; promoting our products at industry tradeshows; and entering
into relationships with similar, web-based providers of outdoor gear. We believe
that these marketing initiatives will optimize our access to governmental
agencies and commercial resellers.





We expect
to retain the services of an independent consultant to manage an internet
specific marketing campaign. Such marketing would include "pay-per-click"
keyword campaigns on major search engines such as Google and Yahoo
and Search Engine Optimization ("SEO"). SEO is the process of improving the
volume and quality of traffic to a web site from search engines via "natural"
("organic" or "algorithmic") search results for targeted keywords. Usually, the
higher a site "ranks", the more searchers will visit that site. SEO means
ensuring that web sites are accessible to search engines and are focused in ways
that help improve the chances they will be found.




An
organic search is a process by which internet users find web sites having unpaid
search engine listings, as opposed to using the pay per click (PPC)
advertisement listings displayed among the search results.





Our
marketing initiatives will create brand awareness and should help drive
traffic to our website. We estimate that the marketing expenses for the next 12
months will be approximately $10,000.





Growth
Strategy





Our
objective is to become a leading provider of outdoor and survival products. We
believe there are significant opportunities to increase our revenues through the
further implementation of our operating strategy and by growing our customer
base, both organically and through strategic acquisitions.





3
 Table of Contents




Key
elements of our growth strategy for the next 12 months will focus on the most
efficient methods to acquire new customers and increase sales with existing
customers. We intend to implement our growth strategy through the following
methods:





●
            selectively
      expand our merchandise categories and product
  line;




●
            target
      new categories of customers such as private security firms, oil drilling
      and mineral mining companies;




●
            tailor
      our marketing, advertising and promotions to attract new customers and
      increase sales with existing
customers;




●
            actively
      seek to evaluate opportunities to develop or acquire businesses within
      attractive outdoor and survival product categories or with a similar
      customer base;●
            attend
      tradeshows in order to create awareness of our company and
      products;





●
            hire
      an independent web developer to enhance our website;
  and




●
            enhance
      relationships with clients by providing high quality customer service
      which will include low prices, efficient and timely product fulfillment
      using state of the art automated supply management system, and providing
      excellent communication channels between our company and our
      customers.




Sourcing
of Products





Our
products are supplied to us by third party suppliers. We depend primarily
on three third-party suppliers, Global Imports, Ledmark Ind. and Rothco for the
supply of our products. Global Imports accounted for more than 90% of our total
purchases during the fiscal year ended March 31, 2008 and 19% for the fiscal
year ended March 31, 2009. Ledmark Ind. accounted for more than 50% of our total
purchases during the fiscal year ended March 31, 2009. We did not purchase
anything from Ledmark Ind. during the fiscal year ended March 31, 2008. The loss
of any of these suppliers, especially Global Imports, could affect our ability
to sell our products at competitive prices, which would decrease our sales or
earnings.





Generally,
we do not expect to enter into long-term supply agreements with vendors so that
we do not obligate ourselves to any one supplier. Rather, we anticipate
continuing to order inventory from various suppliers via purchase orders.
Notwithstanding the foregoing statement, we may enter into supply agreements if
their terms are favorable to us.





Distribution
and Fulfillment





We
currently utilize the services of one fulfillment center, Fresh Warehousing
& Fulfillment in Illinois with which we have a “pay as you go”
arrangement.  We pay a set price of $3.50 per month per pallet space
we use on a day to day basis. If we have no item in storage we pay nothing.
Orders, whether placed by using our website or by telephone are sent by our
company electronically to the fulfillment center. The item is then picked,
packed and shipped directly to the customer. We are also charged a set price of
$3.00 for each order that they process for us.  As our operation
grows, we intend to utilize the services of other fulfillment centers throughout
the United States to distribute our products. However, we do not intend to enter
into any long-term warehouse agreements.





Competition





The
outdoor and survival gear market is highly fragmented and competitive. We
compete directly or indirectly with the following categories of
companies:





●    other
wholesalers such as Coleman, Rio, Stansport and The Sportsman’s
Guide





●   
other emergency survival resellers such as Fisher Safety, ProPac and EOD
Technology.





Many of
our competitors have a substantially greater market presence, name recognition
and financial, distribution, marketing and other resources than we have. In
addition, if our competitors reduce their prices, we may have to reduce our
prices in order to compete. As a result of this competition, we may need to
spend significant sums on advertising and promotion. If these competitors were
to begin offering a broader array of competing products, or if any of the other
factors listed above occurred, our revenues could be reduced or our costs could
be increased, resulting in reduced profitability.





4
 Table of Contents




Seasonality





We
anticipate that sales of our outdoor products will be concentrated in the spring
and summer months and that we will achieve higher sales volumes during such
months.  Periods of inclement weather may have  negative
impact on the market demand for our camping and outdoor
products.  Conversely, periods of extreme weather may impact our
disaster relief products positively.





Significant
Customers





Two of
our customers, Ready First Aid Company and Out In Style, accounted for
approximately 77% of our total sales during the fiscal year ended March 31,
2008. Total sales to Ready First Aid Company accounted for approximately 56% of
our total sales, while Out In Style, a commercial reseller of outdoor products,
accounted for approximately 21% of such sales. During the fiscal year ended
March 31, 2009, Asset Group, a disaster relief government contractor, and Out In
Style accounted for almost 96% of revenues.  Asset Group, accounted
for almost 82% of revenues while Out In Style accounted for 14% of such
sales.




Government
Regulation





We are
subject to a variety of state laws and regulations relating to, among other
things, advertising, pricing, charging and collecting state sales or use tax and
product safety/restrictions.  We are subject to certain federal, state
and local laws and regulations relating to the protection of the environment and
human health and safety. We believe that we are in substantial compliance with
the terms of environmental laws and that we have no liabilities under such laws
that we expect to have a material adverse effect on our business, results of
operations or financial condition.





Employees





All
executive functions including development, strategy and negotiations are
currently being provided by Michael Lieber, our Chief Executive Officer. Mr.
Lieber has agreed to  to waive a portion of his salary until such time
that sufficient funds are available. We retain consultants and other
professionals when necessary.  Additionally, we have one part time
employee who handles all clerical work.




ITEM 1A.
 RISK FACTORS





The
Company's business is subject to numerous risk factors, including the
following.





1.           Our
limited operating history makes it difficult for us to evaluate our future
business prospects and make decisions based on those estimates of our future
performance.





We were
incorporated on April 4, 2006. We have begun offering our products for sale on
our website, www.procurementhub.com
and by telephone. Our limited operating history, based upon limited revenues and
a lack of profitability makes it difficult to evaluate our business on the basis
of historical operations. As a consequence, our past results may not be
indicative of future results. Although this is true for any business, it is
particularly true for us because of our limited operating history. Reliance on
historical results may hinder our ability to anticipate and timely adapt to
increases or decreases in sales, revenues or expenses. For example, if we
overestimate our future sales for a particular period or periods based on our
historical growth rate, we may increase our overhead and other operating
expenses to a greater degree than we would have if we correctly anticipated the
lower sales level for that period and reduced our controllable expenses
accordingly.  If we make poor budgetary decisions as a result of
unreliable historical data, we could continue to incur losses.





2.           The
revenue of our business model is unproven and our success is dependent on our
ability to develop and then expand our customer base.





Our
business model is to generate revenues from the sale of rugged outdoor apparel
and camping and survival goods to small and medium size private businesses as
well as to government agencies. Our apparel line includes items such as shirts,
pants, hats, coats, jackets, gloves and footwear, generally used by military,
security or EMT workers. Our outdoor camping and survival products include items
such as sleeping bags, hammocks, blankets, cots, chairs, stools, ropes, duffle
bags, canteens and cookware. Our business model is new, and our ability to
generate revenue is unproven. During the fiscal year ended March 31, 2008 and
the fiscal year ended March 31, 2009, a significant portion of our revenues was
generated from our larger customers. Targeting governmental agencies is
especially risky because such customers may be subject to budget cuts, budgetary
constraints or a reduction or discontinuation of funding. Therefore, it is not
possible for us to predict the future level of demand for our products that will
be generated by these customers or the future demand for the products in the
end-user marketplace. Our customer concentration exposes us to the risk of
changes in the business condition of any of our major customers and to the risk
that the loss of a major customer would materially adversely affect our results
of operations.  Our success is dependent on our ability to develop and
then expand our customer base. We cannot guarantee that we will ever be
successful in doing this in order to generate revenues in the future. We
recognize that if we are unable to generate revenues, we will not be able to
earn profits or continue operations.  There is no history upon which
to base any assumption as to the likelihood that we will prove successful, and
we can provide investors with no assurance that we will generate any operating
revenues or ever achieve profitable operations.





3.           We
may require additional funding in the future and our operations could be
curtailed if we are unable to obtain required additional funding when
needed.





For the
year ended March 31, 2008, we had gross revenues of $578,167, cost of sales of
$431,556 and gross profits of $146,611.  For the year ended March 31,
2009, we had gross revenues of $449,522, cost of sales of $363,896 and gross
profits of $85,626.  If we continue to realize gross margins similar
to our historical amounts, we will continue to have cash flow problems and will
not be able to fund our operating expenses over the next twelve months. We
anticipate that we will require a minimum of $150,000 to fund our activities for
the next twelve months. We hope that we may be able to increase sales and
thereby increase our cash position. However, there is no assurance that we will
be successful in this regard or that the increase in sales will raise cash
positions to sufficient levels. We may therefore require additional funding
to sustain operations through the next twelve months. The inability to
raise the required capital will restrict our ability to grow and may reduce our
ability to continue to conduct business operations.  If we are unable
to obtain necessary financing, we will likely be required to curtail our
development plans which could cause the Company to become dormant. Any
additional equity financing may involve substantial dilution to our then
existing stockholders.





