DALIAN CAPITAL GROUP, INC.
FORM 10-Q
( Quarterly Report of Financial Condition )
Filed December 7, 2009 for the year ending 09/30/09
Address 900, 850 West Hastings Street
Vancouver
BC V6C 1E1 Canada
Telephone 604-801-5022
Fiscal Year 12/31
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 for the quarterly period
ended September 30, 2009.
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 for the transition
period from __________ to ___________
Commission File Number : 000-52185
Dalian Capital Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware N/A
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
850 West Hastings Street, Suite 900,
Vancouver, BC V6C 1E1, Canada
(Address of principal executive offices,
including zip code)
604-801-5022
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes ( X ) No ( )
Indicate by check mark whether the registrant 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 ( 232.405
of this chapter ) during the preceding 12 months (or for
such shorter period that the registrant was required
to submit and post such files). Yes ( ) No ( )
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a not-accelerated
filer, or a smaller reporting company. See the definitions
of "large accelerated filer," "accelerated filer" and
"smaller reporting company" in Rule 12b-2 of the Exchange
Act.
Large accelerated filer ( ) Accelerated filer ( )
Non-accelerated filer ( ) Smaller reporting company ( X )
Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Act).
Yes ( X ) No ( )
At November 30, 2009, the Company had outstanding of
1,390,000 shares of Common Stock, $0.0001 par value per
share.
DALIAN CAPITAL GROUP, INC.
FORM 10-Q
For the Period Ended September 30, 2009
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION Pages
Item 1. Financial Statements... 1 - 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations... 9-13
Item 3. Quantitative and Qualitative Disclosures
About Market Risk... 13
Item 4T.Controls and Procedures... 13
PART II
Item 1. Legal Proceedings... 14
Item 1A.Risk Factors... 14
Item 2. Unregistered Sales of Equity Securities
and Use of Proceeds... 14
Item 3. Defaults Upon Senior Securities........ 14
Item 4. Submission of Matters to a Vote of Security Holders... 14
Item 5. Other Information... 14
Item 6. Exhibits and Certifications... 15
Part 1. Item 1. Financial Statements
DALIAN CAPITAL GROUP, INC.
Page No.
Balance Sheets... 1
Statements of Operations... 2
Statements of Cash... 3
Notes to Financial Statements... 4 - 8
DALIAN CAPITAL GROUP, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
September 30, 2009
(Expressed in US Dollars)
(Unaudited)
PART 1. FINANCIAL INFORMATION
These financial statements have not been reviewed or audited by our
independent auditors
DALIAN CAPITAL GROUP, INC.
(A development stage company)
BALANCE SHEETS
(Expressed in U.S. Dollars)
(Unaudited)
Sept. 30, Dec 31,
2009 2008
Assets
Current Assets
Cash 164 390
--------------------
Total Assets $ 164 390
--------------------
Liabilities
Current Liabilities
Related parties accounts (Note 4) 89,799 89,699
--------------------
Total liabilities $ 89,799 89,699
--------------------
Stockholders' Equity
Preferred Stock, $0.0001 par value
Authorized 20,000,000 shares
No shares issued and outstanding - -
Common stock, $0.0001 par value
Authorized 100,000,000 shares
Issued 1,390,000 shares $ 139 139
Deficit accumulated during the
development stage (89,774) (89,448)
--------------------
Total stockholders' deficit (89,635) (89,309)
--------------------
Total Liabilities and
Stockholders' Deficit $ 164 390
--------------------
The accompanying notes are an integral part of the financial statements.
1
DALIAN CAPITAL GROUP, INC.
(A development stage company)
STATEMENTS OF OPERATIONS
(Expressed in U.S. Dollars)
(Unaudited)
Inception
May 31,
Three months Ended Nine months ended 2006 to
Sept. 30, Sept. 30, Sept. 30,
2009 2008 2009 2008 2009
Revenue $ - - - - -
------------------------------------------------
Expenses
Bank service charges 35 35 101 59 194
Consultation and
reorganization fees - - - 75,000 75,139
Filing fees and expenses - 326 100 13,996 14,300
Exchange gain/loss 1 5 - 9 16
Registered agent fee - - 125 - 125
------------------------------------------------
Total operating
expenses $ 36 366 326 89,064 89,774
------------------------------------------------
Net loss for
the period $ (36) (366) (326) (89,064) (89,774)
------------------------------------------------
Net loss per
common shares (0.00) (0.00) (0.00) (0.06)
- Basic and Diluted
Weighted average number
of common shares
outstanding 1,390,000 1,390,000 1,390,000 1,390,000
The accompanying notes are an integral part of the financial statements.
