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 JUNE 30, 2010
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission file number: 000-53748
Arrin Corporation
(Exact name of registrant as specified in its charter)
NEVADA 37-1558192
(State of Incorporation) (I.R.S. Employer Id. No.)
3604 54th Drive West, Ste. K204, Bradenton FL 34210 (213) 381-7450
(Address of principal executive offices) (Registrant's telephone number)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 par value per share
(Title of Class)
Indicate by check mark if the registrant) is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act of 1933. 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 Securities Exchange Act of 1934.
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 Three Shades 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 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 regisrant'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
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 Exchange Act): Yes [X] No [ ]
The aggregate market value of the registrant's common stock held by
non-affiliates of the registrant as of the last business day of the registrant's
most recently completed fiscal quarter (June 30, 2010) was approximately $0.00
(based on lack of any trade or posted price reported by OTC on or prior to June
30, 2010). For this purpose, all of the registrant's officers and directors and
their affiliates were assumed to be affiliates of the registrant.
There were 5,567,324 shares of the registrant's common stock outstanding as of
September 20, 2010.
DOCUMENTS INCORPORATED BY REFERENCE: None.
ARRIN CORPORATION
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED JUNE 30, 2010
INDEX
PART I
Item 1 Business 1
Item 1A Risk Factors 4
Item 2 Properties 10
Item 3 Legal Proceedings 10
Item 4 (REMOVED AND RESERVED) 10
PART II
Item 5 Market for Common Equity, Related Stockholder Matters, and Issuer
Purchases of Equity Securities 10
Item 6 Selected Financial Data 11
Item 7 Management's Discussion and Analysis of Financial Condition and
Results of Operation 11
Item 7A Quantitative and Qualitative Disclosure About Market Risk 13
Item 8 Financial Statements and Supplementary Data 13
Item 9 Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 23
Item 9A Controls and Procedures 23
Item 9B Other Information 23
PART III
Item 10 Directors, Executive Officers, and Corporate Governance 23
Item 11 Executive Compensation 25
Item 12 Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters 25
Item 13 Certain Relationships and Related Transactions and Director
Independence 26
Item 14 Principal Accounting Fees and Services 27
PART IV
Item 15 Exhibits and Financial Statement Schedules 28
SIGNATURES 29
ii
PART I
ITEM 1. DESCRIPTION OF BUSINESS
FORWARD-LOOKING STATEMENTS
OUR DISCLOSURE AND ANALYSIS IN THIS ANNUAL REPORT ON FORM 10-K CONTAINS
SOME FORWARD-LOOKING STATEMENTS. FORWARD-LOOKING STATEMENTS GIVE OUR CURRENT
EXPECTATIONS OR FORECASTS OF FUTURE EVENTS. YOU CAN IDENTIFY THESE STATEMENTS
SINCE THEY DO NOT RELATE STRICTLY TO HISTORICAL OR CURRENT FACTS. SUCH
STATEMENTS MAY INCLUDE WORDS SUCH AS "ANTICIPATE," "ESTIMATE," "EXPECT,"
"PROJECT," "INTEND," "PLAN," "BELIEVE," "HOPE" AND OTHER WORDS AND TERMS OF
SIMILAR MEANING. IN PARTICULAR, THESE INCLUDE, AMONG OTHERS, STATEMENTS RELATING
TO OUR BUSINESS PLAN AND OUR INTENTION TO SEEK A BUSINESS COMBINATION WITH AN
OPERATING ENTITY, THE IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS, AND OTHER
STATEMENTS REGARDING MATTERS THAT ARE NOT HISTORICAL FACTS OR STATEMENTS OF
CURRENT CONDITION.
THERE ARE IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS.
WE UNDERTAKE NO OBLIGATION (AND EXPRESSLY DISCLAIM ANY SUCH OBLIGATION) TO
PUBLICLY UPDATE ANY FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW
INFORMATION, FUTURE EVENTS OR OTHERWISE, EXCEPT AS REQUIRED BY LAW. YOU ARE
ADVISED, HOWEVER, TO REVIEW ANY FURTHER DISCLOSURES WE MAKE ON RELATED SUBJECTS
IN OUR FILINGS WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE
"SEC"), ALL OF WHICH ARE AVAILABLE IN THE SEC EDGAR DATABASE AT WWW.SEC.GOV AND
FROM US.
BACKGROUND
Arrin Corporation ("the Company") was organized under the laws of the State
of Nevada on December 31, 2007. The Company was established as part of the
Chapter 11 reorganization of Arrin Systems, Inc. ("Systems"). Under Systems'
Plan of Reorganization, as confirmed by the U.S. Bankruptcy Court for the
Southern District of California, Arrin Corporation was organized to collect
monthly payments from the sale of Systems' assets for the benefit of Systems'
creditors, and to make pro-rata distributions of the money received from that
sale to Systems' creditors. Thus, the Company acted essentially as an escrow
agent, receiving funds for the benefit of others and then distributing those
funds to their intended recipients.
The Bankruptcy Court also ordered that shares in Arrin Corporation be
distributed to Systems' creditors in the expectation that the Company would
develop or acquire additional business(es) or assets, further benefiting
Systems' creditors. The Company has been in the development stage since its
formation and has not yet developed or acquired any business or realized any
revenues. Its only activity has been the single, Court ordered, escrow operation
described above. The Company ceased its escrow operations on or about December
1, 2009.
DESCRIPTION OF CURRENT BUSINESS
Thus from December 2009 until the present, the Company has had no active
business and could be deemed to be a so-called "shell" company, whose only
purpose at this time is to determine and implement a new business purpose. A
"shell" company can be defined as an entity having no or nominal operations and
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with no or nominal assets or assets consisting solely of cash and cash
equivalents. As a shell company, our sole purpose at this time is to locate and
consummate a merger or acquisition with a private entity.
We will not restrict our search to any specific industry or geographical
location. Potential business partners might be found within any industry and in
any state or even outside the United States. Management anticipates that it may
be able to participate in only one potential business venture because a business
partner might require exclusivity. This lack of diversification should be
considered a substantial risk to our shareholders because it will not permit us
to offset potential losses from one venture against gains from another.
We may seek a business opportunity with entities which have recently
commenced operations, or which wish to expand into new products or markets, to
develop a new product, or to utilize the public marketplace in order to raise
additional capital.
We anticipate that the selection of a business opportunity in which to
participate will be complex and extremely risky. Due to general economic
conditions, rapid changes in the business environment, and shortages of
available capital, management believes that there are numerous firms seeking the
benefits of an issuer who has complied with the 1934 Act.
It is our present intent to continue to comply with all of the reporting
requirements under the 1934 Act. The officers and directors of the Company have
agreed to provide the necessary funds, without interest, for the Company to
comply with the 1934 Act reporting requirements, provided that they are officers
and directors of the Company when the obligation is incurred.
It is anticipated that we will incur nominal expenses in the implementation
of the business plan described herein. Because we have no capital with which to
pay these anticipated expenses, present management of the Company will pay these
charges with their personal funds, as interest free loans to the Company or as
capital contributions. However, if loans, the only opportunity which management
has to have these loans repaid will be from a prospective merger or acquisition
candidate.
ACQUISITION OF OPPORTUNITIES
In implementing a structure for a particular business venture, we may
become a party to a merger, consolidation, reorganization, joint venture, or
licensing agreement with another corporation or entity. We may also acquire
stock or assets of an existing business. On the consummation of an agreement, it
is possible that the present management and shareholders of the Company will no
longer be in control of the Company. In addition, and especially if there is a
business combination, our directors may, as part of the terms of the acquisition
or merger, resign and be replaced by new directors without a vote of our
shareholders or may sell their stock, if any, in the Company.