5
 Table of Contents




4.          Two of our customers accounted for
approximately 77% of total sales during the fiscal year ended March 31, 2008 and
one of them accounted for 14% of our total sales during the fiscal year ended
March 31, 2009.  Any negative change in our relationship with our
major customers could have significant negative effects on revenues and
profits.





Two of
our customers, Ever Ready First Aid Company, a commercial reseller of emergency
products, and Out In Style accounted for more than 77% of revenues during the
fiscal year ended March 31, 2008. Ever Ready First Aid Company accounted for 56%
of our total sales, while Out In Style accounted for 21% of such sales. During
the fiscal year ended March 31, 2009, Asset Group, a disaster relief government
contractor, accounted for almost 82% of revenues while Out In Style accounted
for 14% of such sales. Our financial success is directly related to the
willingness of our customers to continue to purchase our products. Failure to
fill customers’ orders in a timely manner could harm our relationships with our
customers.  Furthermore, if our major customers experience planning or
budgetary constraints, significant downturn in their businesses, or fail to
remain committed to our products or brands, then these customers may reduce or
discontinue purchases from us, which could have an adverse effect on our
business, results of operations, and financial condition.





5.     
    Our quarterly results are subject to significant
fluctuations and any period-to-period comparisons of results of operations are
not necessarily meaningful and that, as a result, such comparisons should not be
relied upon as indications of future performance.





Since the
majority of the sales of our products are seasonal and coincide with the spring
and summer outdoor camping season, we expect that our quarterly operating
results will fluctuate significantly. Also, some of our products are used by
governmental and private agencies for disaster relief efforts. Natural or
man-made disasters will therefore probably have a significant impact on our
sales volume but are by definition highly unpredictable and
inconsistent.  Therefore we believe that quarterly revenues, expenses
and operating results are likely to vary significantly in the future, that
period-to-period comparisons of results of operations are not necessarily
meaningful and that, as a result, such comparisons should not be relied upon as
indications of future performance.





6.           We are dependent on three suppliers
for the supply of our products, making us vulnerable to supply problems and
price fluctuations, which could cause us to fail to meet the demands of our
customers and could adversely affect our financial results to the extent we were
unable to find replacement suppliers.





We depend
on three major suppliers to supply us with the products that we resell by
telephone and on our website. We primarily rely on Rothco and Ledmark Ind., both
of whom are wholesale distributors of outdoor apparel, camping and tactical
gear, and Global Imports, a company specializing in imports from China. We do
not have any agreements with our suppliers. The loss of these suppliers could,
in the short term, adversely affect our financial results until alternative
supply arrangements are secured. In addition, there is no assurance that any new
supply arrangements entered into by the Company will have terms as favorable as
those contained in current supply arrangements.




7.           We
may be unable to anticipate changes in consumer preferences for outdoor and
camping goods, which may result in decreased demand for our products and may
negatively affect our revenues and our operating results.





Our
continued operation in the sales of outdoor camping and survival products is in
large part dependent on our ability to anticipate selling products that appeal
to the changing tastes, spending habits and preferences of customers. If we are
not able to anticipate and identify new consumer trends and sell new products
accordingly, demand for our products may decline and our operating results may
be adversely affected. In addition, we may incur significant costs relating to
identifying new consumer trends and marketing new products or expanding our
existing product lines in reaction to what we perceive to be a consumer
preference or demand.  Such development or marketing may not result in
the level of market acceptance, volume of sales or profitability
anticipated.





8.           The
loss of our Chief Executive Officer or our inability to recruit a suitable
replacement may harm our business.





We are
highly dependent on the Chief Executive Officer, Financial Officer, and
Director, Mr. Michael Lieber, to manage our overall operations and identify new
products to expand our sales and enhance our existing product line. We do not
maintain key man life insurance on any of our officers and directors. In
addition, Mr. Lieber is under no contractual obligation to remain employed by
us. If we were to lose his services, or if he is not available to us when we
need him, our ability to continue our business model would suffer and we may be
forced to cease operations until such time as we could hire a suitable
replacement. The loss of Mr. Lieber would have a material adverse effect on
our business and operations.





9.           Our
Chief Executive Officer owns a majority of the outstanding shares of our common
stock and other stockholders may not be able to influence control of the company
or decision making by management of the company.





Our Chief
Executive Officer, Michael Lieber presently owns 99.3% of our outstanding
common.  As a result, our Chief Executive Officer has substantial
control over all matters submitted to our stockholders for approval including
the following matters: election of our board of directors; removal of any of our
directors; amendment of our Certificate of Incorporation or bylaws; and adoption
of measures that could delay or prevent a change in control or impede a merger,
takeover or other business combination involving us. Other stockholders may find
the corporate decisions influenced by our Chief Executive Officer are
inconsistent with the interests of other stockholders.  In addition,
other stockholders may not be able to change the directors and officers, and are
accordingly subject to the risk that management cannot manage the affairs of the
company in accordance with such stockholders’ wishes.





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10.        If
we incur product liability, warranty and other claims against us, including
wrongful death claims, our business, results of operations and financial
condition may be harmed.





We may
become subject, in the ordinary course of business, to litigation involving
product liability and other claims, including wrongful death claims, related to
personal injury and warranties. We do not maintain product liability insurance.
If we do purchase product liability insurance in the future, we cannot be
certain that our insurance coverage will be sufficient to cover all future
claims against us. Any increase in the frequency and size of these claims may
cause the premiums that we are required to pay for such insurance to raise
significantly. It may also increase the amounts we pay in punitive damages,
which may not be covered by our insurance.





11.         We
may, in the future, issue additional common shares, which would reduce
investors' percent of ownership and may dilute our share value.





Our
Certificate of Incorporation authorizes the issuance of 700,000,000 shares of
common stock, par value $0.0001 per share, of which 6,043,720 shares are issued
and outstanding. The future issuance of  shares of common stock may
result in substantial dilution in the percentage of our common stock held by our
then existing shareholders. We may value any common stock issued in the future
on an arbitrary basis. The issuance of common stock for future services or
acquisitions or other corporate actions may have the effect of diluting the
value of the shares held by our investors, and might have an adverse effect on
any trading market for our common stock.





12.        Our
common shares are subject to the "Penny Stock" Rules of the SEC and the trading
market in our securities is limited, which makes transactions in our stock
cumbersome and may reduce the value of an investment in our stock.





The
Securities and Exchange Commission has adopted Rule 15g-9 which establishes the
definition of a "penny stock," for the purposes relevant to us, as any equity
security that has a market price of less than $5.00 per share or with an
exercise price of less than $5.00 per share, subject to certain exceptions. For
any transaction involving a penny stock, unless exempt, the rules
require:





·
            that
      a broker or dealer approve a person's account for transactions in penny
      stocks; and·
            the
      broker or dealer receive from the investor a written agreement to the
      transaction, setting forth the identity and quantity of the penny stock to
      be purchased.




In order
to approve a person's account for transactions in penny stocks, the broker or
dealer must:




·
            obtain
      financial information and investment experience objectives of the person;
      and·
            make
      a reasonable determination that the transactions in penny stocks are
      suitable for that person and the person has sufficient knowledge and
      experience in financial matters to be
              capable
      of evaluating the risks of transactions in penny
  stocks.




The
broker or dealer must also deliver, prior to any transaction in a penny stock, a
disclosure schedule prescribed by the Commission relating to the penny stock
market, which, in highlight form:





·
            sets
      forth the basis on which the broker or dealer made the suitability
      determination; and·
            that
      the broker or dealer received a signed, written agreement from the
      investor prior to the transaction.




Generally,
brokers may be less willing to execute transactions in securities subject to the
"penny stock" rules. This may make it more difficult for investors to dispose of
our Common shares and cause a decline in the market value of our
stock.




Disclosure
also has to be made about the risks of investing in penny stocks in both public
offerings and in secondary trading and about the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and the rights and remedies available to an investor in cases of
fraud in penny stock transactions. Finally, monthly statements have to be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks.





13.        Because
we do not intend to pay any cash dividends on our common stock, our stockholders
will not be able to receive a return on their shares unless they sell
them.





We intend
to retain any future earnings to finance the development and expansion of our
business. We do not anticipate paying any cash dividends on our common stock in
the foreseeable future. Unless we pay dividends, our stockholders will not be
able to receive a return on their shares unless the value of such shares
appreciates and they sell them. There is no assurance that stockholders will be
able to sell shares when desired.





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14.         We
may issue shares of preferred stock in the future that may adversely impact your
rights as holders of our common stock.





Our
Certificate of Incorporation authorizes us to issue up to 20,000,000 shares of
"blank check" preferred stock. Accordingly, our board of directors will have the
authority to fix and determine the relative rights and preferences of preferred
shares, as well as the authority to issue such shares, without further
stockholder approval. As a result, our board of directors could authorize the
issuance of a series of preferred stock that would grant to holders preferred
rights to our assets upon liquidation, the right to receive dividends before
dividends are declared to holders of our common stock, and the right to the
redemption of such preferred shares, together with a premium, prior to the
redemption of the common stock. To the extent that we do issue such additional
shares of preferred stock, your rights as holders of common stock could be
impaired thereby, including, without limitation, dilution of your ownership
interests in us. In addition, shares of preferred stock could be issued with
terms calculated to delay or prevent a change in control or make removal of
management more difficult, which may not be in your interest as holders of
common stock.





