U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of The Securities Exchange Act of 1934
CHINA TICKET CENTER, INC..
(Exact name of registrant as specified in its charter)
Nevada 45-0823587
(State of Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
28248 North Tatum Blvd., Suite B-1-434, Cave Creek, Arizona 85331
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (602) 300-0432
Copy to:
Law Offices of David E. Wise, P.C.
The Colonnade
9901 IH-10 West, Suite 800
San Antonio, Texas 78230
Telephone: (210) 558-2858
Facsimile: (210) 579-1775
Securities to be registered under Section 12(b) of the Act: None
Name of Exchange on which each class is to be registered: Not applicable
Securities to be registered under Section 12(g) of the Exchange Act:
Common Stock, $.0001
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
EXPLANATORY NOTE
We are filing this General Form for Registration of Securities on Form 10
to register our common stock, pursuant to Section 12(g) of the Securities
Exchange Act of 1934, as amended ("Exchange Act")
Once this registration statement is deemed effective, we will be subject to
the requirements of Regulation 13A under the Exchange Act, which will require us
to fie annual reports on Form 10-K, quarterly reports on Form 10-Q and current
reports on Form 8-K, and we will be required to comply with all other
obligations of the Exchange Act applicable to issuers filing statements pursuant
to Section 12(g) of the Exchange Act.
Unless otherwise noted, references in this registration statement to "China
Ticket Center, Inc.," the "Company," "we," "our," or "us" means China Ticket
Center, Inc.
FORWARD LOOKING STATEMENTS
There are statements in this registration that are not historical facts.
These "forward-looking statements" can be identified by use of terminology such
as "believe," "hope," "may," "anticipate," "should," "intend," "plan," "will,"
"expect," "estimate," "project," "positioned," "strategy" and similar
expressions. You should be aware that these forward-looking statements are
subject to risks and uncertainties that are beyond our control. For a discussion
of these risks, you should carefully read this entire Registration Statement,
especially the risks discussed under "Risk Factors." Although management
believes that the assumptions underlying the forward looking statements included
in this Registration Statement are reasonable, they do not guarantee our future
performance, and actual results could differ from contemplated by these forward
looking statements. The assumptions used for purposes of the forward-looking
statements specified in the following information represent estimates of future
events and are subject to uncertainty as to possible changes in economic,
legislative, industry, and other circumstances. As a result, the identification
and interpretation of data and other information and their use in developing and
selecting assumptions from and among reasonable alternatives require the
exercise of judgment. To the extent that the assumed events do not occur, the
outcome may vary substantially from anticipated or projected results, and,
accordingly, no opinion is expressed on the achievability of those
forward-looking statements. In the light of these risks and uncertainties, there
can be no assurance that the results and events contemplated by the
forward-looking statements contained in this Registration Statement will in fact
transpire. You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of their dates. We do not
undertake any obligation to update or revise any forward-looking statements.
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TABLE OF CONTENTS
Item Number
and Caption Page
----------- ----
ITEM 1. BUSINESS ......................................................... 1
ITEM 1A. RISK FACTORS ..................................................... 6
ITEM 2. FINANCIAL INFORMATION ............................................ 11
ITEM 3. PROPERTIES ....................................................... 13
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ... 13
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS ................................. 15
ITEM 6. EXECUTIVE COMPENSATION ........................................... 16
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE ..................................................... 16
ITEM 8. LEGAL PROCEEDINGS ................................................ 17
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS ........................... 17
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES .......................... 18
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED .......... 18
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS ........................ 20
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ...................... 20
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE ......................................... 20
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS ................................ 20
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ITEM 1. BUSINESS
BUSINESS DEVELOPMENT
China Ticket Center, Inc. ("Company") was incorporated in the State of
Nevada on March 7, 2011. The Company has been in the developmental stage since
inception and has conducted virtually no business operations, other than
organization activities and preparation of this registration statement on Form
10. The Company has no full-time employees and owns no real estate or personal
property. The Company was formed as a vehicle to pursue a business combination
and has made no efforts to identify a possible business combination. As a
result, the Company has not conducted negotiations or entered into a letter of
intent concerning any target business. The business purpose of the Company is to
seek the acquisition of, or merger with, an existing company. We have no cash.
The Independent Auditor's Report to our financial statements for the period
ended March 14, 2011, included in this Form 10, indicates that there are a
number of factors that raise substantial doubt about our ability to continue as
a going concern. Such doubts identified in the report include the fact (i) that
we have not established any source of revenue to cover our operating costs; (ii)
that we will engage in very limited activities without incurring any liabilities
that must be satisfied in cash until a source of funding is secured; (iii) that
we will offer noncash consideration and seek equity lines as a means of
financing our operations; (iv) that if we are unable to obtain revenue producing
contracts or financing or if the revenue or financing we do obtain is
insufficient to cover any operating losses we may incur, we may substantially
curtail or terminate our operations or seek other business opportunities through
strategic alliances, acquisitions or other arrangements that may dilute the
interests of existing stockholders.
BUSINESS OF ISSUER
The Company, based on our proposed business activities, is a "blank check"
company. The U.S. Securities and Exchange Commission ("SEC") defines those
companies as "any development stage company that is issuing a penny stock,
within the meaning of Section 3 (a) (51) of the Exchange Act of 1934, as amended
("Exchange Act") and that has no specific business plan or purpose, or has
indicated that its business plan is to merge with an unidentified company or
companies. Under Rule 12b-2 promulgated under the Exchange Act, the Company will
be deemed to be a "shell company," because it has no or nominal assets (other
than cash) and no or nominal operations. Many states have enacted statutes,
rules and regulations limiting the sale of securities of "blank check" companies
in their respective jurisdictions. Management does not intend to undertake any
efforts to cause a market to develop in our securities, either debt or equity,
until we have successfully concluded a business combination. The Company intends
to comply with the periodic reporting requirements of the Exchange Act for so
long as we are subject to those requirements.
The Company was organized to provide a method for a foreign or domestic
privately held company to become a reporting company whose securities are
qualified for trading in the United States securities markets, such as the New
York Stock Exchange ("NYSE"), NASDAQ, American Stock Exchange ("AMEX") or the
OTC Bulletin Board, and, as a vehicle to investigate and, if such investigation
warrants, acquire a target company or business seeking the perceived advantages
of being a publicly held reporting company. The Company's principal business
objective for the next 12 months and beyond will be to achieve long-term growth
potential through a combination with a business rather than immediate,
short-term earnings. The Company will not restrict its potential candidate
target companies to any specific industry or geographical location and, thus,
may acquire or merge with any type of business, domestic or foreign.
Our analysis of new business opportunities will be undertaken by and under
the supervision of our Mr. Hongqiang Xu, our President and Chief Executive
Officer, Mr. Zhiguo Tan, our Vice President and Mr. Qieping Zhang, our Chief
1
Financial Officer. As of the date of this filing, we have not entered into any
definitive agreement with any party, nor have there been any specific
discussions with any potential business combination candidate regarding business
opportunities for the Company. We have unrestricted flexibility in seeking,
analyzing and participating in potential business opportunities. However, we
have no cash at this time and no plan to raise money through the sale of equity
or borrow money from a traditional lending source. Our management team,
consisting of Messrs. Xu, Tan and Zhang, has verbally committed to the Company
that they will fund the costs of preparing the Company's Exchange Act reports
(Form 10-Ks, Form 10-Qs, Form 8-Ks) for the current fiscal year ending December
31, 2011. However, our management team has not committed to pay such costs
beyond the preparation of the Form 10-K for the fiscal year ending December 31,
2011. In the event that our management team fails to pay such costs, the
Company's common stock would likely be limited to quotation on the Pink Sheets
and no market for the common stock would develop or, if a market did develop,
the market for our common stock would not exist for very long. Investors in our
common stock could lose part or all of their investment in our shares.
