UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 10-Q





(Mark One)





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





For the quarterly period ended July 31, 2011


or





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





For the transition period from to





Commission File Number: 000-53071





SHC ADVANCE SERVICES INC.


(Exact name of registrant as specified in its charter)





Delaware

27-3819428(State or other jurisdiction of

Incorporation or organization)

(I.R.S.

Employer

Identification

No.)5/F Chinachem Century Tower178 Gouchester RoadWanchai, Hong Kong

N/A(Address of principal executive offices)

(Zip Code)





(852) 2116-8146





(Registrant’s telephone number, including area code)





(Former name, former address and former fiscal year, if changed since last report)





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





Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 if this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  ̈ Yes  ̈ No





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer  ̈
Accelerated filer  ̈


Non-accelerated filer (Do not check if a smaller reporting company) o Smaller reporting companyx


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





Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of September 20, 2011, there were 1,000,000 shares of common stock, par value $0.001 per share, of the Registrant outstanding.







INDEX




PagePART I. FINANCIAL INFORMATIONItem 1.
Financial StatementsBalance Sheet at October 31, 2010 and July 31, 2011 (unaudited)
1Statement of Operations for the period from October 14, 2010 (Inception) to July 31, 2011 and  for the nine months and three months ended July 31, 2011 (unaudited)
2Statement of Stockholders’ Equity for the period from October 14, 2010 (Inception) to July 31, 2011(unaudited)
3Statement of Cash Flows for the period from October 14, 2010 (Inception) to July 31, 2011 and for the three months ended July 31, 2011(unaudited)
4Notes to Financial Statements
5Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
8Item 3.
Quantitative and Qualitative Disclosure About Market Risk
10Item 4.
Controls and Procedures
10PART II. OTHER INFORMATIONItem 1.
Legal Proceedings
10Item 1A.
Risk Factors
11Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
11Item 3.
Defaults Upon Senior Securities
11Item 4.
(Removed and Reserved)
11Item 5.
Other Matters
11Item 6.
Exhibits
12SIGNATURES
12





PART I. FINANCIAL INFORMATION





Item 1. Financial Statements.





SHC ADVANCE SERVICES INC.





BALANCE SHEET


AS AT JULY 31, 2011 AND OCTOBER 31, 2010


(Stated in US Dollars)





31-Jul-11


2010(Unaudited)


(Audited)ASSETSCurrent assetsCash and cash equivalents

$
35,000


$
35,000TOTAL ASSETS

$
35,000


$
35,000LIABILITIES AND STOCKHOLDERS’ EQUITYAccruals

$
3,000


$
30,000Loans from Director


34,202



-TOTAL LIABILITIES

$
37,202


$
30,000Commitments and contingencies

$
-


$
-STOCKHOLDERS’ EQUITYPreferred Stock, $0.001 par value, 10,000,000 shares authorized, no share issued and outstanding at July 31, 2011 and October 31, 2010

$
-


$
-Common stock at $0.001 par value; 30,000,000 shares authorized, 1,000,000 shares issued and outstanding at July 31, 2011 and October 31, 2010


1,000



1,000Additional paid-in capital


34,000



34,000Accumulated deficits


(37,202
)


(30,000
)TOTAL STOCKHOLDERS’ EQUITY


(2,202
)


5,000TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$
35,000


$
35,000





See accompanying notes to financial statements


1


SHC ADVANCE SERVICES INC.





STATEMENTS OF OPERATIONS


FOR THE PERIOD FROM OCTOBER 14, 2010 (INCEPTION) TO JULY 31, 2011 AND FOR THE NINE MONTHS AND THREE MONTHS ENDED JULY 31, 2011


(Stated in US Dollars)





For the period fromFor the three


For the nine


October 14, 2010months ended


months ended


(inception) toJuly 31, 2011


July 31, 2011


July 31, 2011Net revenues

$
-


$
-


$
-Operating expenses:General and administrative


(2,936
)


(7,202
)


(37,202
)Loss before income taxes

$
(2,936
)

$
(7,202
)

$
(37,202
)Income taxes


-



-



-Net loss

$
(2,936
)

$
(7,202
)

$
(37,202
)





See accompanying notes to financial statements


2


SHC ADVANCE SERVICES INC.