2
DALIAN CAPITAL GROUP, INC.
(A development stage company)
STATEMENTS OF CASH FLOWS
(Expressed in U.S. Dollars)
(Unaudited)
Inception
May 31,
Nine months ended 2006 to
Sept. 30, Sept. 30,
2009 2008 2009
Cash Flows Provided By (Used In) :
Operating activities
Net loss for the period $ (326) (89,064) (89,774)
Adjustments to reconcile
net income to net
cash used in operating activities:
Accounts payable to related parties 100 89,196 89,799
-------------------------------
Net cash used in operating activities (226) 132 25
Cash flows from Investing activities - - -
Cash flows from Financing activities
Shares issued for services - - 139
-------------------------------
Net cash provided by
financing activities - - 139
-------------------------------
Net increase (decrease) in cash $ (226) 132 164
Cash - beginning of period 390 - -
-------------------------------
Cash - end of period $ 164 132 164
The accompanying notes are an integral part of the financial statements.
3
DALIAN CAPITAL GROUP, INC.
(A development stage company)
NOTES TO FINANCIAL STATEMENTS
September 30, 2009
(Unaudited)
Note 1. Nature Of Operations And Going Concern
Dalian Capital Group, Inc. was incorporated in the State of Delaware on
May 31, 2006 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.
These financial statements have been prepared in accordance with the
accounting principles generally accepted in the United States applicable to
a going concern which assumes that the Company will realize its assets
and discharge its liabilities in the normal course of business. Realization
values may be substantially different from carrying values, as shown in the
financial statements, should the Company be unable to continue as a
going concern.
As of September 30, 2009 the Company is considered to be in the
development stage as the Company has not generated revenues from
operations. The Company's future operations are dependent upon its ability
to obtain third party financing in the form of debt and equity and
ultimately to generate future profitable operations or income from its
operations. The Company is currently seeking additional funds through future
debt or equity financing to offset future cash flow deficiencies. Such
financing may not be available or may not be available on reasonable terms.
The resolution of this going concern issue is dependent on the realization
of management's plans. If management is unsuccessful in raising future debt
or equity financing, the Company will be required to liquidate assets and
curtail or possibly cease operations.
As of September 30, 2009 the Company had an accumulated deficit of $89,774.
The loss of $326 for the nine months period ended September 30, 2009 are for
filing fees and other expenses.
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Company have been prepared in accordance
with accounting principles generally accepted in the United States. Because a
precise determination of many assets and liabilities is dependent upon future
events the preparation of financial statements for a period necessarily
involves the use of estimates which have been made using careful judgment.
4
The financial statements have, in management's opinion, been properly
prepared within reasonable limits of materiality within the framework of the
accounting policies summarized below :
(a) Cash and cash equivalents
The Company considers all short-term investments, including
investments in certificates of deposits, with a maturity date at
purchase of three months or less to be cash equivalents.
(b) Revenue recognition
The Company will record its revenue on the accrual basis, whereby
revenue is recognized upon the sales orders being placed.
Cost is recorded on the accrual basis, when the purchase orders
are placed and operating costs are incurred rather than paid for.
(c) Foreign currencies
The functional currency of the Company is the United States dollar.
Transactions in foreign currencies are translated into United States
dollars at the rates in effect on the transaction date. Exchange gains
or losses arising on translation or settlement of foreign currency
denominated monetary items are included in the statement of
operations.
(d) Financial instruments
The Company's financial instruments consists of : cash; promissory notes
receivable; accounts payable and accrued liabilities; and convertible
debentures payable.
Management is of the opinion that the Company is not subject to
significant interest, current or credit risks on the financial
instruments included in these financial statements. The fair market
values of these financial instruments approximate their carrying values.
(f) Income taxes
The Company follows the asset and liability method of accounting for
income taxes. Under this method, current taxes are recognized for the
estimated income taxes payable for the current period.
