DALIAN CAPITAL GROUP, INC.
FORM 10-K
(Annual Report)
Filed 03/22/2012for the Fiscal Year Ended 12/31/11
Address
900 – 850 West Hastings Street
Vancouver, BC V6C 1E1
Canada
Telephone
604-801-5022
Fiscal Year
12/31
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 December 31, 2011.
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from __________ to ___________
Commission File Number: 000-52185
Dalian Capital Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware
N/A
(State or other jurisdiction
(IRS Employer
of incorporation or organization)
Identification No.)
900 - 850 West Hastings Street,
Vancouver, BC, Canada V6C 1E1
(Address of principal executive offices,
including zip code)
604-801-5022
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b)
of the Act: None
Securities registered pursuant to Section 12(g)
of the Act: Common Stock, $0.0001 par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ( ) No ( X )
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ( ) No ( X )
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
Page2 of31
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 ( )
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 submittedand 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). Yes ( ) No ( )
Indicate by check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ( X )
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a not-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 ( ) Smaller reporting company ( X )
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes ( X ) No ( )
The aggregate market value of the voting and non-voting common equity held by non-affiliates as of issuer cannot be determined as the shares are not quoted in any exchange.
At March 22, 2012 the Company had issued and outstanding of 1,390,000 shares of Common Stock, $0.0001 par value per share.
Page3 of31
DALIAN CAPITAL GROUP, INC.
FORM 10-K
For the Fiscal Year Ended December 31, 2011
TABLE OF CONTENTS
PART I
Page
Item 1
Business
5 - 6
Item 1A
Risk Factors
6
Item 1B
Unresolved Staff Comments
6
Item 2
Properties
7
Item 3
Legal Proceedings
7
Item 4
Submission of Matters to a Vote of
7
Security Holders
PART II
Item 5
Market for Registrant’s Common Equity, Related
Stockholder Matters and Issuer Purchases of
Equity Securities
7
Item 6
Selected Financial Data
8
Item 7
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
8 - 9
Item 7A
Quantitative and Qualitative Disclosures About
Market Risk
9
Item 8
Financial Statements and Supplementary Data
11 - 21
Item 9
Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
22
Item 9A
Controls and Procedures
22
Item 9B
Other Information
23
PART III
Item 10
Directors, Executive Officers and Corporate Governance
23 - 24
Item 11
Executive Compensation
24
Item 12
Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
24
Item 13
Certain Relationships and Related Transactions, and
Director Independence
24
Item 14
Principal Accounting Fees and Services
24
PART IV
Item 15
Exhibits, Financial Statement Schedules
Signatures 24 - 31
Page4 of31
PART I
This Annual Report on Form 10-K contains forward-looking statements that have been made pursuant to the provisions of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995 and concern matters that involve risks and uncertainties that could cause actual results to differ materially from historical results or from those projected in the forward-looking statements. Discussions containing forward-looking statements may be found in the material set forth under “Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in other sections of this Form 10-K. Words such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue” or similar words are intended to identify forward-looking statements, although not all forward-looking statements contain these words. Although we believe that our opinions and expectations reflected in the forward-looking statements are reasonable as of the date of this Report, we cannot guarantee future results, levels of activity, performance or achievements, and our actual results may differ substantially from the views and expectations set forth in this Annual Report on Form 10-K. We expressly disclaim any intent or obligation to update any forward-looking statements after the date hereof to conform such statements to actual results or to changes in our opinions or expectations.
Readers should carefully review and consider the various disclosures made by us in this Report, set forth in detail in Part I, under the heading “Risk Factors,” as well as those additional risks described in other documents we file from time to time with the Securities and Exchange Commission, which attempt to advise interested parties of the risks, uncertainties, and other factors that affect our business. We undertake no obligation to publicly release the results of any revisions to any forward-looking statements to reflect anticipated or unanticipated events or circumstances occurring after the date of such statements.