PERCEIVED BENEFITS
There are certain perceived benefits to being a reporting company with a
class of publicly-traded securities. These are commonly thought to include the
following:
* the ability to use registered securities to make acquisitions of
assets or businesses;
* increased visibility in the financial community;
* the facilitation of borrowing from financial institutions;
* improved trading efficiency;
* shareholder liquidity;
* greater ease in raising capital;
* compensation of key employees through stock options for which there
may be a market valuation;
* enhanced corporate image; and
* a presence in the United States' capital markets.
POTENTIAL TARGET COMPANIES
A business entity that may be interested in a business combination with the
Company may include the following:
* a company for which a primary purpose of becoming a public company is
the use of its securities for the acquisition of assets or business;
* a company that is unable to find an underwriter of its securities or
is unable to find an underwriter of securities on terms acceptable to
it;
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* a company that believes it will be able to obtain investment capital
on more favorable terms after it has become public;
* a foreign company that may wish an initial entry into the United
States' securities markets;
* a special situation company, such as a company seeking a public market
to satisfy redemption requirements under a qualified Employees Stock
Option Plan; and
* a company seeking one or more of the other perceived benefits of
becoming a public company.
The analysis of new business opportunities will be undertaken by or under
the supervision of our officers, directors, accountants and legal counsel. We
will have unrestricted flexibility in seeking, analyzing and participating in
potential business opportunities. In our efforts to analyze potential
acquisition targets, we will consider the following kinds of factors:
* potential for growth, indicated by new technology, anticipated market
expansion or new products or services;
* competitive position as compared to other firms of similar size and
experience within the industry segment, as well as within the industry
as a whole;
* strength and diversity of management, either in place or scheduled for
recruitment;
* capital requirements and anticipated availability of required funds,
to be provided by the Company or from operations, through the sale of
additional securities, through joint ventures or similar arrangements
or from other sources;
* the cost of participation by the Company as compared to the perceived
tangible and intangible values and potentials;
* the extent to which the business opportunity can be advanced;
* the accessibility of required management expertise, personnel, raw
materials, services, professional assistance and other required items;
and
* other factors deemed to be relevant by our management team.
In applying the foregoing criteria, no one of which will be controlling,
management will attempt to analyze all factors and circumstances and make a
determination based upon reasonable investigative measures and available data.
Potentially available business opportunities may occur in many different
industries, and at various stages of development, all of which will make the
task of comparative investigation and analysis of such business opportunities
extremely difficult and complex. Due to our limited financial resources
available for investigation, we may not discover or adequately evaluate adverse
facts about the opportunity to be acquired.
No assurances can be given that the Company will be able to enter into a
business combination of any nature.
3
FORM OF ACQUISITION
The manner in which the Company participates in an opportunity will depend
upon the nature of the opportunity, the respective needs and desires of the
Company and the promoters of the opportunity and the relative negotiating
strength of the Company and such promoters.
It is likely that the Company will acquire its participation in a business
opportunity through the issuance of common stock or other securities of the
Company. Although the terms of any such transaction cannot be predicted, it
should be noted that in certain circumstances the criteria for determining
whether or not an acquisition is a so-called "tax-free" reorganization under
Section 368(a) (1) of the Internal Revenue Code of 1986, as amended ("Code"),
depends upon whether the owners of the acquired business own 80% or more of the
voting stock of the surviving entity. If a transaction were structured to take
advantage of these provisions rather than other "tax-free" provisions provided
under the Code, our stockholders would, in such circumstances, retain 20% or
less of the total issued and outstanding shares of the Company. Under other
circumstances, depending upon the relative negotiating strength of the parties,
our stockholders may retain substantially less than 20% of the total issued and
outstanding shares of the surviving entity. This could result in substantial
additional dilution to the equity of those who were stockholders of the Company
prior to such reorganization.
Our present stockholders will likely not have control of a majority of our
voting shares following a reorganization transaction. As part of such a
transaction, all or a majority of the officers and directors may resign and new
officers and directors may be appointed without any vote by our stockholders.
In the case of an acquisition, the transaction may be accomplished upon the
sole determination of management without any vote or approval by stockholders.
In the case of a statutory merger or consolidation directly involving the
Company, it will likely be necessary to call a stockholders' meeting and obtain
the approval of the holders of a majority of the outstanding shares. The
necessity to obtain such stockholder approval may result in delay and additional
expense in the consummation of any proposed transaction and will also give rise
to certain appraisal right to dissenting stockholders. Most likely, management
will seek to structure any such transaction so as not to require stockholder
approval.
It is anticipated that the investigation of specific business opportunities
and the negotiation, drafting and execution of relevant agreements, disclosures
documents and other instruments will require substantial management time and
attention and substantial cost for accountants, attorneys and others. If a
decision is made not to participate in a specific business opportunity, the
costs incurred in the related investigation would not be recoverable.
Furthermore, even if an agreement is reached for the participation in a specific
business opportunity, the failure to consummate that transaction may result in
the loss to the Company of the related costs incurred.
We presently have no employees other than our three officers. Our officers
are engaged in outside business activities and anticipate they will devote to
our business very limited time until the acquisition of a successful business
opportunity has been identified. We expect no significant changes in the number
of our employees other than such changes, if any, incident to a business
combination.
Although our management has not taken any preliminary steps to consummate a
business combination, we anticipate beginning our search for viable business
combination targets once we become a fully reporting company with the U.S.
Securities and Exchange Commission. We believe there are many valuable resources
we can reach out to in order to identify potential targets including, but not
limited to, business brokers, networking web sites, conferences, business
professionals and direct contacts by our management with business owners.
4
COMPETITIVE CONDITIONS
We are in a highly competitive market for a small number of business
opportunities which could reduce the likelihood of consummating a successful
business combination. 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 small public companies and venture capital
firms, are active in mergers and acquisitions of companies that may be desirable
target candidates for us. Nearly all these entities have significantly greater
financial resources, technical expertise and managerial capabilities than we do;
consequently, we will be at a competitive disadvantage in identifying possible
business opportunities and successfully completing a business combination. These
competitive factors may reduce the likelihood of our identifying and
consummating a successful business combination. In reality, it might be more
feasible for a privately held company to file its own Form 10 registration
statement to become a fully reporting company than to give up ownership to the
Company by entering into a business combination with us.
In the event we are successful in identifying a private company that is
interested in combining with us, the private company will have to provide us
with a lot of information related to its business history, prospects, financial
condition, management and have books and records that are auditable without
undue time and expense. Upon entry into a definitive agreement with a target, we
will have to file a Form 8-K describing the proposed transaction, that the
proposed transaction will result in a change in control of our Company and
include audited financial statements of the combined entity as an exhibit to the
Form 8-K or in an amendment to the Form 8-K.
We are voluntarily filing this Registration Statement with the U.S.
Securities and Exchange Commission and we are under no obligation to do so under
the Securities Exchange Act of 1934.
REPORTS TO SECURITY HOLDERS
1. We will be subject to the informational requirements of the Exchange
Act. Accordingly, we will file annual, quarterly and periodic reports,
proxy statements, information statements and other information with
the SEC.
2. The public may read and copy any materials the Company files with the
SEC at the SEC's Public Reference Room at 100 F Street, NE, Room 1580,
Washington, D.C. 20549. The public may call the SEC at 1-800-SEC-0330
for further information on the Public Reference Room. Our SEC filings
will also be available to the public at the SEC's web site at
http://www.sec.gov.
5
ITEM 1A. RISK FACTORS.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. IF ANY OF THE
FOLLOWING RISKS ACTUALLY MATERIALIZES, OUR BUSINESS, FINANCIAL CONDITION AND
RESULTS OF OPERATIONS WOULD SUFFER AND OUR SHAREHOLDERS COULD LOSE ALL OR PART
OF THEIR INVESTMENT IN OUR SHARES.
OUR INDEPENDENT AUDITOR HAS RAISED DOUBT ABOUT OUR ABILITY TO CONTINUE AS A
GOING CONCERN.
