UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________
FORM 10-Q
_____________________________
(Mark One)
x | Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended June 30, 2007
o | Transition report under Section 13 or 15(d) of the Exchange Act |
For the transition period from _____________ to _____________
Commission File Number 000-51431
Chardan North China Acquisition Corporation
(Exact name of registrant as specified in is charter)
Delaware | 20-2479743 |
(State or other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
625 Broadway, Suite 1111, San Diego, California 92101 (Address of principal executive offices) | |
(619) 795-4627 (Registrant’s telephone number, including area code) | |
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition. of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o Accelerated filer o Non-accelerated filer x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x No o
As of August 1, 2007, 7,000,000 shares of common stock, par value $.0001 per share, were issued and outstanding.
CHARDAN NORTH CHINA ACQUISITION CORPORATION
FORM 10-Q
INDEX
Part I | Financial Information: | |
Item 1 | Financial Statements (Unaudited): | |
Balance Sheet | F-1 | |
Statements of Operations | F-2 | |
Statement of Stockholders’ Equity | F-3 | |
Statement of Cash Flows | F-4 | |
Notes to Financial Statements | 3-6 | |
Item 2 | Management's Discussion and Analysis of Financial Condition and Results of Operations | 6 |
Item 3 | Quantitative and Qualitative Disclosures About Market Risk | 8 |
Item 4 | Controls and Procedures | 8 |
Part II | Other Information | |
Item 1A | Risk Factors | 9 |
Item 6 | Exhibits | 9 |
Signatures | 10 |
2
Chardan North China Acquisition Corporation | |||||||
(A Development Stage Company) | |||||||
Condensed Balance Sheets |
June 30, 2007 | December 31, 2006 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | - | $ | 529 | |||
Investments held in trust | 31,822,482 | 31,294,931 | |||||
Prepaid expenses and other | 16,170 | 25,768 | |||||
Total current assets | 31,838,652 | 31,321,228 | |||||
Long term deferred tax asset | 296,534 | 292,188 | |||||
Total Assets | $ | 32,135,186 | $ | 31,613,416 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable and accrued liabilities | $ | 972,303 | $ | 507,871 | |||
Income taxes payable | 255,325 | 203,955 | |||||
Notes payable, related parties | 162,204 | 107,500 | |||||
Deferred interest | 398,563 | 293,106 | |||||
Total current liabilities | 1,788,395 | 1,112,432 | |||||
Commitments | |||||||
Common stock subject to possible conversion | 5,964,017 | 5,964,017 | |||||
1,149,425 shares at conversion value | |||||||
Stockholders' equity: | |||||||
Preferred stock, $.0001 par value, 1,000,000 | - | - | |||||
shares authorized, none issued | |||||||
Common stock, $.0001 par value: 20,000,000 | 700 | 700 | |||||
shares authorized, 7,000,000 shares issued and outstanding | |||||||
(includes 1,149,425 shares subject to possible conversion) | |||||||
Additional paid-in capital | 25,006,126 | 25,006,126 | |||||
Deficit accumulated during the development stage | (624,052 | ) | (469,859 | ) | |||
Total stockholders' equity | 24,382,774 | 24,536,967 | |||||
Total Liabilities and Stockholders' Equity | $ | 32,135,186 | $ | 31,613,416 |
See the accompanying notes to the condensed financial statements
F-1
Chardan North China Acquisition Corporation | ||||||
(A Development Stage Company) | ||||||
Condensed Statements of Operations |
From | ||||||||||||||||
Three | Three | Six | Six | March 10, 2005 | ||||||||||||
Months | Months | Months | Months | (Inception) | ||||||||||||
Ended | Ended | Ended | Ended | Through | ||||||||||||
June 30, 2007 | June 30, 2006 | June 30, 2007 | June 30, 2006 | June 30, 2007 | ||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||
Costs and Expenses | ||||||||||||||||
Admin and office support | 22,500 | 22,500 | 45,000 | 45,000 | 172,500 | |||||||||||
Consulting | - | - | - | - | 66,700 | |||||||||||
Insurance | 16,888 | 17,500 | 39,374 | 35,000 | 131,861 | |||||||||||
