UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2010
Commission File Number 000-53748
ARRIN CORPORATION
(Exact name of registrant as specified in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
3604 54th Drive West, Ste. K104
Bradenton, FL 34210
(Address of principal executive offices, including zip code)
Telephone (213) 381-7450 Facsimile (213) 384-1035
(Telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the last 90 days. YES [X] NO [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). YES [ ] NO [X]
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,"
"non-accelerated filer," and "smaller reporting company" in Rule 12b-2 of the
Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). YES [X] NO [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 10,567,324 shares of Common Stock
outstanding as of November 9, 2010.
FORWARD-LOOKING STATEMENTS
OUR DISCLOSURE AND ANALYSIS IN THIS QUARTERLY REPORT ON FORM 10-Q 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.
The un-audited quarterly financial statements for the period ended September 30,
2010, prepared by the Company, immediately follow.
2
ITEM 1. FINANCIAL STATEMENTS
ARRIN CORPORATION
(A Development Stage Company)
BALANCE SHEETS
(unaudited)
As of As of
September 30, June 30,
2010 2009
---------- ----------
ASSETS
ASSETS
Cash $ 453,627 $ 250,598
Federal Income Tax Receivable 186 155
---------- ----------
TOTAL ASSETS $ 453,813 $ 250,753
========== ==========
LIABILITIES
CURRENT LIABILITIES
Payable per Bankruptcy Plan $ 0 $ 0
Interest Payable -- 4,863
Officer Loans Payable 453,979 250,200
---------- ----------
TOTAL LIABILITIES 438,549 255,063
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $0.001 par value:
75,000,000 shares authorized,
5,567,324 shares issued and out
as of 6/30/09 and 10,567,324 at 9/30/10 10,567 5,567
Deficit accumulated during development stage (9,877) (5,567)
Current Year Net Income/(Loss) (856) (4,310)
---------- ----------
TOTAL SHAREHOLDERS' EQUITY (DEFICIT) (166) (4,310)
---------- ----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 453,813 $ 250,753
========== ==========
See Notes to Financial Statements
3
ARRIN CORPORATION
(A Development Stage Company)
STATEMENT OF OPERATIONS
(unaudited)
Cumulative from
December 31, 2007
Three Months Ended (inception) thru
September 30, September 30, September 30,
2010 2009 2010
---------- ---------- ----------
REVENUE $ -- $ -- $ --
---------- ---------- ----------
Total Revenue -- -- --
EXPENSES
General & Administrative 1,178 -- 1,178
Professional Expense -- -- 4,000
Reorganization Expense -- -- 1,567
---------- ---------- ----------
Operating Expense 1,178 -- 6,745
---------- ---------- ----------
OPERATING INCOME (LOSS) 1,178 -- (6,745)
OTHER INCOME (EXPENSE)
Interest Income 321 -- 874
Interest Expense (5,625) -- (10,488)
Current Income Tax -- -- --
Income Tax Benefit -- -- --
---------- ---------- ----------
NET INCOME (LOSS) $ (6,482) $ -- $ (16,359)
========== ========== ==========
Basic & Diluted Income(Loss) per Share 0 0
---------- ----------
Weighted average number of common shares
outstanding 5,567,324 5,567,324
See Notes to Financial Statements
4
ARRIN CORPORATION
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
September 30, 2010
(unaudited)
Accumulated
Additional During the Total
Common Stock Paid-in Development Stockholders
Shares Amount Capital Stage Equity
------ ------ ------- ----- ------
Common Stock Issued
Per Court Order
Dec. 31, 2007 567,324 $ 567 $ 0 $ 0 $ 567
Common Stock Issued
Per Court Order
Jan. 15, 2008 1,000,000 1,000 0 1,000
Common Stock Issued
For Cash Feb. 4, 2008 4,000,000 4,000 0 4,000
Net loss for year
Ended June 30, 2008 (5,567) (5,567)
---------- -------- ------- --------- --------
Balance, June 30, 2008 5,567,324 5,567 0 (5,567) 0
---------- -------- ------- --------- --------
Net loss for year
Ended June 30, 2009 0 0
---------- -------- ------- --------- --------
Balance, June 30, 2009 5,567,324 5,567 0 (5,567) 0
---------- -------- ------- --------- --------
Net income for period
Ended June 30, 2010 (9,877) 4,310
---------- -------- ------- --------- --------
Common Stock Issued
For Cash Sep 30, 2010 5,000,000 5,000 5,000
---------- -------- ------- --------- --------
Balance, September 30, 2010 10,567,324 $ 10,567 $ 0 $ (16,359) $ (5,792)
========== ======== ======= ========= ========
See Notes to Financial Statements
5
ARRIN CORPORATION
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(unaudited)
Three Months Ended
September 30, September 30,
2010 2009
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ (6,842) $ --
---------- ----------
Adjustments to reconcile net income (loss) to
net cash (used in) operations:
Federal Income Tax Withheld -31 --
Increase in Interest Payable 5,625 --
- ----------
Changes in operating assets and liabilities (888) --
---------- ----------
NET CASH PROVIDED BY (USED IN) OPERATIONS -- --
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
NET CASH PROVIDED BY INVESTING ACTIVITIES -- --
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issuance 5,000 --
Borrowing from related party on convertible bond 198,916 --
---------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 203,916 --
---------- ----------
NET INCREASE (DECREASE) 203,028 --
---------- ----------
CASH BEGINNING OF PERIOD 250,598 --
---------- ----------
CASH END OF PERIOD $ 453,627 $ --
========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid $ -- $ --
---------- ----------
Income taxes paid $ -- $ --
---------- ----------
See Notes to Financial Statements
6
ARRIN CORPORATION
(A Development Stage Company)
Notes to Financial Statements
September 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 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 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 additional business. Its only activity is
the single, Court ordered, escrow operation described above. The Company ceased
its escrow operation 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.