It is anticipated that any securities issued by our Company in any such
reorganization would be issued in reliance upon exemption from registration
under applicable federal and state securities laws. It is anticipated that it
will also be a method of taking a private company public known as a "back door"
1934 Act registration procedure.
We will participate in a business opportunity only after the negotiation
and execution of appropriate written agreements. Although the terms of such
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agreements cannot be predicted, generally such agreements will require some
specific representations and warranties by all of the parties thereto, will
specify certain events of default, will detail the terms of closing and the
conditions which must be satisfied by each of the parties prior to and after
such closing, will outline the manner of verifying revenue and bearing costs,
including costs associated with the Company's attorneys and accountants, will
set forth remedies on default and will include miscellaneous other terms.
Our present intent is that we will not enter into an agreement to acquire
or merge with any entity which cannot provide independent audited financial
statements at the time of closing of the proposed transaction and supply other
information that is normally disclosed in filings with the Securities and
Exchange Commission. We are subject to all of the reporting requirements
included in the 1934 Act. These rules are intended to protect investors by
deterring fraud and abuse in the securities markets through the use of shell
companies. Included in these requirements is the affirmative duty of the Company
to file independent audited financial statements as part of its Form 8-K to be
filed with the Securities and Exchange Commission upon consummation of a merger
or acquisition, as well as the Company's audited financial statements included
in its annual report on Form 10-K. In addition, in the filing of the Form 8-K
that we file to report an event that causes us to cease being a shell company,
we are required to include that information that is normally reported by a
company in its original Form 10.
ACCOUNTING IN THE EVENT OF A BUSINESS COMBINATION
In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards "SFAS" No. 141, "Business Combinations" and SFAS
No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires business
combinations initiated after June 30, 2001 to be accounted for using the
purchase method of accounting, and broadens the criteria for recording
intangible assets separate from goodwill. Recorded goodwill and intangibles will
be evaluated against these new criteria and may result in certain intangibles
being subsumed into goodwill, or alternatively, amounts initially recorded as
goodwill may be separately identified and recognized apart from goodwill. SFAS
No. 142 requires the use of a non-amortization approach to account for purchased
goodwill and certain intangibles. Under a non-amortization approach, goodwill
and certain intangibles is more than its fair value. Goodwill is the excess of
the acquisition costs of the acquired entity over the fair value of the
identifiable net assets acquired. The Company is required to test goodwill and
intangible assets that are determined to have an indefinite life for impairments
at least annually. The provisions of SFAS No. 142 require the completion of an
annual impairment test with any impairment recognized in current earnings. The
provisions of SFAS No. 141 and SFAS No. 142 may be applicable to any business
combination that we may enter into in the future.
We have also been informed that most business combinations will be
accounted for as a reverse acquisition with us being the surviving registrant.
As a result of any business combination, if the acquired entity's shareholders
will exercise control over us, the transaction will be deemed to be a capital
transaction where we are treated as a non-business entity. Therefore, the
accounting for the business combination is identical to that resulting from a
reverse merger, except no goodwill or other intangible assets will be recorded.
For accounting purposes, the acquired entity will be treated as the accounting
acquirer and, accordingly, will be presented as the continuing entity.
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REPORTING ISSUER STATUS
The Company chose to become a reporting company on a voluntary basis
because one attraction of the Company as a merger partner or acquisition vehicle
will be its status as a public company. In addition, we became a reporting
company to enhance investor protection and to provide information if a trading
market commences. Only those companies that report their current financial
information to the Securities and Exchange Commission, banking, or insurance
regulators are permitted to be quoted on the OTC Bulletin Board System.
Based upon our proposed future business activities, it is possible that we
may be deemed a "blank check" company (see "Risk Factors"). The Securities and
Exchange Commission definition of such a company is 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 issuing "penny stock."
A "penny stock" security is any equity security other than a security (i)
that is a reported security (ii) that is issued by an investment company (iii)
that is a put or call issued by the Option Clearing Corporation (iv) that has a
price of $5.00 or more (except for purposes of Rule 419 of the Securities Act of
1933, as amended) (v) that is registered on a national securities exchange (vi)
that is authorized for quotation on the NASDAQ Stock Market, unless other
provisions of the defining rule are not satisfied, or (vii) that is issued by an
issuer with (a) net tangible assets in excess of $2,000,000, if in continuous
operation for more than three years or $5,000,000 if in operation for less than
three years or (b) average revenue of at least $6,000,000 for the last three
years.
ITEM 1A. RISK FACTORS
Our business is subject to numerous risk factors, including the following:
1. We have had no operating history or earnings and negligible revenues from
operations and we are insolvent.
We have no assets or financial resources except cash from an officer loan.
We will, in all likelihood, sustain operating expenses without corresponding
revenues, at least until the consummation of a business combination. This may
result in us incurring a net operating loss that will increase continuously
until we can consummate a business combination with a profitable business
opportunity. There is no assurance that we can identify such a business
opportunity and consummate such a business combination.
Our auditor's going concern opinion and the notation in the financial
statements indicate that we do not have significant cash or other material
assets and that we are relying on advances from stockholders, officers and
directors to meet our limited operating expenses. We are insolvent in that we
are unable to pay our debts in the ordinary course of business as they become
due.
2. Our proposed plan of operation is speculative.
The success of our proposed plan of operation will depend to a great extent
on the operations, financial condition and management of the identified business
opportunity. While management intends to seek business combination(s) with
4
entities having established operating histories, there can be no assurance that
we will be successful in locating candidates meeting such criteria. In the event
we complete a business combination, of which there can be no assurance, the
success of our operations may be dependent upon management of the successor firm
or venture partner firm and numerous other factors beyond our control.
3. We face intense competition for business opportunities and combinations.
We are and will continue to be an insignificant participant in the business
of seeking mergers with, joint ventures with, and acquisitions of, small private
and public entities. A large number of established and well-financed entities,
including venture capital firms, are active in mergers and acquisitions of
companies that may be our desirable target candidates. Nearly all such entities
have significantly greater financial resources, technical expertise and
managerial capabilities than we have and, consequently, we will be at a
competitive disadvantage in identifying possible business opportunities and
successfully completing a business combination. Moreover, we will also compete
in seeking merger or acquisition candidates with numerous other small public
companies.
4. We have no agreements for a business combination or other transaction and
have established no standards for a business combination.
We have no arrangement, agreement or understanding with respect to engaging
in a merger with, joint venture with, or acquisition of, a private or public
entity. There can be no assurance that we will be successful in identifying and
evaluating suitable business opportunities or in concluding a business
combination. Management has not identified any particular industry or specific
business within an industry for our evaluation. There is no assurance that we
will be able to negotiate a business combination on terms favorable to us. We
have not established a specific length of operating history or a specified level
of earnings, assets, net worth or other criteria which we will require a target
business opportunity to have achieved, and without which we would not consider a
business combination in any form with such business opportunity. Accordingly, we
may enter into a business combination with a business opportunity having no
significant operating history, losses, limited potential or no potential for
earnings, limited assets, negative net worth or other negative characteristics.
5. Our success is dependent upon management that has other full time
employment, has limited experience and will only devote limited part time
working for the Company, and this makes our future even more uncertain.
None of our officers has entered into a written employment agreement with
the Company and none is expected to do so in the foreseeable future. We have not
obtained key man life insurance on any of our officers or directors.
Notwithstanding the combined limited experience and time commitment of
management, loss of the services of any of these individuals would adversely
affect development of our business and its likelihood of continuing operations.
6. The reporting requirements under federal securities law may delay or
prevent us from making certain acquisitions.
