Attached files
| file | filename |
|---|---|
| EX-32 - Tia II, Inc | v169414_ex32.htm |
| EX-31.2 - Tia II, Inc | v169414_ex31-2.htm |
| EX-31.1 - Tia II, Inc | v169414_ex31-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
(Mark
One)
FORM
10-K
|
x
|
ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
fiscal year ended September 30, 2009
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 0-52286
TIA
II, INC.
(Exact
name of registrant as specified in its charter)
|
Delaware
|
51-0597955
|
|
State
or other jurisdiction of
Incorporation
or organization
|
(I.R.S.
Employer
Identification
No.)
|
58
Heng Shan Road, Kun Lun Shopping Mall,
Harbin,
The People’s Republic of China 150090
(Address
of principal executive offices) (Zip Code)
Registrant’s
telephone number, including area code 011-86-451-8233-5794
Securities
registered pursuant to Section 12(b) of the Act:
|
Title
of each class
|
Name
of each exchange on which registered
|
|
___________________________________
|
___________________________________
|
|
___________________________________
|
___________________________________
|
Securities
registered pursuant to section 12(g) of the Act:
Common
Stock
(Title of
class)
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
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.
¨
Yes
o No
Note – Checking the box above
will not relieve any registrant required to file reports pursuant to Section 13
or 15(d) of the Exchange Act from their obligations under those
Sections.
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 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such
files).
o Yes ¨ No
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. ¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
|
Large accelerated filer ¨
|
Accelerated filer ¨
|
|
|
Non-accelerated filer ¨ (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 Act).
x Yes
¨ No
All the
issued and outstanding voting common equity is held by an affiliate of the
Company.
Note.—If a determination as to
whether a particular person or entity is an affiliate cannot be made without
involving
unreasonable
effort and expense, the aggregate market value of the common stock held by
non-affiliates may be calculated on the basis of assumptions reasonable under
the circumstances, provided that the assumptions are set forth in this
Form.
APPLICABLE
ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate
by check mark whether the registrant has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court. o
Yes ¨ No
(APPLICABLE
ONLY TO CORPORATE REGISTRANTS)
Indicate
the number of shares outstanding of each of the registrant’s classes of common
stock, as of the latest practicable date.
As of December 18, 2009, there are
presently 1,000,000 shares of common stock, par value $0.0001 issued and
outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
List
hereunder the following documents if incorporated by reference and the Part of
the Form 10-K (e.g., Part I, Part II, etc.) into which the document is
incorporated: (1) Any annual report to security holders; (2) Any proxy or
information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933. The listed documents should be clearly
described for identification purposes (e.g., annual report to security holders
for fiscal year ended December 24, 1980).
PART
I
Item
1. Business.
Tia II,
Inc. (the "Company", “we, “our” or the "Registrant") was incorporated in the
State of Delaware on August 17, 2006. Our present principal
executive offices are located at 58 Heng Shan Road, Kun Lun Shopping Mall,
Harbin, The People’s Republic of China 150090. Our telephone number
is 011-86-451-8233-5794.
We were
formed for seeking a merger, acquisition or other business combination
transaction with a privately owned entity seeking to become a publicly owned
entity.
We
voluntarily filed a Registration Statement on Form 10-SB to register our common
stock under Section 12(g) of the Securities Exchange Act of 1934 (the "Exchange
Act") on October 31, 2006. Our current principal business activity is to
seek a suitable acquisition candidate through acquisition, merger, reverse
merger or other suitable business combination method.
As a
"reporting company," we may be more attractive to a private acquisition target
because our common stock is eligible to be quoted on the OTC Bulletin
Board although there is no assurance it will be quoted. As a result of
filing our Registration Statement, we are obligated to file with the Securities
and Exchange Commission (the "Commission") certain periodic reports, including
an annual report containing audited financial statements. We anticipate
that we will continue to file such reports as required under the Exchange
Act.
We are a
“shell company” as defined under Rule 405 and the Securities Act of 1933, as
amended ( the “Securities Act”) and Rule 12b-2 of the Exchange Act as a
registrant, other than an asset-backed issuer, that has (i) no or nominal
operations; and (ii) either (a) no or nominal assets; (b) assets consisting
solely of cash and cash equivalents; or (c) assets consisting of any amount of
cash and cash equivalents and nominal other assets. Private companies
wishing to become publicly traded may wish to merge with a shell company through
a reverse merger or reverse acquisition transaction whereby the shareholders of
the private company become the majority of the shareholders of the combined
company. The private company may purchase for cash all or a portion of the
common shares of the shell company from its major stockholders. Typically,
the board and officers of the private company become the new board and officers
of the combined company and often the name of the private company becomes the
name of the combined entity.
We
have very limited capital, and it is unlikely that we will be able to take
advantage of more than one such business opportunity. We intend to seek
opportunities demonstrating the potential of long-term growth. Presently,
we have yet to identify a business opportunity that we plan to pursue, and we
have not reached any agreement or definitive understanding with any person
concerning an acquisition.
No
assurance can be given that we will be successful in finding or acquiring a
desirable business opportunity, given the limited funds that are expected to be
available for acquisitions. Furthermore, no assurance can be given that
any acquisition, which does occur, will be on terms that are favorable to us or
our current stockholder.
Our
search will be directed toward small and medium-sized enterprises, which have a
desire to become public corporations. In addition these enterprises
may wish to satisfy, either currently or in the reasonably near future, the
minimum tangible asset requirement in order to qualify shares for trading on
NASDAQ or on an exchange such as the NYSE Alternext U.S. (formerly known as the
American Stock Exchange) (See the subsection of Item 1 called “Investigation and Selection of
Business Opportunities"). We anticipate that the business
opportunities presented to us will either (i) be in the process of formation, or
be recently organized with limited operating history or a history of losses
attributable to under-capitalization or other factors; (ii) experiencing
financial or operating difficulties; (iii) be in need of funds to develop new
products or services or to expand into a
new market, or have plans for rapid expansion through
acquisition of competing businesses; or (iv) have other similar characteristics.
We intend to concentrate our acquisition efforts on properties or businesses
that we believe to be undervalued or that we believe may realize a substantial
benefit from being publicly owned. Given the above factors, investors
should expect that any acquisition candidate might have little or no operating
history, or a history of losses or low profitability.
We do not
propose to restrict our search for investment opportunities to any particular
geographical area or industry, and may, therefore, engage in essentially any
business, to the extent of our limited resources. Our discretion in the
selection of business opportunities is unrestricted, subject to the availability
of such opportunities, economic conditions and other factors.
Any
entity which has an interest in being acquired by, or merging into us, is
expected to be an entity that desires to become a public company and establish a
public trading market for its securities. In connection with such a merger or
acquisition, it is highly likely that an amount of stock constituting control of
the Company would either be issued by us or be purchased from our current
principal stockholder by the acquiring entity or its affiliates. If stock is
purchased from the current principal stockholder, the transaction is likely to
result in substantial gains to the current principal stockholder relative to his
purchase price for such stock. In our judgment, none of our then officers and
directors would thereby become an underwriter within the meaning of the Section
2(11) of the Securities Act of 1933, as amended, as long as the transaction is a
private transaction rather than a public distribution of securities. The sale of
a controlling interest by our principal stockholder would occur at a time when
minority stockholders, if there are any, are unable to sell their shares because
of the lack of a public market for such shares.
Depending
upon the nature of the transaction, our current officer and director may resign
his management and board position in connection with a change of control or
acquisition of a business opportunity (see the subsection of Item 1 called "Form of Acquisition" and Item
1A called "Risk
Factors"). In the event of such a resignation, our current
management would thereafter have no control over the conduct of our
business.
It is
anticipated that business opportunities will come to our attention from various
sources, including our officer and director, our stockholder, professional
advisors such as attorneys and accountants, securities broker-dealers, venture
capitalists, members of the financial community and others who may present
unsolicited proposals. We have no plans, understandings, agreements, or
commitments with any individual for such person to act as a finder of
opportunities for the Company.
Investigation and Selection
of Business Opportunities
To a
large extent, a decision to participate in a specific business opportunity may
be made upon our analysis of the quality of the other company’s management and
personnel, the anticipated acceptability of new products or
marketing concepts, the merit of
technological changes, the perceived benefit the business
opportunity will derive from becoming a publicly held entity, and numerous other
factors which are difficult, if not impossible, to analyze through the
application of any objective criteria. In many instances, it is anticipated
that the historical operations of a specific business
opportunity may not necessarily be indicative of the potential for the future
because of a variety of factors, including, but not limited to, the possible
need to expand substantially, shift marketing approaches, change product
emphasis, change or substantially augment management, raise capital and the
like.
It is
anticipated that we will not be able to diversify, but will essentially be
limited to the acquisition of one business opportunity because of our limited
financing. This lack of diversification will not permit us to offset
potential losses from one business opportunity against profits from another, and
should be considered an adverse factor affecting any decision to purchase our
securities.
Certain
types of business acquisition transactions may be completed without any
requirement that we first submit the transaction to the stockholders for their
approval. In the event the proposed transaction is structured in such a
fashion that stockholder approval is not required, holders of our securities
(other than the principal stockholder holding a controlling interest) should not
anticipate that they would be provided with financial statements or any other
documentation prior to the completion of the transaction. Other types of
transactions may require prior approval of the stockholders.
In the
event a proposed business combination or business acquisition transaction
requires stockholder approval, we will be required to prepare a Proxy or
Information Statement describing the proposed transaction, file it with the
Commission for review and approval, and mail a copy of it to all our
stockholders prior to holding a stockholders’ meeting for purposes of voting on
the proposal or if no stockholders’ meeting will be held, prior to consummating
the proposed transaction. Minority shareholders may have the right, in the
event the transaction is approved by the required number of stockholders, to
exercise statutory dissenter’s rights and elect to be paid the fair value of
their shares.
The
analysis of business opportunities will be undertaken by or under the
supervision of our current sole officer and director, who is not a professional
business analyst. Although there are no current plans to do so, our
management might hire an outside consultant to assist in the investigation and
selection of business opportunities, and might pay a finder's fee. Since our
management has no current plans to use any outside consultants or advisors to
assist in the investigation and selection of business opportunities, no policies
have been adopted regarding use of such consultants or advisors, the criteria to
be used in selecting such consultants or advisors, the services to be provided,
the term of service, or the total amount of fees that may be paid.
However, due to our limited resources, it is likely that any such fee we
agree to pay would be paid in stock and not in cash.