15.         We
may be adversely affected by recent events in the capital and credit
markets.





Recent
declines in consumer and business confidence and spending, together with severe
reductions in the availability and cost of credit and volatility in the capital
and credit markets, have adversely affected business and economic environments.
These conditions have resulted in financial instability or other adverse effects
at many prospective buyers of our goods. Any of these events may adversely
affect our cash flow, profitability and financial condition. Moreover, the
current worldwide financial crisis has reduced the availability of liquidity and
credit to fund or support the continuation and expansion of business operations
worldwide. Many lenders and institutional investors have reduced and, in some
cases, ceased to provide funding to corporations such as ours. Continued
disruption of the credit markets has affected and could continue to adversely
affect our ability to access capital to implement our plans for
expansion.





16.       
Because we are not subject to compliance with rules requiring the adoption of
certain corporate governance measures,our stockholders have limited protections
against interested director transactions, conflicts of interest and similar
matters.





The
Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by the
SEC, the New York and American Stock Exchanges and the Nasdaq Stock Market,
as a result of Sarbanes-Oxley, require the implementation of various measures
relating to corporate governance. These measures are designed to enhance the
integrity of corporate management and the securities markets and apply to
securities which are listed on those exchanges or the Nasdaq Stock Market.
Because we are not presently required to comply with many of the corporate
governance provisions and because we chose to avoid incurring the substantial
additional costs associated with such compliance any sooner than necessary, we
have not yet adopted these measures. Because none of our directors are
independent directors, we do not currently have independent audit or
compensation committees. As a result, these directors have the ability, among
other things, to determine their own level of compensation. Until we comply with
such corporate governance measures, regardless of whether such compliance is
required, the absence of such standards of corporate governance may leave our
stockholders without protections against interested director transactions,
conflicts of interest and similar matters and investors may be reluctant to
provide us with funds necessary to expand our operations.





17.         The
costs to meet our reporting and other requirements as a public company subject
to the Exchange Act of 1934 will be substantial and may result in us having
insufficient funds to expand our business or even to meet routine business
obligations.





As a
public entity, subject to the reporting requirements of the Exchange Act of
1934, we incur ongoing expenses associated with professional fees for
accounting, legal and a host of other expenses for annual reports and proxy
statements. We estimate that these costs will range up to $100,000 per year for
the next few years and will be higher if our business volume and activity
increases but lower during the first year of being public because our overall
business volume will be lower, and we will not yet be subject to the
requirements of Section 404 of the Sarbanes-Oxley Act of 2002.




ITEM 1B.
 UNRESOLVED STAFF COMMENTS





None.






8
 Table of Contents




ITEM 2.
 PROPERTIES





The
Company has no properties and at this time has no agreements to acquire any
properties.  The Company’s office is located in the home of Michael Lieber,
our Chief Executive Officer, Chief Financial Officer, and
Director.  Mr. Lieber provides such office to the Company on a
month-to-month basis for $1,500 per month.




ITEM 3.
 LEGAL PROCEEDINGS





There is
no litigation pending or threatened by or against the Company.  The
Company may become involved in legal proceedings in the ordinary course of its
business.




ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS





See Item
5- Other Information.





ITEM 5. OTHER
INFORMATION





On August
12, 2008, shareholders holding a majority of our outstanding shares of Common
Stock by written action, as permitted by Section 228 of the General Corporation
Law of Delaware, removed Andrea Bereck as a director of the Company and
determined that, until changed by a vote of the Board of Directors or of the
shareholders, our Company’s Board of Directors, would consist of one
director.





Subsequently
on the same date, the Board of Directors, acting by its sole director, removed
Andrea Bereck as Secretary of the Company and appointed  Michael
Lieber to that position.





As a
result of these actions, Mr. Lieber is currently the sole director and the sole
officer of the Company.






9
 Table of Contents





PART II







ITEM 5.
 MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES





MARKET
INFORMATION





Our
Registration Statement, as filed with the SEC on Form S-1 on April 3rd, 2008,
was declared effective by the SEC on April 16th, 2008.
On May 8th 2008
FINRA cleared our securities for an unpriced quotation on the OTC Bulletin Board
and Pink Sheets under the symbol CHBS. On May 23rd, 2008
FINRA cleared a request by our market maker to submit a quote of $0.35 bid,$0
..50 ask on the OTC Bulletin Board and Pink Sheets. As of June 29th, 2009, there
has been no active trading market established.





HOLDERS





As of
June 29th, 2009, we have 6,043,720 shares of $ 0.0001 par value common stock
issued and outstanding held by 43 shareholders of record. The stock transfer
agent for our securities is Island Stock Transfer, 100 Second Avenue South,
Suite 705S, St. Petersburg, FL 33701, telephone (727) 289-0010.





DIVIDEND
POLICY





The
Company has never paid cash dividends on any of its securities. The Company
currently intends to retain any earnings for use in its operations and does not
anticipate paying cash dividends in the foreseeable future. Future dividend
policy will be determined by the Company's Board of Directors based upon the
Company's earnings, if any, its capital needs and other relevant
factors.





RECENT
SALES OF UNREGISTERED SECURITIES; USE OF PROCEEDS FROM UNREGISTERED
SECURITIES





On April
4, 2006, we issued 6,000,000 shares of our common stock to Tradewise Associates
LLC.  The sole member and manager of Tradewise Associates LLC is
Michael Lieber, our Chief Executive Officer, Chief Financial Officer, and a
Director.  The purchase price paid for such shares was equal to their
par value, $0.0001 per share, and amounted in the aggregate to
$600.  The shares were issued under Section 4(2) of the Securities Act
of 1933, as amended.  Mr. Lieber was our founding officer and director
and had access to all of the information which would be required to be included
in a registration statement, and the transaction did not involve a public
offering.





On April
4, 2006, we issued 2,000 shares of our common stock to Andrea Bereck, a former
officer.  The purchase price paid for such shares was equal to their
par value, $0.0001 per share, and amounted in the aggregate to
$0.20.  The shares were issued under Section 4(2) of the Securities
Act of 1933, as amended.  Ms. Bereck was our founding officer and
director and had access to all of the information which would be required to be
included in a registration statement, and the transaction did not involve a
public offering.





From
August 2006 through May 2007, we issued 41,720 shares of common stock to 41
investors in a private placement pursuant to the exemptions from registration
under the Securities Act provided by Regulation D of the Securities Act. The
consideration paid for such shares was $0.50 per share, amounting in the
aggregate to $20,860.  Each of the purchasers was an accredited
investor, and the Company conducted the private placement without any general
solicitation or advertisement and a restriction on resale. Proceeds of the
offering were utilized for general corporate purposes.





ITEM 6.
 SELECTED FINANCIAL DATA





The
Company is not subject to this requirement since it is a smaller reporting
company.





ITEM 7.
 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF
OPERATIONS





This
discussion contains forward-looking statements which relate to future events or
our future financial performance. In some cases, you can identify
forward-looking statements by terminology such as “may”, “should”, “expects”,
“plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or
“continue” or the negative of these terms or other comparable
terminology.  These statements are only predictions and involve known
and unknown risks, uncertainties and other factors, including the risks in the
section entitled “Risk Factors,” that may cause our or our industry’s actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.While
these forward-looking statements, and any assumptions upon which they are based,
are made in good faith and reflect our current judgment regarding the direction
of our business, actual results


will
almost always vary, sometimes materially, from any estimates, predictions,
projections, assumptions or other future performance suggested herein. Except as
required by applicable law, including the Securities laws of the United States,
we do not intend to update any of the forward-looking statements to conform
these statements to actual results.





10
 Table of Contents




We are a
company engaged in the direct sales of outdoor camping and survival products
mainly to commercial resellers and governmental agencies involved in emergency
management and public safety.  Typical items we sell include rugged
outdoor wear, tents, sleeping bags, hammocks, blankets, cots, chairs, stools,
ropes, duffle bags, hydropacks, knives, flashlights, canteens, and
cookware.





Results of Operation





For the
year ended March 31, 2009, we had gross revenues of $449,522. For the year ended
March 31, 2008 we had $578,167 in revenues. This decline of 22% is mainly
due to a decrease in State and Local government allocations of funds for
disaster preparedness. Due to significant tax revenue declines, local
governments have had budget constraints that have had a negative impact on
budget funds available for non-essential items.





For
the year ended March 31, 2009, cost of sales was $363,896 and gross profits
were $85,626. For the year ended March 31, 2008, cost of sales was $431,556
and gross profits were $146,611. The decrease of approx. 16% and 42%
respectively is due to lower sales. Also there were tighter margins due to
heavier competition from other companies trying to reduce their
inventory.





For the
year ended March 31, 2009, total operating expenses were $129,639 resulting in a
loss from operations in the amount of $44,014. Some of the operating
expenses included the following: Salaries & Commissions (39,100),
Shipping (218), Professional fees (48,526) and rent (18,000). For the year ended
March 31, 2008, total operating expenses were $319,974 resulting in a
loss from operations in the amount of $173,363. Some of the operating
expenses included the following: Salaries & Commissions (189,400),
Shipping (9,847), Professional fees (40,986) and rent (18,000). The decrease in
operating expenses of 59% is primarily due to lower salaries paid during
this past fiscal year.





