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, 2010
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 0-53255
CANISTEL ACQUISITION CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 20-5572714
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
215 Apolena Avenue, Newport Beach, California 92662
(Address of principal executive offices) (zip code)
202/387-5400
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
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 Smaller reporting company
(do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of stock, as of the latest practicable date.
Class Outstanding at
July 31, 2010
Common Stock, par value $0.0001 1,000,000
Documents incorporated by reference: None
PART I -- FINANCIAL INFORMATION
CANISTEL ACQUISITION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
PAGE 1 CONDENSED BALANCE SHEETS AS OF JUNE 30, 2010
(UNAUDITED) AND DECEMBER 31, 2009
PAGE 2 CONDENSED STATEMENTS OF OPERATIONS FOR THE THREE
AND SIX MONTHS ENDED JUNE 30, 2010 AND 2009 AND FOR
THE PERIOD FROM SEPTEMBER 13, 2006 (INCEPTION) TO
JUNE 30, 2010 (UNAUDITED)
PAGE 3 CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS'
DEFICIT FOR THE PERIOD SEPTEMBER 13, 2006 (INCEPTION)
TO JUNE 30, 2010 (UNAUDITED)
PAGE 4 CONDENSED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS
ENDED JUNE 30, 2010 AND 2009 AND FOR THE PERIOD
FROM SEPTEMBER 13, 2006 (INCEPTION) TO JUNE 30, 2010
(UNAUDITED)
PAGES 5 - 8 NOTES TO FINANCIAL STATEMENTS AS OF JUNE 30, 2010
(UNAUDITED)
CANISTEL ACQUISITION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONDENSED BALANCE SHEETS
As of June 30, 2010 and December 31, 2009
ASSETS
------
June 30, 2010 December 31,
(Unaudited) 2009
---------- -----------
Cash $ 500 $ 500
-------- --------
TOTAL ASSETS $ 500 $ 500
------------ ======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
LIABILITIES
Accrued liabilities $ 3,000 $ 3,000
-------- --------
Total Liabilities 3,000 3,000
-------- --------
STOCKHOLDERS' DEFICIT
Preferred stock, $.0001 par value,
20,000,000 shares authorized,
none issued and outstanding - -
Common stock, $.0001 par value,
100,000,000 shares authorized,
1,000,000 issued and outstanding 100 100
Additional paid-in capital 2,717 2,717
Deficit accumulated during development stage (5,317) (5,317)
-------- --------
Total Stockholders' Deficit (2,500) (2,500)
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 500 $ 500
------------------------------------------- ========= ========
See accompanying notes to condensed financial statements.
1
CANISTEL ACQUISITION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF OPERATIONS
For the three and six months ended June 30, 2010 and 2009
and for the Period from September 13, 2006 (Inception) to June 30, 2010
(Unaudited)
For the For the For the For the For the Period
3-Months 3-Months 6-Months 6-Months from September
Ended Ended Ended Ended 13, 2006
June 30, June 30, June 30, June 30, (Inception)
2010 2009 2010 2009 to June 30,
2010
Income $ - $ - $ - $ - $ -
------- ------- ------ ------- -------
Expenses
Organization
expense - - - - 650
Professional Fees - - - - 4,667
------- ------- ------ ------- -------
Total expenses - - - - 5,317
------- ------- ------ ------- -------
NET LOSS - - - - (5,317)
========= ======= ======= ====== ======== =======
Basic and diluted--
loss per share $ - $ - $ - $ -
Weighted average
number of shares
outstanding;
basic and diluted 1,000,000 1,000,000 1,000,000 1,000,000
See accompanying notes to condensed financial statements
2
CANISTEL ACQUISITION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
For the Period From September 13, 2006 (Inception) to June 30, 2010
(Unaudited)
--------------------
Deficit
Accumulated Total
Additional During Stockholders'
Common Stock Issued Paid-In Development Equity
Shares Amount Capital Stage (Deficit)
--------- ------ ------- -------- ----------
BALANCE, SEPTEMBER 13,2006 - $ - $ - $ - $ -
(Date of Inception)
Common Stock Issuance 1,000,000 100 400 - 500
Fair value of expenses contributed 535 535
Net Loss (535) (535)
---------- ------- -------- ---------- ---------
BALANCE AS OF DECEMBER 31, 2006 1,000,000 100 935 (535) 500
---------- ------- -------- -------- ---------
Fair Value of expenses contributed 115 115
Net Loss (115) (115)
---------- ------- -------- -------- ---------
BALANCE AS OF DECEMBER 31, 2007 1,000,000 100 1,050 (650) 500
---------- ------- -------- -------- ---------
Net Loss (2,000) (2,000)
--------- ------ -------- -------- ---------
BALANCE AS OF DECEMBER 31, 2008 1,000,000 100 1,050 (2,650) (1,500)
---------- ------- -------- -------- ---------
Fair Value of expense contributed 1,667 1,667
Net Loss (2,667) (2,667)
---------- ------- -------- -------- ---------
BALANCE AS OF December 31, 2009 1,000,000 100 2,717 (5,317) (2,500)
---------- ------- -------- -------- ---------
Net Loss - -
---------- ------- -------- -------- --------
BALANCE AS OF June 30, 2010 1,000,000 $ 100 $ 2,717 $(5,317) $(2,500)