The Independent Auditor's Report to our financial statements for the period
ended March 14, 2011, included in this Form 10, indicates that there are a
number of factors that raise substantial doubt about our ability to continue as
a going concern. Such doubts identified in the report include the fact (i) that
we have not established any source of revenue to cover our operating costs; (ii)
that we will engage in very limited activities without incurring any liabilities
that must be satisfied in cash until a source of funding is secured; (iii) that
we will offer noncash consideration and seek equity lines as a means of
financing our operations; (iv) that if we are unable to obtain revenue producing
contracts or financing or if the revenue or financing we do obtain is
insufficient to cover any operating losses we may incur, we may substantially
curtail or terminate our operations or seek other business opportunities through
strategic alliances, acquisitions or other arrangements that may dilute the
interests of existing stockholders.
THERE MAY BE CONFLICTS OF INTEREST BETWEEN OUR MANAGEMENT AND OUR NON-MANAGEMENT
STOCKHOLDERS.
Conflicts of interest create the risk that management may have an incentive
to act adversely to the interests of other investors. A conflict of interest may
arise between our management's personal pecuniary interest and its fiduciary
duty to our stockholders. Further, our management's own pecuniary interest may
at some point compromise its fiduciary duty to our stockholders.
OUR BUSINESS IS DIFFICULT TO EVALUATE BECAUSE WE HAVE NO OPERATING HISTORY.
As the Company has no operating history or revenue and only minimal assets,
there is a risk that we will be unable to continue as a going concern and
consummate a business combination. The Company has had no recent operating
history nor any revenues or earnings from operations since inception. We have no
significant assets or financial resources. We will, in all likelihood, sustain
operating expenses without corresponding revenues, at least until the
consummation of a business combination. This may result in our incurring a net
operating loss that will increase continuously until we can consummate a
business combination with a profitable business opportunity. We cannot assure
you that we can identify a suitable business opportunity and consummate a
business combination.
THERE ARE RELATIVELY LOW BARRIERS TO BECOMING A BLANK CHECK COMPANY OR SHELL
COMPANY, THEREBY INCREASING THE COMPETITION FOR A SMALL NUMBER OF BUSINESS
OPPORTUNITIES.
There are relatively low barriers to becoming a blank check or shell
company. A newly incorporated company with a single shareholder and sole officer
and director may become a blank check company or shell company by voluntarily
subjecting itself to the SEC reporting requirements by filing and seeking
effectiveness of a Form 10, thereby registering its common stock pursuant to
Section 12(g) of the Securities and Exchange Act of 1934 with the SEC. Assuming
no comments to the Form 10 have been received from the SEC, the registration
statement is automatically deemed effective 60 days after filing the Form 10
with the SEC. The relative ease and low cost with which a company can become a
reporting blank check or shell company can increase the already highly
competitive market for a limited number of businesses that will consummate a
successful business combination.
6
THERE IS COMPETITION FOR THOSE PRIVATE COMPANIES SUITABLE FOR A MERGER
TRANSACTION OF THE TYPE CONTEMPLATED BY OUR MANAGEMENT.
The Company is in a highly competitive market for a small number of
business opportunities which could reduce the likelihood of consummating a
successful business combination. 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 small public companies and venture capital
firms, are active in mergers and acquisitions of companies that may be desirable
target candidates for us. Nearly all these entities have significantly greater
financial resources, technical expertise and managerial capabilities than we do;
consequently, we will be at a competitive disadvantage in identifying possible
business opportunities and successfully completing a business combination. These
competitive factors may reduce the likelihood of our identifying and
consummating a successful business combination. In reality, it might be more
feasible for a privately held company to file its own Form 10 registration
statement to become a fully reporting company than to give up ownership to the
Company by entering into a business combination with us.
FUTURE SUCCESS IS HIGHLY DEPENDENT ON THE ABILITY OF OUR MANAGEMENT TO LOCATE
AND ATTRACT A SUITABLE ACQUISITION.
The nature of our operations is highly speculative and there is a
consequent risk of loss of your investment. The success of our 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 entities having established operating
histories, we cannot assure you that we will be successful in locating
candidates meeting that criterion. In the event we complete a business
combination, 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.
THE COMPANY HAS NO EXISTING AGREEMENT FOR A BUSINESS COMBINATION OR OTHER
TRANSACTION.
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. No assurances can be given that we will successfully identify and
evaluate suitable business opportunities or that we will conclude a business
combination. Management has not identified any particular industry or specific
business within an industry for evaluation. We cannot guarantee that we will be
able to negotiate a business combination on favorable terms, and there is
consequently a risk that funds allocated to the purchase of our shares will not
be invested in a company with active business operations.
OUR MANAGEMENT INTENDS TO DEVOTE ONLY A LIMITED AMOUNT OF TIME TO SEEKING A
TARGET COMPANY WHICH MAY ADVERSELY IMPACT OUR ABILITY TO IDENTIFY A SUITABLE
ACQUISITION CANDIDATE.
While seeking a business combination, management anticipates devoting no
more than a few hours per week to the Company's affairs in total. No one on our
management team has entered into a written employment agreement with us nor are
any of them expected to do so in the foreseeable future. This limited commitment
may adversely impact our ability to identify and consummate a successful
business combination.
THE TIME AND COST OF PREPARING A PRIVATE COMPANY TO BECOME A PUBLIC REPORTING
COMPANY MAY PRECLUDE US FROM ENTERING INTO A MERGER OR ACQUISITION WITH THE MOST
ATTRACTIVE PRIVATE COMPANIES.
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Target companies that fail to comply with SEC reporting requirements may
delay or preclude acquisition. Sections 13 and 15(d) of the Exchange Act require
reporting companies 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 that may be incurred by some target
entities to prepare these statements may significantly delay or essentially
preclude consummation of an acquisition. Otherwise suitable acquisition
prospects that do not have or are unable to obtain the required audited
statements may be inappropriate for acquisition so long as the reporting
requirements of the Exchange Act are applicable.
THE COMPANY MAY BE SUBJECT TO FURTHER GOVERNMENT REGULATION WHICH WOULD
ADVERSELY AFFECT OUR OPERATIONS.
Although we will be subject to the reporting requirements under the
Exchange Act, management believes we will not be subject to regulation under the
Investment Company Act of 1940, as amended ("Investment Company Act"), since we
will not be engaged in the business of investing or trading in securities. If we
engage in business combinations which result in our holding passive investment
interests in a number of entities, we could be subject to regulation under the
Investment Company Act. If so, 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 SEC as to our status
under the Investment Company Act and, consequently, violation of the Investment
Company Act could subject us to material adverse consequences.
ANY POTENTIAL ACQUISITION OR MERGER WITH A FOREIGN COMPANY MAY SUBJECT US TO
ADDITIONAL RISKS.
If we enter into a business combination with a foreign concern, we will be
subject to risks inherent in business operations outside of the United States.
These risks include, for example, currency fluctuations, regulatory problems,
punitive tariffs, unstable local tax policies, trade embargoes, risks related to
shipment of raw materials and finished goods across national borders and
cultural and language differences. Foreign economies may differ favorably or
unfavorably from the United States economy in growth of gross national product,
rate of inflation, market development, rate of savings, and capital investment,
resource self-sufficiency and balance of payments positions, and in other
respects.
THERE IS CURRENTLY NO TRADING MARKET FOR OUR COMMON STOCK, AND LIQUIDITY OF
SHARES OF OUR COMMON STOCK IS LIMITED.
