SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K(12)(g)(3)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): November 1, 2005
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NT HOLDING CORP.
(Exact name of registrant as specified in Charter)
DELAWARE 000-15303 73-1215433
(State or other (Commission File No.) (IRS Employee
jurisdiction of Identification No.)
incorporation
or organization)
385 Freeport, #1
Sparks, NV 89431
(Address of Principal Executive Offices)
Unit 507, Commercial House
No. 35 Queen's Road Central, Hong Kong
(Former Address of Principal Executive Offices)
917-981-4569
(Issuer Telephone Number)
852-9188-2864
(Former Issuer Telephone Number)
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12(b) under the Exchange
Act (17 CFR 240.14a-12(b))
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
This report contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These include statements about our
expectations, beliefs, intentions or strategies for the future, which we
indicate by words or phrases such as "anticipate," "expect," "intend," "plan,"
"will," "we believe," "our company believes," "management believes" and similar
language. These forward-looking statements are based on our current expectations
and are subject to certain risks, uncertainties and assumptions, including those
set forth in the discussion under Part 1, Item 1 "Description of Business" and
Part 1, Item 6 "Management's Discussion and Analysis", including under the
heading "- Risk Factors" under Part 1, Item 6. Our actual results may differ
materially from results anticipated in these forward-looking statements. We base
our forward-looking statements on information currently available to us, and we
assume no obligation to update them. In addition, our historical financial
performance is not necessarily indicative of the results that may be expected in
the future and we believe that such comparisons cannot be relied upon as
indicators of future performance.
Certain financial information included in this annual report has been derived
from data originally prepared in Renminbi (RMB), the currency of the People's
Republic of China and Hong Kong Dollar (HKD), the currency of Hong Kong. For
purposes of this report, a conversion rate of US$1.00 to RMB 8.3 was utilized.
There is no assurance that RMB and HKD amounts could have been or could be
converted into US dollars at that rate.
NT Holding Corp., through its subsidiary Tagalder C3 Holdings, Inc.
("Tagalder"), owns 100% of the shareholdings of Hopeful Asia Limited, a Hong
Kong Company that owns 75% of Fujia Coking and Chemical Company Limited, a
wholly owned foreign enterprise (WOFE) incorporated in China ("FJCC") that owns
the drilling rights of a coke mine property called Yong'an coal mine, located in
Xixinzhuang Town of Xiaoyi city, Shanxi Province, China and a proprietary
patented technology in coke production.
PART 1
ITEM 1. DESCRIPTION OF BUSINESS
HISTORY
NT Holding Corp., (the "Company", "we", "our", "us" or "NTHH"), was incorporated
on April 11, 1984 under the laws of the State of Delaware as CMS Advertising. On
September 25, 1989 we changed our name to Unico, Inc., and again on April 25,
2002 ABSS, Corp. Initial business activities, associated with the sale and
administration of cooperative direct mail advertising franchises commenced in
May 1984. In September 1986, the Company filed an initial registration statement
with the Securities and Exchange Commission and initiated a plan to expand
Company operations through the acquisition of existing businesses operating in
related fields. The Company also operated and owned a second subsidiary during
1996, Cal-Central Marketing Corporation ("Cal-Central"). Cal-Central was
discontinued during 1996 and was involved in cooperative advertising distributed
primarily through supermarkets, pharmacies and restaurants. Franchising
activities related to this business were conducted through United Marketing,
which the Company had acquired on July 17, 1987. On January 29, 1999, the
shareholders of the Company approved the sale of all of the issued and
outstanding common stock of United Marketing to Next Generation Media Corp.
("NexGen"). The sale was effective and closed April 1, 1999. In July 2000, the
Company acquired from NexGen all the issued and outstanding stock of The
Independent News. On January 31, 2001, The Company incorporated The Local
Times.com, Inc. and New Media, Inc. In August 2001, the Company ceased its
newspaper operations. Under partly new management, the Company planned to
develop a fashion-oriented holding and marketing company.
On October 3, 2001 NTHH incorporated Money Buckets, Inc., a Nevada corporation,
to become the operational unit of NTHH's fashion business. On December 17, 2001,
NTHH entered into a license agreement with Cybernic Holdings, Inc., to (a)
produce and brand Aleksander Bla, a line of women's clothing and (b) to produce
and develop a fashion related internet project, Fashion Expo. The agreement
provides for among other things, that the Company will change its name to ABSS,
Corp., and that the Company would reverse split its outstanding common shares by
1-30 and issue 3,791,393 new restricted shares (947,848 shares as of December
31, 2004) to Cybernic Holdings, Inc.
On July 11, 2003, the Company filed a Current Report on Form 8K based on a
change in control of the Company and the appointment of a new President of the
Company. Mr. Alan Lew acquired the majority interest from Cybernic Holdings in a
private transaction.