Otherwise,
in analyzing potential business opportunities, our management anticipates that
it will consider, among other things, the following factors:
|
|
·
|
potential
for growth and profitability indicated by new technology, anticipated
market expansion, or new products;
|
|
|
·
|
our
perception of how any particular business opportunity will be received by
the investment community and by our
stockholders;
|
|
|
·
|
whether,
following the business combination, the financial condition of the
business opportunity would be, or would have a significant prospect in the
near future of becoming, sufficient to enable the securities of the
Company to qualify for listing on an exchange or on a national automated
securities quotation system, such as NASDAQ, so as to permit the trading
of such securities to be exempt from the requirements of Rule 15g-9
adopted by the Commission (See the subsection of Item 1A called "Risk Factors
");
|
|
|
·
|
capital
requirements and anticipated availability of required funds, to be
provided by us or from operations, through the sale of additional
securities, through joint ventures or similar arrangements, or from other
sources;
|
|
|
·
|
the
extent to which the business opportunity can be
advanced;
|
|
|
·
|
competitive
position as compared to other companies of similar size and experience
within the industry segment as well as within the industry as a
whole;
|
|
|
·
|
strength
and diversity of existing management or management prospects that are
scheduled for recruitment;
|
|
|
·
|
the
cost of participation by the Company as compared to the perceived tangible
and intangible values and potential;
and
|
|
|
·
|
the
accessibility of required management expertise, personnel, raw materials,
services, professional assistance, and other required
items.
|
We are
unable to predict when we may participate in a business opportunity. We
expect, however, that the analysis of specific proposals and the selection of a
business opportunity may take several months or more.
Prior to
making a decision to participate in a business opportunity, we will generally
request that we are provided with written materials regarding the business
opportunity containing as much relevant information as possible, including, but
not limited to, such items as a description of products, services and
company history; management resumes; financial information; available
projections, with related assumptions upon which they are based; an explanation
of proprietary products and services; evidence of existing patents, trademarks,
or service marks, or rights thereto; present and proposed forms of compensation
to management; a description of transactions between such company and its
affiliates during the relevant periods; a description of present and required
facilities; an analysis of risks and competitive conditions; a financial plan of
operation and estimated capital requirements; audited financial statements, or
if they are not available, un-audited financial statements, together with
reasonable assurance that audited financial statements would be able to be
produced within a reasonable period not to exceed 60 days following completion
of a merger or acquisition transaction; and the like.
As part
of our investigation, our executive officer and director may meet personally
with management and key personnel of acquisition, may visit and inspect material
facilities, obtain independent analysis or verification of certain information
provided, check references of management and key personnel candidates, and take
other reasonable investigative measures, to the extent our limited financial
resources and management expertise allow him to do so.
It is
possible that the range of business opportunities that might be available for
consideration by us could be limited by the impact of the Commission regulations
regarding purchase and sale of penny stocks. The regulations would affect, and
possibly impair, any market that might develop in our securities until such time
as they qualify for listing on NASDAQ or on an
exchange which would make them exempt
from applicability of the penny stock regulations. (See the Item 1A called
"Risk Factors - Regulation of
Penny Stocks").
We
believe that various types of potential merger or acquisition candidates might
find a business combination with us to be attractive. These include acquisition
candidates desiring to create a public market for their shares in order to
enhance liquidity for current stockholders, acquisition candidates, which have
long-term plans for raising capital through public sale of securities and
believe that the possible prior existence of a public market for their
securities would be beneficial, and acquisition candidates which plan to acquire
additional assets through issuance of securities rather than for cash, and
believe that the possibility of development of a public market for their
securities will be of assistance in that process. Acquisition candidates, who
have a need for an immediate cash infusion, are not likely to find a potential
business combination with us to be an attractive alternative.
Form of
Acquisition
It is
impossible to predict the manner in which we may participate in a business
opportunity. Specific business opportunities will be reviewed as well as the
respective needs and desires of the Company and the promoters of the opportunity
and, upon the basis of the review and the relative negotiating strength of the
Company and such promoters, the legal structure or method deemed by management
to be suitable will be selected. Such structure may include, but is not limited
to, leases, purchase and sale agreements, licenses, joint ventures and other
contractual arrangements. We may act directly or indirectly through an interest
in a partnership, corporation or other form of organization. Implementing such
structure may require the merger, consolidation or reorganization of the Company
with other corporations or forms of business organization. In addition, the
present management and stockholder of the Company most likely will not have
control of a majority of the voting stock of the Company following a merger or
reorganization transaction. As part of such a transaction, our existing director
may resign and new directors may be appointed without any vote by
stockholders.
It is
likely that we will acquire a participation in a business opportunity through
the issuance of common stock or other securities of the Company. Although the
terms of any such transaction cannot be predicted, it should be noted that in
certain circumstances the criteria for determining whether or not an acquisition
is a so-called B tax free reorganization under the Internal Revenue Code of 1986
as amended, depends upon the issuance to the stockholders of the acquired
company of a controlling interest (i.e., 80% or more) of the common stock of the
combined entities immediately following the reorganization. If a
transaction were structured to take advantage of these provisions rather than
other tax-free provisions provided under the Internal Revenue Code, our current
stockholder would retain 20% or less of the total issued and outstanding shares.
This could result in substantial additional dilution in his equity to such
reorganization. Any such issuance of additional shares might also be done
simultaneously with a sale or transfer of shares representing a controlling
interest in our by the current officer, director and principal
stockholder.
It is
anticipated that any new securities issued in any reorganization would be issued
in reliance upon one or more exemptions from registration under applicable
federal and state securities laws to the extent that such exemptions are
available. In some circumstances, however, as a negotiated element of the
transaction, the Company may agree to register such securities either at the
time the transaction is consummated or under certain conditions at specified
times thereafter. The issuance of substantial additional securities and
their potential sale into any trading market that might develop in our
securities may have a depressive effect upon such market.
We will
participate in a business opportunity only after the negotiation and execution
of a written agreement. Although the terms of such agreement cannot be
predicted, generally such an agreement would require specific representations
and warranties by all of the parties thereto, specify certain events of default,
detail the terms of closing and the conditions which must be satisfied by each
of the parties thereto prior to such closing, outline the manner of bearing
costs if the transaction is not closed set forth remedies upon default, and
include other miscellaneous terms.
As a
general matter, we anticipate that we, and/or our principal stockholder will
enter into a letter of intent with the management, principals or owners of a
prospective business opportunity prior to signing a binding agreement.
Such a letter of intent will set forth the terms of the proposed
acquisition but will not bind any of the parties to consummate the transaction.
Execution of a letter of intent will by no means indicate that consummation of
an acquisition is probable. Neither we nor any of the other parties to the
letter of intent will be bound to consummate the acquisition unless and until a
definitive agreement is executed. Even after a definitive agreement is
executed, it is possible that the acquisition would not be consummated should
any party elect to exercise any right provided in the agreement to terminate it
on specific grounds.
It is
anticipated that the investigation of specific business opportunities and the
negotiation, drafting and execution of relevant agreements, disclosure documents
and other instruments will require substantial management time and attention and
substantial costs for accountants, attorneys and others. If a decision is
made not to participate in a specific business opportunity, the costs incurred
in the related investigation would not be recoverable. Moreover, because
many providers of goods and services require compensation at the time or soon
after the goods and services are provided, our inability to pay until an
indeterminate future time may make it impossible to produce goods and
services.
Competition
We expect
to encounter substantial competition in our efforts to locate attractive
business combination opportunities. The competition may in part come from
business development companies, venture capital partnerships and corporations,
small investment companies, brokerage firms, and the like. Some of these types
of organizations are likely to be in a better position than us to obtain
access to attractive business acquisition candidates either because they have
greater experience, resources and managerial capabilities than us, because they
are able to offer immediate access to limited amounts of cash, or for a variety
of other reasons. We also will experience competition from other public
companies with similar business purposes, some of which may also have funds
available for use by an acquisition candidate.
Employees and
Officers
During the fiscal year ended September
30, 2009, our then only employee and officer, Mary Passalaqua who was our
President, Secretary and a director resigned all of her positions as officer and
director on December 8, 2008.
On
December 8, 2008, the board of directors appointed Mr. Xiqun Yu to serve as our
Chief Executive Officer, Chief Financial Officer and Secretary. In
addition, Mr. Yu was also appointed as our director.
We expect
to use consultants, attorneys and accountants as necessary, and do not
anticipate a need to engage any full-time employees so long as we are seeking
and evaluating business opportunities. The need for employees and their
availability will be addressed in connection with the decision whether or not to
acquire or participate in specific business opportunities.
There are
no employees represented by a labor union or are covered by a collective
bargaining agreement.
Item
1A. Risk
Factors
Our
business and plan of operation is subject to numerous risk factors, including,
but not limited to, the following:
Our
limited operating history makes our potential difficult to assess.
We have
no assets or financial resources. We will, in all likelihood, continue to
sustain operating expenses without corresponding revenue, at least until the
consummation of a business combination. This will most likely result in
the Company incurring a net operating loss, which will increase continuously
until we can consummate a business combination with a target company.
There is no assurance that we can identify such a target company and
consummate such a business combination.
We
have no agreement for a business combination and no minimum
requirements for a business combination.
We have
no current arrangement, agreement or understanding with respect to engaging in a
business combination with a specific entity. There can be no assurance that we
will be successful in identifying and evaluating suitable business opportunities
or in concluding a business combination. No particular industry or
specific business within an industry has been selected for a target company.
We have not established a specific length of operating history or a
specified level of earnings, assets, net worth or other criteria which we will
require a target company to have achieved, or without which, we would not
consider a business combination with such business entity. Accordingly, we may
enter into a business combination with a business entity having no significant
operating history, losses, limited or no potential for immediate earnings,
limited assets, negative net worth or other negative characteristics.
There is no assurance that we will be able to negotiate a business
combination on terms favorable to us.
There
is no assurance of success or profitability of the Company.
There is
no assurance that we will acquire a favorable business opportunity.
Even if we should become involved in a business opportunity, there
is no assurance that we will generate revenue or profit, or that the market
price of our outstanding shares will be increased thereby. The type of
business to be acquired may be one that desires to avoid effecting
its own public offering and the
accompanying expense, delays, uncertainties and federal and
state requirements which purport to protect investors. Because of our
limited capital, it is more likely than not that any acquisition by us will
involve other parties whose primary interest is the acquisition of control of a
publicly traded company. Moreover, any business opportunity acquired may
be currently unprofitable or present other negative factors.
We may not be able to diversify our
business.
Because
of our limited financial resources, it is unlikely that we will be able to
diversify our acquisitions or operations. Our probable inability to diversify
our activities into more than one area will subject us to economic fluctuations
within a particular business or industry and therefore increase the risks
associated with our operations.
We
have only one director and officer.
Because
management consists of only one person, while seeking a business combination,
Xiqun Yu, our Chief Executive Officer, Chief Financial Officer and Secretary,
will be the only person responsible in conducting our day-to-day operations.
We do not benefit from having access to multiple judgments that a
greater number of directors or officers would provide, and we will rely
completely on the judgment of our one officer and director when selecting a
target company. Mr. Yu anticipates devoting only a limited amount of time
per month to the business of the Company. Mr. Yu has not entered into a
written employment agreement with the Company and he is not expected to do so.
We do not anticipate obtaining key man life insurance on Mr. Yu. The loss of the
services of Mr. Yu would adversely affect development of our business and
likelihood of our continuing operations.
We
depend on management and management's participation is limited.
We will
be entirely dependent upon the experience of our sole officer and director in
seeking, investigating, and acquiring a business and in making decisions
regarding our operations. It is possible that, from time to time, the
inability of Mr. Yu to devote his full time attention to the Company will cause
us to lose an opportunity.
Conflicts
of interest exist between the Company and its management.