Marketing fees | 18,115 | 30,347 | 50,212 | 55,183 | 169,977 | |||||||||||
Professional fees | 171,049 | 166,827 | 331,887 | 360,218 | 1,003,317 | |||||||||||
State franchise tax | 9,928 | 5,875 | 13,100 | 11,750 | 60,876 | |||||||||||
Travel | 5,637 | 77,513 | 12,862 | 163,683 | 355,386 | |||||||||||
Other operating costs | 8,948 | 12,117 | 17,892 | 36,607 | 102,537 | |||||||||||
Total costs and expenses | 253,065 | 332,679 | 510,327 | 707,441 | 2,063,154 | |||||||||||
Operating loss | (253,065 | ) | (332,679 | ) | (510,327 | ) | (707,441 | ) | (2,063,154 | ) | ||||||
Other income (expense): | ||||||||||||||||
Interest income | 218,153 | 173,878 | 422,094 | 419,229 | 1,600,394 | |||||||||||
Other income | - | - | 35,000 | - | 35,000 | |||||||||||
Interest expense | (7,915 | ) | - | (10,459 | ) | - | (12,224 | ) | ||||||||
Penalties - income tax | (43,477 | ) | - | (43,477 | ) | - | (43,477 | ) | ||||||||
Net loss before income tax provision | (86,304 | ) | (158,801 | ) | (107,169 | ) | (288,212 | ) | (483,461 | ) | ||||||
Income tax (expense) benefit | (23,225 | ) | 42,875 | (47,024 | ) | 59,288 | (140,591 | ) | ||||||||
Net loss | $ | (109,529 | ) | $ | (115,926 | ) | $ | (154,193 | ) | $ | (228,924 | ) | $ | (624,052 | ) | |
Loss per share - basic and diluted | (0.02 | ) | (0.02 | ) | (0.02 | ) | (0.03 | ) | (0.10 | ) | ||||||
Weighted average shares outstanding - basic and diluted | 7,000,000 | 7,000,000 | 7,000,000 | 7,000,000 | 6,016,627 |
See the accompanying notes to the condensed financial statements
F-2
Chardan North China Acquisition Corporation | ||||||
(A Development Stage Company) | ||||||
Condensed Statements of Changes in Stockholders' Equity |
Additional | Stockholders' | |||||||||||||||
Common | Paid - In | Accumulated | Equity | |||||||||||||
Shares | Amount | Capital | (Deficit) | (Deficit) | ||||||||||||
Issuance of common shares to initial shareholders on March 10, 2005 | 1,250,000 | $ | 125 | $ | 24,875 | $ | - | $ | 25,000 | |||||||
at $0.02 per share | ||||||||||||||||
Sale of 5,750,000 units, net of underwriters' discount and offering expenses | 5,750,000 | 575 | 30,945,168 | - | 30,945,743 | |||||||||||
(includes 1,149,425 shares subject to possible conversion) | - | |||||||||||||||
Proceeds subject to possible conversion of 1,149,425 shares | - | - | (5,964,017 | ) | - | (5,964,017 | ) | |||||||||
Proceeds from issuance of an underwriter's option | - | - | 100 | - | 100 | |||||||||||
Loss for the twelve monts ended December 31, 2005 | - | - | - | (101,742 | ) | (101,742 | ) | |||||||||
Balance at December 31, 2005 | 7,000,000 | $ | 700 | $ | 25,006,126 | $ | (101,742 | ) | $ | 24,905,084 | ||||||
Loss for the twelve months ended December 31, 2006 | (368,117 | ) | (368,117 | ) | ||||||||||||
Balance at December 31, 2006 | 7,000,000 | $ | 700 | $ | 25,006,126 | $ | (469,859 | ) | $ | 24,536,967 | ||||||
Unaudited: | ||||||||||||||||
Loss for the six months ended June 30, 2007 | (154,193 | ) | (154,193 | ) | ||||||||||||
Balance at June 30, 2007 | 7,000,000 | $ | 700 | $ | 25,006,126 | $ | (624,052 | ) | $ | 24,382,774 |
See the accompanying notes to the condensed financial statements
F-3
Chardan North China Acquisition Corporation | ||||
(A Development Stage Company) | ||||
Condensed Statement of Cash Flows |
From | ||||||||||
Six | Six | March 10, 2005 | ||||||||
Months | Months | (Inception) | ||||||||
Ended | Ended | Through | ||||||||
June 30, 2007 | June 30, 2006 | June 30, 2007 | ||||||||
(Unaudited) | (Unaudited) | (Unaudited) | ||||||||
Cash Flows from Operating Activities: | ||||||||||
Net loss | $ | (154,193 | ) | $ | (228,924 | ) | $ | (624,052 | ) | |
Adjustments to reconcile net loss to net cash | ||||||||||
used in operating activities: | ||||||||||
Amortization of discounts and interest earned on securities held in trust | (527,551 | ) | (520,132 | ) | (1,987,481 | ) | ||||
Changes in operating Assets and Liabilities: | ||||||||||
Prepaid expenses and other current assets | 9,598 | 42,500 | (6,001 | ) | ||||||