On August 15, 2005, pursuant to the terms of an Agreement for Share Exchange
(the "NewFair Share Exchange Agreement") dated by and among the Company, Alan
Lew, an individual ("Alan Lew"), Newfair Associates Limited, a British Virgin
Islands corporation ("Newfair"), and the Shareholders of Newfair (collectively
the "Shareholders"), the Company acquired all of the issued and outstanding
common stock of Newfair from the Shareholders in exchange for a total of
21,614,000 shares of common stock of the Company(the "Newfair Exchange Shares").
Following the issuance of the Newfair Exchange Shares, the Company had a total
of 24,667,665 shares of common stock issued and outstanding.
Immediately after closing of the transaction, the Company transferred all of its
ownership interest in its wholly-owned subsidiary, PNC Labs, Inc. ("PNC") to
Alan Lew in exchange for Alan Lew assuming all of the assets and liabilities of
PNC. As additional consideration, the Company issued 200,000 shares of common
stock to Alan Lew (who immediately transferred it to PNC).
On October 28, 2005, the Company entered into a Rescission Agreement (the
"Rescission Agreement") pertaining to the NewFair Share Exchange Agreement dated
August 15, 2005 principally between the Company and NewFair Associates Limited
("NewFair"). The effect of the Rescission Agreement is to rescind the
transactions set forth in the NewFair Share Exchange Agreement. As a result of
the cancellation of shares pursuant to the terms of the Rescission Agreement,
the historical shareholders of NewFair no longer have effective control of the
Company and control has reverted to the Registrant's shareholders prior to
August 15, 2005.
On November 1, 2005, pursuant to the terms of an Agreement for Share Exchange
(the "Tagalder Share Exchange Agreement") entered into by and among the Company,
Alan Lew, Tagalder C3 Holdings Inc., a British Virgin Islands corporation
("Tagalder"), and the Shareholders of Tagalder (collectively the
"Shareholders"), the Company acquired all of the issued and outstanding common
stock of Tagalder from the Shareholders in exchange for a total of 19,946,000
shares of the common stock of the Company (the "Tagalder Newfair Exchange
Shares"). Following the issuance of the Newfair Exchange Shares, NT has a total
of 23,782,665 shares of common stock issued and outstanding. Additional
consideration of $150,000 shall be paid to PNC upon the earlier to occur of (a)
the Company successfully raising at least $150,000 from third party investors,
or (b) November 1, 2006.
BUSINESS OVERVIEW
NTHH, through its wholly owned subsidiary Tagalder, owns 100% of Hopeful Asia
Limited, that in turn owns 75% of Fujia Coking and Chemical Company Limited, a
wholly owned foreign enterprise (WOFE) incorporated in China ("FJCC") that owns
the drilling rights of a coke mine property called Yong'an coal mine, located in
Xixinzhuang Town of Xiaoyi city, Shanxi Province, China.
FJCC was established on March 23, 2005 by Hopeful Asia Limited, a coke trading
company with 5 years of operations, Datong Tongjia Iron & Steel Co., Ltd, a
state-owned enterprise founded in 1958 and Xiaoyi Jinyan Coke Making Co., Ltd, a
Chinese company founded in 1985 and specialized in coke making and chemical
businesses. The respective ownership interests of each founder were:
o Hong Kong Hopeful (Asia) Ltd 75%
o Shanxi Datong Tongjia Iron & Steel Co., Ltd 15%
o Xiaoyi Jinyan Electrical Power, Coal & Chemical Co., Ltd 10%
With the rapid development of Chinese economy, there is a tremendous demand for
steel and refined metal. The Chinese metal and steel refining industry sectors
has been growing but is hindered by limited source of coke. The price of coke
increases significantly in recent years due to the limited supply of coking
coal, the raw material for production of coke. The existing coke manufacturing
process requires at least 70% of coking coal as raw material. The price of
coking coal increases substantially in the recent years. Many coke producers in
China have to import coking coal from overseas suppliers. In the main coking
coal producing areas in Shanxi Province, it is estimated that the reserves in
coking coal will be exhausted in the next 20 to 30 years and is definitely
insufficient to meet the demand.
FJCC is located in Datong, Shanxi province, a city famous for its abundant
reserves of coal called "Datong Coal". However, Datong Coal can only be used for
burning as an energy source because of its quality and content. It is difficult
and uneconomical to use Datong Coal as raw material to extract other valuable
chemicals and the economical value of Datong Coal is limited. Since the reserves
of Datong Coal in Datong city are tremendous, success in exploring a new way to
use Datong Coal to extract coke and other valuable chemical products can add
tremendous value to Datong Coal and is an extremely profitable business.
FJCC was established with an aim to make use of Datong Coal resources in Datong
City and turn Datong Coal into more valuable chemical products. The shareholders
of FJCC have employed a special research institute to conduct the research and
development on the coke manufacturing process. Through repeated tests and
research, they developed a patented technology ("Coking Technology") on using up
to 40% of Datong Coal as raw material to manufacture coke while coking coal
component is reduced to 20%. Coking Technology can reduce production cost by 19%
as compared to the conventional coke manufacturing technique. The Coking
Technology is a fully computerized automatic process, leading to 30% manpower
reduction. .ACRE Coking & Refractory Engineering Consulting Corporation MCC, the
largest domestic coking project design company was contracted to be responsible
for the design of the facilities required by the Coking Technology.