Our shares of common stock are not registered under the securities laws of
any state or other jurisdiction, and accordingly there is no public trading
market for our common stock. Further, no public trading market is expected to
develop in the foreseeable future unless and until the Company completes a
business combination with an operating business and the Company thereafter files
a registration statement under the Securities Act of 1933, as amended (the
"Securities Act"). Therefore, outstanding shares of our common stock cannot be
offered, sold, pledged or otherwise transferred unless subsequently registered
pursuant to, or exempt from registration under, the Securities Act and any other
applicable federal or state securities laws or regulations. Shares of our common
stock cannot be sold under the exemptions from registration provided by Rule 144
under or Section 4(1) of the Securities Act ("Rule 144"), in accordance with the
letter from Richard K. Wulff, Chief of the Office of Small Business Policy of
the Securities and Exchange Commission's Division of Corporation Finance, to Ken
Worm of NASD Regulation, dated January 21, 2000 ( "Wulff Letter"). In 2007, the
SEC announced that it is changing certain aspects of the Wulff Letter, and such
8
changes shall apply retroactively to our stockholders. Effective February 15,
2008, all holders of shares of common stock of a "shell company" will be
permitted to sell their shares of common stock under Rule 144, subject to
certain restrictions, starting one year after (i) the completion of a business
combination with a private company in a reverse merger or reverse takeover
transaction after which the company would cease to be a "shell company" (as
defined in Rule 12b-2 under the Exchange Act) and (ii) the disclosure of certain
information on a Current Report on Form 8-K within four business days
thereafter. Compliance with the criteria for securing exemptions under federal
securities laws and the securities laws of the various states is extremely
complex, especially in respect of those exemptions affording flexibility and the
elimination of trading restrictions in respect of securities received in exempt
transactions and subsequently disposed of without registration under the
Securities Act or state securities laws.
WE HAVE NEVER PAID DIVIDENDS ON OUR COMMON STOCK.
We have never paid dividends on our Common Stock and do not presently
intend to pay any dividends in the foreseeable future. We anticipate that any
funds available for payment of dividends will be re-invested into the Company to
further its business strategy.
THE COMPANY MAY BE SUBJECT TO CERTAIN TAX CONSEQUENCES IN OUR BUSINESS, WHICH
MAY INCREASE OUR COST OF DOING BUSINESS.
We may not be able to structure our acquisition to result in tax-free
treatment for the companies or their stockholders, which could deter third
parties from entering into certain business combinations with us or result in
being taxed on consideration received in a transaction. Currently, a transaction
may be structured so as to result in tax-free treatment to both companies, as
prescribed by various federal and state tax provisions. We intend to structure
any business combination so as to minimize the federal and state tax
consequences to both us and the target entity; however, we cannot guarantee that
the business combination will meet the statutory requirements of a tax-free
reorganization or that the parties will obtain the intended tax-free treatment
upon a transfer of stock or assets. A non-qualifying reorganization could result
in the imposition of both federal and state taxes that may have an adverse
effect on both parties to the transaction.
OUR BUSINESS WILL HAVE NO REVENUES UNLESS AND UNTIL WE MERGE WITH OR ACQUIRE AN
OPERATING BUSINESS.
We are a development stage company and have had no revenues from
operations. We may not realize any revenues unless and until we successfully
merge with or acquire an operating business.
THE COMPANY INTENDS TO ISSUE MORE SHARES IN A MERGER OR ACQUISITION, WHICH WILL
RESULT IN SUBSTANTIAL DILUTION TO EXISTING SHAREHOLDERS.
Our Articles of Incorporation authorize the issuance of a maximum of
250,000,000 shares of common stock. Any merger or acquisition effected by us may
result in the issuance of additional securities without stockholder approval and
may result in substantial dilution in the percentage of our common stock held by
our then existing stockholders. Moreover, the common stock issued in any such
merger or acquisition transaction may be valued on an arbitrary or
non-arm's-length basis by our management, resulting in an additional reduction
in the percentage of common stock held by our then existing stockholders. Our
Board of Directors has the power to issue any or all of such authorized but
unissued shares without stockholder approval. To the extent that additional
shares of common stock or preferred stock are issued in connection with a
business combination or otherwise, dilution to the interests of our stockholders
will occur and the rights of the holders of common stock might be materially and
adversely affected.
9
THE COMPANY HAS CONDUCTED NO MARKET RESEARCH OR IDENTIFICATION OF BUSINESS
OPPORTUNITIES, WHICH MAY AFFECT OUR ABILITY TO IDENTIFY A BUSINESS TO MERGE WITH
OR ACQUIRE.
The Company has neither conducted nor have others made available to us
results of market research concerning prospective business opportunities.
Therefore, we have no assurances that market demand exists for a merger or
acquisition as contemplated by us. Our management has not identified any
specific business combination or other transactions for formal evaluation by us,
such that it may be expected that any such target business or transaction will,
present such a level of risk that conventional private or public offerings of
securities or conventional bank financing will not be available. There is no
assurance that we will be able to acquire a business opportunity on terms
favorable to us. Decisions as to which business opportunity to participate in
will be unilaterally made by our management, which may act without the consent,
vote or approval of our stockholders.
BECAUSE WE MAY SEEK TO COMPLETE A BUSINESS COMBINATION THROUGH A "REVERSE
MERGER," FOLLOWING SUCH A TRANSACTION WE MAY NOT BE ABLE TO ATTRACT THE
ATTENTION OF MAJOR BROKERAGE FIRMS.
Additional risks may exist since we will assist a privately held business
to become public through a "reverse merger." Securities analysts of major
brokerage firms may not provide coverage of our Company since there is no
incentive to brokerage firms to recommend the purchase of our common stock. No
assurance can be given that brokerage firms will want to conduct any secondary
offerings on behalf of our post-merger company in the future.
WE CANNOT ASSURE YOU THAT FOLLOWING A BUSINESS COMBINATION WITH AN OPERATING
BUSINESS, OUR COMMON STOCK WILL BE LISTED ON NASDAQ OR ANY OTHER SECURITIES
EXCHANGE.
Following a business combination, we may seek the listing of our common
stock on NASDAQ or the American Stock Exchange. However, we cannot assure you
that following such a transaction, we will be able to meet the initial listing
standards of either of those or any other stock exchange, or that we will be
able to maintain a listing of our common stock on either of those or any other
stock exchange. After completing a business combination, until our common stock
is listed on the NASDAQ or another stock exchange, we expect that our common
stock would be eligible to trade on the OTC Bulletin Board, another
over-the-counter quotation system, or on the "pink sheets," where our
stockholders may find it more difficult to dispose of shares or obtain accurate
quotations as to the market value of our common stock. In addition, we would be
subject to an SEC rule that, if it failed to meet the criteria set forth in such
rule, imposes various practice requirements on broker-dealers who sell
securities governed by the rule to persons other than established customers and
accredited investors. Consequently, such rule may deter broker-dealers from
recommending or selling our common stock, which may further affect its
liquidity. This would also make it more difficult for us to raise additional
capital following a business combination.
AS A BLANK CHECK COMPANY, ANY REGISTERED OFFERING OF OUR SECURITIES WILL HAVE TO
COMPLY WITH RULE 419 UNDER THE SECURITIES ACT OF 1933, WHICH COULD IMPACT OUR
ABILITY TO RAISE EQUITY FUNDS FROM INVESTORS.
In the event we register an offering of our securities with the Securities
and Exchange Commission while we are a blank check company, we will have to
comply with Rule 419 under the Securities Act of 1933. Rule 419 is a cumbersome
rule applicable to blank check companies selling penny stocks in a registered
offering. Rule 419 requires that the gross proceeds raised in such an offering
be deposited into an escrow account with a financial institution insured by the
10
FDIC or in a separate bank account established by a registered broker or dealer
in which the broker or dealer acts as trustee for the persons having the
beneficial interests in the account. Furthermore, Rule 419 requires the
securities issued to investors in the blank check offering be issued in the name
of such investors but certificates representing such securities must be
deposited into the escrow account instead of being delivered directly to
investors, and the records of the escrow agent, maintained in good faith and in
the regular course of business, must show the name and interest of each party to
the account.
The initial registration statement for the blank check offering shall
disclose the specific terms of the offering, including, but not limited to:
* The terms and provisions of the escrow or trust agreement and the
effect thereof upon the company's right to receive funds and the
effect of the escrow or trust agreement upon the investor's funds and
securities required to be deposited into the escrow or trust account,
including, if applicable, any material risk of non-insurance of
investors' funds resulting from deposits in excess of the insured
amounts; and
* The obligation of the company to provide, and the right of the
purchaser to receive, information regarding an acquisition, including
the requirement that pursuant to Rule 419, investors confirm in
writing their investment in the company's securities.