Sections 13 and 15(d) of the Securities Exchange Act of 1934, as amended,
(the "1934 Act"), require companies subject thereto to provide certain
information about significant acquisitions, including certified financial
statements for the company acquired, covering one, two, or three years,
depending on the relative size of the acquisition. The time and additional costs
5
that may be incurred by some target entities to prepare such statements may
significantly delay or essentially preclude consummation of an otherwise
desirable acquisition by the Company. Acquisition prospects that do not have or
are unable to obtain the required audited statements may not be appropriate for
acquisition so long as the reporting requirements of the 1934 Act are
applicable.
In addition to the audited financial statements, in the filing of the Form
8-K that we file to report an event that causes us to cease being a shell
company, we will be required to include that information that is normally
reported by a company in a Form 10. The time and additional costs that may be
incurred by some target entities to prepare and disclose such information may
significantly delay or essentially preclude consummation of an otherwise
desirable acquisition by the Company.
7. The Investment Company Act of 1940 creates a situation wherein we would be
required to register and could be required to incur substantial additional
costs and expenses.
Although we are subject to regulation under the 1934 Act, management
believes the Company is not subject to regulation under the Investment Company
Act of 1940, insofar as we will not be engaged in the business of investing or
trading in securities. In the event we engage in a business combination that
results in us holding passive investment interests in a number of entities, we
could be subject to regulation under the Investment Company Act of 1940. In such
event, we would be required to register as an investment company and could be
expected to incur significant registration and compliance costs. We have
obtained no formal determination from the Securities and Exchange Commission as
to the status of our Company under the Investment Company Act of 1940 and,
consequently, any violation of such Act would subject us to material adverse
consequences.
8. Our present management most likely will not remain after we complete a
business combination.
A business combination involving the issuance of our Common Stock will, in
all likelihood, result in shareholders of a private company obtaining a
controlling interest in us. Any such business combination may require our
management to sell or transfer all or a portion of the Company's Common Stock
held by them, and/or resign as members of the Board of Directors. The resulting
change in our control could result in removal of one or more present officers
and directors and a corresponding reduction in or elimination of their
participation in our future affairs.
9. At the time we do any business combination, each shareholder will most
likely hold a substantially lesser percentage ownership in the Company.
Our current primary plan of operation is based upon a business combination
with a private concern that, in all likelihood, would result in the Company
issuing securities to shareholders of any such private company. The issuance of
our previously authorized and unissued Common Stock would result in reduction in
the percentage of shares owned by our present and prospective shareholders and
may result in a change in our control or in our management.
10. As a shell company, we face substantial additional adverse business and
legal consequences.
6
We may enter into a business combination with an entity that desires to
establish a public trading market for its shares. A business opportunity may
attempt to avoid what it deems to be adverse consequences of undertaking its own
public offering by seeking a business combination with us. Such consequences may
include, but are not limited to, time delays of the registration process,
significant expenses to be incurred in such an offering, loss of voting control
to public shareholders and the inability or unwillingness to comply with various
federal and state laws enacted for the protection of investors.
On June 29, 2005, the Securities and Exchange Commission adopted final
rules amending the Form S-8 and the Form 8-K for shell companies like us. The
amendments expand the definition of a shell company to be broader than a company
with no or nominal operations/assets or assets consisting of cash and cash
equivalents. The amendments prohibit the use of a From S-8 (a form used by a
corporation to register securities issued to an employee, director, officer,
consultant or advisor), under certain circumstances, and revise the Form 8-K to
require a shell company to include current Form 10 information, including
audited financial statements, in the filing on Form 8-K that the shell company
files to report the acquisition of the business opportunity. This initial filing
must be made within four days of the acquisition. The Form 8-K filing may be
reviewed by the Securities and Exchange Commission and the prospects of certain
disclosures or review or the lack of the ability to issue securities using a
Form S-8 may delay the consummation of a business combination because of the
target entity's inability to comply with various federal and state laws enacted
for the protection of investors or the unwillingness to assume the significant
costs of compliance.
11. Our Common Stock may never be publicly traded and you may have no ability
to sell the shares.
There is no established public trading market for our shares of Common
Stock. And there can be no assurance that a market for our Common Stock will be
established or that, if established, a market will be sustained. Therefore, if
you purchase our Common Stock you may be unable to sell the shares. Accordingly,
you should be able to bear the financial risk of losing your entire investment.
Only market makers can apply to quote securities. Market makers who desire
to initiate quotations in the OTC Bulletin Board system must complete an
application (Form 211) (unless an exemption is applicable) and by doing so, will
have to represent that it has satisfied all applicable requirements of the
Securities and Exchange Commission Rule 15c2-11 and the filing and information
requirements promulgated under the Financial Industry Regulatory Authority, Inc.
("FINRA") Bylaws. The OTC Bulletin Board will not charge us a fee for being
quoted on the service. FINRA rules prohibit market makers from accepting any
remuneration in return for quoting issuers' securities on the OTC Bulletin Board
or any similar medium. FINRA will review the market maker's application (unless
an exemption is applicable) and if cleared, it cannot be assumed by any investor
that any federal, state or self-regulatory requirements
other than certain FINRA rules and Rule 15c2-11 have been considered by FINRA.
Furthermore, the clearance should not be construed by any investor as indicating
that FINRA, the Securities and Exchange Commission, or any state securities
commission has passed upon the accuracy or adequacy of the documents contained
in the submission.
The OTC Bulletin Board is a market maker or dealer-driven system offering
quotation and trading reporting capabilities - a regulated quotation service
that displays real-time quotes, last-sale prices, and volume information in OTC
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equity securities. The OTC Bulletin Board securities are not listed and traded
on the floor of an organized national or regional stock exchange. Instead, OTC
Bulletin Board securities transactions are conducted through a telephone and
computer network connecting market makers or dealers in stocks.
We are currently in the process of engaging a market maker to complete an
application (Form 211) (unless an exemption is applicable) to initiate
quotations for our common stock in the OTC Bulletin Board system , and there is
no assurance that our Common Stock will be accepted for listing on the OTC
Bulletin Board or on any other trading system.
12. If our Common Stock does not meet blue sky resale requirements, certain
shareholders may be unable to resell our Common Stock.
The resale of Common Stock must meet the blue sky resale requirements in
the states in which the proposed purchasers reside. If we are unable to qualify
the Common Stock and there is no exemption from qualification in certain states,
the holders of the Common Stock or the purchasers of the Common Stock may be
unable to sell them.
13. Our shareholders may face significant restrictions on the resale of our
Common Stock due to state "blue sky" laws or if we are determined to be a
"blank check" company.
There are state regulations that may adversely affect the transferability
of our Common Stock. We have not registered our Common Stock for resale under
the securities or "blue sky" laws of any state. We may seek qualification or
advise our shareholders of the availability of an exemption. But we are under no
obligation to register or qualify our Common Stock in any state or to advise the
shareholders of any exemptions.
Current shareholders, and person who desire to purchase the Common Stock in
any trading market that may develop in the future, should be aware that there
might be significant state restrictions upon the ability of new investors to
purchase the Common Stock.
Blue sky laws, regulations, orders, or interpretations place limitations on
offerings or sales of securities by "blank check" companies or in "blind-pool"
offerings, or if such securities represent "cheap stock" previously issued to
promoters or others. These limitations typically provide, in the form of one or
more of the following limitations, that such securities are:
(a) Not eligible for sale under exemption provisions permitting sales
without registration to accredited investors or qualified purchasers;
(b) Not eligible for the transaction exemption from registration for
non-issuer transactions by a registered broker-dealer;
(c) Not eligible for registration under the simplified small corporate
offering registration (SCOR) form available in many states;
(d) Not eligible for the "solicitations of interest" exception to
securities registration requirements available in many states;
(e) Not permitted to be registered or exempted from registration, and thus
not permitted to be sold in the state under any circumstances.