Certain
conflicts of interest exist between the Company and its sole officer and
director. He has other business interests to which he currently devotes
attention, and is expected to continue to do so. As a result, conflicts of
interest may arise that can be resolved only through his exercise of judgment in
a manner that is consistent with his fiduciary duties to the
Company.
It is
anticipated that our principal stockholder, Mr. Xiqun Yu, may actively
negotiate or otherwise consent to the purchase of a portion of his common stock
as a condition to, or in connection with, a proposed merger or acquisition
transaction. In this process, our principal stockholder may consider his
own personal pecuniary benefit rather than the best interest of the Company.
We
may need additional financing.
We have
very limited funds, and such funds, may not be adequate to take advantage of any
available business opportunities. Even if our currently available funds
prove to be sufficient to pay for our operations until we are able to acquire an
interest in, or complete a transaction with, a business opportunity, such funds
will clearly not be sufficient to enable us to exploit the opportunity. Thus,
our ultimate success will depend, in part, upon our availability to raise
additional capital. In the event that we require modest amounts of additional
capital to fund our operations until we are able to complete a business
acquisition or transaction, such funds, are expected to be provided by the
principal shareholder. However, we have not investigated the
availability, source, or terms that might govern the acquisition of the
additional capital, which is expected to be required in order to exploit a
business opportunity, and will not do so until we have determined the level of
need for such additional financing. There is no assurance that additional
capital will be available from any source or, if available, that it can be
obtained on terms acceptable to us. If not available, our operations will
be limited to those that can be financed with our modest
capital.
We
may need to depend upon outside advisors.
To
supplement the business experience of our officer and director, we may be
required to employ accountants, technical experts, appraisers, attorneys, or
other consultants or advisors. The selection of any such advisors will be made
by our officer. Furthermore, it is anticipated that such persons may be engaged
on an as needed basis without a continuing fiduciary or other obligation to the
Company. In the event Mr. Yu considers it necessary to hire outside advisors, he
may elect to hire persons who are affiliates, if those affiliates are able to
provide the required services.
We
may have significant competition for business opportunities and combinations and
may be at a competitive disadvantage in completing a business
combination.
We are
and will continue to be an insignificant participant in the business of seeking
mergers with and acquisitions of business entities. A large number of
established and well-financed entities, including venture capital firms are
active in mergers and acquisitions of companies, which may be merged
alternatively, acquisition target candidates for us. Nearly all such
entities have significantly greater financial resources, technical expertise and
managerial capabilities than us and, consequently, we will be at a competitive
disadvantage in identifying possible business opportunities and successfully
completing a business combination. Moreover, we will also compete in
seeking merger or acquisition candidates with other public shell companies, some
of which may also have funds available for use by an acquisition
candidate.
The
reporting requirements imposed upon us may delay or preclude our ability to
enter into a business combination.
Pursuant
to the requirements of Section 13 of the Exchange Act, we are required to
provide certain information about significant acquisitions including audited
financial statements of the acquired company. Because we are a shell
company these audited financial statements must be furnished within fifteen
business days following the effective date of a business combination.
Obtaining audited financial statements are the economic
responsibility of the target company. The additional time and costs that
may be incurred by some potential target companies to prepare such financial
statements may significantly delay or essentially preclude consummation of an
otherwise desirable acquisition by us. Acquisition prospects that do not
have or are unable to obtain the required audited financial statements may not
be appropriate for acquisition so long as the reporting requirements of the
Exchange Act are applicable. Notwithstanding a target company’s agreement
to obtain audited financial statements within the required time frame, such
audited financial statements may not be available to us at the time of effecting
a business combination. In cases where audited financial statements are
unavailable, we will have to rely upon un-audited information that has not been
verified by independent auditors in making our decision to engage in a
transaction with the business entity. This risk increases the prospect
that a business combination with such a business entity might prove to be an
unfavorable one for us.
We
lack market research and a marketing organization.
We have
neither conducted, nor have others made available to us, market research
indicating that demand exists for the transactions contemplated by us. In
the event demand exists for a transaction of the type contemplated by us, there
is no assurance we will be successful in completing any such business
combination.
It
is probable that there will be a change in control of the Company and/or
management.
In
conjunction with completion of a business acquisition, it is anticipated that we
will issue an amount of our authorized, but un-issued, common stock that
represents the greater majority of the voting power and equity of the Company,
which will, in all likelihood, result in stockholders of a target company
obtaining a controlling interest in the Company. As a condition of the
business combination agreement, the current stockholder of the Company may agree
to sell or transfer all or a portion of his common stock so as to provide the
target company with all or majority control. The resulting change in
control of the Company will likely result in removal of the present officer and
director of the Company and a corresponding reduction in or elimination of his
participation in the future affairs of the Company.
Stockholders
will likely suffer a dilution of the value of their shares upon a business
combination.
A
business combination normally will involve the issuance of a significant number
of additional shares. Depending upon the value of the assets acquired in
such business combination, the per-share value of the Company's common stock may
increase or decrease, perhaps significantly.
No
public market exists and no public market may develop for our common
stock.
There is
currently no public market for our common stock, and no assurance can be given
that a market will develop or that a shareholder ever will be able to liquidate
its investment without considerable delay, if at all. If a market should
develop, the price may be highly volatile. Factors such as those discussed
in Item 1A "Risk Factors” section may have a significant impact upon the market
price of the securities. Owing to the low price of the
securities, many brokerage firms may
not be willing to effect transactions in the
securities. Even if a purchaser finds a broker willing to effect a
transaction in these securities, the combination of brokerage
commissions, state transfer taxes, if any, and any other selling costs may
exceed the sales proceeds.
Registration
of shares of our common stock may be required for resale.
It is the
Commission’s position that securities issued by a "shell company” such as
ourselves cannot be sold under the exemption from registration provided by Rule
144 promulgated under the Securities Act of 1933 (the "Act"), but must be
registered under the Act. Accordingly, the securities sold to our
affiliates may have to be registered under the Act prior to resale. Any
other securities issued to individuals in the capacity of management,
affiliates, control persons and promoters may also have to be registered prior
to resale and shall be issued with appropriate restricted legend to reflect the
registration requirements.
There
may be restrictions imposed by states on the sale of common stock by
investors.
Because
our securities have not been registered for resale under the Blue Sky laws of
any state, the holders of such shares and persons who desire to purchase them in
any trading market that might develop in the future, should be aware, that there
may be significant state Blue Sky law restrictions upon the ability of investors
to sell the securities and of purchasers to purchase the securities.
Accordingly, investors should consider the secondary market for our
securities to be a limited one.
We
may be subject to additional risks because of doing business in a foreign
country.
We may
effectuate a business combination with a merger target whose business operations
or even headquarters, place of formation or primary place of business are
located outside the United States of America. In such event, we may face
the significant additional risks associated with doing business in that country.
In addition to the language barriers, different presentations of financial
information, different business practices, and other cultural differences and
barriers that may make it difficult to evaluate such a merger target, ongoing
business risks result from the international political situation, uncertain
legal systems and applications of law, prejudice against foreigners, corrupt
practices, uncertain economic policies and potential political and economic
instability that may be exacerbated in various foreign countries.
The
consummation of a business combination may subject the Company and our
stockholders to federal and state taxes.
Federal
and state tax consequences will, in all likelihood, be major considerations in
any business combination that we may undertake. Currently, such transactions may
be structured to result in tax-free treatment to both companies, pursuant to
various federal and state tax provisions. We intend to structure any
business combination so as to minimize the federal and state tax consequences to
both of the Company and the target entity; however, there can be no assurance
that such business combination will meet the statutory requirements of a
tax-free reorganization or that the parties will obtain the intended tax-free
treatment upon a transfer of stock or assets. A non-qualifying reorganization
could result in the imposition of both federal and state taxes, which may have
an adverse effect on both parties to the transaction.
REGULATION
OF PENNY STOCKS
The
Commission has adopted a number of rules to regulate “penny stocks." Such rules
include Rule 3a51-1 and Rules 15g-1 through 15g-9 under the Securities Exchange
Act of 1934, as amended. Because our securities may constitute “penny stocks"
within the meaning of the rules (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, largely traded in the National Association of Securities Dealers’ (NASD)
OTC Bulletin Board or the "Pink Sheets", the rules would apply to us and to our
securities.
The
Commission has adopted Rule 15g-9 that established sales practice requirements
for low price securities. Unless the transaction is exempt, it shall be unlawful
for a broker or dealer to sell a penny stock to, or to effect the purchase of a
penny stock by any person unless prior to the transaction: (i) the broker
or dealer has approved the person’s account for transactions in penny stock
pursuant to this rule and (ii) the broker or dealer has received from the person
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 stock, the broker or
dealer must: (a) obtain from the person information concerning the
person's financial situation, investment experience, and investment objectives;
(b) reasonably determine that transactions in penny stock are suitable for that
person, and that the person has sufficient knowledge and experience in financial
matters that the person reasonably may be expected to be capable of evaluating
the risks of transactions in penny stock; (c) deliver to the person a written
statement setting forth the basis on which the broker or dealer made the
determination (i) stating in a highlighted format that it is unlawful for the
broker or dealer to affect a transaction in penny stock unless the broker or
dealer has received, prior to the transaction, a written agreement to the
transaction from the person; and (ii) stating in a highlighted format
immediately preceding the customer signature line that (iii) the broker or
dealer is required to provide the person with the written statement; and (iv)
the person should not sign and return the written statement to the broker or
dealer if it does not accurately reflect the person’s financial situation,
investment experience, and investment objectives; and (d) receive from the
person a manually signed and dated copy of the written statement.
It is
also required that disclosure be made as to the risks of investing in penny
stock and the commissions payable to the broker-dealer, as well as current price
quotations and the remedies and rights available in cases of fraud in penny
stock transactions. Statements, on a monthly basis, must be sent to the
investor listing recent prices for the penny stock and information on the
limited market. Shareholders should be aware that, according to Securities
and Exchange Commission Release No. 34-29093, the market for penny stocks
has suffered in recent years from patterns of fraud and abuse. Such patterns
include (i) control of the market for the security by one or a few
broker-dealers that are often related to the promoter or issuer; (ii)
manipulation of prices through prearranged matching of purchases and sales and
false and misleading press releases; (iii) "boiler room" practices involving
high-pressure sales tactics and unrealistic price projections by inexperienced
sales persons; (iv) excessive and undisclosed bid-ask differential and markups
by selling broker-dealers; and (v) the wholesale dumping of the same securities
by promoters and broker dealers after prices have been manipulated to a desired
level, along with the resulting inevitable collapse of those prices and with
consequent investor losses. Our management is aware of the abuses that
have occurred historically in the penny stock market. Although we do not expect
to be in a position to dictate the behavior of the market or of broker-dealers
who participate in the market, management will strive within the confines of
practical limitations to prevent the described patterns from being established
with respect to our securities.
Item
2. Properties.
We
currently maintain a mailing address at c/o China Education Alliance, Inc. 58
Heng Shan Road, Kun Lun Shopping Mall, Harbin, The People’s Republic of China
150090. Our telephone number is 011-86-451-8233-5794.
Other
than this mailing address, we do not currently maintain any other office
facilities, and do not anticipate the need for maintaining office facilities at
any time in the near future. We pay no rent or other fees for the use of the
mailing address as these offices are used virtually full-time by other
businesses of our Chief Executive Officer, Chief Financial Officer and
Secretary.