Deferred income taxes are provided based on the estimated future tax
effects on temporary differences between financial statement carrying
amounts of assets and liabilities and their respective tax bases as well
as the benefit of losses available to be carried forward to future years
for tax purposes.
5
Deferred tax assets and liabilities are measured using enacted tax rates
that are expected to apply to taxable income in the years in which those
temporary differences are expected to be covered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is
recognized in operations in the period that includes the enactment date.
A valuation allowance is recorded for deferred tax assets when it is more
likely than not that such deferred tax assets will not be realized.
(g) Loss per share
Loss per share computations are based on the weighted average number
of common shares outstanding during the period. Common share equivalents
consisting of stock options and warrants are not considered in the
computation because their effect would be anti-dilative.
(h) Recently Issued Accounting Pronouncements
On June 30, 2009, the Financial Accounting Standards Board (FASB) issued
FASB Statement No. 168, the FASB Accounting Standards Codification and
the Hierarchy of Generally Accepted Accounting Principles - a replacement
of FASB Statement No. 162. On the effective date of this statement, FASB
Accounting Standard Codification (ASC) becomes the source of authoritative
U.S. accounting and reporting standards for nongovernmental entities, in
addition to guidance issued by the Securities and Exchange Commission
(SEC). At that time, FASB ASC will supersede all then-existing, non-SEC
accounting and reporting standards for nongovernmental entities. Once
effective, all other nongrandfathered, non-SEC accounting literature not
included in FASB ASC will become nonauthoritative.
Under ASC 815, the Company discloses derivative instruments and hedging
activities, which requires entities to provide enhanced disclosures about
(a) how and why an entity uses derivative instruments, (b) how derivative
instruments and related hedged items affect an entity's financial position,
financial performance and cash flows.
Under ASC 805, "Business Combinations", the Company uses the
acquisition method of accounting for all business combinations and for an
acquirer to be identified for each business combination. Under ASC 805,
the Company is also required to recognize the assets acquired, the
liabilities assumed, and any noncontrolling interest in the acquiree at
the acquisiton date, measured at their fair values as of that date, with
limited exceptions specified in ASC 805. In addition, acquisition costs
and restructuring costs that the acquirer expected but was not obligated
to incur to be recognized separately from the business combination,
therefore, expensed instead of part of the pruchase price allocation.
ASC 805 will be applied prospectively to business combinations for which
the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008. Early adoption
is prohibited.
6
The Company follows ASC 825-10 in measuring the fair value of options
for financial assets and liabilities. The Company is permitted to
irrevocably elect fair value on a contract-by-contract basis as the
initial and subsequent measurement attribute for many financial assets
and liabilities and certain other items including insurance contracts.
Entities electing the fair value option would be required to recognize
changes in fair value in earnings and to expense upfront cost and fees
associated with the item for which the fair value option is elected.
ASC 825-10 is effective for fiscal years beginning after November 15,
2007. Early adoption is permitted as of the beginning of a fiscal year
the begins on or before November 15, 2007, provided the entity also
elects to apply the provisions of ASC 825-10, Fair Value Measurements.
Note 3. SHAREHOLDER'S EQUITY
On May 31, 2006 ( inception ), Dalian issued 1,390,000 shares of common
stock for $139 in services by its founding shareholder.
Preferred Stock
Dalian's board of directors has the authority to establish and fix the
designation, powers, or preferences of preferred shares without further
vote by the shareholders.
Authorized Share Capital
As of September 30, 2009 the Company has :-
Authorized Preferred Stock of 20,000,000 shares at $0.0001 par value and
authorized Common Stock of 100,000,000 shares at $0.0001 par value.
As of November 30, 2009 the Company has issued and outstanding of
1,390,000 shares of Common Stock with par value of $0.0001.
Note 4. DUE TO RELATED PARTIES
On September 30, 2009, $89,799 (2008 - $89,699) was due to shareholder
and several corporations related to the Company. These amounts bear no
interest and with not stated repayment terms; the Company recorded no
imputed interest on these borrowings.
Note 5. INCOME TAXES
The Company provides for income taxes under ASC 740, "Income Taxes".
ASC 740 which requires the use of an asset and liability approach in
accounting for income taxes. Deferred tax assets and liabilities are
recorded based on the differences between the financial statement and
tax bases of assets and liabilities and the tax rates in effect currently.