The
Company had two major customers who accounted for more than 96% of revenues
during the year ended March 31, 2009.  Asset Group, a disaster relief
government contractor, accounted for almost 82% of revenues while Out In Style
accounted for 14% of such sales. The Company had two major customers
who accounted for more than 77% of our revenues during the year ended March 31,
2008. One customer, Ever Ready First Aid Company, a commercial reseller and
wholesale distributor of emergency products, accounted for more than 56% of our
total revenues and Out In Style accounted for more than 21% of such
revenues.





Liquidity
and Capital Resources





As of
June 29th, 2009,
we had a cash balance of $2408.





In a
private placement completed in May 2007, we raised $20,860 from the 41 selling
security holders. The proceeds from the sale of the shares were used to fund our
operating expenses which include among others, professional fees, insurance,
payroll and office expenses.   If our operating revenues during the
next twelve months are similar to those of the previous twelve months, we will
not be able to finance our continued operations from our operating revenues and
will have to raise the  funds to pay for these
expenses.  While we have been financed with loans from our Chief
Executive Officer aggregating $96,000 during the fiscal year ending March 31,
2009, there can be no assurance that Mr. Lieber will agree to loan or advance
additional amounts to the Company.  We may have to borrow money from
shareholders or issue debt or equity or enter into a strategic arrangement with
a third party.  There can be no assurance that additional capital will
be available to us from Mr. Lieber or any other source.  We currently
have no agreements, arrangements or understandings with any person to obtain
funds through bank loans, lines of credit or any other sources.  Since
we have no such arrangements or plans currently in effect, our inability to
raise funds for a marketing program will have a severe negative impact on our
ability to remain a viable company.





Off-Balance
Sheet Arrangements





We have
no off-balance sheet arrangements.





ITEM 7A.
 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK





The
Company is not subject to this requirement since it is a smaller reporting
company.





11
 Table of Contents




ITEM 8.
 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA





The
Financial Statements of the Company called for by this item are contained in a
separate section of this report.  See “Index to Consolidated Financial
Statements” on Page F-1.





ITEM 9.
 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL
DISCLOSURES





Morgenstern,
Svoboda & Baer, CPA’s, P.C. is our auditors. There have not been any changes
in or disagreements with accountants on accounting and financial disclosure or
any other matter.




ITEM 9A(T).
 CONTROLS AND PROCEDURES





(a)
Evaluation of disclosure controls and procedures





The
Company’s Chief Executive Officer (acting also as the principal financial
officer) has conducted an evaluation of the Company’s disclosure controls and
procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and
Exchange Act of 1934, as of March 31st, 2009.
 Based on his evaluation, the Company’s Chief Executive
Officer  (acting also as the principal financial officer) has
concluded that the Company’s disclosure controls and procedures were effective
as of the end of such period.





(b)
Changes in internal controls





Additionally,
there were no significant changes in our internal controls or in other factors
that could significantly affect these controls subsequent to the evaluation
date. We have not identified any significant deficiencies or material weaknesses
in our internal controls, and therefore there were no corrective actions
taken.





This
annual report does not include a report of management's assessment regarding
internal control over financial reporting or an attestation report of the
company's registered public accounting firm due to a transition period
established by rules of the Securities and Exchange Commission for newly public
companies.




12
 Table of Contents







PART III




ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE




Directors
and Executive Officers





Set forth
below are the names, ages and present principal occupations or employment, and
material occupations, positions, offices or employments for the past five years
of our current directors and executive officers.





Name
      and Business Address
                
                Age
                
                PositionMichael
      Lieber
                  c/o
      Charleston Basics, Inc.
                  1701
      Avenue I
                  Brooklyn,
      NY 11230
                
                34
                
                President,
      Chief Executive Officer, Chief Financial Officer, Secretary and
      Director




Michael
Lieber.  Mr. Lieber has been the Chief Executive and Financial
Officer and a director of the company from its inception. Mr. Lieber is also the
manager and the sole member of Tradewise Associates L.L.C., a New York limited
liability company, which is the holder of 99.3% of the issued and outstanding
shares of common stock of the Company. Tradewise Associates L.L.C. has no
business activity.





From June
2005 through April 1, 2006, Mr. Lieber worked as a sales manager at Out in
Style, Inc., a commercial reseller of outdoor products. From April 2004 through
April 2005, he was a sales manager at Paterson Mills, an institutional and
health care design firm.  From April 2001 through April 2003, he was
the founder and member-manager of Lieber & Weissman Securities, LLC, a stock
trading firm.




There are
no familial relationships among any of our officers or
directors.  None of our directors or officers is a director in any
other reporting companies.  None of our directors or officers has been
affiliated with any company that has filed for bankruptcy within the last five
years.  The Company is not aware of any proceedings to which any of
the Company’s officers or directors, or any associate of any such officer or
director, is a party adverse to the Company or any of the Company’s subsidiaries
or has a material interest adverse to it or any of its
subsidiaries.




Each
director of the Company serves for a term of one year or until the successor is
elected at the Company’s annual shareholders’ meeting and is qualified, subject
to removal by the Company’s shareholders.  Each officer serves, at the
pleasure of the board of directors, for a term of one year and until the
successor is elected at the annual meeting of the board of directors and is
qualified.





The
Company has not yet adopted a Code of Ethics. We do not have an audit committee
or nominating committee because there is  only 1 directors and one
officer. The board of directors fulfills the functions of the audit committee.
However, the board of directors does not include an audit committee financial
expert.





ITEM 11.
EXECUTIVE COMPENSATION





Summary
Compensation





Since our
incorporation on April 4, 2006, Michael Lieber has been our President, Chief
Executive Officer, Chief Financial Officer and Director. We have no formal
employment agreement with Mr. Lieber. Our board of directors agreed to
compensate Mr. Lieber with an annual base salary equal to $106,600, as of
October 2006; and commissions equal to 11.5% of the Company’s gross revenues,
until further notice. During our fiscal year ended March 31, 2008, Mr. Lieber
was paid a total of $103,900 in salary. No commission was paid to Mr. Lieber in
the year ended March 31, 2008. During the fiscal year ended March 31, 2009, Mr.
Lieber was paid  a total of $27,400 in salary. Though Mr. Lieber was
due additional   salary plus commissions, he has agreed to waive
this additional compensation for the year ending March 31, 2009.





We have
no employment agreements with any of our directors or executive
officers.  We have no pension, health, annuity, bonus, insurance,
stock options, profit sharing or similar benefit plans.  Since our
incorporation on April 4, 2006, no stock options or stock appreciation rights
were granted to any of our directors or executive officers.




13
 Table of Contents




The
following table sets forth information concerning the compensation paid or
earned during the period of April 1, 2007 until March 31, 2008 (Fiscal 2007) and
the period of  April 1, 2008 until March 31, 2009 (Fiscal 2008), for
services rendered to our Company in all capacities by the following persons: (i)
all individuals who served as the principal executive officer (“PEO”)or acting
in a similar capacity during the fiscal year ended March 31, 2008 and fiscal
year ended March 31, 2009, regardless of compensation level; (ii) all
individuals who served as the principal financial officer (“PFO”) or acting in a
similar capacity during the fiscal year ended March 31, 2008 and fiscal year
ended March 31, 2009, regardless of compensation level; (iii) The registrant's
three most highly compensated executive officers other than the PEO and PFO who
were serving as executive officers at the end of the last completed fiscal year
and whose total compensation during the fiscal year ended March 31, 2008 or
March 31, 2009 exceeded $100,000; (iv) up to two additional individuals who
served as officers during the fiscal year ended March 31, 2008 or March 31, 2009
and whose total compensation during the fiscal year ended March 31, 2008 or
March 31, 2009 exceeded $100,000, regardless of whether they were serving as
officers at the end of such fiscal year.




SUMMARY
      COMPENSATION TABLEName
      and principal position
                                                                                                                                        (a)
                                                                                                                                      Year
                                                                                                                                        (b)
                                                                                                                                      
                                                                                                                                      Salary
      ($)
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      Bonus
      ($)
                                                                                                                                        (d)
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      Stock
      Awards ($)
                                                                                                                                        (e)
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      Option
      Awards ($)
                                                                                                                                        (f)
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      Nonqualified
      Deferred
                                                                                                                                        Compensation
      Earnings ($)
                                                                                                                                        (h)
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      All
      Other Compensation ($)
                                                                                                                                        (i)
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      Total
      ($)
                                                                                                                                        (j)Michael Lieber(1)
                                                                                                                                      2007
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      103,900
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      0
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      0
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      0
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      0
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      0
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      103,900Michael Lieber(1)
                                                                                                                                      2008
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      27,400
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      0
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      0
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      0
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      0
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      0
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      27,400


(1) Mr.
Lieber has been serving as our Director, Chief Executive Officer, and Chief
Financial Officer since April 4, 2006.





Outstanding
Equity Awards





During
the fiscal year ended March 31, 2009, none of our directors or executive
officers held unexercised options, stock that had not vested, or equity
incentive plan awards.