Item 1. Description of Business
General Description and Development of Business
Dalian Capital Group, Inc. (the “Company”) was incorporated in the State of Delaware on May 31, 2006. Since inception, the Company has been engaged in organizational efforts in obtaining initial financing. The Company was formed as a vehicle to pursue a business combination and has made efforts to identify a possible business combination. We are a start-up, Development Stage Corporation and have not yet generated or realized any revenues from our business activities.
The Company was organized as a vehicle to investigate and, if such investigation warrants, acquire a target company or business seeking the
Page5 of31
perceived advantages of being a publicly held corporation. 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 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.
Liquidity and Financial Resources
The Company is in the development stage and has not generated any revenues and has incurred losses of $39,696 since inception. At December 31, 2011, the Company had $517 cash and $40,074 in current liabilities. Further, the Company incurred a loss of $17,727 during the year ended December 31, 2011. In view of these conditions, the ability of the Company to continue as a going concern is in substantial doubt and dependent upon achieving a profitable level of operations and on the ability of the Company to obtain necessary financing to fund ongoing operations. To meet these objectives, the Company continues to seek other sources of financing in order to support existing operations and expand the range and scope of its business. However, there are no assurances that any such financing can be obtained on acceptable terms, if at all. These financial statements do not give effect to any adjustments which would be necessary should the Company be unable to continue as a going concern.
Item 1A. Risk Factors
As the Company has no recent operating history or revenue and only minimal assets, there is a risk that we will be unable to continue as a going concern and consummate a business combination. We have no significant assets or financial resources. We will, in all likelihood, sustain operating expenses without corresponding revenues, at least until the consummation of a business combination. This may result in our incurring a net operating loss that will increase continuously until we can consummate a business combination with a profitable business opportunity. We cannot assure you that we can identify a suitable business opportunity and consummate a business combination.
FUTURE SUCCESS IS HIGHLY DEPENDENT ON THE ABILITY OF MANAGEMENT TO LOCATE AND ATTRACT A SUITABLE ACQUISITION.
Item 1B. Unresolved Staff Comments
None
Page6 of31
Item 2. Properties
The Company neither rents nor owns any properties. The Company currently has no policy with respect to investments or interests in real estate, real estate mortgages or securities of, or interests in, persons primarily engaged in real estate activities.
Item 3. Legal Proceedings
There are not presently any material pending legal proceedings to which the Company is a party or as to which any of its property is subject, and no such proceedings are known to the Company to be threatened or contemplated against it.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during the fourth quarter of 2011.
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information.
The Company’s common stock is not trading on any stock exchange. There has been no market activity in its stock since its inception through the date of this filing.
Stockholders.
As of December 31, 2011, there is only one holder of the Company’s common stock, and he is the sole director.
Dividends
The Company has not paid any dividends on our common stock to date and do not intend to pay dividends prior to the completion of a business combination.
Recent Sales of Unregistered Securities and Use of Proceeds
None
Item 6. Selected Financial Data.
Page7 of31
Not applicable
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and notes thereto and the other financial information included elsewhere in this report. Certain statements contained in this report, including, without limitation, statements containing the words “believes,” “anticipates,” “expects” and words of similar import, constitute “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including our ability to create, sustain, manage or forecast our growth; our ability to attract and retain key personnel; changes in our business strategy or development plans; competition; business disruptions; adverse publicity; and international, national and local general economic and market conditions.
Overview
The Company does not currently engage in any business activities that provide cash flow. The Company is currently in the development stage. The Company intends to serve as a vehicle to effect an asset acquisition, merger, exchange or capital stock or other business combination with a domestic or foreign business.
The Company’s main objective is to achieve long-term growth potential through a combination with a business. The Company will not restrict the potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire any type of business. At present, the Company has no business opportunities under contemplation for acquisition. No assurances can be given that the Company will be successful in locating or negotiating with any target business.
Results of Operations for the Years ended December 31, 2011 and 2010
Revenue. There was no revenue for the years ended December 31, 2011 and 2010.