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Virtually all 50 states have adopted one or more of these limitations, or
other limitations or restrictions affecting the sale or resale of stock of blank
check companies or securities sold in "blind pool" offerings or "cheap stock"
issued to promoters or others. Specific limitations on such offerings have been
adopted in:
Alaska Nevada Tennessee
Arkansas New Mexico Texas
California Ohio Utah
Delaware Oklahoma Vermont
Florida Oregon Washington
Georgia Pennsylvania
Idaho Rhode Island
Indiana South Carolina
Nebraska South Dakota
Any secondary trading market which may develop, may only be conducted in
those jurisdictions where an applicable exemption is available or where the
shares have been registered.
We do not have any legal opinion as it relates to whether we are a blind
pool or blank-check company. The Securities and Exchange Commission have adopted
a rule (Rule 419) which defines a blank-check company as (i) a development stage
company, that is (ii) offering penny stock, as defined by Rule 3a51-1, and (iii)
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. Certain jurisdictions may have definitions that are more restrictive
than Rule 419. We have been informed that the Securities and Exchange Commission
has cautioned that "it will scrutinize registered offerings for attempts to
create the appearance that the registrant... has a specific business plan, in an
effort to avoid the application of Rule 419." Provisions of Rule 419 apply to
every registration statement filed under the Securities Act of 1933, as amended,
relating to an offering by a blank-check company.
If we are later determined to be a so-called "blank check" company, our
shareholders will be required to file a registration statement under the
Securities Act of 1933, as amended, prior to the resale of the Common Stock,
unless there exists a transactional or security exemption for such sale under
the Securities Act of 1933, as amended. Current shareholders and persons who
desire to purchase the Common Stock in any trading market that may develop in
the future, should be aware that we are under no obligation to register the
shares on behalf of our shareholders under the Securities Act of 1933, as
amended.
The Company's officers, directors and majority shareholders have expressed
their intentions not to engage in any transactions with respect to the Company's
Common Stock except in connection with or following a business combination
resulting in us no longer being defined as a blank check issuer. Any
transactions in our Common Stock by said shareholders will require compliance
with the registration requirements under the Securities Act of 1933, as amended.
14. Our Common Stock may be subject to significant restriction on resale due to
federal penny stock restrictions.
The Securities and Exchange Commission has adopted rules that regulate
broker or dealer practices in connection with transactions in penny stocks.
Penny stocks generally are equity securities with a price of less than $5.00
9
(other than securities registered on certain national securities exchanges or
quoted on the Nasdaq system, provided that current price and volume information
with respect to transactions in such securities is provided by the exchange
system). The penny stock rules require a broker or dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document prepared by the Securities and Exchange
Commission that provides information about penny stocks and the nature and level
of risks in the penny stock market. The broker or dealer also must provide the
customer with bid and offer quotations for the penny stock, the compensation of
the broker or dealer, and its salesperson in the transaction, and monthly
account statements showing the market value of each penny stock held in the
customer's account. The penny stock rules also require that prior to a
transaction in a penny stock not otherwise exempt from such rules, the broker or
dealer must make a special written determination that a penny stock is a
suitable investment for the purchaser and receive the purchaser's written
agreement to the transaction.
These disclosure requirements may have the effect of reducing the level of
trading activity in any secondary market for our stock that becomes subject to
the penny stock rules, and accordingly, shareholders of our Common Stock may
find it difficult or impossible to sell their securities.
ITEM 2. PROPERTIES
We presently utilize office space at 3604 54th Drive West, Suite K204,
Bradenton, Florida 34210. This space is provided to the Company by our president
on a rent free basis, and it is anticipated that this arrangement will remain
until such time as the Company successfully consummates a joint venture or
merger or acquisition. Management believes that this arrangement will meet the
Company's needs for the foreseeable future.
ITEM 3. LEGAL PROCEEDINGS
There is no litigation, pending or threatened, by or against the
Company.
ITEM 4. (REMOVED AND RESERVED)
PART II
ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER
PURCHASES OF EQUITY SECURITIES
MARKET INFORMATION
There is no trading market for our Common Stock at present and there has
been no trading market since inception. We do have a trading
symbol, ARRI. There is no assurance that a trading market will ever develop or,
if such a market does develop, that it will continue. The Company intends to
request a broker-dealer to make application to FINRA to have the Company's
securities traded on the OTC Bulletin Board System or published, in print and
electronic media, or either, in the Pink Sheets, LLC ("Pink Sheets"), however
there is no assurance that a broker-dealer will agree to make such application.
10
HOLDERS
As of June 30, 2010, there were approximately 78 stockholders of record
holding our common stock.
DIVIDENDS
We have never paid a dividend on our common stock and we do not intend to
pay a dividend in the foreseeable future. We have had no earnings to date and do
not anticipate any earnings until such time as a merger or acquisition is
consummated with another entity.
RECENT SALES OF UNREGISTERED SECURITIES
There were no sales of unregistered securities during the fiscal year ended
June 30, 2010.
REPURCHASES
We have never repurchased any shares of our common stock, nor were any
repurchases made on our behalf, nor have any future repurchases been authorized.
ITEM 6. SELECTED FINANCIAL DATA
The following balance sheet data and statement of operations data for the
year ended June 30, 2010 and 2009 were derived from our audited financial
statements. Our audited financial statements for those periods and the notes
thereto appear elsewhere herein. The data should be read in conjunction with the
annual financial statements, related notes, and other financial information
appearing elsewhere herein.
June 30, 2010 June 30, 2009
------------- -------------
Statement of Operations Data
Revenues $ 553 $ 0
Expenses (4,863) 0
--------- ---------
(Net Loss) $ (4,310) $ 0
========= =========
Loss per share
Basic (0) (0)
Diluted (0) (0)
Balance Sheet Data
Cash $ 250,598 $ 0
Other Current Assets 155 0
--------- ---------
Total Assets $ 250,753 $ 0
========= =========
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis is intended to help you understand
our financial condition and results of operations for the fiscal years ended
11
June 30, 2010 and 2009. You should read the following discussion and analysis
together with our audited financial statements and the notes to the financial
statements included under Item 8 in this report. Our future financial condition
and results of operations will vary from our historical financial condition and
results of operations described below based on a variety of factors. You should
carefully review the risks described under Item 1A and elsewhere in this report,
which identify certain important factors that could cause our future financial
condition and results of operations to vary.
1) Liquidity: The Company had cash of $250,598 from a convertible loan from
management and no liquid instruments at June 30,2010. It is anticipated that we
will incur nominal expenses in the implementation of the business plan described
herein. Because we have no capital with which to pay these anticipated expenses,
present management of the Company will pay these charges with their personal
funds, as 5% interest loans to the Company or as capital contributions. However,
if loans, the only opportunity which management has to have these loans repaid
will be from a prospective licensee or merger or acquisition candidate.
2) Capital Resources: As noted above, the Company has no significant
capital resources but will rely upon loans or capital contributions from
management to meet its needs.
3) Results of Operations: As noted above, the Company has conducted no
operations other than minimal escrow operations and the search for a merger or
acquisition candidate and the preparation of its filings with the SEC since
2009.
4) Off-Balance Sheet Arrangements: The Company has no off balance sheet
arrangements.
5) Disclosure of Contractual Obligations: The Company has no contractual
obligations except repayment of a Convertible Note ("Note") dated February 8,
2010, by which Stephen H. Liu ("Liu") loaned the Company $250,000. The Note
requires the Company to repay Liu $250,000 with simple interest (payable
semi-annually) accruing at the annual rate of 5% on February 8, 2012. The terms
of the Note allow Liu to convert at any time (upon written notice of conversion)
any portion of the principal of the Note or interest thereupon into Company
common stock as follows: the number of shares of common stock to be issued upon
each conversion of the Note shall be determined by dividing that portion of the
principal of the Note to be converted and interest, if any, by the Conversion
Price, and then multiplied by One Hundred Twenty Percent (120%). The Conversion
Price per share shall be the average of the three lowest closing bid prices for
the common stock on the OTC Bulletin Board, NASDAQ SmallCap Market, NASDAQ
National Market System, American Stock Exchange, or New York Stock Exchange
(whichever of the foregoing is at the time the principal trading exchange or
market for the common stock, the "Principal Market"), or if not then trading on
a Principal Market, such other principal market or exchange where the common
stock is listed or traded, for the thirty (30) trading days prior to but not
including the Conversion Date. Liu is the Company's Chief Executive Officer,
Chairman of its Board of Directors and its largest and controlling shareholder.