Item
3. Legal Proceedings
We are
not a party to any pending legal proceedings, and no such proceedings are known
to be contemplated.
Item
4. Submission of Matters to a Vote of Security Holders
No
matters were submitted to a vote of stockholders during the fourth quarter of
the fiscal year ended September 30, 2009.
PART
II
Item
5. Market for Registrant’s Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities.
Market
Price
There is
no trading market for our common stock at present and there has been no trading
market to date. There is no assurance that a trading market will ever
develop or, if such a market does develop, that it will continue.
Options, Warranties and
Other Equity Items
There
are no outstanding options or warrants
to purchase, nor any securities convertible into, the
our common shares. Additionally, there are no shares that could be sold
pursuant to Rule 144 under the Securities Act or that we had agreed to register
under the Securities Act of 1933, as amended for sale by security holders.
Further, there are no common shares of the Company being, or proposed to
be, publicly offered by the Company.
Holders
As of
December 18, 2009, there is one shareholder of our common stock.
Dividends
We have
not paid any dividends to date, and has no plans to do so in the near
future.
Item
6. Selected Financial Data
Not
applicable.
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
GENERAL
We were
originally incorporated on August 17, 2006 under the laws of the State of
Delaware. We were initially formed as a "blank check" entity for the
purpose of seeking a merger, acquisition or other business combination
transaction with a privately owned entity seeking to become a publicly-owned
entity.
Our
current principal business activity is to seek a suitable acquisition candidate
through acquisition, merger or other suitable business combination
method.
It is the
intent of management and our significant stockholder to provide sufficient
working capital necessary to support and preserve the integrity of the corporate
entity. However, there is no legal obligation for either management or
significant stockholder to provide additional future funding. Should this pledge
fail to provide financing and we have not identified any alternative sources of
funding. There will be substantial doubt about our ability to continue as
a going concern.
Our need
for capital may change dramatically because of any business acquisition or
combination transaction. There can be no assurance that we will identify
any such business, product, technology or company suitable for acquisition in
the future. Further, there can be no assurance that we will be successful
in consummating any acquisition on favorable terms or that we will be able to
profitably manage the business, product, technology or company we
acquire.
PLAN
OF OPERATION
GENERAL
Our
current purpose is to seek, investigate and, if such investigation warrants,
merge or acquire an interest in business opportunities presented to us by
persons or companies who or which desire to seek the perceived advantages of a
Securities Exchange Act of 1934 registered corporation. As of the date
hereof, we have no particular acquisitions in mind and have not entered into any
negotiations regarding such an acquisition, and neither our officer and director
nor any promoter has engaged in any negotiations with any representatives of the
owners of any business or company regarding the possibility of a merger or
acquisition between us and such other company.
Pending
negotiation and consummation of a combination, we anticipate that we will have,
aside from carrying on our search for a combination partner, no business
activities, and, thus, will have no source of revenue. Should we incur any
significant liabilities prior to a combination with a private
company, we may not be able to satisfy
such liabilities as are incurred.
If our
management pursues one or more combination opportunities beyond the preliminary
negotiations stage and those negotiations are subsequently terminated, it is
foreseeable that such efforts will exhaust our ability to continue to seek such
combination opportunities before any successful combination can be consummated.
In that event, our common stock will become worthless and holders of our
common stock will receive a nominal distribution, if any, upon our liquidation
and dissolution.
MANAGEMENT
We are in
the development stage and currently has no full-time employees. Mr. Xiqun
Yu is our sole officer, director and controlling stockholder. Mr. Yu is
the Chief Executive Officer, Chief Financial Officer and , Secretary of the
Company. He has agreed to allocate a limited portion of his time to the
activities of the Company without compensation. Potential conflicts may
arise with respect to the limited time commitment by Mr. Yu and the potential
demands of our activities. See Item 13, “Certain Relationships and Related
Transactions, and Director Independence."
The
amount of time spent by Mr. Yu on the activities of the Company is not
predictable. Such time may vary widely from an extensive amount when
reviewing a target company to an essentially quiet time when activities of
management focus elsewhere or some amount in between. It is impossible to
predict with any precision the exact amount of time Mr. Yu will actually be
required to spend to locate a suitable target company. Mr. Yu estimates that the
business plan of the Company can be implemented by devoting less than five hours
per month but such figure cannot be stated with precision.
SEARCH
FOR BUSINESS OPPORTUNITIES
Our
search will be directed toward small and medium-sized enterprises, which have a
desire to become reporting corporations and which are able to provide audited
financial statements. We do not propose to restrict our search for
investment opportunities to any particular geographical area or industry, and
may, therefore, engage in essentially any business, to the extent of our limited
resources. Our discretion in the selection of business opportunities
is unrestricted, subject to the availability of such opportunities, economic
conditions, and other factors. No assurance can be given that we will be
successful in finding or acquiring a desirable business opportunity, and no
assurance can be given that any acquisition, which does occur, will be on terms
that are favorable to us or our current stockholders.
We may
merge with a company that has retained one or more consultants or outside
advisors. In that situation, we expect that the business opportunity will
compensate the consultant or outside advisor. As of the date of this filing,
there have been no discussions, agreements or understandings with any party
regarding the possibility of a merger or acquisition between the Company and
such other company. Consequently, we are unable to predict how the amount of
such compensation would be calculated at this time. It is anticipated that any
finder that the target company retains would be a registered
broker-dealer.
We will
not restrict our search to any specific kind of firm, but may acquire a venture,
which is in its preliminary or development stage, one which is already in
operation or in a more mature stage of its corporate existence. The acquired
business may need to seek additional capital, may desire to have its shares
publicly traded, or may seek other perceived advantages which the Company may
offer. We do not intend to obtain funds to finance the operation of any
acquired business opportunity until such time as we have successfully
consummated the merger or acquisition transaction. There are no loan
arrangements or arrangements for any financing whatsoever relating to any
business opportunities.
EVALUATION
OF BUSINESS OPPORTUNITIES
The
analysis of business opportunities will be under the supervision of our sole
officer and director, who is not a professional business analyst. In analyzing
prospective business opportunities, management will consider such matters as
available technical, financial and managerial resources; working capital and
other financial requirements; history of operations, if any; prospects for the
future; nature of present and expected competition; the quality and experience
of management services which may be available and the depth of that management;
the potential for further research, development, or exploration; specific risk
factors not now foreseeable, but which then may be anticipated to impact the
proposed activities of the Company; the potential for growth or expansion; the
potential for profit; the perceived public recognition or alternatively,
acceptance of products, services, or trades; name identification; and other
relevant factors. In many instances, it is anticipated that the historical
operations of a specific business opportunity may not necessarily be indicative
of the potential for the future because of a variety of factors, including, but
not limited to, the possible need to expand substantially, shift marketing
approaches, change product emphasis, change or substantially augment management,
raise capital and the like. Management intends to meet personally with
management and key personnel of the target business entity as part of its
investigation. To the extent possible, we intend to utilize written
reports and personal investigation to evaluate the above factors. Prior to
making a decision to participate in a business opportunity, we will generally
request that we be provided with written materials regarding the business
opportunity containing as much relevant information as possible, including, but
not limited to, such items as a description of products, services and company
history; management resumes; financial information; available projections, with
related assumptions upon which they are based; an explanation of proprietary
products and services; evidence of existing patents, trademarks, alternatively,
service marks, or rights thereto; present and proposed forms of compensation to
management; a description of transactions between such company and its
affiliates during the relevant periods; a description of present and required
facilities; an analysis of risks and competitive conditions; a financial plan of
operation and estimated capital requirements; audited financial statements, or
if they are not available at that time, un-audited financial statements,
together with reasonable assurance that audited financial statements would be
able to be produced within a required period of time; and the
like.
In the
event we successfully complete the acquisition of or merger with an operating
business entity, that business entity must provide audited financial statements
for at least two most recent fiscal years or, in the event the business entity
has been in business for less than two years, audited financial statements will
be required from the period of inception. Acquisition candidates that do
not have or are unable to obtain the required audited financial statements may
not be considered appropriate for acquisition. We will not acquire
or merge with any entity which cannot provide audited financial statements at or
within a required period after closing of the proposed transaction. The
audited financial statements of the acquired company must be furnished within 15
days following the effective date of a business combination.
When a
non-reporting company becomes the successor of a reporting company by merger,
consolidation, exchange of securities, and acquisition of assets or otherwise,
the successor company is required to provide in a Current Report on Form 8-K the
same kind of information that would appear in a Registration Statement or an
Annual Report on Form 10-K, including audited and pro forma financial
statements. The Commission treats these Form 8-K filings in the same way
it treats the Registration Statements on Form 10-K filings. The Commission
subjects them to its standards of review selection, and the Commission may issue
substantive comments on the sufficiency of the disclosures represented. If
we enter into a business combination with a non-reporting company, such
non-reporting company will not receive reporting status until the Commission has
determined that it will not review the 8-K filing or all of the comments have
been cleared by the Commission.
We
believe that various types of potential merger or acquisition candidates might
find a business combination with the Company to be attractive. These include
acquisition candidates desiring to create a public market for their shares in
order to enhance liquidity for current stockholders, acquisition candidates,
which have long-term plans for raising capital through public sale of securities
and believe that the possible prior existence of a public market for their
securities would be beneficial, and acquisition candidates which plan to acquire
additional assets through issuance of securities rather than for cash, and
believe that the possibility of development of a public market for their
securities will be of assistance in that process. Acquisition candidates,
who have a need for an immediate cash infusion, are not likely to find a
potential business combination with us to be an attractive alternative.
Nevertheless, we have not conducted market research and are not aware of
statistical data that would support the perceived benefits of a merger or
acquisition transaction for the owners of a business opportunity. We are unable
to predict when we may participate in a business opportunity. We expect,
however, that the analysis of specific proposals and the selection of a business
opportunity may take several months or more. There can also be no
assurances that we are able to successfully pursue a business opportunity.
In that event, there is a substantial risk to us that failure to complete
a business combination will significantly restrict our business operation and
force management to cease operations and liquidate the Company.
ACQUISITION
OF A BUSINESS OPPORTUNITY
In
implementing a structure for a particular business acquisition, we may become a
party to a merger, consolidation, and reorganization, joint venture or licensing
agreement with another entity. We may also acquire stock or assets of an
existing business. In connection with a merger or acquisition, it is
highly likely that an amount of stock constituting control of the Company would
either be issued by us or be purchased from our current principal stockholder by
the acquiring entity or its affiliates, and accordingly, the stockholders of the
target company, typically, become the majority of the stockholders of the
combined company, the board of directors and officers of the target company
become the new board and officers of the combined company and often the name of
the target company becomes the name of the combined company.
There are
currently no arrangements that would result in a change of control of the
Company. It is anticipated that any securities issued as a result of
consummation of a business combination will be issued in reliance upon one or
more exemptions from registration under applicable federal and state securities
laws to the extent that such exemptions are available. In some
circumstances, however, as a negotiated element of the transaction, we may agree
to register all or a part of such securities immediately after the transaction
is consummated or at specified times thereafter. If such registration
occurs, of which there can be no assurance; it will be undertaken by the
surviving entity after the Company has entered into an agreement for a business
combination or has consummated a business combination and we are no longer
considered a dormant shell company. Until this occurs, we will not attempt
to register any additional securities.