Operating Expenses. For the year ended December 31, 2011, the Company incurred total operating expenses of $17,727 as compared to $7,161 for the year ended December 31, 2010. A total of $17,000 was incurred on professional fees in 2011; compared to $6,700 in 2010.
Page8 of31
Net Loss. The net loss for the year ended December 31, 2011 was $17,727 as compared to $7,161 for the year ended December 31, 2010, an increase of $10,566.
Liquidity and Financial Resources
The Company remains in the development stage since inception. Operations were financed through loans and advances from director and related parties to cover cash flow deficiencies.The advances have no stated repayment terms.
The Company's financial statements are presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Since inception, we have no revenue and have accumulated operating losses of $39,696. At the present time, and over the next twelve months, our primary focus will be to explore various methods for raising additional funds and seeking profitable ventures.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
The Company does not hold any derivatives or investments that are subject to market risk. The carrying values of any financial instruments, approximate fair value as of those dates because of relatively short-term maturity of these instruments which eliminates any potential market risk associated with such instruments.
Page9 of31
Item 8. Financial Statements and Supplementary Data.
Dalian Capital Group, Inc.
(A Development Stage Company)
December 31, 2011 and 2010
Index to Financial Statements
Contents
Page(s)
Report of Independent Registered Public Accounting Firm 11 - 12 Balance Sheets at December 31, 2011 and 2010 13 Statements of Operations for the Years Ended December 31, 2011 and 2010, and for the Period from May 31, 2006 (inception) through December 31, 2011 14 Statement of Stockholder’s Deficit for the Period from May 31, 2006 (Inception) through December 31, 2011 15 Statements of Cash Flows for the Years Ended December 31, 2011 and 2010 and for the Period from May 31, 2006 (Inception) through December 31, 2011 16 Notes to the Financial Statements 17 - 22 |
|
Page10 of31
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of
Dalian Capital Group, Inc.
(A Development Stage Company)
We have audited the accompanying balance sheet of Dalian Capital Group, Inc.(A Development Stage Company) as of 31 December 2011, and the related statements of operations, stockholder’s deficit and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. The financial statements of Dalian Capital Group, Inc. as of 31 December 2010 and for the year then ended, were audited by other auditors whose report dated 9 February 2011, on those statements included an explanatory paragraph that described conditions which raised substantial doubt about the Company’s ability to continue as a going concern.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated 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 audit provides 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 Dalian Capital Group, Inc. as of 31 December 2011, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
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, conditions exist which raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ James Stafford
Chartered Accountants
Vancouver, Canada
16 March 2012
Page11 of31
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholder of
Dalian Capital Group, Inc.
(A Development Stage Company)
Vancouver, Canada
We have audited the accompanying balance sheets of Dalian Capital Group, Inc., a development stage company, (the “Company”) as of December 31, 2010 and 2009 and the related statements of operations, stockholder’s deficit and cash flowsfor the years then ended and for the period from May 31, 2006 (inception) through December 31, 2010. 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 audit.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit 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 the Company as of December 31, 2010 and 2009 and the results of its operations and its cash flows for the years then ended and for the period from May 31, 2006 (inception) through December 31, 2010 in conformity with accounting principles generally accepted in the United States of America.