Compensation
of Directors





During
the fiscal year ended March 31, 2009, Mr. Lieber was paid a total of $27,400 in
salary. No commission was paid to Mr. Lieber as of March 31, 2009. Any
commission to be paid to Mr. Lieber will be determined by the board of directors of the Company
during the next fiscal year. Except as set forth above under the section
entitled “Summary Compensation,” none of our directors has received any
compensation for the services rendered to our Company in their capacity as
such.






14
 Table of Contents





ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT





The
following table lists, as of June 29th, 2009,
the number of shares of common stock of our Company that are beneficially owned
by (i) each person or entity known to our Company to be the beneficial owner of
more than 5% of the outstanding common stock; (ii) each officer and director of
our Company; and (iii) all officers and directors as a group. Information
relating to beneficial ownership of common stock by our principal shareholders
and management is based upon information furnished by each person using
“beneficial ownership” concepts under the rules of the Securities and Exchange
Commission. Under these rules, a person is deemed to be a beneficial owner of a
security if that person has or shares voting power, which includes the power to
vote or direct the voting of the security, or investment power, which includes
the power to vote or direct the voting of the security. The person is also
deemed to be a beneficial owner of any security of which that person has a right
to acquire beneficial ownership within 60 days. Under the Securities and
Exchange Commission rules, more than one person may be deemed to be a beneficial
owner of the same securities, and a person may be deemed to be a beneficial
owner of securities as to which he or she may not have any pecuniary beneficial
interest. Except as noted below, each person has sole voting and investment
power. The percentages below are calculated based on 6,043,720 shares of our
common stock issued and outstanding as of  June 29th,
2009.  We do not have any outstanding options, warrants or other
securities exercisable
for or convertible into shares of our common stock.  Unless otherwise
indicated, the address of each person listed is c/o Charleston Basics, Inc.,
1701 Avenue I, Brooklyn, NY 11230.




Name
      of Beneficial Owner
                                          Title
      Of Class
                                          
                                          Amount
      and Nature of
                                            Beneficial
      Ownership
                                          
                                          
                                          Percent
      of ClassTradewise
      Associates LLC(1)
                                          Common
                                          
                                          
                                          6,000,000
                                          
                                          
                                          
                                          99.3
                                          %Michael
      Lieber(1)
                                          Common
                                          
                                          
                                          6,000,000
                                          (2)
                                          
                                          
                                          99.3
                                          %Directors
      and Officers as a Group (2 persons)
                                          Common
                                          
                                          
                                          6,000,000
                                          
                                          
                                          
                                          99.3
                                          %





(1) The
sole member and manager of Tradewise Associates LLC is Michael Lieber, who is
our Chief Executive Officer, Chief Financial Officer, and a
Director.




(2)
Includes 6,000,000 shares of common stock owned by Tradewise Associates LLC,
whose sole member and manager is Michael Lieber, our Chief Executive Officer,
Chief Financial Officer, and a Director. There are
no arrangements, known to the registrant, including any pledge by any person of
securities of the registrant or any of its parents, the operation of which may
at a subsequent date result in a change in
control of the registrant.





ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE





We are
not subject to listing requirements of any national securities exchange or
national securities association and, as a result, we are not at this time
required to have our board comprised of a majority of “independent directors.”
We do not believe that any of our directors currently meet the definition of
“independent” as promulgated by the rules and regulations of the American Stock
Exchange. On April 4, 2006, we issued 6,000,000 shares of our common stock to
Tradewise Associates LLC.  The sole member and manager of Tradewise
Associates LLC is Michael Lieber, our President, Chief  Executive
Officer, Chief Financial Officer, and a Director.  The purchase price
paid for such shares was equal to their par value, $0.0001 per share, and
amounted in the aggregate to $600.  The shares were
issued under Section 4(2) of the Securities Act of 1933, as
amended.  Mr. Lieber was our founding officer and director and had
access to all of the information which would be required to be included in a
registration statement, and the transaction did not involve a public
offering.





The
Company’s office is located in the home of Michael Lieber, our Chief Executive
Officer, Chief Financial Officer, and Director.  Mr. Lieber has been
providing such office to the Company since April 3, 2006 for $1,500 per month on
a month-to-month basis.





15
 Table of Contents




During
the fiscal year ended March 31, 2007, Michael Lieber, our Chief Executive
Officer, Chief Financial Officer, and Director, lent $202,500 to the Company for
working capital purposes and the purchase of inventory. Such loan was evidenced
by a promissory note, dated August 24, 2006, made by the Company in the favor of
Mr. Lieber, in the principal amount of $202,500.  Pursuant to the
terms of the promissory note, no interest was to accrue on the unpaid principal
balance.  As of  March 31, 2008, the entire principal balance of
the promissory note was repaid by the Company.





On June
28, 2007, Michael Lieber, our President, Chief Executive Officer, Chief
Financial Officer, and Director, lent $123,000 to the Company for working
capital purposes and the purchase of inventory.  Such loan was
evidenced by a promissory note, dated June 28, 2007, made by the Company in the
favor of Mr. Lieber, in the principal amount of $123,000.  Pursuant to
the terms of the promissory note, no interest shall accrue on the unpaid
principal balance.  The principal balance will be repaid in
installments or in one lump sum, commencing within six months after the date of
the promissory note and continuing until it the balance paid in
full.  As of March 31, 2008 the entire principal balance of the
promissory note has been repaid.





During
the fiscal year ended March 31, 2008  Mr. Lieber made additional loans
to the Company in the aggregate of $245,500, pursuant to Promissory Note dated
August 21, 2007, as amended and restated on March 28, 2008 (the “Amended Note”).
During the fiscal year ended March 31, 2009 Mr. Lieber made additional loans to
the Company in the aggregate of $96,000, pursuant to this same Promissory Note
dated August 21, 2007, as amended and restated on March 28, 2008 (the “Amended
Note”). Pursuant to the terms of the Amended Note, interest on the unpaid
principal balance of the loan accrues at the rate of 3.88% per annum. The
maturity date of the Amended Note is December 31, 2009.  As of June
29th, 2009
the Company has repaid $157,500 of the $341,500.





We
believe that the terms of these transactions reflect, and will continue to
reflect, terms that would be no less favorable to us than those that would be
available between unrelated third parties.





ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES





AUDIT
FEES





The
aggregate fees billed for professional services rendered by our principal
accountant for the audit of our financial statements, review of financial
statements included in our quarterly reports and other fees that are normally
provided by the accountant in connection with statutory and regulatory filings
or engagements during the years ended March 31, 2009 and 2008 were $19,750 and
$18,500 respectively.





AUDIT
RELATED FEES





There
were no fees billed for audit related services by our principal accountant
during the years ended March 31, 2009 and 2008.





TAX
FEES





The
aggregate fees billed for professional services rendered by our principal
accountant for tax compliance, tax advice and tax planning during the years
ended March 31, 2009 and 2008 were $10,830 and $15,675
respectively.





ALL OTHER
FEES





There
were no other fees billed by the principal accountant, other than those
previously reported in this Item 14, during the years ended March 31, 2009 and
2008.





AUDIT
COMMITTEE





The
Company’s Board of Directors functions as its audit committee.  We do not
currently have a “financial expert”, as such term is defined under the
Securities Exchange Act, on the Board of Directors. It is the policy of the
Company for all work performed by our principal accountant to be approved in
advance by the Board of Directors. All of the services described above in this
Item 14 were approved in advance by our Board of Directors.




16
 Table of Contents






PART IV


ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES




Financial Statements.





See index
to financial statements at page F-1.





Exhibits




Number
                Exhibit31.1
                Certificate of Chief Executive Officer and Chief
      Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002.32.1
                Certification of Chief Executive Officer and Chief
      Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.







17
 Table of Contents


SIGNATURES




Pursuant
to the requirements of section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, the Registrant has caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized,
on the 29hday
of June, 2009.






REGISTRANT











Charleston Basics,
      INC.Date:
      June 29, 2009
                By:
                /s/ Michael
      LieberMichael
      LieberChief
      Executive Officer and Chief Financial Officer


By:
                    /s/ Michael
      LieberMichael
      LieberDirector








Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following person on behalf of the Company and in the
capacities and the date indicated.










Date:
      June 29, 2009
                  By:
                  /s/ Michael
      LieberNameChief Executive
      Officer,President, Chief
      FinancialOfficer, Director, (principal
      executive and financial officer)











18
 Table of Contents








CHARLESTON
BASICS, INC.





FINANCIAL
STATEMENTS





MARCH
31, 2009









TABLE OF CONTENTS


PageReport of Independent Public
      Accounting Firm
                          F-2Balance
      Sheets
                          F-3Statements of
      Operations
                          F-4Statements of Cash
      Flows
                          F-5Statements of Stockholders’
      Equity
                          F-6Notes to Financial
      Statements
                          F-7
      –13

















Table of Contents




MORGENSTERN,SVOBODA & BAER, CPA’s,
P.C.


CERTIFIED
PUBLIC ACCOUNTANTS


40
Exchange Place, Suite 1820


New York,
NY 10005


TEL:
(212) 925-9490


FAX:
(212) 226-9134


E-Mail:
msbcpas@gmail.com





Reportof
Independent Registered Public Accounting Firm











Board of
Directors and Stockholders of


Charleston
Basics, Inc.





We have
audited the accompanying balance sheets of Charleston Basics, Inc. as of March
31, 2009 and 2008, and the related statement of operations, shareholders’ equity
and cash flows for each of the years in the two-year period ended March 31,
2009.  Charleston Basics, Inc.’s management is responsible for these
financial statements.  Our responsibility is to express an opinion on
these financial statements based on our audits.