Furthermore, FJCC owns 20 years of drilling rights to a coke mine property
called Yong'an coal mine, located in Xixinzhuang Town of Xiaoyi city in Shanxi
Province. Yong'an coal mine has rich reserves in coking coal. Together with the
Coking Technology and abundant supply of Datong Coal in Shanxi province, FJCC
has excellent competitive advantages in producing quality coke with low
production cost.
Upon the implementation of the Coking Technology, we can produce coke as a main
product with tar, coal gas, crude benzol, sulfur and ammonium sulfate as other
products.
COKE AND COKING COAL MARKET IN CHINA
1. The worldwide market for coke
Coke is the main raw material for the metal and steel refining industry
and it is expected that there will be no substitute for coke in the next
20 to 30 years. With the increasing demand of steel from infrastructure
development and manufacturing sectors of developed and developing
countries, there is an increasing demand for steel. On the other hand,
coke production capacity is decreased gradually. The aging of worldwide
coke production facilities, strengthening in environmental protection
regulation in developed countries, and the limited supply of coking coal
have limited the production capacity of coke.
2. The coke market in China
China was the biggest coke producing and coke exporting country in 2004,
comprising 49.7% of the world coke production and 50% of world coke
exports. In 2004, China produced and consumed 209 million tons and 197
million tons of coke, respectively. Due to the development of metal and
steel refining industry, coke consumption in China has increased
tremendously. It is projected that in 2005 the total coke consumption in
China will be over 225 million tons. However, the total coke production in
China will decrease gradually due to the aging of production facilities
and difficulties in accessing raw material, coking coal. It is predicted
that if the trend of reduction in production volume of coke continues,the
shortage in coke in China will be about 35 million tons a year by 2010.
IMPLEMENTATION OF PRODUCTION FACILITIES
The production facilities will be constructed on the 3,593,830 square feet piece
of land that the Company owns in Zhoushizhuang Town of Datong City.
The whole construction process will be separated into 2 phases.
In phase 1 we will establish a coke manufacturing facility with a production
capacity of 1 million tons per annum. The facility shall include the following:
1. And office building complex of approximately 162,000 square feet
2. Staffs and workers accommodations
3. Coal handling plant - store and handle the incoming coal
4. Coke-making plant - entirely new type coke oven under our patented
Coking Technology. This is a new type of coke oven adopt a new type
clean and rapid wet quenching system and also provide a stationary
bag-house unit for charging and pushing emission control.
5. Gas purification plant - consisting of the condensation and
exhauster unit, desulfurization unit, ammonium sulfate unit
(including coal water stripping unit), final cooler and benzol
scrubbing unit, crude benzole distillation unit and tank farm.
6. Instrument and automation - The detection and regulation unit in the
process to carry out centralized monitoring, control and operation
of all process plants.
7. Boiler house, circulating water system, Li-Br refrigerating station,
air compressor station
8. Machines & Equipment, which include:
a. Transformer - Most of the transformers of our company are
step-down transformer to reduce 35KV of external network to
10KV.
b. Tamper - It is installed at the fixed railway of the operating
room beside the coking coal tower. When the coal charging car
enters the coal tower to reclaim the coal, the tamping machine
tamps the bulk coal dropped into the coal duct into coal cakes
with certain strength to facilitate the coal charging car to
send the coal cakes from the side of coke furnace machine into
the retort.
c. Coke Pusher - It is at the side of coking furnace, consisting
of two systems as coal pushing and coal charging. The coke
pushing system is used to push the mature coke out of the
retort and complete the work as follows: opening and closing
of the furnace door on the side of the machine before pushing
and after pushing, cleaning of furnace door, furnace frame and
furnace table as well as the collection and disposition of
residual coke.
d. Coke Guide System
e. Furnace Doorframe and Protective Board - It is the protective
equipment for the outer body of the furnace. The protective
equipment also includes furnace stay, cross bracing, springs
and fire door. The function of the furnace doorframe and
protective board is to distribute protective pressure onto the
furnace body uniformly as well as to guarantee the tightness
of the furnace body.
f. Quenching Car - It receives the flaming coke pushed out from
the retort and sends them to the quench coke tower to achieve
quenching by water spraying, then places the coke to the
cooling table.
g. Coking furnace - It is a production unit for the purpose of
heating and dry distillation of the coal in the inner isolated
air to enable the unstable components in the coal to
volatilize and the rest of components to produce coke.
In phase 1 we shall expand our coke manufacturing facility to 2 million ton per
annum. The facility will be the same as phase 1 and we will duplicate the
capacity to achieve 2 million ton production per annum.