7
At September 30, 2009, the Company had deficits accumulated during the
development stage of $89,774 available in computing net deferred tax assets
which may be used to offset future taxable income.
8
PART I
This Interim Report on Form 10-Q contains forward-
looking statements that have been made pursuant to the
provisions of Section 27A of the Securities Act of 1933,
Section 21E of the Securities Exchange Act of 1934, and
the Private Securities Litigation Reform Act of 1995 and
concern matters that involve risks and uncertainties that
could cause actual results to differ materially from
historical results or from those projected in the
forward-looking statements. Discussions containing
forward-looking statements may be found in the material
set forth under "Business," "Management's Discussion and
Analysis of Financial Condition and Results of
Operations" and in other sections of this Form 10-Q.
Words such as "may," "will," "should," "could," "expect,"
"plan," "anticipate," "believe," "estimate," "predict,"
"potential," "continue" or similar words are intended to
identify forward-looking statements, although not all
forward-looking statements contain these words. Although
we believe that our opinions and expectations reflected
in the forward-looking statements are reasonable as of
the date of this Report, we cannot guarantee future
results, levels of activity, performance or achievements,
and our actual results may differ substantially from the
views and expectations set forth in this Interim Report
on Form 10-Q. We expressly disclaim any intent or
obligation to update any forward-looking statements after
the date hereof to conform such statements to actual
results or to changes in our opinions or expectations.
Readers should carefully review and consider the
various disclosures made by us in this Report, set forth
in detail in Part I, under the heading "Risk Factors," as
well as those additional risks described in other
documents we file from time to time with the Securities
and Exchange Commission, which attempt to advise
interested parties of the risks, uncertainties, and other
factors that affect our business. We undertake no
obligation to publicly release the results of any
revisions to any forward-looking statements to reflect
anticipated or unanticipated events or circumstances
occurring after the date of such statements.
9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
General
The Company has been in the process of identifying and
discussing a strategic merger or acquisitions but will
need to raise substantial additional capital to fund
this strategy.
The Company does not currently have any employees.
Operations
The Company has not been active since 2006. The net loss
for the three months ended September 30, 2009 was $36
compared to $366 for the three-month period ended June
30, 2008. The decrease for the three month periods
ended September 30, 2009, in relation to the comparable
period in 2008, was due to decreased expenses for
filing fees and expenses. There was no revenue for those
periods stated above.
Liquidity and Financial Resources
The Company has minimal cash reserves and a working
capital deficit of $89,635 ($89,309 - 2008) as of
September 30, 2009. Accordingly, the Company's ability
to sustain operations and pursue its plan of operations
is contingent on the ability to obtain funding. The
Company is seeking such additional funds through private
equity or debt financing. Regardless, there can be no
assurance that such funding will be available on
acceptable terms.
The Company remains in the development stage. Operations
were financed through advances and loans from directors
and related parties. The directors and related parties
have also advanced funds into the Company to cover cash
flow deficiencies. These advances have no stated
interest or repayment terms.
The Company's financial statements are presented on a
going concern basis, which contemplates the realization
10
of assets and the satisfaction of liabilities in the
normal course of business. At September 30, 2009, the
Company has been unsuccessful in its efforts to raise
additional capital to meet management's plan of
operations.
The Company's continued existence as a going concern is
ultimately dependent upon its ability to secure
additional funding.
Critical Accounting Policies
The Company's discussion and analysis of its financial
condition and results of operations are based upon the
Company's financial statements, which have been prepared
in accordance with accounting principles generally
accepted in the United States of America.
The preparation of the financial statements requires the
Company to make estimates and judgments that affect the
reported amount of assets, liabilities, and expenses, and
related disclosures of contingent assets and liabilities.
On an on-going basis, the Company evaluates its estimates,
including those related to intangible assets, income taxes
and contingencies and litigation. The Company bases its
estimates on historical experience and on various
assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for
making judgments about carrying values of assets and
liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates
under different assumptions or conditions.