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 had a deficit accumulated during the development stage at December 31, 2010 and had a net loss and net cash used in operating activities for the year then ended, with no revenues earned since inception. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/Li & Company, PC
Li & Company, PC
Skillman, New Jersey
February 9 , 2011
Page12 of31
Dalian Capital Group, Inc. | |||||||
(A development stage company) | |||||||
Balance Sheets | |||||||
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| December 31, 2011 |
| December 31, 2010 | ||
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Assets |
|
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| |
| Current Assets |
|
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|
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| |
|
| Cash |
| 517 |
|
| 419 |
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|
Total current assets |
| 517 |
|
| 419 | ||
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Total Assets |
| 517 |
|
| 419 | ||
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Liabilities and stockholders' deficit |
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| Current Liabilities |
|
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| |
|
| Accounts Payable and accrued liabilities |
| 5,000 |
|
| - |
|
| Advances from related parties |
| 35,074 |
|
| 22,249 |
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Total current liabilities |
| 40,074 |
|
| 22,249 | ||
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Stockholder's Deficit |
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Preferred Stock: $0.0001 par value; |
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| 20,000,000 shares authorized; |
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| |
| none issued or outstanding |
| - |
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| - | |
Common stock: $0.0001 par value; |
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| 100,000,000 shares authorized; |
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| |
| 1,390,000 shares issued and outstanding |
| 139 |
|
| 139 | |
Deficit accumulated during the development stage |
| (39,696) |
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| (21,969) | ||
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Total stockholder's deficit |
| (39,557) |
|
| (21,830) | ||
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Total Liabilities and Stockholder's Deficit |
| 517 |
|
| 419 | ||
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See accompanying notes to the financial statements. | |||||||
Page13 of31
Dalian Capital Group, Inc. | ||||||||
(A development stage company) | ||||||||
Statement of Operations | ||||||||
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| For the Year ended December 31, 2011 |
| For the Year ended December 31, 2010, 2010 |
| For the Period from May 31, 2006 (Inception) through December 31, 2011 | |
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Revenue |
| - |
| - |
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| - | |
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Operating Expenses |
|
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| |
| Bank service charges |
| 199 |
| 209 |
|
| 638 |
| General and administrative |
| 525 |
| 250 |
|
| 15,338 |
| Professional fees |
| 17,000 |
| 6,700 |
|
| 23,700 |
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Total operating expenses |
| 17,724 |
| 7,159 |
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| 39,676 | |
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Loss from operations |
| (17,724) |
| (7,159) |
|
| (39,676) | |
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| Foreign currency transaction (gain) loss |
| 3 |
| 2 |
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| 20 |
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Total other (income) expense |
| 3 |
| 2 |
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| 20 | |
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Loss before income tax |
| (17,727) |
| (7,161) |
|
| (39,696) | |
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Income tax provision |
| - |
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| - | |
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Net loss |
| (17,727) |
| (7,161) |
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| (39,696) | |
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Net loss per common share |
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- | Basic and Diluted |
| (0.01) |
| (0.01) |
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Weighted average common shares outstanding |
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- | Basic and Diluted |
| 1,390,000 |
| 1,390,000 |
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See accompanying notes to the financial statements. | ||||||||
Page14 of31
Dalian Capital Group, Inc. | ||||||||||
(A development stage company) | ||||||||||
Statement of Stockholder's Deficit | ||||||||||
For the period from May 31, 2006 (Inception) through December 31, 2011 | ||||||||||
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| Common Stock, $0.0001 Par Value |
| Deficit Accumulated during the Development Stage |
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| Total Stockholder's Deficit | ||||
| Shares |
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| Amount |
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May 31, 2006 (Inception) | - |
| $ | - |
| $ | - |
| $ | - |
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Shares issued for incorporation expenses | 1,390,000 |