Rule 419 imposes certain additional disclosure obligations on companies
making blank check offerings. Due to the requirements of Rule 419 and the fact
that investors investing in blank check offerings have no idea if or when an
acquisition or merger transaction will occur, or if the acquisition or merger
target is worthy of the investors money or risks, it may be difficult for the
company to pull off a blank check offering and even if the company is successful
in raising funds in such an offering, it may not be able to find an attractive
acquisition or merger candidate. Therefore, investors in a blank check offering
will have their funds at risk for a prolonged period of time and they may not be
happy with the results of an acquisition or merger, if one were to occur.
THIS REGISTRATION STATEMENT CONTAINS FORWARD-LOOKING STATEMENTS AND INFORMATION
RELATING TO US, OUR INDUSTRY AND TO OTHER BUSINESSES.
These forward-looking statements are based on the beliefs of our
management, as well as assumptions made by and information currently available
to our management. When used in this prospectus, the words "estimate,"
"project," "believe," "anticipate," "intend," "expect" and similar expressions
are intended to identify forward-looking statements. These statements reflect
our current views with respect to future events and are subject to risks and
uncertainties that may cause our actual results to differ materially from those
contemplated in our forward-looking statements. We caution you not to place
undue reliance on these forward-looking statements, which speak only as of the
date of this prospectus. We do not undertake any obligation to publicly release
any revisions to these forward-looking statements to reflect events or
circumstances after the date of this prospectus or to reflect the occurrence of
unanticipated events.
ITEM 2. FINANCIAL INFORMATION.
The following discussion is intended to provide an analysis of our
financial condition and should be read in conjunction with our financial
statements and the notes thereto.
11
BASIS OF PRESENTATION - DEVELOPMENT STAGE COMPANY
We have not earned any revenues from our very limited operations.
Accordingly, our activities have been accounted for as those of a "Development
Stage Enterprise" as set forth in Financial Accounting Standards Board Statement
No. 7 ("SFAS 7"). Among the disclosures required by SFAS 7 are that our
financial statements be identified as those of a development stage company and
that our statements of operations, stockholders' equity (deficit) and cash flows
disclose activity since the date of our inception.
MANAGEMENT'S PLAN OF OPERATION
The Company was incorporated on March 7, 2011, in the State of Nevada to
serve as a vehicle to investigate and, if such investigation warrants, acquire a
target company or business seeking the perceived advantages of being a publicly
held corporation. Our principal business objective for the next 12 months and
beyond such time will be to achieve long-term growth potential through a
combination with a business rather than immediate, short-term earnings. The
Company will not restrict our potential candidate target companies to any
specific business, industry or geographically location and, thus, may acquire
any type of business.
The Company does not currently engage in any business activities that
provide cash flow. The costs of investigating and analyzing business
combinations for the next 12 months and beyond such time will be paid with money
in our treasury, if any, or with additional money contributed by our current
stockholders, or another source, such as additional stockholders.
During the next 12 months we anticipate incurring costs related to:
(i) filing of Exchange Act reports (legal, accounting and auditing fees)
in the amount of approximately $5,000; and
(ii) costs relating to consummating an acquisition in the amount of
approximately $35,000 to pay for legal fees and audit fees.
We believe we will be able to meet the costs of filing Exchange Act reports
during the next 12 months through use of funds to be loaned to or invested in us
by our stockholders, management or other investors. If we enter into a business
combination with a target entity, we will require the target company to pay the
acquisition related fees and expenses as a condition precedent to such an
agreement. Obviously, if our stockholders, management or other investors do not
loan to or invest sufficient funds in the Company, then we will not be able to
meet our SEC reporting obligations and will not be able to attract a private
company with which to combine.
The Company may consider a business which has recently commenced
operations, is a developing company in need of additional funds for expansion
into new products or markets, is seeking to develop a new product or service, or
is an established business which may be experiencing financial or operating
difficulties and is in need of additional capital. In the alternative, a
business combination may involve the acquisition of, or merger with, a company
which does not need substantial additional capital, but which desires to
establish a public trading market for it shares, while avoiding, among other
things, the time delays, significant expense and loss of voting control which
may occur in a public offering.
Our management has not had any preliminary contact or discussions with any
representative of any other entity regarding a business combination with us. Any
target business that is selected may be a financially unstable company or an
12
entity in its early stages of development or growth, including entities without
established records of sales or earnings. In that event, we will be subject to
numerous risks inherent in the business and operations of financially unstable
and early stage or potential emerging growth companies. In addition, we may
effect a business combination with an entity in an industry characterized by a
high level of risk, and, although our management will endeavor to evaluate the
risks inherent in a particular target business, there can be no assurance that
we will properly ascertain or assess all significant risks.
Our management anticipates that it will likely be able to effect only one
business combination, due primarily to our limited financing, and the dilution
of interest for present and prospective stockholders, which is likely to occur
as a result of our management's plan to offer a controlling interest to a target
business in order to achieve a tax-free reorganization. This lack of
diversification should be considered a substantial risk in investing in us
because it will not permit us to offset potential losses from one venture
against gains from another.
The Company anticipates that the selection of a business combination will
be complex and extremely risky. Because of general economic conditions, rapid
technological advances being made in some industries and shortages of available
capital, our management believes that there are numerous firms seeking even the
limited additional capital that we will have and/or the perceived benefits of
becoming a publicly traded corporation. Such perceived benefits of becoming a
publicly traded corporation include, among other things, facilitating or
improving the terms on which additional equity financing may be obtained,
providing liquidity for the principals of and investors in a business, creating
a means for providing incentive stock options or similar benefits to key
employees and offering greater flexibility in structuring acquisitions, joint
ventures and the like through the issuance of stock. Potentially available
business combinations may occur in many different industries and at various
stages of development, all of which will make the task of comparative
investigation and analysis of such business opportunities extremely difficult
and complex.
OFF-BALANCE SHEET ARRANGEMENTS
We have not entered into any off-balance sheet arrangements that have or
are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources and would be
considered material to investors.
ITEM 3. PROPERTIES.
The Company neither rents nor owns any properties. The Company currently
has no policy with respect to investments or interests in real estate, real
estate mortgages or securities of, or interests in, persons primarily engaged in
real estate activities.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(A) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.
The following tables set forth the ownership of our common stock by each
person known by us to be the beneficial owner of more than 5% of our outstanding
common stock, our directors, and our executive officers and directors as a
group. To the best of our knowledge, the persons named have sole voting and
investment power with respect to such shares, except as otherwise noted. There
are not any pending arrangements that may cause a change in control. However, it
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is anticipated that there will be one or more change of control, including
adding members of management, possibly involving the private sale or redemption
of our principal shareholder's securities or our issuance of additional
securities, at or prior to the closing of a business combination.
The information presented below regarding beneficial ownership of our
voting securities has been presented in accordance with the rules of the U.S.
Securities and Exchange Commission and is not necessarily indicative of
ownership for any other purpose. Under these rules, a person is deemed to be a
"beneficial owner" of a security if that person has or shares the power to vote
or direct the voting of the security or the power to dispose or direct the
disposition of the security. A person is deemed to own beneficially any security
as to which such person has the right to acquire sole or shared voting or
investment power within 60 days through the conversion or exercise of any
convertible security, warrant, option or other right. More than one person may
be deemed to be a beneficial owner of the same securities. The percentage of
beneficial ownership by any person as of a particular date is calculated by
dividing the number of shares beneficially owned by such person, which includes
the number of shares as to which such person has the right to acquire voting or
investment power within 60 days, by the sum of the number of shares outstanding
as of such date plus the number of shares as to which such person has the right
to acquire voting or investment power within 60 days. Consequently, the
denominator used for calculating such percentage may be different for each
beneficial owner. Except as otherwise indicated below, we believe that the
beneficial owners of our common stock listed below have sole voting and
investment power with respect to the shares shown.