12
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Management believes that the Company bears no direct market risk. The
Company holds no debt or equity securities, no foreign currencies, and has no
credit facility. Management of the Company has agreed to extend loans to the
Company as needed to meet obligations. The Company has not made any sales,
purchases, or commitments with foreign entities which would expose it to
currency risks.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
INDEPENDENT AUDITORS" REPORT................................................ 14
BALANCE SHEET............................................................... 15
STATEMENT OF OPERATIONS..................................................... 16
STATEMENT OF STOCKHOLDER EQUITY (DEFICIT)................................... 17
STATEMENT OF CASH FLOWS..................................................... 18
NOTES TO FINANCIAL STATEMENTS............................................... 19
13
Stan J.H. Lee, CPA
2160 North Central Rd. Suite 203 * Fort Lee * NJ 07024
P.O. Box 436402 & San Ysidro * CA 92143-9402
619-623-7799 * Fax 619-564-3408 * E-mail) stan2u@gmail.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Arrin Corporation
(A Development Stage Company)
We have audited the accompanying balance sheet of Arrin Corporation as at June
30, 2010 and 2009, and the related statements of operation, shareholders' equity
(deficit) and cash flows for the period from December 31, 2007 ( inception) to
June 30, 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 audit 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. An audit includes 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 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 as of June 30, 2010 and 2009,
and the results of its operation and its cash flows for the period
aforementioned in conformity with U.S. generally accepted accounting principles.
The financial statements have been prepared assuming that the Company will
continue as a going concern. As discussed in the note to the financial
statements, the Company has not established any source of revenue to cover
its operating costs and losses from operations raises substantial doubt about
its ability to continue as a going concern. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
/s/ Stan J.H. Lee, CPA
- ----------------------------------
Stan J.H. Lee, CPA
September 17, 2010
Fort Lee, NJ
14
ARRIN CORPORATION
(A Development Stage Company)
BALANCE SHEETS
As of As of
June 30, 2010 June 30, 2009
------------- -------------
ASSETS
CURRENT ASSETS:
Cash $ 250,598 $ 29,082
Other Current Assets 155 --
--------- ---------
TOTAL ASSETS $ 250,753 $ 29,082
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Payable per Bankruptcy Plan $ -- $ 29,082
Interest payable 4,863 --
Convertible note 250,000 --
Payable to a related party 200 --
--------- ---------
TOTAL CURRENT LIABILITIES 255,063 29,082
--------- ---------
STOCKHOLDERS' EQUITY:
Common stock, $0.001 par value, 75,000,000 shares authorized,
5,567,324 shares issued and outstanding as of June 30,2010
and 2009, respectively 5,567 5,567
Paid-in capital
Deficit accumulated during development stage (9,877) (5,567)
--------- ---------
(4,310) --
--------- ---------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 250,753 $ 29,082
========= =========
See Notes to Financial Statements
15
ARRIN CORPORATION
(A Development Stage Company)
STATEMENT OF OPERATIONS
Cumulative from
December 31, 2007
Fiscal Years ended (inception) to
June 30, 2010 June 30, 2009 June 30, 2010
------------- ------------- -------------
REVENUE
Interest Income $ 553 $ -- $ 553
------------ ------------ ------------
Total Revenue 553 -- 553
------------ ------------ ------------
OPERATING EXPENSES
General and administrative expenses -- -- 5,567
------------ ------------ ------------
Total Expenses -- -- 5,567
------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES -- -- (5,014)
------------ ------------ ------------
OTHER INCOME (EXPENSE)
Interest expense (4,863) -- (4,863)
------------ ------------ ------------
Total other income (expense) (4,863) -- (4,863)
Provision for income taxes -- -- --
------------ ------------ ------------
NET INCOME (LOSS) $ (4,310) $ -- $ (9,877)
============ ============ ============
Basic Income (Loss) per share -- -- --
------------ ------------ ------------
Weighted average common shares
outstanding (Basic) 5,567,324 5,567,324 5,567,324
------------ ------------ ------------
Diluted income (Loss) per share -- -- --
------------ ------------ ------------
Weighted average common shares
outstanding (Diluted) 10,567,324 10,567,324 10,567,324
------------ ------------ ------------
See Notes to Financial Statements
16
ARRIN CORPORATION
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
Deficit
Accumulated
Additional During the
Common Stock Paid-in Development
Shares Amount Capital Stage Total
------ ------ ------- ----- -----
Balance, July 1, 2008 5,567,324 $ 5,567 $ -- $ (5,567) $ --
Net loss for year ended June 30,2009 -- -- -- -- --
--------- ------- ------- -------- --------
Balance as of June 30, 2009 5,567,324 5,567 -- (5,567) --
========= ======= ======= ======== ========
Net loss for year ended June 30,2010 -- -- -- (4,310) (4,310)
--------- ------- ------- -------- --------
Balance as of June 30, 2010 5,567,324 $ 5,567 $ -- $ (9,877) $ (4,310)
========= ======= ======= ======== ========
See Notes to Financial Statements
17
ARRIN CORPORATION
(A Development Stage Company)
STATEMENT OF CASH FLOWS
Cumulative from
December 31, 2007
Fiscal Years ended (inception) to
June 30, 2010 June 30, 2009 June 30, 2010
------------- ------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ (4,310) $ -- $ (9,877)
--------- --------- ---------
Adjustments to reconcile net income (loss) to
net cash (used in) operations
Increase in interest payable 4,863 -- 4,863
Increase in other assets (155) -- (155)
--------- --------- ---------
NET CASH PROVIDED BY (USED IN) OPERATIONS 4,708 -- 4,708
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
NET CASH PROVIDED BY INVESTING ACTIVITIES -- -- --
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Retirement of payable per Bankruptcy Plan (29,082) -- (29,082)
Increase of payable per Bankruptcy Plan -- -- 29,082
Common stock issuance -- -- 5,567
Increase in payable to a related party 200 -- --
Borrowing from a related party on convertible bond 250,000 -- 250,200
--------- --------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 221,118 -- 255,767
--------- --------- ---------
NET INCREASE (DECREASE) 221,516 -- 250,598
--------- --------- ---------
CASH AT THE BEGINNING OF THE PERIOD 29,082 -- --
--------- --------- ---------
CASH AT THE END OF THE PERIOD $ 250,598 $ -- $ 250,598
========= ========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid $ 4,863 $ -- $ 4,863
--------- --------- ---------
Income taxes paid $ -- $ -- $ --
--------- --------- ---------
See Notes to Financial Statements
18
ARRIN CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
NOTE 1. NATURE AND BACKGROUND OF BUSINESS
Arrin Corporation ("the Company" or "the Issuer") was organized under the laws
of the State of Nevada on December 31, 2007. The Company was established as part
of the Chapter 11 reorganization of Arrin Systems, Inc. ("Systems"). Under
Systems' Plan of Reorganization, as confirmed by the U.S. Bankruptcy Court for
the Southern District of California, Arrin Corporation was organized to collect
monthly payments from the sale of Systems' assets for the benefit of Systems'
creditors, and to make pro-rata distributions of the money received from that
sale to Systems' creditors. Thus, the Company acts essentially as an escrow
agent, receiving funds for the benefit of others and then distributing those
funds to their intended recipients.