7
ARRIN CORPORATION
(A Development Stage Company)
Notes to Financial Statements
September 30, 2010
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.
8
ARRIN CORPORATION
(A Development Stage Company)
Notes to Financial Statements
September 30, 2010
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.
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 September 30,
2010 and 2009, there were a total of 10,567,324 and 5,567,324 common shares
issued and outstanding, respectively.
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 Corp. ("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 that 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.
On September 30, 2010, the Company issued an aggregate of 5,000,000 common
shares to Stephen H. Liu ("Liu") upon Liu's exercise of 5,000,000 warrants to
purchase Company common stock by payment of the exercise price of $.001 per
share. All of these warrants were originally issued to creditors of Arrin
Systems, Inc. by order of the U.S. Bankruptcy Court of Southern California as
part of the Chapter 11 Plan of Reorganization of Arrin Systems, Inc. The
warrants were distributed under an exemption from registration provided by
Section 1145 of Title 11 of the U.S. Code (the "Bankruptcy Code"); and the sale
of the 5,000,000 shares of Company common stock to Liu by exercise of the
9
ARRIN CORPORATION
(A Development Stage Company)
Notes to Financial Statements
September 30, 2010
5,000,000 warrants is also exempt from registration as provided by Section 1145
of the Bankruptcy Code.
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
December 31, 2009, and a total 10,567,324 common shares issued and outstanding,
and no warrants issued and outstanding at September 30, 2010
NOTE 5. INCOME TAXES
The Company had no income and made no U.S. federal income tax provision for the
years ended June 30, 2009 and 2010 or for the quarters ended September 30, 2010
and 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 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.
On September 12, 2010, Liu loaned the Company $200,000 pursuant to a Convertible
Note ("Note2") of the same date. The Note2 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 Note2 allow Liu to convert at any time (upon written notice of
conversion) any portion of the principal of the Note2 or interest thereupon into
Company common stock as follows: the number of shares of common stock to be
issued upon each conversion of the Note2 shall be determined by dividing that
portion of the principal of the Note2 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
10
ARRIN CORPORATION
(A Development Stage Company)
Notes to Financial Statements
September 30, 2010
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.
On September 30, 2010, the Company issued an aggregate of 5,000,000 common
shares to Liu upon Liu's exercise of 5,000,000 warrants to purchase Company
common stock by payment of the exercise price of $.001 per share. All of these
warrants were originally issued to creditors of Arrin Systems, Inc. by order of
the U.S. Bankruptcy Court of Southern California as part of the Chapter 11 Plan
of Reorganization of Arrin Systems, Inc. The warrants were distributed under an
exemption from registration provided by Section 1145 of Title 11 of the U.S.
Code (the "Bankruptcy Code"); and the sale of the 5,000,000 shares of Company
common stock to Liu by exercise of the 5,000,000 warrants is also exempt from
registration as provided by Section 1145 of the Bankruptcy Code.
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 September 30, 2009 and none at September 30, 2010.
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 periods ended March
31, 2010 or 2009 other than the warrants described above and the commitment to
pay funds held for the benefit of the creditors of Arrin Systems, Inc. to those
creditors on a quarterly basis.
NOTE 9. CASH HELD FOR THE BENEFIT OF OTHERS
As discussed in Note 1 above, the Company's has 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 funds 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 of the same date. On September
12, 2010, Liu loaned the Company an additional $200,000 pursuant to another
Convertible 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 30, 2010, the Company issued an aggregate of 5,000,000 common
shares to Stephen H. Liu ("Liu") upon Liu's exercise of 5,000,000 warrants to
purchase Company common stock by payment of the exercise price of $.001 per
share. All of these warrants were originally issued to creditors of Arrin
Systems, Inc. by order of the U.S. Bankruptcy Court of Southern California as
part of the Chapter 11 Plan of Reorganization of Arrin Systems, Inc. The
warrants were distributed under an exemption from registration provided by
Section 1145 of Title 11 of the U.S. Code (the "Bankruptcy Code"); and the sale
of the 5,000,000 shares of Company common stock to Liu by exercise of the
5,000,000 warrants is also exempt from registration as provided by Section 1145
of the Bankruptcy Code. See Notes 7. and 4. above.