Cash received on interest bearing accounts | (3,070 | ) | (3,070 | ) | ||||||
Deferred tax asset | (4,346 | ) | (274,469 | ) | (296,534 | ) | ||||
Accounts payable and accrued liabilities | 464,431 | 35,908 | 972,303 | |||||||
Income taxes payable | 51,370 | 33,381 | 255,325 | |||||||
Deferred interest | 105,458 | 103,974 | 398,563 | |||||||
Net cash used by operating activities | (55,233 | ) | (810,832 | ) | (1,290,947 | ) | ||||
Cash Flows from Investing Activities: | ||||||||||
Cash received on interest bearing accounts | 3,070 | 3,070 | ||||||||
Purchases of investments held in trust | - | - | (29,835,000 | ) | ||||||
Net cash used by investing activities | - | 3,070 | (29,831,930 | ) | ||||||
Cash Flows from Financing Activities | ||||||||||
Proceeds from related party loans | 54,704 | - | 162,204 | |||||||
Proceeds from issuance of common stock | - | - | 34,525,000 | |||||||
Proceeds from issuance of option | - | - | 100 | |||||||
Payment of costs associated with public offering | - | - | (3,554,257 | ) | ||||||
Advance to affiliate | - | - | (10,170 | ) | ||||||
Net cash provided by financing activities | 54,704 | - | 31,122,877 | |||||||
Net increase in cash and cash equivalents | (529 | ) | (807,762 | ) | - | |||||
Cash and cash equivalents, beginning of the period | 529 | 856,380 | - | |||||||
Cash and cash equivalents, end of the period | $ | - | $ | 48,618 | $ | - | ||||
Cash paid for taxes | $ | - | $ | 181,800 | $ | 181,800 | ||||
Cash paid for interest | $ | - | $ | - | $ | - |
See the accompanying notes to the condensed financial statements
F-4
CHARDAN NORTH CHINA ACQUISITION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
FOR THE THREE MONTHS ENDED MARCH 31, 2007
1. SUMMARY OF ORGANIZATION AND BASIS OF PRESENTATION
Business and Organization - Chardan North China Acquisition Corp. (Chardan North) was incorporated in Delaware on March 10, 2005 as a blank check company whose objective is to acquire an operating business that has its primary operating facilities in the Peoples Republic of China in any city or province north of the Yangtze River.
Effective July 14, 2005, the Company's Board of Directors and Initial Stockholders authorized an amendment to the Company's Certificate of Incorporation to change the Company's name from Chardan China Acquisition Corp. II to Chardan North China Acquisition Corporation.
In August 2005, Chardan North commenced its efforts to locate a company with which to effect a business combination. After signing a definitive agreement for the acquisition of a target business, such transaction will be submitted for stockholder approval. In the event that stockholders owning 20% or more of the outstanding stock excluding, for this purpose, those persons who were stockholders prior to the Offering, vote against the Business Combination and exercise their conversion rights described below, the Business Combination will not be consummated. All of the Company's stockholders prior to the Initial Public Offering, including all of the officers and directors of the Company ("Initial Stockholders"), have agreed to vote their 1,250,000 founding shares of common stock in accordance with the vote of the majority in interest of all other stockholders of the Company ("Public Stockholders") with respect to the Business Combination. After consummation of the Business Combination, all of these voting safeguards will no longer be applicable. With respect to a Business Combination which is approved and consummated, any Public Stockholder who voted against the Business Combination may demand that the Company convert his or her shares. The per share conversion price will equal the amount in the Trust Fund as of the record date for determination of stockholders entitled to vote on the Business Combination divided by the number of shares of common stock held by Public Stockholders at the consummation of the Offering. Accordingly, Public Stockholders holding 19.99% of the aggregate number of shares owned by all Public Stockholders may seek conversion of their shares in the event of a Business Combination.