STATEMENT OF STOCKHOLDERS’ EQUITY


FOR THE PERIOD FROM OCTOBER 14, 2010 (INCEPTION) TO JULY 31, 2011


(Stated in US Dollars)





AdditionalPreferred


paid-in


AccumulatedCommon stock


stock


capital


deficits


TotalNo. of stock


AmountIssuance of common stock


1,000,000


$
1,000


$
-


$
34,000


$
-


$
35,000Net loss


-



-



-



-



(30,000
)


(30,000
)Balance, October 31, 2010


1,000,000


$
1,000


$
-


$
34,000


$
(30,000
)

$
5,000Net loss


-


$
-


$
-


$
-


$
(7,202
)

$
(7,202
)Balance, July 31, 2011


1,000,000


$
1,000


$
-


$
34,000


$
(37,202
)

$
(2,202
)








See accompanying notes to financial statements


3


SHC ADVANCE SERVICES INC.





STATEMENT OF CASH FLOWS


FOR THE PERIOD FROM OCTOBER 14, 2010 (INCEPTION) TO JULY 31, 2011


(Stated in US Dollars)





For the period fromFor the nine


October 14,months ended


2010(inception)July 31, 2011


to July 31, 2011Cash flows from operating activitiesNet loss

$
(7,202
)

$
(34,266
)Adjustments to reconcile net income to net cash provided by operating activities:Accruals


(27,000
)


1,500Loans from Director


34,202



32,766Net cash used in operating activities

$
-


$
-Cash flows from financing activitiesIssue of capital

$
-


$
35,000Net cash provided by financing activities

$
-


$
35,000Net cash and cash equivalents sourced

$
-


$
35,000Effect of foreign currency translation on cash and cash equivalents


-



-Cash and cash equivalents–beg of period

$
35,000


$
-Cash and cash equivalents–end of period

$
35,000


$
35,000





See accompanying notes to financial statements


4


SHC ADVANCE SERVICES INC.


NOTES TO FINANCIAL STATEMENTS


FOR THE PERIOD FROM OCTOBER 14, 2010 (INCEPTION) TO JULY 31, 2011




(Stated in US Dollars)





1.
ORGANIZATION AND PRINCIPAL ACTIVITIES





SHC Advance Services Inc. (the “Company”) was incorporated under the laws of the State of Delaware on October 14, 2010. The Company is a shell company with no substantial operations or assets.





2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





(a)
Method of accounting





The Company maintains its general ledger and journals with the accrual method of accounting for financial reporting purposes. The financial statements and notes are representations of management. Accounting policies adopted by the Company conform to generally accepted accounting principles in the United States of America (“US GAAP”) and have been consistently applied in the presentation of financial statements.





(b)
Use of estimates





The preparation of the financial statements in conformity with generally accepted accounting principles in the United States of America 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 periods. Management makes these estimates using the best information available at the time the estimates are made; however actual results could differ materially from those estimates.





(c)
Income taxes





The Company accounts for income taxes using an asset and liability approach and allows for recognition of deferred tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future realization is uncertain.


5


SHC ADVANCE SERVICES INC.


NOTES TO FINANCIAL STATEMENTS


FOR THE PERIOD FROM OCTOBER 14, 2010 (INCEPTION) TO JULY 31, 2011


(Stated in US Dollars)





2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





(d)
Recently implemented standards





In April 2011, the FASB issued ASU 2011-02, Receivable (Topic 310) “A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring”, which clarifies when creditors should classify loan modifications as troubled debt restructurings. The guidance is effective for interim and annual periods beginning on or after June 15, 2011, and applies retrospectively to restructurings occurring on or after the beginning of the year. The guidance on measuring the impairment of a receivable restructured in a troubled debt restructuring is effective on a prospective basis. A provision in ASU 2011-02 also supersedes the FASB’s deferral of the additional disclosures about troubled debt restructurings as required by ASU 2010-20. The adoption of ASU 2011-02 is not expected to have a material impact on the Company’s financial condition or results of operations.