The
issuance of substantial additional securities and their potential sale into any
trading market may have a depressive effect on the market value of our
securities in the future if such a market develops, of which there is no
assurance. There have been no plans, proposals, arrangements or
understandings with respect to the sale or issuance of additional securities.
While the actual terms of a transaction to which we may be a party cannot be
predicted, it may be expected that the parties to the business transaction will
find it desirable to avoid the creation of a taxable event and thereby structure
the acquisition in a "tax-free” reorganization under Sections 351 or 368 of the
Internal Revenue Code of 1986, as amended. In order to obtain tax-free
treatment, it may be necessary for the owners of the surviving entity to own 80%
or more of the voting stock of the surviving entity. In this event, our
current stockholder would retain less than 20% of the issued and outstanding
shares of the surviving entity, which could result in significant dilution in
the equity of such stockholder. However, treatment as a tax-free
reorganization will not be a condition of any future business combination and if
it is not the case, we will not obtain an opinion of counsel that the
reorganization will be tax-free. With respect to any merger or acquisition,
negotiations with target company management are expected to focus on the
percentage of the Company which the target company shareholders would acquire in
exchange for all of their shareholdings in the target company. Depending upon,
among other things, the target company's assets and liabilities, our only
shareholder will in all likelihood hold a substantially lesser percentage
ownership interest in the Company following any merger or acquisition. The
percentage ownership may be subject to significant reduction in the event we
acquire a target company with substantial assets.
Any
merger or acquisition effected by us can be expected to have a significant
dilutive effect on the percentage of shares held by our stockholder at such
time. We will participate in a business opportunity only after the negotiation
and execution of appropriate agreements. Although the terms of such agreements
cannot be predicted, generally such agreements will require certain
representations and warranties of the parties thereto, will specify certain
events of default, will detail the terms of closing and the conditions which
must be satisfied by the parties prior to and after such closing, outline the
manner of bearing costs, including costs associated with our attorneys and
accountants, and will include other miscellaneous terms. It is anticipated
that we will not be able to diversify, but will essentially be limited to the
acquisition of one business opportunity because of our limited financing.
This lack of diversification will not permit us to offset potential losses
from one business opportunity against profits from another, and should be
considered an adverse factor affecting any decision to purchase our securities.
There are no present plans, proposals, arrangements or understandings to
offer the shares of the post-merger companies to third parties if any mergers
occur, and there is no marketing plan to distribute the shares of the
post-merger companies to third parties. Mr. Yu has not had any preliminary
contact, agreements or understandings with anyone to help sell these
shares.
We intend
to seek to carry out our business plan as discussed herein. In order to do so,
we need to pay ongoing expenses, including particularly legal and accounting
fees incurred in conjunction with preparation and filing of this registration
statement, and in conjunction with future compliance with our on-going reporting
obligations.
We do not
intend to make any loans to any prospective merger or acquisition candidates or
unaffiliated third parties.
LIQUIDITY
AND CAPITAL RESOURCES
It is the
belief of management that sufficient working capital necessary to support and
preserve the integrity of the corporate entity will be present. However, there
is no legal obligation for either management or significant stockholders to
provide additional future funding. Should this pledge fail to provide
financing, we have not identified any alternative sources. Consequently, there
is substantial doubt about our ability to continue as a going
concern.
We have
no current plans, proposals, arrangements or understandings with respect to the
sale or issuance of additional securities prior to the location of a merger or
acquisition candidate. Accordingly, there can be no assurance that
sufficient funds will be available to us to allow us to cover the expenses
related to such activities.
Our need
for capital may change dramatically because of any business acquisition or
combination transaction. There can be no assurance that we will identify
any such business, product, technology or company suitable for acquisition in
the future. Further, there can be no assurance that we will be successful
in consummating any acquisition on favorable terms or that we will be able to
profitably manage the business, product, technology or company we
acquire.
Regardless
of whether our cash assets prove to be inadequate to meet our operational needs,
we might seek to compensate providers of services by issuances of stock in lieu
of cash.
Item
7A. Quantitative
and Qualitative Disclosures About Market Risk.
Not Applicable.
Item
8. Financial Statements and Supplementary
Data
INDEX TO FINANCIAL
STATEMENTS
TIA II,
INC.
(A DEVELEOPMENT STAGE
COMPANY)
|
Page
|
|
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
F-1
|
|
FINANCIAL
STATEMENTS
|
|
|
Balance
Sheets as of September 30, 2009 and 2008
|
F-2
|
|
Statement
of Operations for the Years Ended September 30, 2009 and 2008 and
for the Period from August 17, 2006 (Date of Inception) through September
30, 2009
|
F-3
|
|
Statement
of Changes in Stockholder’s Deficiency for the Period from August 17, 2006
(Date of Inception) to September 30, 2009
|
F-4
|
|
Statements
of Cash Flows for the Year Ended September 30, 2009 and 2008 and for the
Period from August 17, 2006 (Date of Inception) and through September 30,
2009
|
F-5
|
|
Notes
to Financial Statements
|
F6-10
|
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Shareholders
and Directors
TIA II,
Inc.
We have
audited the accompanying balance sheets of TIA II, Inc. (a Development Stage
Company) (the “Company”) as of September 30, 2009 and 2008 and the related
statements of operations, changes in stockholders’ deficiency and cash flows for
the years ended September 30, 2009 and 2008. These financial statements are the
responsibility of the Company’s management. Our responsibility is to
express an opinion on these financial statements based on our
audits.
The
cumulative statements of operations, changes in stockholders’ deficit and cash
flows for the period August 17, 2006 (Date of Inception) to September 30, 2009
include amounts for the period August 17, 2006 (Date of Inception) to September
30, 2007. Our opinion, insofar as it relates to the amounts included for the
period August 17, 2006 (Date of Inception) to September 30, 2007, is based
solely on the report of the other auditors. The other auditors’ reports, dated
various dates, expressed unqualified opinions. The other auditors reports have
been furnished to us, and our opinion, insofar as it related to the amounts
included for such prior periods, is based solely on the reports of other
auditors. The financial statements for the period August 17, 2006 (Date of
Inception) to September 30, 2007 reflect a development stage net
loss.
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 audits 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 purposes of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of TIA II, Inc. as of September 30,
2009 and 2008 and the results of its operations and its cash flows for the years
ended September 30, 2009 and 2008 in conformity with accounting principles
generally accepted in the United States.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 3 to the financial
statements, the Company has incurred significant losses since inception. This
raises substantial doubt about the Company's ability to continue as a going
concern. Management's plans, with respect to these matters are also described in
Note 3 to the financial statements. The financial statements do not include any
adjustments that might result should the Company be unable to continue as a
going concern.
|
/s/ Sherb & Co., LLP
|
|
|
Certified
Public Accountants
|
New York,
NY
December
18, 2009
F-1
TIA II,
INC.
(A
DEVELOPMENT STAGE COMPANY)
BALANCE
SHEETS
|
September 30, 2009
|
September 30, 2008
|
|||||||
|
ASSETS
|
||||||||
|
Cash
|
$ | - | $ | 126 | ||||
|
TOTAL
ASSETS
|
$ | - | $ | 126 | ||||
|
LIABILITIES AND STOCKHOLDER’S
DEFICIENCY
|
||||||||
|
CURRENT
LIABILITIES
|
||||||||
|
Accounts
payable and accrued expenses
|
$ | 1,500 | $ | 12,329 | ||||
|
Advances
- related party
|
16,996 | 24,208 | ||||||
|
TOTAL
LIABILITIES
|
18,496 | 36,537 | ||||||
|
STOCKHOLDER’S
DEFICIENCY:
|
||||||||
|
Preferred
stock, $.0001 par value; 10,000,000 shares authorized, -0-
issued
|
- | - | ||||||
|
Common
stock, $.0001 par value; 250,000,000 shares authorized, 1,000,000 shares
issued and outstanding.
|
100 | 100 | ||||||
|
Additional
paid in capital
|
41,295 | 2,358 | ||||||
|
Deficit
accumulated during the development stage
|
(59,891 | ) | (38,869 | ) | ||||
|
TOTAL
STOCKHOLDER’S DEFICIENCY
|
(18,496 | ) | (36,411 | ) | ||||
|
TOTAL
LIABILITIES AND STOCKHOLDER’S DEFICIENCY
|
$ | - | $ | 126 | ||||
The
accompanying notes are an integral part of these financial
statements.
F-2
TIA II,
INC.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENTS
OF OPERATIONS
|
For the period
|
||||||||||||
|
For the Year
|
For the Year
|
from August 17,
|
||||||||||
|
Ended
|
Ended
|
2006 (Date of
|
||||||||||
|
September 30,
|
September 30,
|
Inception) to
|
||||||||||
|
2009
|
2008
|
September 30, 2009
|
||||||||||
|
(Unaudited)
|
||||||||||||
|
REVENUES
|
$ | - | $ | - | $ | - | ||||||
|
GENERAL
AND ADMINISTRATION EXPENSES
|
(20,046 | ) | (18,001 | ) | (56,557 | ) | ||||||
|
IMPUTED
INTEREST
|
(976 | ) | (1,426 | ) | (3,334 | ) | ||||||
|
NET
LOSS
|
$ | (21,022 | ) | $ | (19,427 | ) | $ | (59,891 | ) | |||
|
WEIGHTED
AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED
|
1,000,000 | 1,000,000 | ||||||||||
|
NET
LOSS PER SHARE - BASIC AND DILUTED
|
$ | (0.02 | ) | $ | (0.02 | ) | ||||||
The
accompanying notes are an integral part of these financial
statements.
F-3
TIA II, INC.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENTS
OF CHANGES IN STOCKHOLDER’S DEFICIENCY
|
Accumulated
|
||||||||||||||||||||
|
Deficit
|
||||||||||||||||||||
|
Additional
|
During the
|
Total
|
||||||||||||||||||
|
Common Stock
|
Paid in
|
Development
|
Stockholder’s
|
|||||||||||||||||
|
Shares
|
Amount
|
Capital
|
Stage
|
Deficiency
|
||||||||||||||||
|
Balance
at August 17, 2006 (Date of Inception)
|
- | $ | - | $ | - | $ | - | $ | - | |||||||||||
|
Common
shares issued on August 28, 2006 at $0.0001 per share
|
1,000,000 | $ | 100 | $ | - | $ | - | $ | 100 | |||||||||||
|
Net
loss for the period ended September 30, 2006
|
- | - | - | (365 | ) | (365 | ) | |||||||||||||
|
Balance
at September 30, 2006
|
1,000,000 | 100 | - | (365 | ) | (265 | ) | |||||||||||||
|
Imputed
interest on advance from related parties
|
- | - | 932 | - | 932 | |||||||||||||||
|
Net
loss for the period ended September 30, 2007
|
- | - | - | (19,077 | ) | (19,077 | ) | |||||||||||||
|
Balance
at September 30, 2007
|
1,000,000 | 100 | 932 | (19,442 | ) | (18,410 | ) | |||||||||||||
|
Imputed
interest on advance from related parties
|
- | - | 1,426 | - | 1,426 | |||||||||||||||
|
Net
loss for the period ended September 30, 2008
|
- | - | - | (19,427 | ) | (19,427 | ) | |||||||||||||
|
Balance
at September 30, 2008
|
1,000,000 | 100 | 2,358 | (38,869 | ) | (36,411 | ) | |||||||||||||
|
Imputed
interest on advance from related parties
|
- | - | 976 | - | 976 | |||||||||||||||
|
Advances
payable—related party contributed as capital
|
- | - | 37,961 | - | 37,961 | |||||||||||||||
|
Net
loss for the period ended September 30, 2009
|
- | - | - | (21,022 | ) | (21,022 | ) | |||||||||||||
|
Balance
at September 30, 2009
|
1,000,000 | $ | 100 | $ | 41,295 | $ | (59,891 | ) | $ | (18,496 | ) | |||||||||
The
accompanying notes are an integral part of these financial
statements.