NEW ACCOUNTING PRONOUNCEMENTS
On June 30, 2009, the Financial Accounting Standards
Board (FASB) issued FASB Statement No. 168, The FASB
Accounting Standards Codification(tm) and the Hierarchy of
Generally Accepted Accounting Principles-a replacement
of FASB Statement No. 162. On the effective date of this
statement, FASB Accounting Standards Codification(tm) (ASC)
becomes the source of authoritative U.S. accounting and
reporting standards for nongovernmental entities, in
addition to guidance issued by the Securities and
Exchange Commission (SEC). At that time, FASB ASC will
supersede all then-existing, non-SEC accounting and
11
reporting standards for nongovernmental entities. Once
effective, all other nongrandfathered, non-SEC
accounting literature not included in FASB ASC will
become nonauthoritative.
Under ASC 815, the Company discloses derivative
instruments and hedging activities, which requires
entities to provide enhanced disclosures about (a) how and
why an entity uses derivative instruments, (b) how
derivative instruments and related hedged items are
accounted for under ASC 815 and its related
interpretations and (c) how derivative instruments and
related hedged items affect an entity's financial
position, financial performance and cash flows.
Under ASC 805, "Business Combinations", the Company uses
the acquisition method of accounting for all business
combinations and for an acquirer to be identified for each
business combination. Under ASC 805, the Company is also
required to recognize the assets acquired, the liabilities
assumed, and any noncontrolling interest in the acquiree
at the acquisition date, measured at their fair values as
of that date, with limited exceptions specified in ASC
805. In addition, acquisition costs and restructuring
costs that the acquirer expected but was not obligated to
incur to be recognized separately from the business
combination, therefore, expensed instead of part of the
purchase price allocation. ASC 805 will be applied
prospectively to business combinations for which the
acquisition date is on or after the beginning of the first
annual reporting period beginning on or after December 15,
2008. Early adoption is prohibited.
The Company follows ASC 825-10 in measuring the fair
value of options for financial assets and liabilities.
The Company is permitted to irrevocably elect fair value
on a contract-by-contract basis as the initial and
subsequent measurement attribute for many financial
assets and liabilities and certain other items including
insurance contracts. Entities electing the fair value
option would be required to recognize changes in fair
value in earnings and to expense upfront cost and fees
associated with the item for which the fair value option
is elected. ASC 825-10 is effective for fiscal years
beginning after November 15, 2007. Early adoption is
12
permitted as of the beginning of a fiscal year that
begins on or before November 15, 2007, provided the
entity also elects to apply the provisions of ASC 825-
10, Fair Value Measurements.
Item 3. Quantitative and Qualitative Disclosures About
Market Risk.
The Company at present does not engage in any business
activities thus will not be subjected to any
quantitative or qualitative influences to market risk.
Item 4T. Controls and Procedures.
The Company's Chief Executive Officer and its Chief
Financial Officer are primarily responsible for the
accuracy of the financial information that is presented
in this quarterly Report. These officers have as of the
close of the period covered by this Quarterly Report,
evaluated the Company's disclosure controls and
procedures (as defined in Rules 13a-4c and 15d-14c
promulgated under the Securities Exchange Act of 1934 and
determined that such controls and procedures were
effective in ensuring that material information relating
to the Company was made known to them during the period
covered by this Quarterly Report.
There have been no changes in our internal control over
financial reporting (as defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act) during the fourth
quarter of our 2008 fiscal year that have materially
affected, or are reasonably likely to materially affect,
our internal control over financial reporting.
13
PART II
Item 1. Legal Proceedings.
None
Item 1A. Risk Factors
Not applicable.
Item 2. Unregistered Sales of Equity Securities and Use
of Proceeds.
None
Item 3. Defaults Upon Senior Securities.
Not Applicable.
Item 4. Submission of Matters to a Vote of Security
Holders.
Not Applicable.
Item 5. Other Information.
None
14
Item 6. Exhibits
31.1 Certification of the Chief Executive Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002, filed
herewith.
31.2 Certification of the Chief Financial Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002, filed
herewith.
32.1 Certification of the Chief Executive Officer pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, filed
herewith.
32.1 Certification of the Chief Financial Officer pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, filed
herewith.
SIGNATURES
In accordance with the Securities Exchange Act of 1934,
this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on
the dates indicated.
Dated: December 7, 2009
Dalian Capital Group, Inc.
By: /S/ Erwin Liem
Erwin Liem
Chief Executive Officer
& Director
By: /S/ Michael Lee
Michael Lee
Chief Accounting Officer
15