Such Public Stockholders are entitled to receive their per share interest in the Trust Fund computed without regard to the shares held by Initial Stockholders. Accordingly, a portion of the net proceeds from the offering (19.99% of the amount originally held in the Trust Fund) has been classified as common stock subject to possible conversion in the accompanying balance sheet and 19.99% of the related interest earned on the investments held in the Trust Fund has been recorded as deferred interest.
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Item 310(b) of Regulation S-K. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the six-month period ended June 30, 2007 are not necessarily indicative of the results that may be expected for the year ending December 31, 2007. For further information, refer to the consolidated financial statements and footnotes thereto for the year ended December 31, 2006, included in Form 10-KSB filed with the Securities and Exchange Commission. The condensed balance sheet at December 31, 2006 presented here has been derived from the audited financial statements.
3
Reclassifications - Certain reclassifications have been made in the prior period financial statements for presentation purposes to conform to the current presentation.
Accounting Pronouncements:
Effective January 1, 2007, the Company adopted the provisions of FASB Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes — An Interpretation of FASB Statement No. 109.” FIN 48 provides detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the financial statements in accordance with SFAS No. 109. Tax positions must meet a “more-likely-than-not” recognition threshold at the effective date to be recognized upon the adoption of FIN 48 and in subsequent periods. Upon the adoption of FIN 48, the Company had no unrecognized tax benefits. During the first six months of 2007, the Company recognized no adjustments for uncertain tax benefits.
The Company recognizes interest and penalties, if any, related to uncertain tax positions in selling, general and administrative expenses. No interest and penalties related to uncertain tax positions were accrued at June 30, 2007.
The tax years 2005 and 2006 remain open to examination by the major taxing jurisdictions in which the Company operates. The Company expects no material changes to unrecognized tax positions within the next twelve months.
Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.
2. GOING CONCERN
These financial statements have been prepared assuming that the Company will continue as a going concern. The Company’s Certificate of Incorporation provides for mandatory liquidation of the Company, without stockholder approval, in the event that the Company does not consummate a Business Combination prior to November 10, 2007. This raises substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that may result from the outcome of this uncertainty.
3. RELATED PARTY TRANSACTIONS
Commencing on August 2, 2005 and ending upon the acquisition of a target business, the Company incurs an administrative fee of $7,500 per month from Chardan Capital, LLC, a company managed and partially owned by the Company's Chairman of the Board. The fee includes the provision of office space and certain office and secretarial services. The statements of operations for the three-month period ended June, 2007 and 2006 each include $22,500 of such fees and the statements of operations for the six-month periods ended June 30, 2007 and 2006 each include $45,000 for such fees.
4
In May 2005 the Company made a non-interest bearing advance of $10,170 to an affiliate, which is included in prepaid expenses and other current assets on the accompanying balance sheet. This amount is due on demand, and is expected to be repaid in the current fiscal year.
4. NOTES PAYABLE - RELATED PARTIES
Notes payable - related parties consists of the following as of June 30, 2007:
Unsecured demand notes payable - shareholder notes bearing an annual interest rate of 8% due on various dates during 2007 and 2008. | $ | 162,204 |
5. MATERIAL AGREEMENTS
On February 9, 2007, the Company entered into an Amended and Restated Stock Purchase Agreement (the “Stock Purchase Agreement”) which incorporates all previous amendments to the stock purchase agreement dated as of February 2, 2006, for the acquisition of Gifted Time, which is a holding company owning controlling interests in two Chinese companies (Beijing HollySys and Hangzhou HollySys) engaged in the production and sale of industrial automation and control systems (“HollySys”). Upon completion of the transaction and the expected exchange offer by HLS to holders of Gifted Time preferred stock, assuming full participation in that exchange offer, the Company will own 74.11% and 89.64%, respectively, of the two companies.