F-4
TIA II,
INC.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENTS
OF CASH FLOWS
|
For the period
|
||||||||||||
|
For the Year Ended
|
For the Year Ended
|
from August 17,
2006 (Date of
|
||||||||||
|
September 30,
|
September 30,
|
Inception) to
|
||||||||||
|
2009
|
2008
|
September 30, 2009
|
||||||||||
|
(Unaudited)
|
||||||||||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||||||
|
Net
loss
|
$ | (21,022 | ) | $ | (19,427 | ) | $ | (59,891 | ) | |||
|
Adjustment
to reconcile net loss to net cash used in operting
activities:
|
||||||||||||
|
Imputed
interest cost
|
976 | 1,426 | 3,334 | |||||||||
|
(Decrease)Increase
in accounts payable and accrued expenses
|
(10,829 | ) | 7,994 | 1,500 | ||||||||
|
NET
CASH USED IN OPERATING ACTIVITIES
|
(30,875 | ) | (10,007 | ) | (55,057 | ) | ||||||
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||
|
Proceeds
from the sale of common stock
|
- | - | 100 | |||||||||
|
Proceeds
from related party
|
30,749 | 10,087 | 54,957 | |||||||||
|
NET
CASH PROVIDED BY FINANCING ACTIVITIES
|
30,749 | 10,087 | 55,057 | |||||||||
|
NET
(DECREASE) INCREASE IN CASH
|
(126 | ) | 80 | - | ||||||||
|
CASH
AT BEGINNING OF PERIOD
|
126 | 46 | - | |||||||||
|
CASH
AT END OF PERIOD
|
$ | - | $ | 126 | $ | - | ||||||
|
Non-cash
investing and financing activities
|
||||||||||||
|
Advances
payable — related party contributed as capital
|
$ | 37,961 | $ | - | $ | 37,961 | ||||||
The
accompanying notes are an integral part of these financial
statements.
F-5
TIA II,
INC.
(A
Development Stage Company)
NOTES TO
FINANCIAL STATEMENTS
NOTE 1 -
Organization, Business and Operations
Tia II,
Inc. (the “Company”) was incorporated in Delaware on August 17, 2006, with an
objective to acquire, or merge with, an operating business. As of
September 30, 2009, the Company had not yet commenced any
operations.
The
Company, based on proposed business activities, is a "blank check" company. The
Securities and Exchange Commission (“SEC”) defines such a company as “a
development stage company” that has no specific business plan or purpose, or has
indicated that its business plan is to engage in a merger or acquisition with an
unidentified company or companies, or other entity or person; and is issued
‘penny stock,’ as defined in Rule 3a51-1 under the Securities Exchange Act of
1934. Many states have enacted statutes, rules and regulations limiting the sale
of securities of "blank check" companies in their respective jurisdictions.
Management does not intend to undertake any efforts to cause a market to develop
in its securities, either debt or equity, until the Company concludes a business
combination.
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 and, to a lesser extent that desires to
employ the Company’s funds in its business. The Company’s 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 (“Business
Combination”) rather than immediate, short-term earnings. The Company will not
restrict its potential candidate target companies to any specific business,
industry or geographical location and, thus, may acquire any type of business.
The analysis of new business opportunities will be undertaken by or under the
supervision of the officers and directors of the Company.
Until a
Business Combination is completed, the sole stockholder has agreed to fund the
Company’s operating costs through the earlier of a Business Combination or
September 30, 2009. There is no assurance that the Company will be able to
successfully complete a Business Combination.
NOTE
2 - Development Stage Company
The
Company has not generated significant revenues to date; accordingly, the Company
is considered a development stage enterprise as defined in ASC Topic 915
“Development Stage Entities” (SFAS No. 7, "Accounting and Reporting for
Development Stage Companies.") The Company is subject to a number of risks
similar to those of other companies in an early stage of
development.
On
December 8, 2008, the Company entered into a Stock Purchase Agreement (the
“Purchase Agreement”) whereby the holder (the “Seller”) of all the common stock
of the Company sold their shares to an individual (the “Buyer”) who is now in
control of the Company. The Buyer subsequent to the Purchase
agreement was appointed by the board of directors as the Company’s new Chief
Executive Officer, Chief Financial Officer and Secretary and sole director
pursuant to a written consent of directors. The Seller in conjunction with the
Purchase Agreement resigned as the Company’s director, President and
Secretary.
F-6
NOTE
3 - Summary of Significant Accounting Policies
Basis
of presentation
The
financial statements have been prepared on the basis of a going concern which
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business. The Company has a working capital deficiency of
$16,996 and an accumulated deficit of $58,391 as of September 30, 2009 and
has incurred significant losses since inception. Further losses are anticipated
in the development of an intended business plan. If the Company is unable to
obtain financing in the amounts and on terms deemed acceptable, the business and
future success may be adversely affected. Given the Company's limited operating
history, lack of sales, and its operating losses, there can be no assurance that
it will be able to achieve or maintain profitability. Accordingly, these factors
raise substantial doubt about the Company’s ability to continue as a going
concern.
The
Company will depend almost exclusively on outside capital to complete the
development of a business plan. Such outside capital will include proceeds from
the issuance of equity securities and may include commercial borrowing. There
can be no assurance that capital will be available as necessary to meet these
development costs or, if the capital is available, that it will be on terms
acceptable to the Company.
The
issuances of additional equity securities by the Company may result in a
significant dilution in the equity interests of its current stockholders.
Obtaining commercial loans, assuming those loans would be available, will
increase the Company's liabilities and future cash
commitments.
Income
Taxes
The
Company utilizes the liability method of accounting for income taxes. Under the
liability method, deferred income taxes are determined based on the differences
between the bases of assets and liabilities for financial reporting and income
tax purposes. A valuation allowance is established when necessary to reduce
deferred tax assets to the amount expected to be realized.
The
Company’s gross deferred tax asset related to capitalized start up costs for tax
purposes totaled $ 19,853 at September 30, 2009 and has been fully offset by a
valuation allowance. The effective tax rate differs from the statutory rate of
34% due to the increase in the valuation allowance. Pursuant
to Section 382 of the Internal Revenue Code, use of the Company's net operating
loss carryforwards may be limited if the Company experiences a cumulative change
in ownership of greater than 50% in a moving three-year period. Ownership
changes could impact the Company's ability to utilize net operating losses and
credit carryforwards remaining at the ownership change date. The limitation will
be determined by the fair market value of common stock outstanding prior to the
ownership change, multiplied by the applicable federal rate.
Loss Per Common
Share
Basic and
diluted net loss per common share is computed by dividing the net loss by the
weighted-average number of shares of common stock outstanding for all periods
presented.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted 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 reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those
estimates.
F-7
Fair
Value of Financial Instruments
As of
January 1, 2008, we adopted on a prospective basis certain required provisions
of Topic 820, “Fair Value Measurements.” Those provisions relate to our
financial assets and liabilities carried at fair value and our fair value
disclosures related to financial assets and liabilities. Topic 820 defines fair
value, expands related disclosure requirements and specifies a hierarchy of
valuation techniques based on the nature of the inputs used to develop the fair
value measures. Fair value is defined as the price that would be received to
sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. There are three levels of inputs to
fair value measurements - Level 1, meaning the use of quoted prices for
identical instruments in active markets; Level 2, meaning the use of quoted
prices for similar instruments in active markets or quoted prices for identical
or similar instruments in markets that are not active or are directly or
indirectly observable; and Level 3, meaning the use of unobservable inputs.
Observable market data should be used when available.
The
carrying amounts reported in the balance sheet for cash, accounts payable and
amounts due to related party approximate their fair market value based on the
short-term maturity of these instruments. Virtually all of our valuation
measurements are Level 1 measurements. The adoption of Topic 820 did not have a
significant impact on our consolidated financial statements.
Reclassifications
Certain
reclassifications have been made to the prior periods' financial statements to
conform to the current year classification. These reclassifications had no
effect on previously reported results of operations or retained
earnings.
Recent
Accounting Pronouncements
On June
5, 2003, the United States Securities and Exchange Commission (“SEC”) adopted
final rules under Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”),
as amended by SEC Release No. 33-9072 on October 13, 2009. Commencing with its
annual report for the year ending September 30, 2010, the Company will be
required to include a report of management on its internal control over
financial reporting. The internal control report must include a statement of (i)
management’s responsibility for establishing and maintaining adequate internal
control over its financial reporting; (ii) management’s assessment of the
effectiveness of its internal control over financial reporting as of year end;
and (iii) the framework used by management to evaluate the effectiveness of the
Company’s internal control over financial reporting. Furthermore, it is required
to file the auditor’s attestation report separately on the Company’s internal
control over financial reporting on whether it believes that the Company has
maintained, in all material respects, effective internal control over financial
reporting. The Company is working to meet the requirements.
In
September 2009, the Financial Accounting Standards Board (FASB) issued
Accounting Standards Update 2009-13, “Multiple-Deliverable Revenue
Arrangements,” which amends the multiple-element arrangement guidance under
Accounting Standards Codification (ASC) 605, “Revenue Recognition.” This
guidance amends the criteria for separating consideration of products or
services in multiple-deliverable arrangements. This guidance establishes a
selling price hierarchy for determining the selling price of a deliverable,
eliminates the residual method of allocation, and requires that arrangement
consideration be allocated at the inception of the arrangement to all
deliverables using the relative selling price method. In addition, this guidance
significantly expands required disclosures related to a vendor’s
multiple-deliverable revenue arrangements. This guidance is effective
prospectively for revenue arrangements entered into or materially modified in
fiscal years beginning on or after June 15, 2010. The Company is currently
evaluating the provisions of this guidance but does not anticipate that it will
have a material effect on its consolidated financial statements.
In August
2009, the FASB issued Accounting Standards Update 2009-05, Fair Value
Measurements and Disclosures (Topic 820) Measuring Liabilities at Fair Value.
This guidance clarifies that in circumstances in which a quoted price in an
active market for an identical liability is not available, a reporting entity is
required to measure fair value of such liability using one or more of the of the
techniques prescribed by the update. This guidance is effective for the first
reporting period beginning after issuance which is the period ending December
31, 2009. We are currently evaluating the potential effect on the financial
statements.