========== ======= ======== ======== ========
See accompanying notes to condensed financial statements
3
CANISTEL ACQUISITION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2010 and 2009
and for the Period from September 13, 2006 (Inception) to June 30, 2010
(Unaudited)
------------------------
For the Period from
For the Six For the Six September 13, 2006
Months Ended Months Ended (Inception) to
June 30, 2010 June 30, 2009 June 30, 2010
-------------- -------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ - $ - $ (5,317)
Adjustment to reconcile net loss to
net cash used by operating activities:
Contributed organizational expenses - 650
Contributed professional fees - 1,667 1,667
Increase in liabilities (1,667) 3,000
------------ ------------ -----------
Net Cash Used In Operating Activities - - -
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES - - -
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock - - 500
------------ ------------ ------------
Net Cash Provided By Financing
Activities - - 500
------------ ------------ ------------
INCREASE IN CASH AND CASH EQUIVALENTS - - 500
CASH AND CASH EQUIVALENTS - BEGINNING
OF PERIOD 500 500 -
------------ ---------- -----------
CASH AND CASH EQUIVALENTS - END OF
PERIOD $ 500 $ 500 $ 500
============ =========== ============
See accompanying notes to condensed financial statements
4
CANISTEL ACQUISITION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 2010
(Unaudited)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) Organization and Business Operations
Canistel Acquisition Corporation (a development stage company) ("the
Company") was incorporated in Delaware on September 13, 2006, to serve
as a vehicle to effect a merger, exchange of capital stock, asset
acquisition or other business combination with a domestic or foreign
private business. As of June 30, 2010, the Company had not yet commenced
any formal business operations, and all activity to date relates to the
Company's formation. The Company's fiscal year end is December 31.
The Company's ability to commence operations is contingent upon its
ability to identify a prospective target business.
(B)Interim Financial Statements
The accompanying unaudited condensed balance sheet of Canistel
Acquisition Corporation as of June 30, 2010, and the unaudited condensed
statements of operations for the three and six months ended June 30, 2010
and 2009, and for the period from September 13, 2006 (Inception) to June
30, 2010, and the unaudited condensed statements of cash flows for the
six months ended June 30, 2010 and 2009, and for the period from September
13, 2006 (Inception) to June 30, 2010 reflect all material adjustments
which, in the opinion of management, are necessary for a fair presentation
of results for the interim periods. Certain information and footnote
disclosures required under generally accepted accounting principles
have been condensed or omitted pursuant to the rules and regulations
of the Securities and Exchange Commission, although the Company believes
that the disclosures are adequate to make the information presented
not misleading. The condensed balance sheet information as of
December 31, 2009 was derived from the audited financial statements
included in the Company's Annual Report on Form 10-K. These condensed
financial statements should be read in conjunction with the year-end
audited financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended December 31, 2009, as filed
with the Securities and Exchange Commission on April 15, 2010.
The results of operations for the three and six months ended June 30, 2010
and 2009 are not necessarily indicative of the results to be expected for
the entire fiscal year or for any other period.
5
CANISTEL ACQUISITION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 2010
(Unaudited)
(C) Use of Estimates
The preparation of the 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.
(D) Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid investments purchased with an original maturity of three
months or less to be cash equivalents.
(E) Taxes
Financial Accounting Standards Board ("FASB") Accounting Standards
Codification ("ASC") 740-10-50-2 requires deferred tax assets and
liabilities be recognized for future tax consequence attributable to
differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to
be applied to taxable income in the years in which those temporary
differences are expected to reverse. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in the statement of
income in the period that includes the enactment date. A valuation
allowance is provided for deferred tax assets if it is more likely than
not these items will either expire before the Company is able to realize
their benefits, or that future deductibility is uncertain. Losses incurred
by Company in prior years provide for a net operating loss carry-forward.
However, due to the unpredictability of the Company's future net income,
the asset's balance has been fully reserved for.