In April 2011, the FASB issued ASU 2011-03, Transfers and Servicing (Topic 860), Consideration of Effective Control on Repurchase Agreements, which deals with the accounting for repurchase agreements and other agreements that both entitle and obligate a transferor to repurchase or redeem financial assets before their maturity. ASU 2011-03 changes the rules for determining when these transactions should be accounted for as financings, as opposed to sales. The guidance in ASU 2011-03 is effective for the first interim or annual period beginning on or after December 15, 2011. The guidance should be applied prospectively to transactions or modifications of existing transactions that occur on or after the effective date. Early adoption is not permitted. The adoption of ASU 2011-03 is not expected to have a material impact on the Company’s financial condition or results of operation.





In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (“IFRS”). ASU 2011-04 clarifies some existing concepts, eliminates wording differences between U.S. GAAP and IFRS, and in some limited cases, changes some principles to achieve convergence between U.S. GAAP and IFRS. ASU 2011-04 results in a consistent definition of fair value and common requirements for measurement of and disclosure about fair value between U.S. GAAP and IFRS. ASU 2011-04 also expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. ASU 2011-04 will be effective for the Company beginning after December 15, 2011. The Company does not expect the adoption of ASU 2011-04 to have a material effect on its operating results or financial position.





In June 2011, the Financial Accounting Standard Board (“FASB”) issued Accounting Standard Update (“ASU”) 2011-05, Comprehensive Income (Topic 220) Presentation of Comprehensive Income, which requires an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income, or in two separate but consecutive statements. ASU 2011-05 eliminates the option to present components of other comprehensive income as part of the statement of equity. ASU 2011-05 will be effective for the Company beginning after December 15, 2011. The Company does not expect the adoption of ASU 2011-05 to have a material effect on its operating results or financial position but is evaluating the format revision on the presentation of comprehensive income.





3.
INCOME TAXES





The Company is not subject to any income tax as there are no taxable incomes or assessable profits for the period ended October 31, 2010 and July 31, 2011.





No deferred tax has been provided as there are no material temporary differences arising for the period ended October 31, 2010 and July 31, 2011.





The Company did not have any interest and penalty recognized in the income statements for the period ended October 31, 2010 and July 31, 2011 or balance sheet as of October 31, 2010 and July 31, 2011. The Company did not have uncertainty tax positions or events leading to uncertainty tax position within the next 12 months.


6


SHC ADVANCE SERVICES INC.


NOTES TO FINANCIAL STATEMENTS


FOR THE PERIOD FROM OCTOBER 14, 2010 (INCEPTION) TO JULY 31, 2011


(Stated in US Dollars)





4.
LOANS FROM DIRECTOR





Loans from director are unsecured, non-interest bearing and repayable on demand.


7


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation.





The Company was organized as a vehicle to investigate and, if such investigation warrants, acquire a target company or business seeking the perceived advantages of being a publicly held corporation. Our principal business objective for the next 12 months and beyond such time will be to achieve long-term growth potential through a combination with a business rather than immediate, short-term earnings. There can be no assurance that the Company will ever consummate a business combination and achieve long-term growth potential or immediate, short-term earnings from any business combination the Company enter into. The Company intends to complete a business combination with a company located in China in the manufacturing industry. However, we will not restrict our potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire any type of business.





Operating Expenses





During the period from October 14, 2010 (inception) through July 31, 2011, we had incurred no expenses other than fees paid to the Company’s U.S securities counsel and independent accounting firm and fees associated with the SEC filings.