|
| 139 |
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| 139 |
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Net loss |
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| (139) |
|
| (139) |
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Balance December 31, 2006 | 1,390,000 |
|
| 139 |
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| (139) |
|
| - |
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Net loss |
|
|
|
|
|
| (5,350) |
|
| (5,350) |
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Balance December 31, 2007 | 1,390,000 |
|
| 139 |
|
| (5,489) |
|
| (5,350) |
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Net loss |
|
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|
| (8,959) |
|
| (8,959) |
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Balance December 31, 2008 | 1,390,000 |
|
| 139 |
|
| (14,448) |
|
| (14,309) |
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Net loss |
|
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|
| (360) |
|
| (360) |
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Balance December 31, 2009 | 1,390,000 |
|
| 139 |
|
| (14,808) |
|
| (14,669) |
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Net loss |
|
|
|
|
|
| (7,161) |
|
| (7,161) |
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|
|
|
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|
Balance December 31, 2010 | 1,390,000 |
|
| 139 |
|
| (21,969) |
|
| (21,830) |
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Net loss |
|
|
|
|
|
| (17,727) |
|
| (17,727) |
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Balance December 31, 2011 | 1,390,000 |
| $ | 139 |
| $ | (39,696) |
| $ | (39,557) |
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See accompanying notes to the financial statements. |
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Page15 of31
Dalian Capital Group, Inc. | ||||||||||
(A development stage company) | ||||||||||
Statement of Cash Flows | ||||||||||
|
| For the Year ended December 31, 2011 |
| For the year ended December 31, 2010 |
| For the Period from May 31, 2006 (Inception) through December 31, 2011 | ||||
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Cash Flows from Operating Activities |
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Net loss |
| (17,727) |
|
| (7,161) |
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| (39,696) | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
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| Common shares issued for incorporating expenses |
| - |
|
| - |
|
| 139 | |
Increase in accrued liabilities |
| 5,000 |
|
| - |
|
| 5,000 | ||
|
|
|
|
|
|
|
|
|
| |
Net cash used in operating activities |
| (12,727) |
|
| (7,161) |
|
| (34,557) | ||
|
|
|
|
|
|
|
|
|
| |
Cash flows from financing activities |
|
|
|
|
|
|
| |||
| Advances from related parties |
| 12,825 |
|
| 7,450 |
|
| 35,074 | |
|
|
|
|
|
|
|
|
|
| |
Net cash provided by financing activities |
| 12,825 |
|
| 7,450 |
|
| 35,074 | ||
|
|
|
|
|
|
|
|
|
| |
Net change in cash |
| 98 |
|
| 289 |
|
| 517 | ||
|
|
|
|
|
|
|
|
|
| |
Cash - beginning of period |
| 419 |
|
| 130 |
|
| - | ||
|
|
|
|
|
|
|
|
|
| |
Cash - end of period |
| 517 |
|
| 419 |
|
| 517 | ||
|
|
|
|
|
|
|
|
|
| |
Supplemental disclosure of cash flow information: |
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| |
| Interest paid |
| - |
|
| - |
|
| - | |
|
|
|
|
|
|
|
|
|
| |
| Income tax paid |
| - |
|
| - |
|
| - | |
|
|
|
|
|
|
|
|
|
| |
See accompanying notes to the financial statements. | ||||||||||
Page16 of31
Dalian Capital Group, Inc.
(A Development Stage Company)
December 31, 2011 and 2010
Notes to the Financial Statements
NOTE 1 - ORGANIZATION AND OPERATIONS
Dalian Capital Group, Inc., a development stage company, (the “Company”) was incorporated on May 31, 2006 under the laws of the State of Delaware.
The Company is 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. 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. As of December 31, 2011, the Company had not yet commenced any operations.
The Company is a “blank check” company based on its proposed business activities. The United States 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.
NOTE 2 – GOING CONCERN
As reflected in the accompanying financial statements, the Company had a deficit accumulated during the development stage of $39,696 at December 31, 2011 (2010 - $21,969) and had a net loss of $17,727 (2010 - $7,161) and net cash used in operating activities of $12,727 (2010 - $7,161) for the year then ended, respectively, with no revenues earned since inception.
While the Company is attempting to commence operations and generate revenues, the Company’s cash position may not be significant enough to support the Company’s daily operations. Management intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to generate revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate revenues.
The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The Company’s financial statements have been prepared in accordance withaccounting principles generally accepted in the United States of America (“U.S. GAAP”).
Reclassification
Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported losses.
Development stage company
The Company is a development stage company as defined in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915-10, “Development Stage Entities”. The Company is still devoting substantially all of its efforts
Page17 of31
on establishing the business and its planned principal operations have not commenced. All losses accumulated since inception have been considered as part of the Company's development stage activities.
Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Due to the limited level of operations, the Company has not had to make material assumptions or estimates other than the assumption that the Company is a going concern.
Cash equivalents
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.
Fair value of financial instruments
A fair value hierarchy was established that prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to the unobservable inputs.
The three (3) levels of fair value hierarchy are described below:
|
|
|
Level 1 |
| Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. |
|
|
|
Level 2 |
| Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. |
|
|
|
Level 3 |
| Pricing inputs that are generally observable inputs and not corroborated by market data. |
The carrying amount of the Company’s financial assets and liabilities, such as cash, approximates its fair value because of the short maturity of the instrument.
The Company does not have any assets or liabilities measured at fair value on a recurring or a non-recurring basis, consequently, the Company did not have any fair value adjustments for assets and liabilities measured at fair value at December 31, 2011 or 2010; no gains or losses are reported in the statement of operations that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date for the years ended December 31, 2011 or2010.
Foreign currency transactions
The Company applies the guidelines as set out in ASC 830, “Foreign Currency Matters” for foreign currency transactions. Foreign currency transactions are transactions denominated in currencies other than U.S. Dollar, the Company’s reporting currency. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income.
Income taxes
The Company accounts for income taxes under ASC 740, “Accounting for Income Taxes”, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and
Page18 of31
liabilities of a change in tax rates is recognized in the Statements of Income and Comprehensive Income in the period that includes the enactment date.
Net income (loss) per common share
Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period. There were no potentially dilutive shares outstanding as of December 31, 2011 or 2010.
Recently issued accounting pronouncements
In December 2011, the FASB issued Accounting Standards Update (“ASU”) 2011-12, “Comprehensive Income”. This update amends certain pending paragraphs in ASU No. 2011-05 “Presentation of Comprehensive Income”, to effectively defer only those changes that relate to the presentation of reclassification adjustments out of accumulated other comprehensive income for annual and interim financial statements for public, private, and non-profit entities.
In June 2011, the FASB issued ASU 2011-05, “Presentation of Comprehensive Income”. This update presents an entity with the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. This update eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders' equity. The amendments in this update do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. As ASU 2011-05 relates only to the presentation of Comprehensive Income, the Company does not expect that the adoption of this update will have a material effect on its financial statements.
In May 2011, the FASB issued ASU No. 2011-04, “Fair Value Measurement” to amend the accounting and disclosure requirements on fair value measurements. This ASU limits the highest-and-best-use measure to nonfinancial assets, permits certain financial assets and liabilities with offsetting positions in market or counterparty credit risks to be measured at a net basis, and provides guidance on the applicability of premiums and discounts. Additionally, this update expands the disclosure on Level 3 inputs by requiring quantitative disclosure of the unobservable inputs and assumptions, as well as description of the valuation processes and the sensitivity of the fair value to changes in unobservable inputs. ASU No. 2011-04 is to be applied prospectively and is effective during interim and annual periods beginning after 15 December 2011. The Company does not expect the adoption of this update will have a material effect on its financial statements.
.
NOTE 4 – STOCKHOLDERS’ DEFICIT
Common stock
The Company was incorporated on May 31, 2006 at which time 1,390,000 shares of common stock were issued to the Company’s founder at $0.0001 per share, or $139 for repayment of expenses associated with the incorporation of the Company.
Page19 of31
NOTE 5 – RELATED PARTY TRANSACTIONS
Free office space
The Company has been provided office space by its Chief Executive Officer at no cost. The management determined that such cost is nominal and did not recognize the rent expense in its financial statements.
Advances from related parties
Advances from related parties at December 31, 2011 and 2010, consisted of the following:
|
|
|
|
|
|
|
|
|
|
| December 31, 2011 |
|
| December 31, 2010 |
| ||
|
|
|
|
|
|
|
|
|
Advances from related parties |
| $ | 35,074 |
|
| $ | 22,249 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ) | ||
|
| $ | 35,074 |
|
| $ | 22,249 |
|
|
|
|
|
|
|
| ||
The advances from related parties bear no interest and are due on demand.