OUR PRODUCTS
Upon implementation of our Coking Technology and our commencement into
production, our main products will be:
1. Coke - One of the major component in production of steel, and the
users are steel manufacturing companies
2. Tar - it is used to produce gasoline and the target users are
3. Coal gas - it is used to generate electricity and the users are
power plants
4. Crude benzol - it is used to extract chemical solvent and the users
are
5. Sulfur - it is used to manufacture explosives and the users are
chemical products producers
6. Ammonium sulfate - it is used to make chemical fertilizer and the
major users are chemical fertilizer producers
TARGET MARKETS AND PRINCIPAL CUSTOMERS
We will identify and target the prestigious and large companies in Shanxi
province as our target customers upon commencing our operations and completing
the construction of our facilities:
1. Coke - steel manufacturers including:
a. Shanxi Tongjia Iron & Steel Co., Ltd.
b. Tangshan Guohua Iron & Steel Co., Ltd.
c. Chongqin Iron & Steel Group
d. Zhuhai Yueyufeng Iron & Steel Co., Ltd.
e. Guangdong Yangjiang Iron & Steel Co., Ltd.
2. Tar - automobile and chemical manufacturing companies including:
a. China FAW Group Co., Ltd.
b. China Changan Automobile Co., Ltd.
3. Coal gas - Local power plants
4. Crude benzol - Chemical manufacturing companies
a. China Shenma Group
5. Sulfur - Explosive and chemical products manufacturers
6. Ammonium sulfate - Fertilizer manufacturers including:
a. Datong Fertilizer Co., Ltd
b. Hebei Baoding Chemical Fertilizer Company
c. Zhangjiakou Fertilizer Co.,Ltd.
Our management has confidence that a majority of these potential customers will
ultimately become our customers upon the commencement of our operations because
most of these companies have prior business relationships with our management,
directors and shareholders.
SALES AND MARKETING
All of our products are industrial products and we will not rely on distributors
or wholesalers to distribute our products. Instead we will market our products
directly to our target customers. All our potential customers have prior
business relations with our management, directors and shareholders and the
management believes no distributors or wholesalers are needed.
In view of the fact that we market our products directly to target customers
without relying on any distribution networks, we shall establish a direct
selling team when we commence operations and complete our construction of our
coke manufacturing facilities. A direct selling team under the Company's
management can definitely better serve our customers and provide pre-sales and
after-sales services.
COMPETITION
The competitive environment in China for coke manufacturing is not severe
because of the difficulties in accessing raw material and need for huge economy
of scale in the production process.
Local competitors with comparable production scale as of our company upon
completion of construction of our production facilities are:
1. Shan Xi Sun Coking co., Ltd
2. Jin Hui Coal and Chemical Industry Co., Ltd
3. Tai Yuan Coal Gas Co., Ltd
4. Shanxi Yunzhong Coking Co,. Ltd
5. Tangshan Jiahua Co., Ltd
These named competitors are all adopting traditional coking manufacturing
technology that uses coking coal as main raw material and lead to high
production cost.
We have the following competitive edges over our competitors:
1. We adopt our patented Coking Technology and use Datong Coal as the
main raw material for production of coke and our production cost is
lower than our competitors.
2. We are located in Shanxi province where there is an abundant reserve
in Datong Coal and we have the competitive advantage of proximity to
raw materials. As a result, we have a quality, stable and cheap
source of Datong Coal.
3. We have a 20 years of exclusive, guaranteed mine drilling rights on
Yong'an coal mine, which is capable of over extracting over 1
million ton of coking coal per year. As a result, we have direct
access to a guaranteed source of coking coal as raw material at a
much cheaper cost than purchasing from outside vendors.
4. We have confirmed and stable purchase orders from our shareholders
to support us to operate in a sizable scale of operations in order
to achieve the economy of scale in production to ensure low
production cost.
PRINCIPAL OFFICE
Our headquarters, office and production facilities are located at Zhoushizhuang
Town, Datong city, Shanxi Province, China.
EMPLOYEES AND ORGANIZATION
Currently the Company has a total of 10 employees as follows:
Company Position Number
- ------------ ----------------------- ----------------
NTHH : Chief Executive Officer 1
Hopeful Asia : General Manager 1
FJCC : General Manager 1
Business Manager 1
Assistant Manager 1
Chief Engineer 1
Engineer 2
Secretary 1
Driver 1
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TOTAL 10
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The Chief Executive Officer of NTHH, General Manager of Hopeful Asia and General
Manager of FJCC received no compensation from the Company for the fiscal period
ending June 30, 2005 and from July 1, 2005 to September 30, 2005. The Company
currently has no agreements for compensation of its chief executive, and has no
stock option plan or other equity compensation plan for its employees.