Amount and Nature of Percentage
Name and Address Beneficial Ownership of Class
---------------- -------------------- --------
Hongqiang Xu 8,000,000 33.333%
C-1305 Haojing Mansion Zhichunlu 108
Beijing, PRC 100086
Zhiguo Tan 8,000,000 33.333%
No. 33 Nanfengwoshuikouzi Fengtai District
Beijing, PRC 100088
Qieping Zhang 8,000,000 33.333%
Rm. 1001 Junjinglu 31 Zhongshandadao 190
Neijing, PRC 510665
All Officers and Directors
as a group (3 persons) 24,000,000 100%
The above table is based upon information derived from our stock records.
We believe that each of the shareholders named in this table has sole or shared
voting and investment power with respect to the shares indicated as beneficially
owned; except as set forth above, applicable percentages are based upon
24,000,000 shares of common stock outstanding as of the date of this
registration statement on Form 10. The above percentages may not equal 100% due
to rounding.
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ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS.
Our officers and directors and additional information concerning them are
as follows:
Name Age Position(s)
---- --- -----------
Hongqiang Xu 37 President, Chief Financial Officer and Director
Zhiguo Tan 32 Vice President and Director
Qieping Zhang 40 Chief Financial Officer, Treasurer and Director
HONGQIANG XU has been President of Beijing Hengtonglihua Information
Technology Co. Ltd. since February 2002. Mr. Xu received a Bachelor of
Economics, International Economy and Trade, from Beijing University of
Aeronautics and Astronautics in 2004.
ZHIGUO TAN. Since January 2005, Mr. Tan has served as President of Beijing
Top Travel Flight Services Co. Ltd. Mr. Tan is a 1998 graduate of the Hunan
Chemical Secondary Technical Academy with a focus on technology.
QIEPING ZHANG. SINCE May 2009, Mr. Zhang has been Vice President of G1
Capital (Ningbo) Investment, Consultant and Management Co., Ltd. From July 2008
until April 2009, Mr. Zhang was Assistant President of Jolmo (Foshan)
Investment, Consultant and Management Co. Ltd. In addition, since October 2004,
Mr. Zhang has been President of AdvanceX (Guangzhou) Investment & Consulting Co.
Ltd. In 1993, Mr. Zhang received a Bachelor Degree in Automobile Application
Engineering fro Changsha university of Science and Technology. In July 2001, Mr.
Zhang attended postgraduate studies in Computer Software and Theory at South
China University of Technology. Mr. Zhang is working toward his Masters Degree.
The term of office of each director expires at our annual meeting of
stockholders or until their successors are duly elected and qualified.
A. Significant Employees. None.
B. Family Relationships. None.
C. Involvement in Certain Legal Proceedings.
No officer, director, or persons nominated for such positions, promoter or
significant employee has been involved in the last ten years in any of the
following:
* Any bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer either at the time
of the bankruptcy or within two years prior to that time;
* Any conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor
offenses);
15
* Being subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining, barring,
suspending or otherwise limiting his involvement in any type of
business, securities or banking activities; and
* Being found by a court of competent jurisdiction (in a civil action),
the Commission or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law, and the
judgment has not been reversed, suspended, or vacated.
AUDIT COMMITTEE
The Board of Directors acts as the Audit Committee and the Board has no
separate committees. The Company has no qualified financial expert at this time
because it has not been able to hire a qualified candidate. Further, the Company
believes that it has inadequate financial resources at this time to hire such an
expert. The Company intends to continue to search for a qualified individual for
hire.
CODE OF ETHICS
We do not currently have a code of ethics.
ITEM 6. EXECUTIVE COMPENSATION
Our officers and directors do not receive any compensation for their
services rendered to the Company and have not received any compensation in the
past and are not accruing any compensation pursuant to any agreement with the
Company. No remuneration of any nature has been paid for or on account of
services rendered by a director in such capacity. The Company's officers and
directors intend to devote no more than a few hours a week to our affairs.
However, Mr. Keaveney paid certain formation expenses related to the
incorporation of the Company and contributed time to such formation and in
developing the Company's business plan.
It is possible that, after the Company successfully consummates a business
combination with an unaffiliated entity, that entity may desire to employ or
retain one or a number of members of our management for the purposes of
providing services to the surviving entity. However, the Company has adopted a
policy whereby the offer of any post-transaction employment to members of
management will not be a consideration in our decision whether to undertake any
proposed transaction.
No retirement, pension, profit sharing, stock option or insurance programs
or other similar programs have been adopted by the Company for the benefit of
its employees.
There are no understandings or agreements regarding compensation our
management will receive after a business combination that is required to be
included in this table, or otherwise.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE.
In March 2011, we issued 8,000,000 restricted shares of our common stock to
each of our three officers. All shares were considered issued at their par value
($.0001 per share). See Item 10, "Recent Sales of Unregistered Securities." With
16
respect to the sales made to these three stockholders, the Company relied upon
an exemption from registration under Section 4(2) of the Securities Act of 1933,
as amended ("Securities Act").
Except as otherwise indicated herein, there have been no related party
transactions, or any other transactions or relationships required to be
disclosed pursuant to Item 404 of Regulation S-K.
ITEM 8. LEGAL PROCEEDINGS.
Presently, there are not any material pending legal proceedings to which
the Registrant is a party or as to which any of its property is subject, and the
Registrant does not know nor is it aware of any legal proceedings threatened or
contemplated against it.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS.
(a) Market Information. The Company's Common Stock is not trading on any
stock exchange. The Company is not aware of any market activity in its stock
since its inception and through the date of this filing. There is no assurance
that a trading market will ever develop or, if such a market does develop, that
it will continue.
The Securities and Exchange Commission has adopted Rule 15g-9 which
establishes the definition of a "penny stock," for purposes relevant to us, as
any equity security that has a market price of less than $5.00 per share or with
an exercise price of less than $5.00 per share, subject to certain exceptions.
For any transaction involving a penny stock, unless exempt, the rules require:
(i) that a broker or dealer approve a person's account for transactions in penny
stocks and (ii) the broker or dealer receive from the investor a written
agreement to the transaction, setting forth the identity and quantity of the
penny stock to be purchased. In order to approve a person's account for
transactions in penny stocks, the broker or dealer must (i) obtain financial
information and investment experience and objectives of the person; and (ii)
make a reasonable determination that the transactions in penny stocks are
suitable for that person and that person has sufficient knowledge and experience
in financial matters to be capable of evaluating the risks of transactions in
penny stocks. The broker or dealer must also deliver, prior to any transaction
in a penny stock, a disclosure schedule prepared by the Commission relating to
the penny stock market, which, in highlight form, (i) sets forth the basis on
which the broker or dealer made the suitability determination and (ii) that the
broker or dealer received a signed, written agreement from the investor prior to
the transaction. Disclosure also has to be made about the risks of investing in
penny stocks in both public offerings and in secondary trading, and about
commissions payable to both the broker-dealer and the registered representative,
current quotations for the securities and the rights and remedies available to
an investor in cases of fraud in penny stock transactions. Finally, monthly
statements have to be sent disclosing recent price information for the penny
stock held in the account and information on the limited market in penny stocks.
(b) Holders. As of the date of this filing, there were three record holders
of the 24,000,000 shares of the Company's issued and outstanding Common Stock.
(c) Dividends. The Company has not paid any cash dividends to date and does
not anticipate or contemplate paying dividends in the foreseeable future. It is
the present intention of management to utilize all available funds for the
development of the Company's business.
17
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
In March 2011, right after our incorporation, the Company issued an
aggregate of 24,000,000 restricted shares of its common stock to our three
officers in exchange for an aggregate of $2,400 or $.0001 per share.