Liquidity and Capital Resources


The Company does not currently engage in any business activities that provide cash flow. The Company will be able to conduct its planned operation using currently available capital resources for a minimum of two months.





During the next 12 months we anticipate incurring costs related to:





(i)
filing of Exchange Act reports,


(ii)
payment of annual corporate fees, and


(iii)
investigating, analyzing and consummating an acquisition.


Management anticipates that fees associated with filing of Exchange Act reports including accounting fees and legal fees and payment of annual corporate fees will not exceed $20,000 within next 12 months. We do not currently intend to retain any entity to act as a “finder” to identify and analyze the merits of potential target businesses. Management intends to search for a business combination by contacting various sources including, but not limited to, our affiliates, lenders, investment banking firms, private equity funds, consultants and attorneys and does not plan to conduct a complete and exhaustive investigation and analysis of a business opportunity. Management decisions, therefore, will likely be made without detailed feasibility studies, independent analysis, market surveys and the like which, if we had more funds, would be desirable. If the management can find a suitable target company and decides to conduct exclusive due diligence, on top of the minimum level activity budget, we will have to budget for such additional fees relating to the investigation into the target Company including visiting the facilities and legal fees associated with the reverse merger, which will cost between $50,000 to $80,000. We anticipate we will need an additional $20,000 to $60,000 to consummate a business combination if a suitable target is ever identified and we probably will need more funds if we fail to close the merger with the first target and decide to look for another target. We expect that the expenses for the next 12 months and beyond such time will be paid with amounts that may be loaned to or invested in us by our stockholders, management or other investors. Our stockholders have agreed to pay any costs or expenses incurred by the Company until the successful completion of a business combination though we don’t have a written agreement with them. The loans will be non-interest bearing and payable upon the closing of an initial business combination. We have and had no discussions with investors regarding funding the Company before a business combination. Since we have minimal assets and will cease business operations if we do not timely consummate a business combination and we continue to incur losses due to the expenses associated with being a reporting company under the Exchange Act.


8


Currently, our ability to continue as a going concern is dependent upon our ability to generate future profitable operations and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Our ability to continue as a going concern is also dependant on our ability to find a suitable target company and enter into a possible reverse merger with such company. Management’s plan includes obtaining additional funds by equity financing through a reverse merger transaction and/or related party advances. However there is no assurance of additional funding being available.





The Company may consider a business which has recently commenced operations, is a developing company in need of additional funds for expansion into new products or markets, is seeking to develop a new product or service, or is an established business which may be experiencing financial or operating difficulties and is in need of additional capital. In the alternative, a business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital, but which desires to establish a public trading market for its shares, while avoiding, among other things, the time delays, significant expense, and loss of voting control which may occur in a public offering.





Our officers and directors have not had any preliminary contact or discussions with any representative of any other entity regarding a business combination with us. Any target business that is selected may be a financially unstable company or an entity in its early stages of development or growth, including entities without established records of sales or earnings. In that event, we will be subject to numerous risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies. In addition, we may effect a business combination with an entity in an industry characterized by a high level of risk, and, although our management will endeavor to evaluate the risks inherent in a particular target business, there can be no assurance that we will properly ascertain or assess all significant risks.





Our management anticipates that it will likely be able to effect only one business combination, due primarily to our limited financing and the dilution of interest for present and prospective stockholders, which is likely to occur as a result of our management’s plan to offer a controlling interest to a target business in order to achieve a tax-free reorganization.