PATENTS AND INTELLECTUAL PROPERTIES
We have been awarded a national patent of the Coking Technology, i.e., using a
high-proportion of Datong Coal as a coking manufacturing raw material. The
technology was developed by our Company in collaboration with the Heat Energy
Institute of China. We conducted trial productions at Xiaoyi Jinyan Electric,
Coal & Chemical Co., Ltd for six months. On August 11, 2003, we filed our
application for the patent with Datong City, Shanxi Provincial Government and
State Science and Technology Commission. On July 20, 2005, a national invention
patent was officially granted (Patent No.: ZL03133686.8) to six individuals. All
of the six individuals had fully assigned their ownership of the patent to the
Company through separate agreements.
The use of the Coking Technology can lower the cost of manufacturing coke from
approximately RMB 745 per ton to RMB 605 per ton, since the Coking Technology
enables us to use up to 40% of Datong Coal as raw material. The cost of
producing coke will be lowered by 19%.
GOVERNMENT REGULATIONS
There are several sets of rules and regulations in China governing the
conduction of coke manufacturing business in China:
1. Regulations on Labor Protection in Workplaces Where Toxic
This regulation was adopted by the 57th Executive Meeting of the State
Council held on April 30, 2002 and effective on the same day. This is a
regulation to safeguard labor safety in Shanxi mining business.
These Regulations are formulated in accordance with the provisions of the
Law on the Prevention and Control of Occupational Diseases and other
relevant laws and administrative regulations for the purposes of ensuring
the safe use of toxic substances in workplaces, preventing against,
controlling, and eliminating occupational poisoning hazards, and
protecting workers' lives safety, body health and their relevant rights
and interests.
These regulations shall be applicable to labor protection against possible
occupational poisoning hazards due to the use of toxic substances in
workplaces. All coal and coke producers are required by Chinese government
to comply with this regulation.
2. Regulations on the Labor Management of the Foreign-Funded Enterprises
The regulations are formulated in accordance with State Laws and
Administrative Regulations to safeguard the legal rights and interests of
the employees of foreign-funded enterprises (FFEs) in China to maintain
and develop stable and harmonious relations between the FFEs and the
employees.
The regulations are applicable to Sino-foreign joint equity ventures,
Sino-foreign cooperative ventures, wholly owned foreign enterprises and
Sino-foreign limited companies established in accordance with the law of
China.
3. Law of the People's Republic of China on Safety in Mines
It was declared effect on May 1, 1993 to regulate mining safety policies
in China.
This Law is formulated to maintain safety in mines exploitation to prevent
accidents and protect the safety of workers and staffs working in the
mines.
All activities relating to exploitation of mineral resources conducted
within China shall comply with this regulation.
Mining companies must possess facilities that ensure safety in production,
establish safety management systems and take effective measures to improve
the working conditions for workers and staffs. Mining companies are
required by this regulation to strengthen safety control in mines in order
to labor safety.
4. General Provision to Regulations of Coal Mines in China
This was an administrative law issued by the National Standing Committee
on August.29, 1996 and effective on December.1, 1996.
The main purpose of the regulations is to:
1. Regulate exploitation, utilization and protection of coal resources,
regulate coal production and management, promote and guarantee the
healthy development of coal industry.
2. Protect Coal resources in China. Any action to destroy coal
resources through illegal or excessive exploitation is forbidden.
3. Protect the legal rights and interests of investors investing in the
exploitation of coal resources in China.
The regulations are applicable towards coal mines located in the
territories of China.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This report contains forward-looking statements within the meaning of the
federal securities laws. These include statements about our expectations,
beliefs, intentions or strategies for the future, which we indicate by words or
phrases such as "anticipate," "expect," "intend," "plan," "will," "we believe,"
"NTHH believes," "management believes" and similar language. The forward-looking
statements are based on the current expectations of NTHH and are subject to
certain risks, uncertainties and assumptions, including those set forth in the
discussion under "Description of Business" and "Management's Discussion and
Analysis or Plan of Operation". The actual results may differ materially from
results anticipated in these forward-looking statements. We base the
forward-looking statements on information currently available to us, and we
assume no obligation to update them.
On August 15, 2005, pursuant to the terms of an Agreement for Share Exchange
(the "NewFair Share Exchange Agreement") dated by and among the Company, Alan
Lew, an individual ("Alan Lew"), Newfair Associates Limited, a British Virgin
Islands corporation ("Newfair"), and the Shareholders of Newfair (collectively
the "Shareholders"), the Company acquired all of the issued and outstanding
common stock of Newfair from the Shareholders in exchange for a total of
21,614,000 shares of common stock of the Company(the "Newfair Exchange Shares").
Following the issuance of the Newfair Exchange Shares, the Company has a total
of 24,667,665 shares of common stock issued and outstanding.