NOTE 6 – SUBSEQUENT EVENTS
The Company has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued to determine if they must be reported. The Management of the Company determined that there were no reportable subsequent events to be disclosed.
NOTE 7 – INCOME TAXES
Deferred tax assets
At December 31, 2011, the Company had net operating loss (“NOL”) carry-forwards for Federal income tax purposes of $39,696 (2010 - $21,969) that may be offset against future taxable income through 2031. No tax benefit has been reported with respect to these net operating loss carry-forwards in the accompanying financial statements because the Company believes that the realization of the Company’s net deferred tax assets of approximately $13,497 (2010 - $7,470) was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are fully offset by a valuation allowance of $13,497 (2010 - $7,470).
Deferred tax assets consist primarily of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding its realizability. The valuation allowance increased approximately $6,027 and $2,435 for the year ended December 31, 2011 and 2010, respectively.
Components of deferred tax assets at December 31, 2011 and 2010 are as follows:
|
|
|
|
|
|
|
|
|
|
| December 31, 2011 |
|
| December 31, 2010 |
| ||
Net deferred tax assets – Non-current |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected income tax benefit from NOL carry-forwards |
| $ | 13,497 |
|
| $ | 7,470 |
|
Less valuation allowance |
|
| (13,497) |
|
|
| (7,470) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ) | ||
Deferred tax assets, net of valuation allowance |
| $ | - |
|
| $ | - |
|
|
|
|
|
|
|
| ||
Page20 of31
Income taxes in the statements of operations
A reconciliation of the federal statutory income tax rate and the effective income tax rate as a percentage of income before income taxes is as follows:
|
|
|
|
|
|
|
|
|
|
| For the Year Ended December 31, 2011 |
|
| For the Year Ended December 31, 2010 |
| ||
|
|
|
|
|
|
|
|
|
Federal statutory income tax rate |
|
| 34.0% |
|
|
| 34.0% |
|
Change in valuation allowance on net operating loss carry-forwards |
|
| (34.0%) |
|
|
| (34.0%) |
|
|
|
|
|
|
| ) | ||
Effective income tax rate |
|
| 0.0% |
|
|
| 0.0% |
|
Page21 of31
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
Not applicable
Item 9A (T). Controls and Procedures.
As supervised by our board of directors and our principal executive and principal financial officers, management has established a system of disclosure controls and procedures and has evaluated the effectiveness of that system. The system and its evaluation are reported on in the below Management's Annual Report on Internal Control over Financial Reporting. Our principal executive and financial officer has concluded that our disclosure controls and procedures (as defined in the 1934 Securities Exchange Act Rule 13a-15(e)) as of December 31, 2011, are not effective at the reasonable assurance level due to the two material weaknesses described below:
(i) We do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act which is applicable to us for the year ended December 31, 2011. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.
(ii) We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures, and concluded that the control deficiency that resulted represented a material weakness.
It should be noted that any system of controls, however well designed and operated, can provide only reasonable and not absolute assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of certain events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.
Page22 of31
Management's Annual Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Securities Exchange Act of 1934 (the "Exchange Act"). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.
Management assessed the effectiveness of internal control over financial reporting as of December 31, 2011. We carried out this assessment using the criteria of the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm, pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management's report in this annual report. Management concluded in this assessment that as of December 31, 2011, our internal control over financial reporting is ineffective.
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter of our 2011 fiscal year that havematerially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information.
None.
PART III
Item 10. Directors, Executive Officers, Promoters, Control Persons and Corporate Governance.
(a) Identification of directors.