The Bankruptcy Court also ordered that shares in Arrin Corporation be
distributed to Systems' creditors in the expectation that the Company would
develop or acquire additional business(es) or assets, further benefiting
Systems' creditors. The Company has been in the development stage since its
formation and has not yet developed or acquired any business or realized any
revenues. Its only activity has been the single, Court ordered, escrow operation
described above. The Company ceased its escrow operations on or about December
1, 2009.
The Company has not earned any revenue from operations since inception.
Accordingly, the Company's activities have been accounted for as those of a
"Development Stage Company". The Company's financial statements be identified as
those of a development stage company, and that the statements of operations,
stockholders' equity and cash flows disclose activity since the date of the
Company's inception. The Company has elected a fiscal year ending on June 30.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. BASIS OF ACCOUNTING
The Company's financial statements are prepared using the accrual method of
accounting. The Company has elected a June 30 year-end.
b. BASIC EARNINGS PER SHARE
In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share", which
specifies the computation, presentation and disclosure requirements for earnings
(loss) per share for entities with publicly held common stock. SFAS No. 128
supersedes the provisions of APB No. 15, and requires the presentation of basic
earnings (loss) per share and diluted earnings (loss) per share.
Basic net loss per share amounts are computed by dividing the net loss by the
weighted average number of common shares outstanding. Diluted earnings per share
are computed by dividing the net loss by the weighted average number of common
shares potentially outstanding, assuming that all outstanding warrants, options,
etc. were exercised. The Company has warrants outstanding which are exercisable
for a total of 5,000,000 common shares.
c. 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.
d. CASH and CASH EQUIVALENT
For the Balance Sheet and Statements of Cash Flows, all highly liquid
investments with maturity of three months or less are considered to be cash
equivalents.
19
e. GOODWILL and OTHER INTANGIBLE ASSETS
Goodwill represents the excess of the cost of businesses acquired over the fair
value of the identifiable net assets at the date of acquisition. Goodwill and
intangible assets acquired in a purchase or business combination and determined
to have indefinite useful lives are not amortized, but instead are evaluated for
impairment annually and if events or changes in circumstances indicate, the
carrying amount may be impaired per Statement of Financial Accounting Standards,
No.142 ("SFAS 142"), "Goodwill and Other Intangible Assets". An impairment loss
would generally be recognized when the carrying amount of the reporting unit's
net assets exceeds the estimated fair value of the reporting unit. The estimated
fair value is determined using a discounted cash flow analysis. SFAS 142 also
requires that intangible assets with estimable useful lives be amortized over
their respective estimated useful lives to their estimated residual values, and
reviewed for impairment in accordance with SFAS No. 144, "Accounting for
Impairment or Disposal of Long-Lived Assets".
f. REVENUE RECOGNITION
The Company recognizes revenues and the related costs when persuasive evidence
of an arrangement exists, delivery and acceptance has occurred or service has
been rendered, the price is fixed or determinable, and collection of the
resulting receivable is reasonably assured. Amounts invoiced or collected in
advance of product delivery or providing services are recorded as deferred
revenue. The Company accrues for warranty costs, sales returns, bad debts, and
other allowances based on its historical experience.
g. STOCK-BASED COMPENSATION
Statement of Financial Accounting Standards No. 123 ("SFAS 123"), "Accounting
for Stock-Based Compensation", provides for the use of a fair value based method
of accounting for stock-based compensation. However, SFAS 123 allows the
measurement of compensation cost for stock options granted to employees using
the intrinsic value method of accounting prescribed by Accounting Principles
Board Opinion No. 25 ("APB 25"), "Accounting for Stock Issued to Employees",
which only requires charges to compensation expense for the excess, if any, of
the fair value of the underlying stock at the date a stock option is granted (or
at an appropriate subsequent measurement date) over the amount the employee must
pay to acquire the stock. The Company has elected to account for employee stock
options using the intrinsic value method under APB 25. By making that election,
the Company is required by SFAS 123 to provide pro forma disclosures of net loss
as if a fair value based method of accounting had been applied.
h. INCOME TAXES
Income taxes are provided for using the liability method of accounting in
accordance with SFAS No. 109 "ACCOUNTING FOR INCOME TAXES." A deferred tax asset
or liability is recorded for all temporary differences between financial and tax
reporting. Temporary differences are the differences between the reported
amounts of assets and liabilities and their tax basis. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management, it is more
likely than not that some portion or all of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are adjusted for the effect of
changes in tax laws and rates on the date of enactment.
i. IMPACT OF NEW ACCOUNTING STANDARDS
The Company does not expect the adoption of recently issued accounting
pronouncements to have a significant impact on the Company's results of
operations, financial position, or cash flow.
NOTE 3. GOING CONCERN
The Company's financial statements are prepared in accordance with generally
accepted accounting principles applicable to a going concern. This contemplates
the realization of assets and the liquidation of liabilities in the normal
course of business. Currently, the Company does not have significant cash of its
own or other material assets, nor does it have operations or a source of revenue
sufficient to cover its operation costs and allow it to continue as a going
concern. The officers and directors have committed to advancing certain
operating costs of the Company.
20
Management plans to seek a merger or acquisition target with adequate funds to
support operations. Management has yet to identify a merger or acquisition
target, and there is no guarantee that the Company will be able to identify such
a target business in the future.
NOTE 4. STOCKHOLDERS' EQUITY - COMMON STOCK
The authorized common stock of the Company consists of 75,000,000 shares with
$0.001 par value. No other class of stock is authorized. As of June 30, 2010 and
2009, there were a total of 5,567,324 common shares issued and outstanding.
The Company's first and second stock issuances took place pursuant to the Plan
of Reorganization of Arrin Systems, Inc. ("Systems") confirmed by the U.S.
Bankruptcy Court. On December 12, 2007, the Court ordered the distribution of
shares in Arrin Corporation ("Arrin" or the "Company") to all general unsecured
creditors of Systems, with these creditors to receive one share in Arrin for
each $2.94 of Systems' debt which they held. These creditors received an
aggregate of 567,324 shares in the Company on December 31, 2007.
The Court also ordered the distribution of shares and warrants in Arrin to all
administrative creditors of Systems, with these creditors to receive one share
and five warrants in Arrin for each $0.10 of Systems' administrative debt which
they held. On January 15, 2008, these creditors received an aggregate of
1,000,000 common shares in the Company and 5,000,000 warrants consisting of
1,000,000 "A Warrants" each convertible into one share of common stock at an
exercise price of $1.00; 1,000,000 "B Warrants" each convertible into one share
of common stock at an exercise price of $2.00; 1,000,000 "C Warrants" each
convertible into one share of common stock at an exercise price of $3.00;
1,000,000 "D Warrants" each convertible into one share of common stock at an
exercise price of $4.00; and 1,000,000 "E Warrants" each convertible into one
share of common stock at an exercise price of $5.00.
On December 3, 2009, the Company lowered the exercise price of each of the above
warrants to $0.001 per share.
On February 4, 2008 the Company issued a total of 4,000,000 shares of common
stock to an Officer and Director in exchange for $4,000 in cash to be used as
operating capital for the Company. The shares were issued at a price of $0.001
per share which is their par value.
As a result of these issuances there were a total 5,567,324 common shares issued
and outstanding, and a total of 5,000,000 warrants issued and outstanding, at
June 30, 2008 and also at June 30, 2009.
NOTE 5. INCOME TAXES
The Company had no business activity and made no U.S. federal income tax
provision for the year ended June 30, 2010 or the year ended June 30, 2009.