Immediately after closing of the transaction, the Company transferred all of its
ownership interest in its wholly-owned subsidiary, PNC Labs, Inc. ("PNC") to
Alan Lew in exchange for Alan Lew assuming all of the assets and liabilities of
PNC. As additional consideration, the Company issued 200,000 shares of common
stock to Alan Lew (who immediately transferred it to PNC). Also, the Company
agreed to pay a total of $130,000 to Alan Lew, which was also transferred to
PNC, of which $15,000 has already been paid. The remaining $115,000 shall be
paid upon the earlier to occur of (i) The Company raising sufficient funds from
third party investors such that all debts and obligations of PNC have been
extinguished, or (ii) February 15, 2007.
On October 28, 2005, the Company entered into a Rescission Agreement (the
"Rescission Agreement") pertaining to the NewFair Share Exchange Agreement dated
August 15, 2005 principally between the Company and NewFair Associates Limited
("NewFair"). The effect of the Rescission Agreement is to rescind the
transactions set forth in the NewFair Share Exchange Agreement. $15,000 payment
to PNC was forfeited and retained by PNC. However, the balance of $115,000
additional consideration as pursuant to the NewFair Share Exchange Agreement was
cancelled and the Company was no longer liable to PNC for $115,000.
As a result of the cancellation of shares pursuant to the terms of the
Rescission Agreement, the historical shareholders of NewFair no longer have
effective control of the Company and control will revert to the Registrant's
shareholders prior to August 15, 2005.
On November 1, 2005, pursuant to the terms of an Agreement for Share Exchange
(the "Tagalder Share Exchange Agreement") entered into by and among the Company,
Alan Lew, Tagalder C3 Holdings Inc., a British Virgin Islands corporation
("Tagalder"), and the Shareholders of Tagalder (collectively the
"Shareholders"), the Company acquired all of the issued and outstanding common
stock of Tagalder from the Shareholders in exchange for a total of 19,946,000
shares of the common stock of the Company (the "Tagalder Exchange Shares").
Additional consideration of $150,000 shall be paid to PNC upon the earlier to
occur of (a) the Company successfully raising at least $150,000 from third party
investors, or (b) November 1, 2006.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
NTHH's financial statements and related public financial information are based
on the application of accounting principles generally accepted in the United
States ("GAAP"). GAAP requires the use of estimates; assumptions, judgments and
subjective interpretations of accounting principles that have an impact on the
assets, liabilities, revenue and expense amounts reported. These estimates can
also affect supplemental information contained in our external disclosures
including information regarding contingencies, risk and financial condition. We
believe our use of estimates and underlying accounting assumptions adhere to
GAAP and are consistently and conservatively applied. We base our estimates on
historical experience and on various other assumptions that we believe to be
reasonable under the circumstances. Actual results may differ materially from
these estimates under different assumptions or conditions. We continue to
monitor significant estimates made during the preparation of our financial
statements.
Our significant accounting policies are summarized in Note 1 to our financial
statements. While all these significant accounting policies impact its financial
condition and results of operations, NTHH views certain of these policies as
critical. Policies determined to be critical are those policies that have the
most significant impact on NTHH's consolidated financial statements and require
management to use a greater degree of judgment and estimates. Actual results may
differ from those estimates. Our management believes that given current facts
and circumstances, it is unlikely that applying any other reasonable judgments
or estimate methodologies would cause an adverse effect on our consolidated
results of operations, financial position or liquidity for the periods presented
in this report.
RESULTS OF OPERATIONS
During the period from May 27, 2005 (inception of Tagalder) through September
30, 2005, the Company has engaged in no significant operations other than
organizational activities, acquisition of FJCC and capital resources. The
Company primarily engaged in preparing and organizing the commencement of
operations and future developments of FJCC, which will commence operations in
2006. No revenues were received by the Company during this period.
The Company experienced a net loss of $121,458 for the period from May 27, 2005
(Inception of Tagalder) to September 30, 2005. Expenses amounting to i$64,919
were incurred to maintain its corporate existence and to pay professional
expenses. A total of $56,538 was spent on technical researches and related
professional consultant expenses in FJCC to prepare for the commencement of
operations in 2006.
Liquidity and Capital Resources
Cash
Our cash balance amounted to $16,298 at September 30, 2005.
The Company is currently funding its operations from loans from shareholders and
expects to be funded through cash flow from operations in 2006, upon FJCC
commencing its operations.
From time to time the Company may require extra funding through financing
activities and investments for expansion of FJCC. FJCC shall commence operations
to drill into the coke mine and generates revenue through sales of coke raw
material. However, the Company will also construct its own facilities to process
and extract products from coke as raw material. Funding is required for
construction of facilities. Also, from time to time, the Company may come up
with new expansion opportunities for which our management may consider seeking
external funding and financing. However, as of September 30, 2005, the Company
did not have any plan for new acquisitions.
NEW ACCOUNTING PRONOUNCEMENTS
1. SOP 03-3 Accounting for Certain Loans or Debt Securities Acquired in a
Transfer
This SOP addresses accounting for differences between contractual cash
flows and cash flows expected to be collected from an investor's initial
investment in loans or debt securities (loans) acquired in a transfer if
those differences are attributable, at least in part, to credit quality.