In June
2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No.
46(R),” which amends the consolidation guidance that applies to variable
interest entities under ASC 810, “Consolidation” (FIN 46(R), “Consolidation of
Variable Interest Entities”). SFAS No. 167 changes how a company determines when
an entity that is insufficiently capitalized or is not controlled through voting
(or similar rights) should be consolidated. This guidance is effective for
financial statements issued in fiscal years (and interim periods) beginning
after November 15, 2009. The Company is currently evaluating the provisions of
this guidance but does not anticipate that it will have a material effect on its
financial statements.
F-8
In
May 2009, the FASB issued ASC 855, “Subsequent Events” (SFAS No. 165,
“Subsequent Events”) which establishes general standards of accounting for and
disclosure of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. This guidance is
effective prospectively for interim and annual periods ending after June 15,
2009. The Company included the requirements of this guidance in the preparation
of the accompanying financial statements, and has evaluated subsequent events
through December 17, 2009, the date that the accompanying financial statements
were issued.
In April
2009, the FASB issued new guidance under ASC 320, “Investments—Debt and Equity
Securities,” (FASB Staff Position (FSP) FAS 115-2 and FAS 124-2, “Recognition
and Presentation of Other-Than-Temporary Investments”) which provides a new
other-than-temporary impairment model for debt and equity securities. This
guidance was effective for financial statements issued in fiscal years (and
interim periods) ending after June 15, 2009. ). The application
of the requirements of this guidance did not have a material effect on the
accompanying financial statements.
On
October 10, 2008, the FASB issued new guidance under ASC 820, (SFAS
No. 157-3, “Determining the Fair Value of a Financial Asset When the Market for
That Asset Is Not Activ”). The guidance clarifies the application of
fair falue measurements and disclosure in cases where the market for
the asset is not active. The guidance was effective
upon issuance. ). The application of the requirements of this
guidance did not have a material effect on the accompanying financial
statements.
In April
2008, the FASB issued new guidance under ASC 350, “Intangibles—Goodwill and
Other,” (FSP FAS 142-3, “Determination of the Useful Life of Intangible Assets”)
which amends the factors that should be considered in developing renewal or
extension assumptions used in determining the useful life of a recognized
intangible asset. This guidance was effective for financial statements issued
for fiscal years (and interim periods) beginning after December 15, 2008
(calendar year 2009). The application of the requirements of this guidance did
not have a material effect on the accompanying financial
statements.
In March
2008, the FASB issued new guidance under ASC 815, “Derivatives and Hedging,”
(SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities
– An Amendment of FASB Statement No. 133”) that requires qualitative disclosures
about objectives and strategies for using derivatives, quantitative disclosures
about fair value amounts of, and gains and losses on, derivative instruments,
and disclosures about credit-risk-related contingent features in derivative
agreements. This guidance was effective for fiscal years (and interim periods)
beginning after November 15, 2008 (calendar year 2009). ). The application of
the requirements of this guidance did not have a material effect on the
accompanying financial statements.
.In
December 2007, the FASB issued new guidance under ASC 810, “Consolidation,”
(SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements—An
Amendment of ARB 51”) that clarifies that a noncontrolling (minority) interest
in a subsidiary is an ownership interest in the entity that should be reported
as equity in the consolidated financial statements. The guidance also requires
consolidated net income to include the amounts attributable to both the parent
and noncontrolling interest, with disclosure on the face of the consolidated
statement of operations of the amounts attributable to the parent and to the
noncontrolling interest. ). The application of the requirements of this guidance
did not have a material effect on the accompanying financial
statements.
A variety
of proposed or otherwise potential accounting standards are currently under
study by standard setting organizations and various regulatory agencies. Due to
the tentative and preliminary nature of those proposed standards, management has
not determined whether implementation of such proposed standards would be
material to our financial statements.
F-9
NOTE
4 - Advances- Related Party
In
December 2008 all the issued shares of the Company were sold to a new
shareholder, accordingly the control and management of the Company changed
subsequent to this transaction. Prior to this transaction the Company received a
$139 advance on August 17, 2006 and a $10,000 advance on August 28, 2006 from
the former sole stockholder. On August 28, 2006, the amount owed by the Company
for these advances was reduced by $100 when the former sole shareholder
purchased 1,000,000 shares of common stock at .0001 per share. The Company
received a further advance of $13,753 and $10,097 from the former sole
shareholder during the years ended September 30, 2009 and 2008, respectively.
During the year ended September 30, 2009, the Company received $16,996 from the
current sole shareholder. As of September 30, 2009, the former
sole stockholder has given up her advance totaling $37,961 without restriction.
The Company has recorded this as a capital contribution. As of
September 30, 2009, the Company owes $0 to the former sole stockholder and
$16,996 to the current sole stockholder.
As the
advances are non-interest bearing, the Company recorded an imputed interest of
$976, $1,426 and $3,334 for the years ended September 30, 2009 and 2008 and for
the period from August 17, 2006 (Date of Inception) though September 30, 2009,
respectively. This imputed interest is being recorded at an annualized rate of
5.65% and as an expense and a capital contribution to the Company for all
periods presented.
NOTE
5 - Preferred Stock
The
Company is authorized to issue 10,000,000 shares of preferred stock with such
designations, voting and other rights and preferences as may be determined from
time to time by the Board of Directors.
F-10
Item
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None.
Item 9A. Controls
and Procedures.
Evaluation
of our Disclosure Controls.
As of the
end of the period covered by this Annual Report on Form 10-K, our principal
executive officer and principal financial officer has evaluated the
effectiveness of our “disclosure controls and procedures” (“Disclosure
Controls”). Disclosure Controls, as defined in Rule 13a-15(e) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), are procedures that are
designed with the objective of ensuring that information required to be
disclosed in our reports filed under the Exchange Act, such as this Annual
Report, is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission’s rules and forms.
Disclosure Controls are also designed with the objective of ensuring that such
information is accumulated and communicated to our management, including the
Chief Executive Officer and Chief Financial Officer, as appropriate to allow
timely decisions regarding required disclosure. Our management, including the
Chief Executive Officer and Chief Financial Officer, does not expect that our
Disclosure Controls will prevent all error and all fraud. A 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. Further,
the design of a control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered relative to their
costs. 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. These inherent
limitations include the realities that judgments in decision-making can be
faulty, and that breakdowns can occur because of simple error or mistake. 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
design will succeed in achieving its stated goals under all potential future
conditions.
Based
upon their controls evaluation, our Chief Executive Officer and Chief Financial
Officer has concluded that our Disclosure Controls are effective at a reasonable
assurance level.
Management’s
Report of Internal Control over Financial Reporting.
A
company’s internal control over financial reporting is a process designed by, or
under the supervision of, a public company’s principal executive and principal
financial officers, or persons performing similar functions, and effected by the
board of directors, management and other personnel, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally
accepted accounting principles (“GAAP”) including those policies and procedures
that: (i) pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of the assets of
the company, (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with GAAP,
and that receipts and expenditures are being made only in accordance with
authorizations of management and directors of the company, and (iii) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the company’s assets that could have a
material effect on the financial statements.
Management
is responsible for establishing and maintaining adequate internal control over
financial reporting. Our management, with the participation of our Chief
Executive Officer and Chief Financial Officer, has assessed the effectiveness of
our internal control over financial reporting as of July 31, 2008. In making
this assessment, our management used the criteria established in Internal Control—Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO).
During
this evaluation, the Company identified a material weakness in its internal
control over financial reporting. A material weakness is a
deficiency, or combination of deficiencies, in internal control over financial
reporting such that there is a reasonable possibility that a material
misstatement of our annual or interim financial statements will not be prevented
or detected on a timely basis. The identified material weakness
consists of, as of the end of the period covered by this report, limited
resources and limited number of employees, namely the lack of an audit
committee, an understaffed financial and accounting function, and the need for
additional personnel to prepare and analyze financial information in a timely
manner and to allow review and on-going monitoring and enhancement of our
controls.
Based on
our assessment and the criteria discussed above, the Company has concluded that,
as of September 30, 2009, the Company’s internal control over financial
reporting was not effective as a result of the aforementioned material
weakness.
Notwithstanding
the material weakness in the Company’s internal control over financial reporting
and the Company’s consequently ineffective disclosure controls and procedures
discussed above, management believes that the financial statements included in
this Annual Report on Form 10-K present fairly, in all material respects, our
financial position, results of operations, and cash flows for the periods
presented in accordance with the U. S. generally accepted accounting
principles.
This
annual report does not include an attestation report of the Company’s
independent registered public accounting firm regarding internal control over
financial reporting. Management’s report was not subject to attestation by the
Company’s independent registered public accounting firm pursuant to temporary
rules of the SEC that permit the Company to provide only management’s report in
this annual report.
Changes in Internal Control
over Financial Reporting
There
were no changes in our internal control over financial reporting identified in
connection with the evaluation required by paragraph (d) of Rule 13a-15 or
15d-15 under the Exchange Act that occurred during the year
ended September 30, 2009 that have materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.
Item
9B. Other
Information.
None.
PART
III
Item
10. Directors,
Executive Officers and Corporate Governance.
Set forth
below is the name of our sole director and officer.
|
Name
|
Age
|
Position Held
|
||
|
Xiqun
Yu
|
42
|
Chief
Executive Officer, Chief Financial Officer and
Secretary
|
Mr. Xiqun
Yu serves as Chief Executive Officer, Chief Financial Officer and Secretary at
the pleasure of the board of directors.
Mr. Xiqun
Yu shall serve as our director until the next annual meeting of stockholders or
until his prior death, resignation or removal and until any successors are duly
elected and have qualified.
Directors
will be elected for one-year terms at the annual stockholders meeting.
Officers will hold their positions at the pleasure of the board of
directors, absent any employment agreement, of which none currently exists or is
contemplated. There is no arrangement or understanding between Mr. Yu and
any other person pursuant to which he was or is to be selected as a director or
officer, and there is no arrangement, plan or understanding as to whether
non-management shareholders will exercise their voting rights to continue to
elect the current director to our board. There are also no arrangements,
agreements or understandings between non-management shareholders that may
directly or indirectly participate in or influence the management of our
affairs.
Mr. Yu
and any other directors and officers hereafter appointed or elected will devote
their time to our affairs on an as needed basis, this, depending on the
circumstances, could amount to as little as two hours per month, or more than
forty hours per month, but more than likely will encompass less than five (5)
hours per month. There are no agreements or understandings for any officer
or director to resign at the request of another person, and none of the officers
or directors are acting on behalf of, or will act at the direction of, any other
person.
Mr. Yu,
age 42, is the Chairman and Chief Executive Officer of China Education
Alliance, Inc. and has held the position since the organization of its
subsidiaries in 2001. He has more than 17 years of experience in senior
management with several northern China based enterprises. He was responsible for
marketing, strategic planning and designing for many of these corporations. Mr.
Yu previously served as the Chief Executive Officer of RETONG.COM, and chairman
of Harbin Zhonghelida Technology Corporation, Heilongjiang Retong Advertising
Co., Ltd. and Heilongjiang Wantong Telecommunication Project Co., Ltd. Mr. Yu is
a member of the Council of China Harbin Advertising Association and is a
Director of the China Internet Network Association. Mr. Yu received a degree in
Business Administration from the Harbin University of Science and Technology in
1989.