NOTE 6. RELATED PARTY TRANSACTIONS
The Company neither owns nor leases any real or personal property. An officer of
the corporation provides office services without charge. Such costs are
immaterial to the financial statements and accordingly, have not been reflected
therein. The officers and directors for the Company are involved in other
business activities and may, in the future, become involved in other business
opportunities. If a specific business opportunity becomes available, such
persons may face a conflict in selecting between the Company and their other
business interest. The Company has not formulated a policy for the resolution of
such conflicts. On December 10, 2009, Stephen H. Liu acquired 4,000,000 common
shares from an officer and director of the Company, and an additional 1,000,000
common shares and 5,000,000 warrants from other shareholders pursuant to the
closing of a share purchase agreement.
On February 8, 2010, Stephen H. Liu ("Liu") loaned the Company $250,000 pursuant
to a Convertible Note ("Note") of the same date. The Note requires the Company
to repay Liu $250,000 with simple interest (payable semi-annually) accruing at
the annual rate of 5% on February 8, 2012.
The terms of the Note allow Liu to convert at any time (upon written notice of
conversion) any portion of the principal of the Note or interest thereupon into
Company common stock as follows: the number of shares of common stock to be
21
issued upon each conversion of the Note shall be determined by dividing that
portion of the principal of the Note to be converted and interest, if any, by
the Conversion Price, and then multiplied by One Hundred Twenty Percent (120%).
The Conversion Price per share shall be the average of the three lowest closing
bid prices for the common stock on the OTC Bulletin Board, NASDAQ SmallCap
Market, NASDAQ National Market System, American Stock Exchange, or New York
Stock Exchange (whichever of the foregoing is at the time the principal trading
exchange or market for the common stock, the "Principal Market"), or if not then
trading on a Principal Market, such other principal market or exchange where the
common stock is listed or traded, for the thirty (30) trading days prior to but
not including the Conversion Date.
Liu is the Company's Chief Executive Officer, Chairman of its Board of Directors
and its largest and controlling shareholder.
NOTE 7. WARRANTS AND OPTIONS
There were 5,000,000 warrants outstanding, each to acquire one share of common
stock of the Company, as at June 30, 2010 and 2009. These warrants are more
fully described above in Note 4: Stockholders' Equity.
NOTE 8. COMMITMENT AND CONTINGENCY
There is no commitment or contingency to disclose as of the year ended June 30,
2010 or 2009 other than the warrants described above in Note 7: Warrants and
Options and the $250,000 loan to the Company from Stephen H. Liu, the Company's
Chairman, Chief Executive Officer and largest and controlling shareholder.
NOTE 9. CASH HELD FOR THE BENEFIT OF OTHERS
As discussed in Note 1 above, the Company's operated essentially as an escrow
agent, receiving funds from the sale of the assets of its bankrupt former
affiliate, Arrin Systems, Inc., and then distributing those assets to the
creditors of Arrin Systems, Inc. The Company ceased its escrow operations on or
about December 1, 2009. On February 8, 2010, Stephen H. Liu ("Liu") loaned the
Company $250,000 pursuant to a Convertible Note ("Note") of the same date. Thus
the cash shown on the Company's Balance Sheets is a loan to the Company, and the
receipt of that cash is not considered revenue to the Company and thus is not
shown in its Statement of Operations.
NOTE 10. SUBSEQUENT EVENTS
On September 12, 2010, Stephen H. Liu ("Liu") loaned the Company $200,000
pursuant to a Convertible Note ("Note") of the same date. The Note requires the
Company to repay Liu $200,000 with simple interest (payable semi-annually)
accruing at the annual rate of 5% on September 12, 2012.
The terms of the Note allow Liu to convert at any time (upon written notice of
conversion) any portion of the principal of the Note or interest thereupon into
Company common stock as follows: the number of shares of common stock to be
issued upon each conversion of the Note shall be determined by dividing that
portion of the principal of the Note to be converted and interest, if any, by
the Conversion Price, and then multiplied by One Hundred Twenty Percent (120%).
The Conversion Price per share shall be the average of the three lowest closing
bid prices for the common stock on the OTC Bulletin Board, NASDAQ SmallCap
Market, NASDAQ National Market System, American Stock Exchange, or New York
Stock Exchange (whichever of the foregoing is at the time the principal trading
exchange or market for the common stock, the "Principal Market"), or if not then
trading on a Principal Market, such other principal market or exchange where the
common stock is listed or traded, for the thirty (30) trading days prior to but
not including the Conversion Date.
Liu is the Company's Chief Executive Officer, Chairman of its Board of Directors
and its largest and controlling shareholder.
22
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There are no changes or disagreements with the findings of our accountants.
ITEM 9A. CONTROLS AND PROCEDURES
We are responsible for establishing and maintaining adequate internal
control over financial reporting in accordance with Exchange Act Rule 13a-15.
Our Chief Executive Officer and Chief Financial Officer conducted an evaluation
of the effectiveness of our internal control over financial reporting as of June
30, 2009 and concluded that as of that date, our disclosure controls and
procedures were effective to provide reasonable assurance that information we
are required to disclose in reports that we file or submit under the Exchange
Act is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission rules and forms, and that
such information is accumulated and communicated to our Chief Executive Officer
and Chief Financial Officer to allow timely decisions regarding required
disclosure.
This annual report does not include a report of management's assessment
regarding internal control over financial reporting or an attestation report of
the Company's registered public accounting firm due to a transition period
established by rules of the Securities and Exchange Commission for newly public
companies.
Changes in internal control over financial reporting. There have not been
any changes in our internal control over financial reporting (as such term is
defined in Rule 13a-15(f) under the Exchange Act), or any other factors during
the period covered by this report, that have materially 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, AND CORPORATE GOVERNANCE
The current members of our board of directors are as follows:
Name of Director Age Year First Became a Director
---------------- --- ----------------------------
Stephen H. Liu 50 Director since 2009
George Lin 49 Director since 1-22-10
Gary L. Blum 69 Director since 2009
PRINCIPAL OCCUPATIONS DURING AT LEAST THE PAST FIVE YEARS AND CERTAIN
DIRECTORSHIPS
Dr. Stephen Liu currently serves as Chairman and Chief Executive Officer of
ChiMed, Inc., a visual health content provider for consumers in Asia. From
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September 2000 through September 2008, Dr. Liu served as Chairman of
InterBusiness Bank and from 1992 until 2006, Dr. Liu served on the faculty of
the UCLA School of Medicine and was a team physician staff member for UCLA
athletics for 8 years. Dr. Liu graduated from the University of Southern
California School of Medicine, and trained as an orthopedic surgeon specializing
in Sports Medicine.
The Board of Directors of Cardo Medical, Inc. (CDOM:OTCBB) appointed
Stephen Liu, M.D., as a director effective as of April 8, 2010.
Mr. George Lin is a California Certified Public Accountant. In 1985 he
established The George Lin Organization (www.georgelinorganization.com) f/k/a
The George Lin Management Co. to be business and tax advisors to business
entities and individuals. Aside from tax and accounting consultation and audit
representation, the company acts as a business management firm. Mr. Lin has
experience and an understanding of business management operations/controls and
various fields of taxation. Mr. Lin received his B.S. in Accounting from
Cleveland State University in 1983; M.B.A. in Business Management from
Youngstown State University in 1985; and a Master in Science Taxation degree
from Golden Gate University in 1999. Additionally, since late 2009, he teaches
business development and comprehensive taxation for TaxSmart America Business
Centers and acts as a consultant for its licensees.
Mr. Gary L. Blum established the Law Offices of Gary L. Blum in 1978. Mr.