The Stock Purchase Agreement provides for the Company to form a wholly owned subsidiary under the laws of the British Virgin Islands, under the name “HLS Systems International Limited” (“HLS”). At the time of closing of the Stock Purchase Agreement, the Company will merge with and into HLS for the purpose of redomestication out of the United States. Simultaneously with the redomestication merger, HLS will acquire all of the issued and outstanding common stock of Gifted Time Holdings Limited (“Gifted Time”), a British Virgin Islands company that holds a controlling interest in HollySys pursuant to existing stock consignment agreements dated December 30, 2005, and share transfer agreements dated January 12, 2006 between Gifted Time and certain stockholders of HollySys. The common stock of Gifted Time will be acquired for 22,200,000 shares of common stock of HLS equal to 73% of the total issued and outstanding common stock of the post-transaction company, and cash consideration of $30,000,000. A variable portion of the cash consideration will be deferred, ranging from $3,000,000 to $7,000,000, depending on the number of shares that the Company shareholders redeem, if any, in the process of approving the transaction. The amount of the cash payment that will be deferred will be determined at closing and will equal the sum of $3,000,000 plus two-thirds of the difference between the funds in the trust account (following the exercise of any conversion rights by the Company stockholders) and $30,000,000. The deferred portion of the cash purchase price is not payable until HLS generates positive cash flow of at least twice the deferred amount or HLS receives at least $60 million of additional financing.
5
As additional consideration, participating parties will be entitled to receive, on an all or none basis each year, an additional 2,000,000 shares for each of the next four fiscal years and an additional 3,000,000 shares for the fifth fiscal year beginning with the year ending December 31, 2007 if HollySys achieves the following operating after-tax profits:
Year Ending December 31 | After-Tax Profit | |||
2007 | $ | 23,000,000 | ||
2008 | $ | 32,000,000 | ||
2009 | $ | 43,000,000 | ||
2010 | $ | 61,000,000 | ||
2011 | $ | 71,000,000 |
HLS intends to offer to exchange 1.3 million shares of its common stock for the outstanding shares of the preferred stock of Gifted Time.
The following discussion should be read in conjunction with the Company’s Consolidated Financial Statements and footnotes thereto contained in this report.
Forward Looking Statements
The statements discussed in this Report include forward looking statements that involve risks and uncertainties detailed from time to time in the Company’s reports filed with the Securities and Exchange Commission. Please refer to our Annual Report on Form 10-KSB for a discussion of the risks related to our business.
We were formed on March 10, 2005, to serve as a vehicle to effect a merger, capital stock exchange, asset acquisition or other similar business combination with an operating business that has its primary operating facilities located in the People’s Republic of China in any city or province north of the Yangtze River. We consummated our initial public offering on August 10, 2005. All activity from March 10, 2005 through August 10, 2005 related to our formation and our initial public offering.
We will utilize the cash derived from the proceeds of our completed public offering, our capital stock, debt or a combination of cash, capital stock and debt, in effecting a business combination.
Recent Developments
We entered into an agreement to acquire all of the issued and outstanding common stock of Gifted Time on February 2, 2006. As a result, we had until August 10, 2007 to complete a business combination before being required to commence dissolution of the Company. Our board of directors had determined that it was at least possible that we would not be able to complete the business combination with Gifted Time by that date. For that reason, we conducted a special meeting of our stockholders on August 7, 2007 for the purpose of, among other things, amending our certificate of incorporation to extend the time by which we must conclude a business combination until November 10, 2007. That proposition was approved by our stockholders and our charter documents have been amended to reflect that extension. As a result, we now have until November 10, 2007 to conclude our transaction with Gifted Time. If we are unable to do so within that time, we do not believe it is possible either to extend the time further or to conclude a different transaction within that time.
6
On August 9, 2007, the SEC declared our registration statement on Form S-4 effective. That form contains the proxy materials to be used to conduct a shareholder vote on the Gifted Time Holdings transaction, among other things. That special meeting has been scheduled for September 7, 2007, and owners of record of our stock as of August 10, 2007 will be entitled to vote at that meeting.
Additional information regarding the proposals on which our stockholders voted and the reasons for the vote is available from our definitive proxy materials filed with the Commission on Form DEF 14 A on July 20, 2007.
Financial Performance.