We relied upon Section 4(2) of the Securities Act of 1933, as amended for
the above issuances. We believed that Section 4(2) was available because:
* None of these issuances involved underwriters, underwriting discounts
or commissions;
* We placed restrictive legends on all certificates issued;
* No sales were made by general solicitation or advertising; and
* Sales were made only to accredited investors
In connection with the above transactions, we provided the following to all
investors:
* Access to all our books and records.
* Access to all material contracts and documents relating to our
operations.
* The opportunity to obtain any additional information, to the extent we
possessed such information, necessary to verify the accuracy of the
information to which the investors were given access.
The Company's Board of Directors has the power to issue any or all of the
authorized but unissued Common Stock without stockholder approval. The Company
currently has no commitments to issue any shares of common stock. However, the
Company will, in all likelihood, issue a substantial number of additional shares
in connection with a business combination. Since the Company expects to issue
additional shares of common stock in connection with a business combination,
existing stockholders of the Company may experience substantial dilution in
their shares. However, it is impossible to predict whether a business
combination will ultimately result in dilution to existing shareholders. If the
target has a relatively weak balance sheet, a business combination may result in
significant dilution. If a target has a relatively strong balance sheet, there
may be little or no dilution.
ITEM 11. DESCRIPTION OF SECURITIES
COMMON OR PREFERRED STOCK.
The authorized capital stock of the Company consists of 250,000,000 shares
of Common Stock, par value $.0001 per share. The following summarized the
important provisions of the Company's capital stock.
COMMON STOCK
Holders of shares of common stock are entitled to one vote for each share
on all matters to be voted on by the stockholders. Holders of common stock do
not have cumulative voting rights. Holders of common stock are entitled to share
ratably in dividends, if any, as may be declared from time to time by the Board
18
of Directors in its discretion from funds legally available therefore. In the
event of a liquidation, dissolution or winding up of the company, the holders of
common stock are entitled to share pro rata all assets remaining after payment
in full of all liabilities. All of the outstanding shares of common stock are
fully paid and non-assessable.
Holders of common stock have no preemptive rights to purchase the Company's
common stock. There are no conversion or redemption rights or sinking fund
provisions with respect to the common stock.
The description of certain matters relating to the securities of the
Company is a summary and is qualified in its entirety by the provisions of the
Company's Articles of Incorporation and By-Laws, copies of which have been filed
as exhibits to this Form 10.
DIVIDENDS
Dividends, if any, will be contingent upon the Company's revenues and
earnings, if any, capital requirements and financial conditions. The payment of
dividends, if any, will be within the discretion of the Company's Board of
Directors. The Company presently intends to retain all earnings, if any, for use
in its business operations and accordingly, the Board of Directors does not
anticipate declaring any dividends prior to a business combination.
HOLDERS
There are three holders of record of our Common Stock as of March 21, 2011.
TRADING OF SECURITIES IN SECONDARY MARKET
The Company presently has 24,000,000 shares of common stock issued and
outstanding, all of which are "restricted securities," as that term is defined
under Rule 144 promulgated under the Securities Act, in that such shares were
issued in private transactions not involving a public offering.
Following a business combination, a target company will normally wish to
list its common stock for trading in one or more United States securities
markets. The target company may elect to apply for such listing immediately
following the business combination or at some later time.
If, after a business combination, we do not meet the qualifications for
listing on the Nasdaq Capital Market, we may have a market maker apply for
quotation of our securities on the Over-the-Counter Bulletin Board. In certain
cases we may elect to have our securities initially quoted in the "pink sheets"
published by the Pink Sheets, LLC. On April 7, 2000, the Securities and Exchange
Commission issued a clarification with regard to the reporting status under the
Securities Exchange Act of 1934 of a non-reporting company after it acquired a
reporting "blank check" company. This letter clarified the Commission's position
that such Company would not be a successor issuer to the reporting obligation of
the "blank check" company by virtue of Exchange Act Rule 12g-3(a).
We intend that any merger we undertake would not be deemed a "back door"
registration since we would remain the reporting company and the Company that we
merge with would not become a successor issuer to our reporting obligations by
virtue of Commission Rule 12g-3(a).
19
TRANSFER AGENT
The Company does not currently have a transfer agent for its shares of
Common Stock. The Company may appoint a transfer agent or act as its own until a
merger candidate can be identified.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Nevada Revised Statutes allow us to indemnify our officers, directors,
employees, and agents from any threatened, pending, or completed action, suit,
or proceeding, whether civil, criminal, administrative, or investigative, except
under certain circumstances. Indemnification may only occur if a determination
has been made that the officer, director, employee, or agent acted in good faith
and in a manner, which such person believed to be in the best interests of the
corporation. A determination may be made by the shareholders; by a majority of
the directors who were not parties to the action, suit, or proceeding confirmed
by opinion of independent legal counsel; or by opinion of independent legal
counsel in the event a quorum of directors who were not a party to such action,
suit, or proceeding does not exist.
The expenses of officers and directors incurred in defending a civil or
criminal action, suit or proceeding must be paid by us as they are incurred and
in advance of the final disposition of the action, suit or proceeding, if and
only if the officer or director undertakes to repay said expenses to us if it is
ultimately determined by a court of competent jurisdiction that he is not
entitled to be indemnified by us.
The indemnification and advancement of expenses may not be made to or on
behalf of any officer or director if a final adjudication establishes that the
officer's or director's acts or omission involved intentional misconduct, fraud
or a knowing violation of the law and was material to the cause of action.
Article VII, Section 7. of our By-Laws require us to indemnify our
officers, directors, employees and agents to the fullest extent permitted under
the laws of Nevada.
ITEM 13. FINANCIAL STATEMENTS
The audited financial statements of China Ticket Center, Inc. for the
period from inception on March 7, 2011, until the period ended March 14, 2011,
appear beginning at F-1.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
..
There are not and have not been any disagreements between the Registrant
and its accountants on any matter of accounting principles, practices or
financial statement disclosure.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
(a)(1) Financial Statements
Financial statements for China Ticket Center, Inc. listed in the Index
to Financial Statements and Supplementary Data on page F-1 are filed as
part of this Registration Statement.
(a)(2) Financial Statement Schedule
Financial Statement Schedule for China Ticket Center, Inc. listed in
the Index to Financial Statements and Supplementary Data on page F-1 are
filed as part of this Registration Statement.
(b) Exhibits
Exhibit
Number Description
------ -----------
3.1 Articles of Incorporation *
3.2 By-Laws *
4.1 Specimen Stock Certificate *
23.1 Consent of the Independent Registered Public Accounting Firm *
----------
* Filed herewith.
20
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this Form 10 registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized.
CHINA TICKET CENTER, INC.
Date: March 29, 2011 By: /s/ Hongqiang Xu
-----------------------------------------
Name: Hongqiang Xu
Title: President and Chief Executive Officer
21
China Ticket Center, Inc.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
March 14, 2011
FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm F-1
Balance Sheet F-2
Statement of Operations F-3
Statement of Changes in Stockholders' Deficit F-4
Statement of Cash Flows F-5
Notes to Financial Statements F-6
Stan J.H. Lee, CPA
2160 North Central Rd. Suite 203* Fort Lee * NJ 07024
P.O. Box 436402 * San Diego * 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
China Ticket Center, Inc.
(A Development Stage Company)
We have audited the accompanying balance sheet of China Ticket Center, Inc.. as
of May 14, 2011, and the related statements of operation, shareholders' equity
(deficit) and cash flows for the period from May 7, 2011 (inception date) to May
14, 2011. 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 China Ticket Center, Inc. as of
March 14, 2011, 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 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
March 17, 2011
Fort Lee, NJ, 07024
F-1
CHINA TICKET CENTER, INC.