This pronouncement is effective for loans acquired in fiscal years
beginning on or after December 14, 2004.
2. EITF 02-14 Whether an Investor Should Apply the Equity Method of
Accounting to Investments Other Than Common Stock (May 2004)
The consensus of the task force is that the equity method of accounting
for an investment should be used when the investment is in-substance
common stock. When the investment is not in-substance common stock the
equity method is not to be used. This pronouncement is effective for
reporting periods beginning after September 15, 2004.
3. SFAS 151 Inventory Costs (November 2004)
This statement amended ARB 43 to require items such as idle facility
expense, excessive spoilage, double freight, and rehandling costs to be
recognized as current period charges and that allocation of fixed
production overheads to the costs of conversion be based on the normal
capacity of the production facilities. This pronouncement is effective for
fiscal years beginning after June 15, 2005.
4. SFAS 152 Accounting for Real Estate Time-Sharing Transactions (December
2004)
This statement adopted the AICPA's SOP 04-2 "Accounting for Real Estate
Time-Sharing Transactions", providing guidance on a seller's accounting
for real estate time-sharing transactions. This pronouncement is effective
for fiscal years beginning after June 15, 2005.
5. SFAS 153 Exchange of Non-Monetary Assets (December 2004)
This statement confirms that exchanges of nonmonetary assets are to be
measured based on the fair value of the assets exchanged except for
exchanges of nonmonetary assets that do not have commercial substance.
Those are measured at entity specific values. This pronouncement is
effective for exchanges occurring in fiscal periods beginning after June
15, 2005.
6. SFAS 123 (revised 2004)--Share-Based Payment (December 2004)
The statement requires public entities to measure the cost of employee
services received in exchange for an award of equity instruments based on
the grant-date fair value of the award. The cost will be recognized over
the period during which an employee is required to provide service in
exchange for the award. No compensation cost is recognized for equity
instruments for which employees do not render the requisite service. This
pronouncement is effective for non-SB issuers on the first interim or
annual period beginning after June 15, 2005, and effective for SB issuers
on the first interim or annual period beginning after December 15, 2005.
It is effective for non-public entities on the first annual reporting
period beginning after December 15, 2005.
The implementations of the above pronouncements are not expected to have a
significant effect on the Company's consolidated financial statement
presentation or disclosure.
INFLATION
Inflation has not had a material impact on our business.
CURRENCY EXCHANGE FLUCTUATIONS
All of the Company's revenues and a majority of the expenses from May 27, 2005
to September 30, 2005 were denominated primarily in Renminbi ("RMB"), the
currency of China and Hong Kong Dollar (HKD), the currency of Hong Kong. There
can be no assurance that RMB-to-U.S. dollar exchange rates and HKD-to-U.S.
dollar exchange rates will remain stable. A devaluation of RMB or HKD relative
to the U.S. dollar would adversely affect our business, financial condition and
results of operations. We do not engage in currency hedging.
ITEM 3. DESCRIPTION OF PROPERTY
Through FJCC, we own a 3,593,830 square foot piece of land in Zhoushizhuang
town, Datong city, Shanxi province, adjacent to the coke mine of which FJCC has
the drilling rights.
There is no lien or encumbrance on any of the mentioned properties.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of common stock as of November 10, 2005 (subsequent to the issuance of
Tagalder Exchange Shares) by each person known to us to own beneficially more
than 5% of our common stock, each of our directors, each of our named executive
officers; and all executive officers and directors as a group.
Shares %
Name Position Held Owned Owned
- ------------------ ------------------------ ---------- ------
Chun Ka Tsun Chief Executive Officer 10,338,200 (1) 43.5%
and director
Alan Lew Director 1,287,511 5.4%
Chan Tsz King 8,974,840 (2) 37.7%
All directors and
executive officers
as a group 11,625,711 48.9%
- ------------------
(1) Chun Ka Tsun held the ownership in NTHH through TG Wanasports
Management Limited, a BVI incorporated company wholly owned by Mr.
Chun
(2) Chan Tsz King held the ownership in NTHH through Fugu Enterprise,
Inc., a BVI incorporated company wholly owned by Mr. Chan
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The table below sets forth the names and ages of our current directors and
executive officers, their principal offices and positions and the date each such
person became a director or executive officer of our company. Our executive
officers are appointed annually by the Board of Directors. Our directors serve
one year terms until their successors are elected. The executive officers serve
terms of one year or until their death, resignation or removal by the Board of
Directors. There are no family relationships between any of the directors and
executive officers. In addition, there were no arrangements or understanding
between any executive officer and any other person pursuant to which any person
was selected as an executive officer. Currently, directors are not compensated
for serving on the Board of Directors. We have not established compensation or
executive committees. Currently, our entire board of directors serves as our
audit committee. Because of the small size of the Company and the risk attendant
to a small public company, we are currently unable to attract an audit committee
financial expert to our Board of Directors.