We
conducted our audits 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.  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 audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting.  Accordingly, we express no
such opinion.  An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis
for our opinions.





In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Charleston Basics, Inc. as of March
31, 2009 and 2008 and the results of its operations and its cash flows for each
of the years in the two-year period ended March 31, 2009 in conformity with
accounting principles generally accepted in the United States of
America.





The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern.  As discussed in Note 3 to the financial
statements, the Company has suffered recurring losses from operations which
raises substantial doubt about its ability to continue as a going
concern.  Management’s plans regarding those matters are also
described in Note 3.  The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.




Morgenstern,
Svoboda & Baer, CPA’s PC


Certified
Public Accountants




New York,
NY


June 29,
2009








F-2
 Table of Contents





CHARLESTON
BASICS, INC.


BALANCE SHEETS (AUDITED)


AS
OF MARCH 31, 2009 AND MARCH 31, 2008




ASSETS
                                                
                                                03/31/2009
                                                
                                                
                                                03/31/2008Current
      AssetsCash
      and cash equivalents
                                                
                                                $
                                                445
                                                
                                                
                                                $
                                                33Accounts
      receivable, net
                                                
                                                
                                                13,224
                                                
                                                
                                                
                                                736Inventory
                                                
                                                
                                                24,076
                                                
                                                
                                                
                                                11,597Total
      Current Assets
                                                
                                                
                                                37,745
                                                
                                                
                                                
                                                12,366Property
      & equipment, netIntangible
      assets - net
                                                
                                                
                                                -
                                                
                                                
                                                
                                                3,355Total
      Assets
                                                
                                                $
                                                37,745
                                                
                                                
                                                $
                                                15,721LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      LiabilitiesAccounts
      payable
                                                
                                                $
                                                46,230
                                                
                                                
                                                $
                                                20,411Accrued
      expenses
                                                
                                                
                                                19,072
                                                
                                                
                                                
                                                15,951Loan
      from Stockholder
                                                
                                                
                                                184,000
                                                
                                                
                                                
                                                146,000Total
      Current Liabilities
                                                
                                                
                                                249,302
                                                
                                                
                                                
                                                182,362Stockholders'
      EquityPreferred
      stock, $.0001 par value
                                                  20,000,000
      shares authorized,  none outstanding
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -Common
      stock, $.0001 par value,  700,000,000 shares
                                                
                                                
                                                604
                                                
                                                
                                                
                                                604authorized;
      6,043,720 issued &&
      outstanding 03/31/09 and 3/31/08Additional
      paid in capital
                                                
                                                
                                                20,856
                                                
                                                
                                                
                                                20,856Accumulated
      deficit
                                                
                                                
                                                (233,017
                                                )
                                                
                                                
                                                (188,101
                                                )Total
      Stockholders' Deficit
                                                
                                                
                                                (211,557
                                                )
                                                
                                                
                                                (166,641
                                                )Total
      Liabilities and Stockholders' Deficit
                                                
                                                $
                                                37,745
                                                
                                                
                                                $
                                                15,721




The
accompanying notes are an integral part of these financial
statements.






F-3
 Table of Contents


CHARLESTON
BASICS, INC.
 STATEMENTS OF OPERATIONS (AUDITED)
 FOR
THE YEARS ENDING MARCH 31, 2009 AND 2008




2009
                                        
                                        
                                        2008Sales,
      net
                                        
                                        $
                                        449,522
                                        
                                        
                                        $
                                        578,167Cost
      of sales
                                        
                                        
                                        363,896
                                        
                                        
                                        
                                        431,556Gross
      profit
                                        
                                        
                                        85,626
                                        
                                        
                                        
                                        146,611Distribution
      costs
                                        
                                        
                                        218
                                        
                                        
                                        
                                        9,847Selling,
      general and administrative expenses
                                        
                                        
                                        129,421
                                        
                                        
                                        
                                        310,127(Loss)
      from operations
                                        
                                        
                                        (129,640
                                        )
                                        
                                        
                                        (319,974
                                        )(Loss)
      before income taxes
                                        
                                        
                                        (44,014
                                        )
                                        
                                        
                                        (173,363
                                        )Provision
      for income taxes
                                        
                                        
                                        902
                                        
                                        
                                        
                                        5,512Net
      (loss)
                                        
                                        $
                                        (44,916
                                        )
                                        
                                        
                                        (178,875
                                        )Net
      (loss) per common shareBasic
      and Diluted
                                        
                                        $
                                        (.01
                                        )
                                        
                                        $
                                        (.03
                                        )Weighted
      average common shares outstandingBasic
      and Diluted
                                        
                                        
                                        6,043,720
                                        
                                        
                                        
                                        6,039,970




The
accompanying notes are an integral part of these financial
statements.





F-4
 Table of Contents





CHARLESTON
BASICS, INC.


STATEMENTS OF CASH FLOWS
 FOR
THE YEARS ENDED MARCH 31, 2009 AND 2008




2009
                                        
                                        
                                        2008CASH
      FLOWS FROM OPERATING ACTIVITIESNet  (loss)
                                        
                                        $
                                        (44,916
                                        )
                                        
                                        $
                                        (178,875
                                        )Adjustments
      to reconcile net income to net cashprovided
      by operating activities:Depreciation
      and amortization
                                        
                                        
                                        3,355
                                        
                                        
                                        
                                        3,354(Increase)
      / decrease in assets:Accounts
      receivables
                                        
                                        
                                        (12,488
                                        )
                                        
                                        
                                        78,865Inventory
                                        
                                        
                                        (12,479
                                        )
                                        
                                        
                                        56,615Increase
      / (decrease) in current liabilities:Accounts
      payable and accrued expenses
                                        
                                        
                                        28,940
                                        
                                        
                                        
                                        (129,216
                                        )Net
      cash provided (used) by operating activities
                                        
                                        
                                        (37,588
                                        )
                                        
                                        
                                        (169,257
                                        )CASH
      FLOWS FROM FINANCING ACTIVITIESLoan
      from stockholder - net
                                        
                                        
                                        38,000
                                        
                                        
                                        
                                        146,000Stock
      issuance and capital paid in
                                        
                                        
                                        -
                                        
                                        
                                        
                                        3,750Net
      Cash (used) provided by Financing Activities
                                        
                                        
                                        38,000
                                        
                                        
                                        
                                        149,750Net
      change in cash and cash equivalents
                                        
                                        
                                        412
                                        
                                        
                                        
                                        (19,507
                                        )Cash,
      beginning balance
                                        
                                        
                                        33
                                        
                                        
                                        
                                        19,540Cash,
      ending balance
                                        
                                        $
                                        445
                                        
                                        
                                        $
                                        33SUPPLEMENTAL
      DISCLOSURES:Cash
      paid during the year for:Income
      tax payments
                                        
                                        $
                                        88
                                        
                                        
                                        $
                                        5,599Interest
      payments
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        -


The
accompanying notes are an integral part of these financial
statements.








F-5
 Table of Contents




CHARLESTON
BASICS, INC.
 STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
(AUDITED)
 FOR
THE YEARS ENDED MARCH 31, 2009 AND 2008




Additional
                            
                            
                            Retained
      Earnings
                            
                            
                            TotalCommon
      Stock
                            
                            
                            Paid-In
                            
                            
                            (Accumulated
                            
                            
                            Stockholders'Shares
                            
                            
                            Amount
                            
                            
                            Capital
                            
                            
                            Deficit)
                            
                            
                            Equity/
      (Deficit)Balance
      March 31, 2007
                            
                            
                            6,036,220
                            
                            
                            $
                            604
                            
                            
                            $
                            17,106
                            
                            
                            $
                            (9,226
                            )
                            
                            $
                            8,484Stock
      issuance and additional paid in capital
                            
                            
                            7,500
                            
                            
                            
                            -
                            
                            
                            
                            3,750
                            
                            
                            
                            -
                            
                            
                            
                            3,750Net
      loss for the year ending March 31, 2008
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            (178,875
                            )
                            
                            
                            (178,875
                            )Balance
      – March 31, 2008
                            
                            
                            6,043,720
                            
                            
                            
                            604
                            
                            
                            
                            20,856
                            
                            
                            
                            (188,101
                            )
                            
                            
                            (166,641
                            )Net
      loss for the year ending March 31, 2009
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            (44,916
                            )
                            
                            
                            (44,916
                            )Balance
      – March 31, 2009
                            
                            
                            6,043,720
                            
                            
                            $
                            604
                            
                            
                            $
                            20,856
                            
                            
                            $
                            (233,017
                            )
                            
                            $
                            (211,557
                            )


The
accompanying notes are an integral part of these financial
statements.





F-6
 Table of Contents





CHARLESTON
BASICS, INC.


NOTES TO FINANCIAL STATEMENTS


MARCH
31, 2009





Note
1 - ORGANIZATION





Charleston
Basics, Inc. (the “Company”) was incorporated on April 4, 2006 under the laws of
the State of Delaware. The Company is now engaged in the sale of outdoor camping
goods and tactical gear.





Note
2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES





Basis of
Presentation





The
accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of
America.





Use of
Estimates





The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.





Risks and
Uncertainties





The
Company is subject to substantial risks from, among other things, intense
competition associated with the industry in general, other risks associated with
financing, liquidity requirements, rapidly changing customer requirements,
limited operating history and the volatility of public markets.