(A Development Stage Company)
Balance Sheet
March 14,
2011
--------
ASSETS
Current assets
Cash $ --
--------
Total current assets --
--------
TOTAL ASSETS $ --
========
LIABILITIES & STOCKHOLDERS' DEFICIT
Current liabilities
Accrued expenses $ 1,000
--------
Total current liabilities 1,000
--------
TOTAL LIABILITIES 1,000
--------
Stockholders' deficit
Common stock ($.0001 par value, 250,000,000 shares
authorized; 24,000,000 shares issued and outstanding) 2,400
Deficit accumulated during development stage (3,400)
--------
Total Stockholders' deficit (1,000)
--------
TOTAL LIABILITIES & STOCKHOLDERS' DEFICIT $ --
========
See Notes to Financial Statements
F-2
CHINA TICKET CENTER, INC.
(A Development Stage Company)
Statement of Operations
For the
period from
March 7, 2011
(inception) to
March 14,
2011
------------
Revenues
Revenues $ --
------------
Total revenues --
------------
Operating expenses
Professional fees 1,000
Organization and related expenses 2,400
------------
Total operating expenses 3,400
------------
Net loss $ (3,400)
============
Basic loss per share $ (0.00)
============
Weighted average number of common shares outstanding 24,000,000
============
See Notes to Financial Statements
F-3
CHINA TICKET CENTER
(A Development Stage Company)
Statement of Changes in Stockholders' Deficit
For the period from March 7, 2011 (inception) to March 14, 2011
Deficit
Accumulated
Common Additional During Total
Common Stock Paid-in Development Stockholders'
Stock Amount Capital Stage Deficit
----- ------ ------- ----- -------
March 7, 2011 (inception)
Shares issued for services
at $.0001 per share 24,000,000 $ 2,400 $ -- $ -- $ 2,400
Net loss for the period (3,400) (3,400)
----------- ----------- ------- ----------- -----------
Balance March 14, 2011 24,000,000 $ 2,400 $ -- $ (3,400) $ (1,000)
=========== =========== ======= =========== ===========
See Notes to Financial Statements
F-4
CHINA TICKET CENTER, INC.
(A Development Stage Company)
Statement of Cash flows
For the
period from
March 7, 2011
(inception) to
March 14,
2011
--------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (3,400)
Adjustments to reconcile net loss to net cash
(used) by operating activities
Increase in accrued expenses 1,000
--------
Net cash used by operating activities (2,400)
--------
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash provided by investing activities --
--------
CASH FLOWS FROM FINANCING ACTIVITIES
Stock issued for services 2,400
--------
Net cash provided by financing activities 2,400
--------
Net increase in cash --
Cash at beginning of period --
--------
Cash at end of period $ --
========
NONCASH INVESTING AND FINANCING ACTIVITIES:
Common stock issued to founder for services rendered $ 2,400
========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $ --
========
Income taxes paid $ --
========
See Notes to Financial Statements
F-5
CHINA TICKET CENTER, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
As of March 14, 2011
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
China Ticket Center, Inc. (the "COMPANY") was incorporated under the laws
of the State of Nevada on March 7, 2011 and has been inactive since inception.
The Company intends to serve as a vehicle to effect an asset acquisition,
merger, exchange of capital stock or other business combination with a domestic
or foreign business.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION - DEVELOPMENT STAGE COMPANY
The Company is a development stage company as defined by ASC 915-10-05,
"Development Stage Entity". The Company is still devoting substantially all of
its efforts on establishing the business and its planned principal operations
have not commenced. All losses accumulated, since inception, have been
considered as part of the Company's development stage activities.
ACCOUNTING METHOD
The Company's financial statements are prepared using the accrual method of
accounting. The Company has elected a fiscal year ending on December 31.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles accepted in the United States of America 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. In the opinion of management, all
adjustments necessary in order to make the financial statements not misleading
have been included. Actual results could differ from those estimates.
CASH EQUIVALENTS
The Company considers all highly liquid investments with maturity of three
months or less when purchased to be cash equivalents.
INCOME TAXES
The Company uses the asset and liability method of accounting for income
taxes in accordance with ASC 740-10, "Accounting for Income Taxes." Under this
method, income tax expense is recognized for the amount of: (i) taxes payable or
refundable for the current year; and, (ii) deferred tax consequences of
temporary differences resulting from matters that have been recognized in an
F-6
entity's financial statements or tax returns. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in the results of operations in the period
that includes the enactment date. A valuation allowance is provided to reduce
the deferred tax assets reported if, based on the weight of available positive
and negative evidence, it is more likely than not that some portion or all of
the deferred tax assets will not be realized.
ASC 740-10 prescribes a recognition threshold and measurement attribute for
the financial statement recognition of a tax position taken or expected to be
taken on a tax return. Under ASC 740-10, a tax benefit from an uncertain tax
position taken or expected to be taken may be recognized only if it is "more
likely than not" that the position is sustainable upon examination, based on its
technical merits. The tax benefit of a qualifying position under ASC 740-10
would equal the largest amount of tax benefit that is greater than 50% likely of
being realized upon ultimate settlement with a taxing authority having full
knowledge of all the relevant information. A liability (including interest and
penalties, if applicable) is established to the extent a current benefit has
been recognized on a tax return for matters that are considered contingent upon
the outcome of an uncertain tax position. Related interest and penalties, if
any, are included as components of income tax expense and income taxes payable.
BASIC EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share is computed by dividing net income, or
loss, by the weighted average number of shares of common stock outstanding for
the period. Diluted earnings (loss) per share is computed by dividing net
income, or loss, by the weighted average number of shares of both common and
preferred stock outstanding for the period
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. INCOME TAXES
At March 14, 2011, the Company had a federal operating loss carryforward of
$3,400, which begins to expire in 2028. Components of net deferred tax assets,
including a valuation allowance, are as follows at March 14, 2011:
F-7
2011
--------
Deferred tax assets:
Net operating loss carryforward $ --
Stock-based compensation 1,190
--------
1,190
Less: Valuation Allowance (1,190)
--------
$ --
========
The valuation allowance for deferred tax assets as of March 14, 2011 was
$1,190. In assessing the recovery of the deferred tax assets, management
considers whether it is more likely than not that some portion or all of the
deferred tax assets will not be realized. The ultimate realization of deferred
tax assets is dependent upon the generation of future taxable income in the
periods in which those temporary differences become deductible. Management
considers the scheduled reversals of future deferred tax liabilities, projected
future taxable income, and tax planning strategies in making this assessment. As
a result, management determined it was more likely than not the deferred tax
assets would not be realized as of March 14, 2011, and recorded a full valuation
allowance. Reconciliation between the statutory rate and the effective tax rate
for the period ended March 14, 2011 is as follows:
2011
------
Federal statutory tax rate (35.0)%
Change in valuation allowance 35.0 %
------
Effective tax rate 0.0 %
NOTE 4. GOING CONCERN
The Company's financial statements are prepared using accounting principles
generally accepted in the United States of America applicable to a going concern
that contemplates the realization of assets and liquidation of liabilities in
the normal course of business. The Company has not established any source of
revenue to cover its operating costs. The Company will engage in very limited
activities without incurring any liabilities that must be satisfied in cash
until a source of funding is secured. The Company will offer noncash
consideration and seek equity lines as a means of financing its operations. If
the Company is unable to obtain revenue producing contracts or financing or if
the revenue or financing it does obtain is insufficient to cover any operating
losses it may incur, it may substantially curtail or terminate its operations or
F-8
seek other business opportunities through strategic alliances, acquisitions or
other arrangements that may dilute the interests of existing stockholders.
NOTE 5. SHAREHOLDER'S EQUITY
Upon formation, the Board of Directors issued 24,000,000 shares of common
stock for $2,400 in services to the founding shareholder of the Company to fund
organizational start-up costs.
The stockholders' equity section of the Company contains the following
classes of capital stock as of March 14, 2011:
* Common stock, $0.0001 par value: 250,000,000 shares authorized;
24,000,000 shares issued and outstanding.
F-9
INDEX TO EXHIBITS
Exhibit
Number Description
------ -----------
3.1 Articles of Incorporation *
3.2 By-Laws *
4.1 Specimen Stock Certificate *
23.1 Consent of the Independent Registered Public Accounting Firm *
----------
* Filed herewith.