(F) Continuing Financial Support
The accompanying financial statements have been prepared in conformity
with accounting principles generally accepted in the United States of
America. The Company has no operations and continues to incur on-going
professional fees to maintain its current filings with the SEC. The
Company has an accumulated deficit of $5,317 and a working capital
deficit of $2,500 as of June 30, 2010.
The future success of the Company is dependent on its ability to find and
successfully merge with a target business and on the President and/or Tiber
Creek Corporation to financially support the Company until that time. There
can be no assurance that the Company will be successful in completing a
merger. The President, who is a 50% shareholder in the Company (by virtue
of his 100% ownership of Tiber Creek Corporation, a 50% shareholder, (see
Note 3) has agreed to financially support the on-going expenses of the
Company.
6
CANISTEL ACQUISITION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 2010
(Unaudited)
(G) Earnings Per Share
Basic earnings per share are computed by dividing income available to
common shareholders by the weighted-average number of common shares
outstanding during the period. Diluted earnings per share is computed
similar to basic earnings per share except that the denominator is
increased to include the number of additional common shares that would
have been outstanding if the potential common shares had been issued and
if the additional common shares were dilutive. There were no potentially
dilutive securities for the three and six months ended June 30, 2010 and
2009.
(H) Fair Value of Financial Instruments
Financial Accounting Standards Board ("FASB") Accounting Standard
Codification ("ASC") 820, "Fair Value Measurements and Disclosures,"
establishes a three-tier fair value hierarchy, which prioritizes the
inputs in measuring fair value. The hierarchy prioritizes the inputs
into three levels based on the extent to which inputs used in measuring
fair value are observable in the market. These tiers include:
Level 1 defined as observable inputs such as quoted prices in active
markets;
Level 2 defined as inputs other than quoted prices in active markets that
are either directly or indirectly observable; and
Level 3 defined as unobservable inputs in which little or no market data
exists, therefore requiring an entity to develop its own assumptions.
The carrying amounts of certain financial instruments, including cash and
cash equivalents and accrued liabilities approximate their fair values
because of the short-term maturity of these instruments.
(I) Recent Accounting Pronouncements
In January 2010, the FASB issued ASU 2010-06, "Fair Value Measurements
and Disclosures (Topic 820): Improving Disclosures about Fair Value
Measurements". This update provides amendments to Topic 820 that will
provide more robust disclosures about (1) the different classes of assets
and liabilities measured at fair value, (2) the valuation techniques and
inputs used, (3) the activity in Level 3 fair value measurements, and
(4) the transfers between Levels 1, 2, and 3. The Company does not expect
adoption of ASU 2010-06 to have a material impact on the Company's
results of operations or financial condition.
In February 2010, the FASB issued ASU 2010-09, "Subsequent Events
(Topic 855): Amendments to Certain Recognition and Disclosure
Requirements." This update addresses both the interaction of the
requirements of Topic 855, Subsequent Events, with the SEC's reporting
requirements and the intended breadth of the reissuance disclosures
provision related to subsequent events (paragraph 855-10-50-4). The
amendments in this update have the potential to change reporting by both
private and public entities, however, the nature of the change may vary
depending on facts and circumstances. The adoption of ASU 2010-09 did
not have a material impact on the Company's results of operations or
financial condition.
7
CANISTEL ACQUISITION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 2010
(Unaudited)
NOTE 2 STOCKHOLDERS' DEFICIT
(A) Preferred Stock
The Company is authorized to issue 20,000,000 shares of preferred stock
at $.0001 par value, with such designations, voting and other rights and
preferences as may be determined from time to time by the Board of
Directors.
(B) Common Stock
The Company is authorized to issue 100,000,000 shares of common stock
at $.0001 par value. The Company issued 500,000 shares of its common
stock to Tiber Creek Corporation, a Delaware corporation, and 500,000
shares of its common stock to IRAA Fin Serv, an unincorporated California
business entity, pursuant to Section 4(2) of the Securities Act of 1933
for an aggregate consideration of $500.
NOTE 3 RELATED PARTIES
Legal counsel to the Company is a firm owned by the President of the
Company who also owns 100% of the outstanding stock of Tiber Creek
Corporation, a 50% shareholder. Tiber Creek Corporation will perform
consulting services for the Company in the future. Additional paid-in
capital as of June 30, 2010 includes $2,317 of fair value of organization
and professional costs incurred by related parties on behalf of the
Company.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company will attempt to locate and negotiate with a business
entity for the combination of that target company with the Company. The
combination will normally take the form of a merger, stock-for-stock
exchange or stock-for-assets exchange (the "business combination"). In
most instances the target company will wish to structure the business
combination to be within the definition of a tax-free reorganization
under Section 351 or Section 368 of the Internal Revenue Code of 1986, as
amended. No assurances can be given that the Company will be successful
in locating or negotiating with any target business.