Contingencies





Certain
conditions may exist as of the date the financial statements are issued, which
may result in a loss to the Company but which will only be resolved when one or
more future events occur or fail to occur. The Company’s management and legal
counsel assess such contingent liabilities, and such assessment inherently
involves an exercise of judgment. In assessing loss contingencies related to
legal proceedings that are pending against the Company or unasserted claims that
may result in such proceedings, the Company’s legal counsel evaluates the
perceived merits of any legal proceedings or unasserted claims as well as the
perceived merits of the amount of relief sought or expected to be
sought.





If the
assessment of a contingency indicates that it is probable that a material loss
has been incurred and the amount of the liability can be estimated, then the
estimated liability would be accrued in the Company’s financial statements. If
the assessment indicates that a potential material loss contingency is not
probable but is reasonably possible, or is probable but cannot be estimated,
then the nature of the contingent liability, together with an estimate of the
range of possible loss if determinable and material would be
disclosed.





Loss
contingencies considered to be remote by management are generally not disclosed
unless they involve guarantees, in which case the guarantee would be
disclosed.





Cash and Cash
Equivalents





Cash and
cash equivalents include cash in hand and cash in time deposits, certificates of
deposit and all highly liquid debt instruments with original maturities of three
months or less.




F-7
 Table of Contents




CHARLESTON
BASICS, INC.


NOTES
TO FINANCIAL STATEMENTS


MARCH
31, 2009





Note
2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (continued)





Inventory





Inventories
are valued at the lower of cost (determined on first in/first out basis) or
market. Management compares the cost of inventories with the market value and
allowance is made for writing down their inventories to market value, if lower.
As of March 31, 2009 and March 31, 2008, inventory consisted of finished goods
valued at $24,076 and $11,597, respectively.





Accounts
Receivable





The
Company maintains reserves it judges are required for potential credit losses on
accounts receivable. Management reviews the composition of accounts receivable
and analyzes historical bad debts, customer concentrations, customer credit
worthiness, current economic trends and changes in customer payment patterns to
evaluate the adequacy of these reserves. Terms of the sales vary. Reserves are
recorded primarily on a specific identification basis.  There were no
doubtful accounts as of March 31, 2009 and March 31, 2008.





Long-Lived
Assets




Since
inception, the Company adopted Statement of Financial Accounting Standards No.
144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS
144”), which addresses financial accounting and reporting for the impairment or
disposal of long-lived assets and supersedes SFAS No. 121, “Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,”
and the accounting and reporting provisions of Accounting Principals Board
(“APB”) Opinion No. 30, “Reporting the Results of Operations for a Disposal of a
Segment of a Business.” The Company periodically evaluates the carrying value of
long-lived assets to be held and used in accordance with SFAS 144. SFAS 144
requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets
carrying amounts. In that event, a loss is recognized based on the amount by
which the carrying amount exceeds the fair market value of the long-lived
assets. Loss on long-lived assets to be disposed of is determined in a similar
manner, except that fair market values are reduced for the cost of disposal.
Based on its review, the Company believes that, as of March 31, 2009, there were
no significant impairments of its long-lived assets.





Fair Value of Financial
Instruments





Statement
of Financial Accounting Standard No. 107, “Disclosures about Fair Value of
Financial Instruments,” requires that the Company disclose estimated fair values
of financial instruments. The carrying amounts reported in the statements of
financial position for current assets and current liabilities qualifying as
financial instruments are a reasonable estimate of fair value.





Revenue
Recognition





The
Company’s revenue recognition policies are in compliance with Staff Accounting
Bulletin (“SAB”) 104, “Revenue Recognition”. Revenue is recognized at the date
the price is fixed or determinable, the delivery is completed, no other
significant obligations of the Company exist and collectability is reasonably
assured. Payments received before all of the relevant criteria for revenue
recognition are satisfied are recorded as unearned revenue.






F-8
 Table of Contents




CHARLESTON
BASICS, INC.


NOTES
TO FINANCIAL STATEMENTS


MARCH
31, 2009





Note
2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (continued)





Advertising





Advertising
expenses consist primarily of costs of promotion for corporate image and product
marketing and costs of direct advertising. The Company expenses all advertising
costs as incurred.  For the years ended March 31, 2009 and March 31,
2008, it amounted to $2,883 and $366, respectively.  The Company does
not have any cooperative agreements with its vendors and therefore did not
receive any payments toward advertising from them.





Distribution
Costs





The
Company’s shipping and handling costs are classified as distribution costs and
presented separately on the Statement of Operations, in accordance with the
Emerging Issues Task Force Issue No. 00-10, “Accounting for Shipping and
Handling Fees and Costs.”  For the years ended March 31, 2009 and
2008, it amounted to $218 and $9,847, respectively.





Income
Taxes





The
Company utilizes SFAS No. 109, “Accounting for Income Taxes,” which requires the
recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the financial statements or
tax returns. Under this method, deferred income taxes are recognized for the tax
consequences in future years of differences between the tax bases of assets and
liabilities and their financial reporting amounts at each period end based on
enacted tax laws and statutory tax rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount
expected to be realized.





Intangibles





Since
inception, the Company adopted SFAS No. 142, “Goodwill and Other Intangible
Assets,” (“SFAS 142”), which addresses financial accounting and reporting for
goodwill and other intangible assets after they have been initially recognized
and supersedes APB Opinion No. 17, “Intangible Assets.” The Company periodically
evaluates the carrying value of intangible assets to be held and used in
accordance with SFAS 142 to assess impairment of intangible assets subject to
amortization when events or change in circumstances indicate that the carrying
amount of the intangible assets may not be recoverable on a non discounted
basis. Intangible assets are amortized using the straight-line method over their
estimated period of benefit. Evaluation of the recoverability of intangible
assets is made annually to take into account events or circumstances that
warrant revised estimates of useful lives or that indicate that impairment
exists. All of our intangible assets are subject to amortization. Based on its
review, the company believes that, as of March 31, 2009, there were no
impairments of intangible assets.





F-9
 Table of Contents




CHARLESTON
BASICS, INC.


NOTES
TO FINANCIAL STATEMENTS


MARCH
31, 2009





Note
2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (continued)





Concentration of Credit
Risk





Financial
instruments that potentially subject the Company to concentrations of credit
risk are cash, accounts receivable and other receivables arising from its normal
business activities. The Company places its cash in what it believes to be
credit-worthy financial institutions. The Company controls credit
risk


related
to accounts receivable through credit approvals, credit limits and monitoring
procedures. The Company routinely assesses the financial strength of its
customers and, based upon factors surrounding the credit risk, establishes an
allowance, if required, for uncollectible accounts and, as a consequence,
believes that its accounts receivable credit risk exposure beyond such allowance
is limited. As of March 31, 2009, management expects to fully collect the
Company’s account receivable.  Therefore, no amount was set as an
allowance for accounts receivable.





Segment
Reporting





SFAS No.
131, “Disclosure about the Segments of an Enterprise and Related Information,”
requires use of the management approach model for segment reporting. The
management approach model is based on how a company’s management organizes
segments within the company for making operating decisions and assessing
performance. Reportable segments are based on products and services, geography,
legal structure, management structure, or any other manner in which management
disaggregates a company. The Company presently has only one operating
segment.





Net Income (Loss) Per
Share





Basic net
income (loss) per share is computed on the basis of the weighted average number
of common shares outstanding during the period.





Diluted
net income (loss) per share is computed on the basis of the weighted average
number of common shares and common share equivalents
outstanding.  Dilutive securities having an anti-dilutive effect on
diluted net income (loss) per share are excluded from the
calculation.





Dilution
is computed by applying the treasury stock method.  Under this method,
options and warrants are assumed to be exercised at the beginning of the period
(or at the time of issuance, if later), and as if funds obtained thereby were
used to purchase common stock at the average market price during the
period.





Recent Accounting
Pronouncements





In June
2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in
Income Taxes-an interpretation of FASB Statement No. 109” ("FIN48"). FIN 48
prescribes a recognition threshold and measurement attribute for the financial
statement recognition and measurement of a tax position taken or expected to be
taken in a tax return.  FIN 48 also provides guidance on
de-recognition, classification, treatment of interest and penalties, and
disclosure of such positions. Effective January 1, 2007, the Company adopted the
provisions of FIN 48, as required. As a result of implementing FIN 48, there has
been no adjustment to the Company's financial statements and the adoption of FIN
48 did not have a material effect on the Company's consolidated financial
statements.





In
September 2006, FASB issued SFAS 157, “Fair Value Measurements.”  This
Statement defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles (“GAAP”), and expands disclosures
about fair value measurements.  This Statement applies under
other








F-10
 Table of Contents




CHARLESTON
BASICS, INC.


NOTES
TO FINANCIAL STATEMENTS


MARCH
31, 2009





Note
2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (continued)





accounting
pronouncements that require or permit fair value measurements, the Board having
previously concluded in those accounting pronouncements that fair value is the
relevant measurement attribute.  Accordingly, this Statement does not
require any new fair value measurements.  However, for some entities,
the application of this Statement will change current practice.  This
Statement is effective for financial statements issued for fiscal years
beginning after November 15, 2007, and interim periods within those fiscal
years.  The adoption of this standard had no material impact on the
Company’s financial statements.