Audit Committee and
Financial Expert
We do not
have an Audit Committee. Mr. Yu, the sole director, performs some of the
same functions of an Audit Committee, such as: recommending a firm of
independent certified public accountants to audit the annual financial
statements; reviewing the independent auditor’s independence, the financial
statements and their audit report; and reviewing management's administration of
the system of internal accounting controls. We do not currently have a
written audit committee charter or similar document.
We have
no financial expert. We believe the cost related to retaining a financial
expert at this time is prohibitive. Further, because we have no business
operations, management believes the services of a financial expert are not
warranted.
Code of
Ethics
A code of
ethics relates to written standards that are reasonably designed to deter
wrongdoing and to promote:
|
1.
|
Honest
and ethical conduct, including the ethical handling of actual or apparent
conflicts of interest between personal and
professional relationships;
|
|
2.
|
Full,
fair, accurate, timely and understandable
disclosure in reports and documents that are filed
with, or submitted to, the Commission and in other
public communications made by an
issuer;
|
|
3.
|
Compliance
with applicable governmental laws, rules and
regulations;
|
|
4.
|
The
prompt internal reporting of violations of the
code to an appropriate person or persons
identified in the code;
and
|
|
5.
|
Accountability
for adherence to the code.
|
We have
not adopted a corporate code of ethics that applies to our principal executive
officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions
The
decision to not adopt such a code of ethics resulted from the Company having
only one officer and one director, who is the same person, thus eliminating the
need for such a code.
Nominating
Committee
We do not
have a Nominating Committee or Nominating Committee Charter. Mr. Xiqun Yu,
our sole director, performs some of the functions associated with a Nominating
Committee. We have elected not to have a Nominating Committee in that we
are a development stage company with limited operations and
resources.
Indemnification of Officers
and Directors
Our
By-Laws provide for the indemnification of our directors, officers, employees,
and agents, under certain circumstances, against attorneys fees and other
expenses incurred by them in any litigation to which they become a party arising
from their association with or activities on behalf of the Company. We
will also bear the expenses of such litigation for any of our directors,
officers, employees, or agents, upon such persons promise to repay us therefore
if it is ultimately determined that any such person shall not have been entitled
to indemnification. This indemnification policy could result in
substantial expenditure by the Company, which we may be unable to
recoup.
Conflicts of
Interest
Mr. Yu
will only devote a small portion of his time to affairs of the Company.
There will be occasions when the time requirements of our business
conflict with the demands of his other business and investment activities.
Such conflicts may require that we attempt to employ additional personnel.
There is no assurance that the services of such persons will be available
or that they can be obtained upon terms favorable to us.
The
officers, directors and principal shareholders of the Company may actively
negotiate for the purchase of a portion of their common stock as a condition to,
or in connection with, a proposed merger or acquisition transaction. It is
anticipated that a substantial premium may be paid by the purchaser in
conjunction with any sale of shares by our officer, director and principal
shareholder made as a condition to, or in connection with, a proposed merger or
acquisition transaction. The fact that a substantial premium may be paid
to our management to acquire his shares creates a conflict of interest for him
and may compromise their state law a fiduciary duty to our other shareholders.
In making any such sale, members of our management may consider their own
personal pecuniary benefit rather than the best
interests of the Company and our other
shareholders, and the other shareholders are not expected to be afforded the
opportunity to approve or consent to any
particular buy-out transaction involving shares held by
members of our management.
It is not
currently anticipated that any salary, consulting fee, or finders fee shall be
paid to any of our directors or executive officers, or to any other
affiliate of the Company. Although management has no current
plans to cause the Company to do so, it is possible that we will enter
into an agreement with an acquisition candidate requiring
the sale of all or a portion of the common stock held by our current
stockholder to the acquisition candidate or principals thereof, or to
other individuals or business entities, or requiring some other form of payment
to our current stockholder, or requiring the future employment of
specified officers and payment of salaries to them. It is more likely than not
that any sale of securities by our current stockholder to an acquisition
candidate would be at a price substantially higher than that originally paid by
such stockholder. Any payment to our current stockholder in the context of an
acquisition involving the Company would be determined entirely by the largely
unforeseeable terms of a future agreement with an unidentified business
entity.
Compliance with Section
16(a) of the Securities Exchange Act of 1934
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our executive
officers and directors, and persons who beneficially own more than 10% of our
equity securities, to file reports of ownership and changes in ownership with
the Securities and Exchange Commission. Officers, directors and greater
than 10% shareholders are required by Commission regulation to furnish us with
copies of all Section 16(a) forms they file.
Based
solely on our review of the copies of such reports received by us and on written
representations by our officers and directors regarding their compliance with
the applicable reporting requirements under Section 16(a) of the Exchange Act,
we believe that, other than our ex-officer and director, Ms. Mary Passalaqua’s
failure to file a Form 4 regarding the disposition of her shares in
the Company to Mr. Xiqun Yu, with respect to the fiscal year ended September 30,
2009, our officer and director, and all of the persons known to us to own more
than 10% of our common stock, filed all required reports on a timely
basis.
Item
11.
Executive Compensation.
On
December 8, 2008, we appointed Mr. Xiqun Yu as our new Chief Executive Officer,
Chief Financial Officer and sole director pursuant to a written consent of
directors.
Also
on December 8, 2008, Ms. Mary Passalaqua resigned with immediate
effect as the our President, Secretary, and director.
No
officer or director has received any compensation from the Company since our
inception, and we are not accruing any compensation. Until we acquire
additional capital, it is not anticipated that any officer or director will
receive compensation from the Company other than reimbursement for out-of-pocket
expenses incurred on our behalf.
We have
no stock option, retirement, pension, insurance program or profit sharing
programs or other similar programs for the benefit of directors, officers or
other employees, but the board of directors may recommend adoption of one or
more such programs in the future.
Employment
Agreements
We have
not entered into any employment agreements with executive officers or other
employees to date.
Item
12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
The
following table sets forth each person
known by the Company to be the beneficial owner of five
percent or more of the common stock of the Company and the
sole director and officer of the Company. Each such person has
sole voting and investment power with respect to the shares shown.
|
Name and Address of Beneficial Owner
|
Amount of Beneficial Ownership
|
Percentage of Class
|
||||||
|
Xiqun
Yu
58
Heng Shan Road, Kun Lun Shopping Mall, Harbin, The People’s Republic of
China 150090
|
1,000,000 | (1) | 100 | % | ||||
|
All
executive officers and directors as a group
|
1,000,000 | (1) | 100 | % | ||||
|
(1)
|
Mr.
Xiqun Yu was appointed our Chief Executive Officer, Chief Financial
Officer, Secretary and director on December 8,
2008. Also on December 8, 2008, Mr. Xiqun Yu entered into and
closed on a Common Stock Purchase Agreement with the Company and Ms. Mary
Passalaqua to purchase from Ms. Passalaqua 1,000,000 shares of common
stock of the Company, being all the issued and outstanding shares of
common stock of the Company.
|
Item
13. Certain Relationships and Related Transactions, and Director
Independence.
On
December 8, 2008, Mr. Xiqun Yu entered into a Common Stock Purchase Agreement to
purchase 1,000,000 shares of common stock of the Company from Ms. Mary
Passalaqua for a purchase consideration of $25,000. The
transaction closed on December 8, 2008. We relied upon Section 4(2) of the
Securities Act of 1933, as amended, for an exemption from registration of these
shares and no underwriter was used in this transaction. Because of this
transaction, Mr. Xiqun Yu became our controlling and sole shareholder, owning
all the issued and outstanding shares of our common stock.
Additionally, Mr. Xiqun Yu was also appointed our sole director and Chief
Executive Officer, Chief Financial Officer and Secretary.
It is the
Commission’s position that securities issued by a "shell" company such as us
cannot be sold under the exemption from registration provided by Rule 144
promulgated under the Securities Act of 1933 (the "Act"), but must be
registered under the Securities Act of 1933. Accordingly, the securities sold to
Mr. Xiqun Yu. will be registered under the Act prior to resale. Any other
securities issued to individuals in the capacity of management, affiliates,
control persons and promoters will also be registered with the Commission prior
to resale and shall be issued with appropriate restricted legend to reflect the
registration requirements.
Item
14. Principal Accounting Fees and Services.
Audit and
Non-Audit Fees
The
following table sets forth the fees billed to us for the fiscal year ended
December 31, 2007 by our outside auditor:
|
Fiscal Year Ended
|
Fiscal Year Ended
|
|||||||
|
September 30, 2009
|
September 30, 2008
|
|||||||
|
Audit
Fees
|
$ | 3,000 | $ | 2,000 | ||||
|
Audit
Related Taxes
|
$ | - | $ | - | ||||
|
Tax
Fees
|
$ | - | $ | - | ||||
|
Other
Fees
|
$ | - | $ | - | ||||
Under
the Sarbanes-Oxley Act of 2002, all audit and non-audit services performed by
our independent accountants must now be approved in advance by our Audit
Committee to assure that such services do not impair our accountants'
independence. Since we do not have an Audit Committee, the function of the Audit
Committee is carried out by our board of directors, which presently comprises
Mr. Xiqun Yu.
PART
IV
Item
15.
Exhibits, Financial
Statement Schedules
|
Exhibit No.
|
Description
|
|
|
3.1
|
Certificate
of Incorporation, as filed with the Delaware Secretary of State on August
17, 2006.*
|
|
|
3.2
|
By-Laws.*
|
|
| 10.1 | Common Stock Purchase Agreement dated December 8, 2008 entered into between the Company, Mr. Xiqun Yu and Mary Passalaqua.** | |
|
31.1
|
Certification
of the Principal Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.***
|
|
|
31.2
|
Certification
of the Principal Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.***
|
|
|
32.1
|
Certification
of the Principal Executive Officer pursuant to U.S.C. Section 1350 as
adopted pursuant to Section 906 of the Sarbanes -Oxley Act of
2002.***
|
|
|
32.2
|
Certification
of the Principal Financial Officer pursuant to U.S.C. Section
1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.***
|
*Filed as
an exhibit to the Company's Registration Statement on Form 10-SB, as filed with
the Securities and Exchange Commission on October 31, 2006, and incorporated
herein by this reference.
** Filed
as an exhibit to the Company’s Current Report on Form 8-K on December 9,
2008.
*** The
Exhibits attached to this Form 10-K shall not be deemed "filed" for purposes of
Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or
otherwise subject to liability under that section, nor shall it be deemed
incorporated by reference in any filing under the Securities Act of 1933, as
amended, or the Exchange Act, except as expressly set forth by specific
reference in such filing.
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) 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.
|
TIA
II, INC.
|
|
/s/ Xiqun Yun
|
|
By:
Xiqun Yu
|
|
Title:
Chief Executive Officer, Chief Financial Officer and
Secretary
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
|
/s/ Xiqun Yun
|
|
By:
Xiqun Yu
|
|
Title:
Chief Executive Officer, Chief Financial Officer,
Secretary
and a director
|