We had a net loss of $109,529 for the three months ended June 30, 2007. Expenses were $253,065, consisting principally of $5,637 of travel expenses, $22,500 for a monthly administrative services agreement, $16,888 for directors and officers liability insurance, state franchise taxes of $9,928, $171,049 for professional fees and $8,948 for other operating costs, together with an income tax provision of $23,225, offset by interest income on the trust fund investments in the amount of $218,153.
The loss for the quarter ending June 30, 2007 compares with a net loss of $115,798 for the same period in 2006. The principal difference in operating costs and expenses between the two periods was travel expense, which declined from more than $77,000 to the $5,637 noted in the preceding paragraph. That decrease in travel was due to the fact that the terms of the agreement governing the transaction with Gifted Time Holdings had been finalized, eliminating the need for travel to identify a target business, conduct due diligence and negotiate the terms of the transaction. Significant changes in non-operating items between the two periods included an increase in interest income of about $45,000. In addition, we recorded an income tax provision of about $23,000 for the three-month period ending June 30, 2007 compared with an income tax benefit of approximately $43,000 for the same period in 2006, resulting in a net change of approximately $66,000 for the quarter ending June 30, 2007.
During the six months ended June 30, 2007, our net loss was $154,193. Expenses were $510,327, consisting principally of $12,862 of travel expenses, $45,000 for a monthly administrative services agreement, $39,374 for directors and officers liability insurance, state franchise taxes of $13,100, $331,887 for professional fees and $27,892 for other operating costs, together with an income tax provision of $47,024, offset by interest income on the trust fund investments in the amount of $422,094.
During the comparable period a year ago we had a net loss of $228,924, a difference of about $75,000. The greater loss for the first half of 2006 was the result of our having incurred about $105,000 more in travel expenses in 2006, as well as about $30,000 more in professional fees. Significant differences in non-operating items included an income tax provision of $47,204 for the six months ending June 30, 2007 versus an income tax benefit of $59,288 for the same period in 2006, a change of about $106,000, and other income of $35,000 for the 2007 period versus none for 2006.
7
We have used all of the net proceeds of our initial public offering to acquire a target business, including identifying and evaluating prospective acquisition candidates, selecting the target business and structuring, negotiating and consummating the business combination. As a result, we do not have any funds from our public offering remaining outside of the trust fund to operate through the consummation of the proposed business combination with Gifted Time Holdings. We have acquired the additional operating capital needed to effect a business combination through borrowing, and we intend to continue to do so, some or all of which may be borrowing from our officers and directors of their affiliates.
We do not expect to raise additional funds to consummate the business combination with Gifted Time Holdings, as the current agreement calls only for stock consideration plus an amount of cash consideration that can be satisfied from the funds we have in our trust account.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Pursuant to the instructions for Item 305(c) of Regulation S-K, this item is not applicable to us for interim periods of this fiscal year.
ITEM 4. CONTROLS AND PROCEDURES.
An evaluation of the effectiveness of our disclosure controls and procedures as of June 30, 2007 was made under the supervision and with the participation of our management, including our chief executive officer and our chief financial officer. Based on that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective as of the end of the period covered by this report. During the most recently completed fiscal quarter, there has been no significant change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
8
There have been no material changes to the risk factors disclosed in our most recent Annual Report on Form 10-KSB.
ITEM 6. EXHIBITS.
(a) | Exhibits: |
3.1 - Certificate of Incorporation*
3.1(a) - Amendment to Certificate of Incorporation*
3.1(b) - Amendment to Certificate of Incorporation**
3.2 - Bylaws*
31.1 - Rule 13a-14(a) Certification by CEO
31.2 - Rule 13a-14(a) Certification by CFO
32.1 - Section 1350 Certification by CEO
32.2 - Section 1350 Certification by CFO
* | Incorporated by reference from the registration statement on Form S-1 (Reg. No. 333-132826) |
** | Incorporated by reference from the Current Report on Form 8-K filed August 10, 2007 |
9
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: August 14, 2007 | CHARDAN NORTH CHINA ACQUISITION CORPORATION | |
| | |
By: | /s/ Li Zhang | |
Li Zhang Chief Executive Officer (Principal Executive Officer) |
By: | /s/ Kerry Propper | |
Kerry Propper Chief Financial Officer and Secretary (Principal Accounting and Financial Officer) |
10