The Company anticipates that the selection of a business combination will be complex and extremely risky. Our potential merger targets are firms seeking either the benefits of a business combination with an SEC reporting company and/or the perceived benefits of becoming a publicly traded corporation. Such perceived benefits of becoming a publicly traded corporation include, among other things, facilitating or improving the terms on which additional equity financing may be obtained, providing liquidity for the principals of and investors in a business, creating a means for providing incentive stock options or similar benefits to key employees, and offering greater flexibility in structuring acquisitions, joint ventures and the like through the issuance of stock. While a private operating company may achieve the same benefits by filing its own Exchange Act registration statement, such benefits can be achieved at a potentially faster rate with limited regulatory review through the completion of a business combination with a public reporting company. While a potentially available business combination may occur in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. We plan to identify a suitable target within next six months and consummate a business combination within the next twelve months. However, the time required to select and evaluate a target business and to structure and complete a business combination cannot presently be ascertained with any degree of certainty.


In identifying, evaluating and selecting a target business, we may encounter intense competition from other entities having a business objective similar to ours. There are numerous blank check companies that have gone public in the United States that have significant financial resources, that are seeking to carry out a business plan similar to our business plan. Many of these entities are well established and have extensive experience identifying and effecting business combinations directly or through affiliates. Many of these competitors possess greater technical, human and other resources than us and our financial resources will be relatively limited when contrasted with those of many of these competitors. We believe our competitive strategy will be to capitalize on the fast-growing economy of China by pursuing middle market companies involved in manufacturing industry. Personal contact and credibility are critical for investing in China. The members of our management team were all born and raised in China. Mr. Chang, our President, Chief Financial Officer, Secretary and Director, has more than 14 years of investment experience in China and Mr. Chong, our Treasurer and Director has more than 10 years of sales and marketing experience in China. They both have strong social and professional ties to the region. Our management will rely on their network of contacts in the business or financial community, which include entrepreneurs, members of leading local families, senior managers in banks, and partners in law firms and accounting firms.





Off-Balance Sheet Arrangements





We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.


9


Item 3. Quantitative And Qualitative Disclosures About Market Risk.





We are a smaller reporting company and, therefore, we are not required to provide information required by this Item.





Item 4. Controls and Procedures.





Evaluation of Disclosure Controls and Procedures





As of the end of the period covered by this Quarterly Report, the Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer (the “Certifying Officers”), conducted evaluations of the Company’s disclosure controls and procedures. As defined under Sections 13a–15(e) and 15d–15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the term “disclosure controls and procedures” means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including the Certifying Officers, to allow timely decisions regarding required disclosures.


Based on this evaluation, the Certifying Officers have concluded that the Company’s disclosure controls and procedures were not effective to ensure that material information is recorded, processed, summarized and reported by management of the Company on a timely basis in order to comply with the Company’s disclosure obligations under the Exchange Act and the rules and regulations promulgated thereunder.





Changes in internal control over financial reporting





Our management, with the participation of the President, Chief Financial Officer and Secretary, has not identified any change in our internal control over financing reporting in connection with its evaluation of the quarter ended July 31, 2011, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.





Limitations on the Effectiveness of Internal Controls





Readers are cautioned that our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any control design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.





Changes in internal control over financial reporting





Our management, with the participation of the President, Chief Financial Officer and Secretary, has not identified any change in our internal control over financing reporting in connection with its evaluation of the quarter ended July 31, 2011, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.





PART II   OTHER INFORMATION





ITEM 1.   Legal Proceedings





None.


10


Item 1A. Risk Factors.





We are a smaller reporting company and, therefore, we are not required to provide information required by this Item.





Item 2. Unregistered Sales of Equity Securities and Use of Proceeds





None.





Item 3. Defaults Upon Senior Securities





None.





Item 4. (Removed and Reserved).





Item 5. Other Information.





None.


11


Item 6. Exhibits





Number

Description31.1

Certification of Chief Executive Officer Pursuant To Sarbanes-Oxley Section 30232.1

Certification Pursuant To 18 U.S.C. Section 1350 (*)





SIGNATURES





Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on the 20th day of September, 2011.





Date: September 20, 2011


SHC ADVANCE SERVICES INC.By:
/s/ Victor ChangName: Victor ChangTitle: President, Chief Financial Officer, and Secretary


12