The Company has not restricted its search for any specific kind of
businesses, and it may acquire a business which is in its preliminary or
development stage, which is already in operation, or in essentially any
stage of its business life. It is impossible to predict the status of any
business in which the Company may become engaged, in that such 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.
In implementing a structure for a particular business acquisition,
the Company may become a party to a merger, consolidation,
reorganization, joint venture, or licensing agreement with another
corporation or entity.
It is anticipated that any securities issued in any such business
combination would be issued in reliance upon exemption from registration
under applicable federal and state securities laws. In some
circumstances, however, as a negotiated element of its transaction, the
Company 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, 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. The
issuance of additional securities and their potential sale into any
trading market which may develop in the Company's securities may depress
the market value of the Company's securities in the future if such a
market develops, of which there is no assurance.
The Company will participate in a business combination only after
the negotiation and execution of appropriate agreements. Negotiations
with a target company will likely focus on the percentage of the Company
which the target company shareholders would acquire in exchange for their
shareholdings. 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 and will
include miscellaneous other terms. Any merger or acquisition effected by
the Company can be expected to have a significant dilutive effect on the
percentage of shares held by the Company's shareholders at such time.
In January 2010, the FASB issued ASU 2010-06, "Fair Value Measurements
and Disclosures (Topic 820): Improving Disclosures about Fair Value
Measurements". This update provides amendments to Topic 820 that will
provide more robust disclosures about (1) the different classes of assets
and liabilities measured at fair value, (2) the valuation techniques and
inputs used, (3) the activity in Level 3 fair value measurements, and (4)
the transfers between Levels 1, 2, and 3. The Company does not expect
adoption of ASU 2010-06 to have a material impact on the Company's
results of operations or financial condition.
In February 2010, the FASB issued ASU 2010-09, "Subsequent Events
(Topic 855): Amendments to Certain Recognition and Disclosure
Requirements." This update addresses both the interaction of the
requirements of Topic 855, Subsequent Events, with the SEC's reporting
requirements and the intended breadth of the reissuance disclosures
provision related to subsequent events (paragraph 855-10-50-4). The
amendments in this update have the potential to change reporting by both
private and public entities, however, the nature of the change may vary
depending on facts and circumstances. The adoption of ASU 2010-09
did not have a material impact on the Company's results of operations
or financial condition.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.
Information not required to be filed by Smaller reporting companies.
ITEM 4. Controls and Procedures.
Disclosures and Procedures
Pursuant to Rules adopted by the Securities and Exchange Commission,
the Company carried out an evaluation of the effectiveness of the design
and operation of its disclosure controls and procedures pursuant to
Exchange Act Rules. This evaluation was done as of the end of the
period covered by this report under the supervision and with the
participation of the Company's principal executive officer (who is
also the principal financial officer).
Based upon that evaluation, he believes that the Company's
disclosure controls and procedures are effective in gathering, analyzing
and disclosing information needed to ensure that the information
required to be disclosed by the Company in its periodic reports is
recorded, summarized and processed timely. The principal executive
officer is directly involved in the day-to-day operations of the Company.
This Quarterly Report does not include an attestation report of
the Company's registered public accounting firm regarding internal
control over financial reporting. Management's report was not subject
to attestation by the Company's registered public accounting firm
pursuant to temporary rules of the Securities and Exchange
Commission that permit the Company to provide only management's
report in this Quarterly Report.
Changes in Internal Controls
There was no change in the Company's internal control over
financial reporting that was identified in connection with such
evaluation that occurred during the period covered by this report
that has materially affected, or is reasonably likely to materially
affect, the Company's internal control over financial reporting.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no legal proceedings against the Company and the Company
is unaware of such proceedings contemplated against it.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
(a) Not applicable.
(b) Item 407(c)(3) of Regulation S-K:
During the quarter covered by this Report, there have not been
any material changes to the procedures by which security holders
may recommend nominees to the Board of Directors.
ITEM 6. EXHIBITS
(a) Exhibits
31 Certification of the Chief Executive Officer and Chief
Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
32 Certification of the Chief Executive Officer and Chief
Financial Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
CANISTEL ACQUISITION CORPORATION
By: /s/ James M. Cassidy
President, Chief Financial Officer
Dated: August 12, 2010
Pursuant to 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.
NAME OFFICE DATE
/s/ James M. Cassidy Director August 12, 2010