The following table furnishes the information concerning Company directors and officers as of the date of this report. The directors of the Registrant are elected every year and serve until their successors are elected and qualify. They are:
Name
Age
Title
Term
Erwin Liem
51
President and
Annual
Page23 of31
Director
Erwin Liem acts as President, Secretary, Treasurer and Director for the Company. Mr. Liem has served as an officer and Director of the Company since October 2006.
ITEM 11. Executive Compensation
None
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth, as of December 31, 2011, the number of shares of common stock owned of record and beneficially by executive officers, directors and persons who hold 5% or more of the outstanding common stock of the Company. Also included are the shares held by all executive officers and directors as a group.
Amount and Nature
Of Beneficial
Percentage
Name and Address
Ownership
of Class
Erwin Liem
1,390,000
100%
Ste. 900,
850 West Hastings St.
Vancouver, BC V6C 1E1
Canada
ITEM 13. Certain Relationships and Related Transactions, and Director Independence
There were no related party transactions, or any other transactions or relationships required to be disclosed pursuant to Item 404 of Regulation S-B.
ITEM 14. Principal Accountant Fees and Services
The firm, James Stafford, CA’s, replaced Li & Company, LLC as the company’s principal accountant on July 30, 2011.
PART IV
Item 15. Exhibits
31.1 Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
31.2 Certification of the Chief Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
Page24 of31
32.1 Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.2 Certification of the Chief Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
SIGNATURES
In accordance with 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.
Dated: March 22, 2012
DALIAN CAPITAL GROUP, INC.
By:/S/ Erwin Liem
Erwin Liem
Chief Executive Officer
& Director
By:/S/ Ian Dewar
Ian Dewar
Chief Accounting Officer
Page25 of31
Exhibit 31.01 |
|
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO |
RULE 13A-14(A) OF THE SECURITIES EXCHANGE ACT AND |
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 |
|
I, Erwin Liem, Director and Chief Executive Officer of Dalian Capital Group, Inc. certify that : |
|
1. I have reviewed this Annual Report on Form 10-K/A of Dalian Capital Group, Inc. |
|
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have : |
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purpose in accordance with general accepted accounting principles; |
c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. |
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing |
the equivalent functions ): |
|
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarized and report financial information; |
and |
|
b. Any fraud, whether or not material, that involves management or other employees |
who have a significant role in the registrant's internal control over financial reporting. |
|
Dated : March 22, 2012 Signature : /s/ Erwin Liem |
Erwin Liem |
Director and Chief
Executive Officer
Page27 of31
Exhibit 31.02 |
|
CERTIFICATION OF CHIEF ACCOUNTING OFFICER PURSUANT TO |
RULE 13A-14(A) OF THE SECURITIES EXCHANGE ACT AND |
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 |
I, Ian Dewar, Chief Accounting Officer of Dalian Capital Group, Inc. certify that : |
|
1. I have reviewed this Annual Report on Form 10-K of Dalian Capital Group, Inc.; |
|
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have : |
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purpose in accordance with general accepted accounting principles; |
|
c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. |
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing |
the equivalent functions ): |
|
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarized and report financial information; |
and |
|
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
|
Dated : March 22, 2012 Signature : /s/ Ian Dewar ------------- |
Ian Dewar |
Chief Accounting Officer
Page29 of31
EXHIBIT 32.01
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Dalian Capital Group, Inc. (the “Registrant”) on Form 10-K for the year ended December 31, 2011, as filed with the Securities and Exchange Commission on the date hereof (the “Report”),
I, Erwin Liem, Director and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
/s/ Erwin Liem
------------
Erwin Liem
Director and Chief Executive Officer
March 22, 2012
Page30 of31
EXHIBIT 32.02
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Dalian Capital Group, Inc. (the “Registrant”) on Form 10-K for the year ended December 31, 2011, as filed with the Securities and Exchange Commission on the date hereof (the “Report”),
I, Ian Dewar, Chief Accounting Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
/s/ Ian Dewar
-------------
Ian Dewar
Chief Accounting Officer
March 22, 2012
Page31 of31