In
September 2006, FASB issued SFAS 158, “Employers’ Accounting for Defined Benefit
Pension and Other Postretirement Plans – an amendment of FASB Statements No. 87,
88, 106, and 132(R)” (“SFAS No. 158”).  SFAS No. 158 improves
financial reporting by requiring an employer to recognize the over funded or
under funded status of a defined benefit postretirement plan (other than a
multiemployer plan) as an asset or liability in its statement of financial
position and to recognize changes in that funded status in the year in which the
changes occur through comprehensive income of a business entity or changes in
unrestricted net assets of a not-for-profit organization.  This
Statement also improves financial reporting by requiring an employer to measure
the funded status of a plan as of the date of its year-end statement of
financial position, with limited exceptions. An employer with publicly traded
equity securities is required to initially recognize the funded status of a
defined benefit postretirement plan and to provide the required disclosures as
of the end of the fiscal year ending after December 15, 2006.





An
employer without publicly traded equity securities is required to recognize the
funded status of a defined benefit postretirement plan and to provide the
required disclosures as of the end of the fiscal year ending after June 15,
2007.  However, an employer without publicly traded equity securities
is required to disclose the following information in the notes to financial
statements for a fiscal year ending after December 15, 2006, but before June 16,
2007, unless it has applied the recognition provisions of this Statement in
preparing those financial statements:





a.          
 A brief description of the provisions of this Statement


b.            The
date that adoption is required


c.            The
date the employer plans to adopt the recognition provisions of this Statement,
if earlier.





The
requirement to measure plan assets and benefit obligations as of the date of the
employer’s fiscal year-end statement of financial position is effective for
fiscal years ending after December 15, 2008.  The adoption of this
standard had no impact on the Company’s financial statements.





In
September 2006, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 108 (“SAB 108”).  SAB 108 was issued to provide
interpretive guidance on how the effects of the carryover reversal of prior year
misstatements should be considered in quantifying a current year misstatement.
The provisions of SAB 108 are effective for the Company for its March 31, 2007
year-end.  The adoption of SAB 108 had no impact on the Company’s
financial statements.





In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Asset and Financial Liabilities – Including an Amendment of FASB
Statement No. 115” (“SFAS No. 159”). SFAS No. 159 permits entities to choose to
measure many financial instruments, and certain other items, at fair market
value. This Statement is expected to expand the use of fair value measurement,
which is consistent with the Board’s long-term measurement objectives for
accounting for financial instruments.  SFAS No. 159 is effective as of
the beginning of an entity’s first fiscal year that begins after November 15,
2007. The adoption of SFAS No. 159 had no material impact on the Company’s
financial conditions or the results of operations.





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 Table of Contents


CHARLESTON
BASICS, INC.
 NOTES
TO FINANCIAL STATEMENTS
 MARCH
31, 2009




Note
2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (continued)








In
December 2007, FASB issued SFAS No. 160, “Non-Controlling Interests in
Consolidated Financial Statements.”  This Statement amends ARB 51 to
establish accounting and reporting standards for the non-controlling (minority)
interest in a subsidiary and for the deconsolidation of a
subsidiary.  It clarifies that a non-controlling interest in a
subsidiary is an ownership interest in the consolidated entity that should be
reported as equity in the consolidated financial statements.  SFAS No.
160 is effective for the Company’s fiscal year beginning October 1,
2009.  Management is currently evaluating the effect of this
pronouncement on financial statements.





In March
2008, FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and
Hedging Activities.”  The new standard is intended to improve
financial reporting about derivative instruments and hedging activities by
requiring enhanced disclosures to enable investors to better understand their
effects on an entity’s financial position, financial performance, and cash
flows.  It is effective for financial statements issued for fiscal
years and interim periods beginning after November 15, 2008, with early
application encouraged.  The new standard also improves transparency
about the location and amounts of derivative instruments in an entity’s
financial statements; how derivative instruments and related hedged items are
accounted for under Statement 133; and how derivative instruments and related
hedged items affect its financial position, financial performance, and cash
flows.  Management is currently evaluating the effect of this
pronouncement on financial statements.





On May 8,
2008, FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting
Principles,” which will provide framework for selecting accounting principles to
be used in preparing financial statements that are presented in conformity with
U.S. generally accepted accounting principles (GAAP) for nongovernmental
entities. With the issuance of SFAS No. 162, the GAAP hierarchy for
nongovernmental entities will move from auditing literature to accounting
literature.  The Company is currently assessing the impact of SFAS No. 162
on its financial position and results of operations.





The FASB
has issued SFAS No. 163, “Accounting for Financial Guarantee Insurance
Contracts. “  SFAS No. 163 clarifies how SFAS No. 60, “Accounting and
Reporting by Insurance Enterprises,” applies to financial guarantee insurance
contracts issued by insurance enterprises, and addresses the recognition and
measurement of premium revenue and claim liabilities.  It requires
expanded disclosures about contracts, and recognition of claim liability prior
to an event of default when there is evidence that credit deterioration has
occurred in an insured financial obligation. It also requires disclosure about
(a) the risk-management activities used by an insurance enterprise to evaluate
credit deterioration in its insured financial obligations, and (b) the insurance
enterprise's surveillance or watch list. The Company is currently evaluating the
impact of SFAS No. 163.





Note
3 – COMMITMENTS
AND CONTINGENCIES





The
Company leases office space from related party for $1,500 per month on a
month-to-month basis.  The Company expenses all rental costs as
incurred. For the years ended March 31, 2009 and 2008, it amounted to $18,000
and $13,500, respectively. This payment is inclusive of use of the office
equipment; therefore the Company did not acquire any office furniture or
equipment. The cost of web site was capitalized and amortized as intangible
assets as required by generally accepted accounting principles. There is no
formal lease agreement existing at the present that obligates company to record
any future minimum payments.





On May
13, 2008, the Company finalized an agreement to issue 40,000 shares of
restricted common stock in lieu of payment of a $10,000
obligation.  As of March 31, 2009, the Company has not yet issued
these shares specified in the agreement.




F-12
 Table of Contents




CHARLESTON
BASICS, INC.
 NOTES
TO FINANCIAL STATEMENTS
 MARCH
31, 2009




Note
3 – COMMITMENTS
AND CONTINGENCIES(continued)





The
Company did not have sufficient cash to pay for the cost of its operations or to
pay its current debt obligations. The company has borrowed $184,000 from a
shareholder as of March 31, 2009.





The fact
that the Company continued to sustain losses, had negative working capital at
March 31, 2009, and still requires additional sources of outside cash to sustain
operations, continued to create uncertainty about the Company’s ability to
continue as a going concern. We believe that we will not have sufficient
liquidity to meet our operating cash requirements for the current level of
operations during the next year. Our ability to continue as a going concern is
dependent upon receiving additional funds either through the issuance of debt or
the sale of additional common stock and the success of management's plan to
expand operations. Although we may obtain external financing through the sale
of our securities, there can be no assurance that such financing will be
available, or if available, that any such financing would be on terms acceptable
to us. If we are unable to fund our cash flow needs, we may have to reduce
or stop planned expansion or scale back operations and reduce our
staff.





Note
4 – RELATED
PARTIES





The
Company borrowed during the year from a shareholder and owes him $184,000 and
$146,000 at March 31, 2009 and March 31, 2008, respectively, plus accrued
interest, interest being at the rate of 3.88% per annum.  The amount
borrowed plus all accrued interest under promissory notes dated August 21, 2007
were restated in a grid note dated March 28, 2008 and will be repaid on or prior
to a maturity date of December 31, 2009.  Unpaid interest is $13,504
and $6,485 at March 31, 2009 and March 31, 2008, respectively.  In
addition, for the year ended March 31, 2009, the Company paid the shareholder a
salary of $1,400 and accrued additional salary of $26,000; and for the year
ended March 31, 2008, a salary of $103,900.





Note
5 – MAJOR CUSTOMERS
AND CONCENTRATED CREDIT RISK





The
Company had two major customers who accounted for 96% of revenues during the
year ended March 31, 2009.  One customer accounted for 82%, and a
second for 14% of the Company’s sales.  Two major customers accounted
for more than 77% of revenues during the year ended March 31,
2008.  One accounted for 56%; a second for 21% of the Company’s
sales.





There was
one customer accounting for 100% of accounts receivable at March 31, 2009. One
customer accounted for over 65% of accounts receivable at March 31, 2008. The
Company had two vendors providing 38% of purchases during the year ended March
31, 2009.  In the year ended March 31, 2008, two major vendors
accounted for 100% of purchases.  The Company primarily sells to
governmental bodies who deal with natural and man-made disasters. Their planning
and budgeting for these events may significantly affect the result of
operations.







Note
6 – INCOME
TAXES





The
Company is governed by the US Income Tax Laws, as well as by laws of New York
State and New York City. Pursuant to the US, NYS and NYC Income Tax
Laws.  The Company’s operations have incurred net accumulated
operating losses of approximately $216,000 as of March 31, 2009 for income tax
purposes.  However, a hundred percent allowance has been created on
the deferred tax asset of approximately $86,000 due to the uncertainty of its
realization.





The
following is a reconciliation of income tax expense:





March
      31, 2009
                      
                      
                      March
      31, 2008Current
                      
                      $
                      902
                      
                      
                      $
                      5,512Deferred
                      
                      
                      -
                      
                      
                      
                      -Total
                      
                      $
                      902
                      
                      
                      $
                      5,512





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