Blum has served as counsel for a wide variety of closely-held and public
companies for over three decades. He also has extensive experience in the field
of entertainment, having been counsel for the production and financing of over
fifty motion pictures. Prior to becoming an attorney, he was a tenured professor
of philosophy at the University of Nebraska, Omaha. Mr. Blum received his B.S.,
Magna Cum Laude, in Mathematics from Loras College; an M.A. in Philosophy from
the University of Notre Dame; and J.D. and M.B.A. degrees from the University of
Southern California Gould School of Law and Marshall School of Business,
respectively.
The current executive officers of the Company are as follows:
Name of Officer Age Position
--------------- --- --------
Stephen H. Liu 50 President and CEO
George Lin 49 Treasurer and CFO
Gary L. Blum 69 Secretary
Background information on our executive officers is set forth above under
our board of directors.
CODE OF ETHICS.
We have adopted a code of ethics that applies to our principal executive
officer, principal financial officer, and persons performing similar functions.
The code of ethics will be posted on the investor relations section of the
Company's website in the event that we develop a website. At such time as we
have posted the code of ethics on our website, we intend to satisfy the
24
disclosure requirements under Item 10 of Form 8-K regarding any amendment to, or
waiver from, a provision of the code of ethics by posting such information on
the website. A copy of our code of ethics may be obtained without charge, upon
request, by writing to our Chief Executive Officer at 3604 54th Drive West, Ste.
K204, Bradenton FL 34210.
AUDIT COMMITTEE.
Our board of directors has not established an audit committee. In addition,
we do not have a compensation committee or executive committee or similar
committees. We will not, in all likelihood, establish an audit committee until
such time as the Company generates a positive cash flow of which there can be no
assurance. We recognize that an audit committee, when established, will play a
critical role in our financial reporting system by overseeing and monitoring
management's and the independent auditors' participation in the financial
reporting process. At such time as we establish an audit committee, its
additional disclosures with our auditors and management may promote investor
confidence in the integrity of the financial reporting process.
Until such time as an audit committee has been established, the full board
of directors will undertake those tasks normally associated with an audit
committee to include, but not by way of limitation, the (i) review and
discussion of the audited financial statements with management, and (ii)
discussions with the independent auditors of matters required to be discussed by
the Statement On Auditing Standards No. 61 and No. 90, as may be modified or
supplemented.
ITEM 11. EXECUTIVE COMPENSATION
No officer or director has received any compensation for services rendered
to the Company since its inception, nor are there any agreements in place or
contemplated to provide compensation to any officer or director. None of our
directors or officers will receive any finders fee, either directly or
indirectly, as a result of their respective efforts to implement the Company's
business plan outlined herein and/or identify or negotiate a license, merger, or
acquisition for the Company. We have no retirement, pension, profit sharing,
stock option or insurance programs or other similar programs for the benefit of
our officers, directors, or employees, and we have no employees.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The following table sets forth certain information as of June 30, 2010
regarding the beneficial ownership of our common stock (i) by each person known
by the Company to be the beneficial owner of more than five percent of the
outstanding common stock, (ii) by each director of the Company, (iii) by each
executive officer of the Company and (iv) by all executive officers and
directors of the Company as a group.
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Name and Address of Number of Shares
Beneficial Owner Beneficially Owned Percent of Class
---------------- ------------------ ----------------
Stephen H. Liu 10,000,000 (1) 94.63%
3604 54th Drive West, Ste K204
Bradenton, FL 34210
George Lin 0 0%
3604 54th Drive West, Ste K204
Bradenton, FL 34210
Gary L. Blum 0 0%
3604 54th Drive West, Ste K204
Bradenton, FL 34210
All Officers and 10,000,000 94.93%
Directors as a Group
(three individuals)
- ----------
(1) Comprised of 5,000,000 shares of common stock and 5,000,000 warrants to
purchase common stock at an exercise price of $.001 per share, exercisable
at any time.
The remaining 567,324 shares of the Company's outstanding common shares are
held by 77 persons, no one of which is known to be the beneficial owner of five
percent (5%) or more of the Company's common shares. There are, as of the date
hereof, a total of 10,567,324 common shares issued and outstanding.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS AND DIRECTOR
INDEPENDENCE
On February 8, 2010, Stephen H. Liu ("Liu") loaned the Company $250,000
pursuant to a Convertible Note ("Note") of the same date. The Note requires the
Company to repay Liu $250,000 with simple interest (payable semi-annually)
accruing at the annual rate of 5% on February 8, 2012.The terms of the Note
allow Liu to convert at any time (upon written notice of conversion) any portion
of the principal of the Note or interest thereupon into Company common stock as
follows: the number of shares of common stock to be issued upon each conversion
of the Note shall be determined by dividing that portion of the principal of the
Note to be converted and interest, if any, by the Conversion Price, and then
multiplied by One Hundred Twenty Percent (120%). The Conversion Price per share
shall be the average of the three lowest closing bid prices for the common stock
on the OTC Bulletin Board, NASDAQ SmallCap Market, NASDAQ National Market
System, American Stock Exchange, or New York Stock Exchange (whichever of the
foregoing is at the time the principal trading exchange or market for the common
stock, the "Principal Market"), or if not then trading on a Principal Market,
such other principal market or exchange where the common stock is listed or
traded, for the thirty (30) trading days prior to but not including the
Conversion Date.
Liu is the Company's Chief Executive Officer, Chairman of its Board of
Directors and its largest and controlling shareholder.
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The Company's three directors are also its three officers. Therefore none
of its directors may be considered as independent.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Stan J. H. Lee, CPA has audited the Company's financial statements since
2007. The following table sets forth the aggregate fees billed by Stan J. H. Lee
to the Company for:
2010 2009
------ ------
Audit fees, including the audit of the Company's
annual financial statements and fees related to
consents and review of registration statements $2,000 $2,500
Audit related fees 0 0
Tax fees and tax related fees 0 0
All other fees for other services 0 0
The Board of Directors acts as the Audit Committee. The Board pre-approves
the engagement of accountants to render all audit services for the Company, as
well as any changes to the terms of the engagement. The Board will also
pre-approve all non-audit related services proposed to be provided by the
Company's independent registered public accounting firm. The Board reviews the
terms of the engagement, a description of the engagement and a budget for the
engagement.
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PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following documents are filed as part of this report:
The financial statements listed below are included under Item 8 of this
report:
Balance Sheets as of June 30, 2010 and 2009;
Statements of Operations for the years ended June 30, 2010 and 2009;
Statements of Stockholders' Equity since 2007 (inception);
Statements of Cash Flows for the years ended June 30, 2010 and 2009; and
Notes to Financial Statements.
Exhibit 3.1 Articles of Incorporation (1)
Exhibit 3.2 Bylaws (2)
Exhibit 4.1 Convertible Note (3)
Exhibit 31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
Filed herewith
Exhibit 31.2 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
Filed herewith
Exhibit 32.1 Section 1350 Certification of Chief Executive Officer
Filed herewith
Exhibit 32.2 Section 1350 Certification of Chief Financial Officer
Filed herewith
- ----------
(1) Incorporated by reference to exhibit 3.1 included in the Registrant's Form
10, filed on July 31, 2009
(2) Incorporated by reference to exhibit 3.2 included in the Registrant's Form
10, filed on July 31, 2009
(3) Incorporated by reference to exhibit 4.1 included in the Registrant's Form
8-K, filed on February 16, 2010
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Arrin Corporation, the Registrant, has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: September 22, 2010 ARRIN CORPORATION
By: /s/ Stephen H. Liu
---------------------------------
Stephen H. Liu
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of Arrin Corporation,
in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Stephen H. Liu President and Director September 22, 2010
- -------------------------- (Principal Executive Officer)
Stephen H. Liu
/s/ George Lin Chief Financial Officer, Director September 22, 2010
- -------------------------- (Principal Financial Officer)
George Lin
/s/ Gary L. Blum Secretary, Director September 22, 2010
- --------------------------
Gary L. Blum
29