Liu is the Company's Chief Executive Officer, Chairman of its Board of Directors
and its largest and controlling shareholder.
On October 11, 2010, the Company issued a warrant to CCG Investor Relations
Partners LLC ("Holder") which entitled the Holder to purchase up to 100,000
fully-paid and non-assessable shares of Company common stock at the same price
paid for the Company's common stock upon the completion of its next equity
financing in excess of US$500,000. The warrant expires on October 11, 2013.
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
FORWARD LOOKING STATEMENTS
The discussion contained herein contains "forward-looking statements" that
involve risk and uncertainties. These statements may be identified by the use of
terminology such as "believes," "expects," "may," "should" or "anticipates" or
expressing this terminology negatively or similar expressions or by discussions
of strategy. The cautionary statements made in this Form 10-Q should be read as
being applicable to all related forward-looking statements wherever they appear
in this Form 10-Q. Our actual results could differ materially from those
discussed in this report.
COMPANY HISTORY
Arrin Corporation ("the Company" or "the Issuer") was organized under the laws
of the State of Nevada on December 31, 2007 as part of the implementation of the
Chapter 11 plan of reorganization of Arrin Systems, Inc. ("Systems"). Systems
filed for Chapter 11 Bankruptcy in April 2007 in the U.S. Bankruptcy Court for
the Southern District of California. Systems' plan of reorganization was
confirmed by the Court on December 12, 2007 and became effective on December 30,
2007. The plan of reorganization provided for the establishment of the Issuer
and for the Issuer to receive, on a monthly basis, the proceeds of the sale of
Systems' business contracts from the buyer of those contracts, Acxiom
Corporation. The plan of reorganization also required the Issuer to prepare and
mail checks to Systems' unsecured creditors representing their pro rata share of
the proceeds received from the sale of System's contracts to Acxiom Corporation.
These receipts and disbursements were to continue for three years after which
the payments from Acxiom and to the creditors will cease. Thus, in effect, the
business of the Issuer has been to act as an escrow agent for the benefit of
Systems' creditors. The Company ceased its escrow operation on or about December
1, 2009. The Company is seeking to acquire or acquire a new business.
LIQUIDITY: The Company had cash of $453,627 (and no liquid instruments) at
September 30, 2010 from convertible loans from management and cash of $250,598
at June 30, 2010. Those funds at June 30, 2010 were also from convertible loans
from management and thus were not revenue to the Company. It is anticipated that
we will incur only 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 loans to the Company or as capital contributions.
CAPITAL RESOURCES: As noted above, the Company has no significant capital
resources of its own but will rely upon loans or capital contributions from
management to meet its needs.
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.
OFF-BALANCE SHEET ARRANGEMENTS: The Company has no off-balance sheet
arrangements.
DISCLOSURE OF CONTRACTUAL OBLIGATIONS: The Company has no contractual
obligations except: (1) 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; and (2)
repayment of a Convertible Note ("Note2") dated September 12, 2010, by which
Stephen H. Liu ("Liu") loaned the Company $200,000. The Note2 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 each of
the Note and Note2 (collectively, the "Notes") allow Liu to convert at any time
(upon written notice of conversion) any portion of the principal of the Notes or
interest thereupon into Company common stock as follows: the number of shares of
common stock to be issued upon each conversion of the Notes shall be determined
by dividing that portion of the principal of the Notes 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
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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.
GOING CONCERN.
The accompanying financial statements are presented on a going concern basis.
The Company's financial condition raises substantial doubt about the Company's
ability to continue as a going concern. The Company does not have significant
cash or other material assets and it is relying on advances from stockholders,
officers and directors to meet its limited operating expenses.
ITEM 3. 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 4. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Our management team, under the supervision and with the participation of our
principal executive officer and our principal financial officer, evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures as such term is defined under Rule 13a-15(e) promulgated under the
Exchange Act, as of the last day of the fiscal period covered by this report,
September 30, 2010. The term disclosure controls and procedures means our
controls and other procedures that are designed to ensure that information
required to be disclosed by us in the reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the SEC's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by us in the reports that we
file or submit under the Exchange Act is accumulated and communicated to
management, including our principal executive and principal financial officer,
or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure. Based on this evaluation, our principal
executive officer and our principal financial officer concluded that, as of
September 30, 2010, our disclosure controls and procedures were effective at a
reasonable assurance level.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes in our internal control over financial reporting during
the fiscal quarter ended September 30, 2010 that materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 1A. RISK FACTORS
There have been no material changes to the risks of our business from those
stated in our Form 10-K filed with the Securities Exchange Commission on
September 24, 2010.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS
No. Description
- --- -----------
31.1 Certification of Chief Executive Officer required by Rule 13a-14(a) or
Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial Officer required by Rule 13a-14(a) or
Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as
adopted 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.
Date: November 16, 2010 ARRIN CORPORATION
By: /s/ Stephen H. Liu
------------------------------------
Stephen H. Liu
Chairman/CEO
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