RESIGNATION AND APPOINTMENT OF DIRECTOR
Subsequent to the NewFair Share Exchange Agreement on August 15, 2005, effective
August 30, 2005, Mr. Alan Lew resigned as Chief Executive Officer, President,
Chief Financial Officer and any other capacity as an officer of the Company. Mr.
Andre Todd resigned as a Director and Secretary of the Company, and Mr. Aaron
Etra resigned as a Director of the Company.
Effective upon Mr. Andre Todd's and Mr. Aaron Etra's resignations, the Board of
Directors appointed Mr. Ivan Wong as director, President, Chief Financial
Officer and Secretary of the Company and Mr. Yue Wei as Chief Executive Officer
of the Company. On September 9, 2005, Mr. Wei was appointed as a member of the
board of directors of the Company.
Subsequent to the Rescission Agreement on October 28, 2005, Mr. Wei resigned as
director and Chief Executive Officer of the Company and Mr. Wong resigned as
directors, President, Secretary and Chief Financial Officer on the same day.
Neither Mr. Wei nor Mr. Wong had any disagreements with the Company.
On November 1, 2005, the Company completed the Tagalder Share Exchange Agreement
and effective November 4, 2005, Mr. Chun Ka Tsun, age 32, was appointed as a
member of the board of directors of the Company.
BIOGRAPHIES OF OFFICERS AND DIRECTORS
Chun Ka Tsun
Mr. Chun Ka Tsun, age 32 is the Chief Executive Officer and Director of the
Company. For the past 13 years Mr. Chun had been self employed as a business
management consultant. He has experience in corporate finance transactions,
mergers and acquisitions, project financing, direct investments, company
restructuring and capital fund raising activities.
Alan Lew
Alan Lew, is a Director of the Company. Mr. Lew has vast experience and contacts
in the Biotechnology industry. He was most recently a Clinical site manager with
Pfizer Inc. where part of his responsibilities included monitoring and locating
new physicians for investigational trials. Mr. Lew has also worked for Memorial
Sloan-Kettering Hospital in New York City and Acorda Therapeutics.
Name Position Date Of Appointment
- -------------- ----------------------- -------------------
Chun Ka Tsun Chief Executive Officer November 4, 2005
Director
Alan Lew Director July 11, 2003
CODE OF ETHICS
The Company has not yet adopted a code of ethics, but intends to do so in the
very immediate future.
ITEM 6. EXECUTIVE COMPENSATION
The executives of the Company received no compensation from the Company for the
fiscal period ending June 30, 2005 and from July 1, 2005 to September 30, 2005.
The Company currently has no agreements for compensation of its executive, and
has no stock option plan or other equity compensation plan for its employees.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company, through Tagalder, borrowed funds from Chun Ka Tsun, the Chief
Executive Officer, Director and over 5% shareholder of the Company, through TG
Wanasports Management Limited, a company registered in BVI and wholly owned by
Chun Ka Tsun. The Company through Tagalder also borrowed funds from Chan Tsz
King, an over 5% shareholder of the Company, through Rich Key International
Investment Limited, a company registered in Hong Kong and wholly owned by Chan
Tsz King.
For the period ended September 30, 2005, the Company borrowed $11,417 from Chun
Ka Tsun and $11,380 from Chan Tsz King.
ITEM 8. DESCRIPTION OF SECURITIES
The Company has authorized up to 100,000,000 shares of common stock with a par
value of $0.001 per share. As of June 30, 2005 and September 30, 2005, there
were 3,086,665 and 3,836,665 shares of common stock issued and outstanding,
respectively. On November 1, 2005, the Company completed the Tagalder Share
Exchange Agreement and issued a total of 19,946,000 common shares. After the
issuance, the Company had 23,782,665 shares issued and outstanding.
The Company has authorized up to 5,000,000 shares of preferred stock with a par
value of $0.001 per share. The preferred stock can be issued in various series
with varying dividend rates and preferences. As of June 30, 2005 and September
30, 2005, there were no series or shares of preferred stock issued or
outstanding.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
Our common stock is quoted on the Over-the-Counter Bulletin Board ("OTCBB")
under the symbol "NTHH".
Trading in our common stock has been limited and sporadic. The following table
shows the range of high and low bid quotations reported by the OTCBB in each
fiscal quarter from October 1, 2003 to September 30, 2005, and the subsequent
interim period. The OTCBB quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commission, and may not represent actual transactions. As
of September 30, 2005, there were approximately 470 holders of record of our
common stock. This number does not include an indeterminate number of
shareholders whose shares are held by brokers in street name.
BID PRICES FOR THE REPORTING PERIOD
Year Period High Low
- ---- ----------------------- ---- ----
2003 Fourth quarter 0.40 0.40
2004 First Quarter 1.80 0.60
Second Quarter 1.00 0.32
Third Quarter 2.75 0.20
Fourth quarter 1.50 0.20
2005 First Quarter 0.60 0.60
Second Quarter 1.30 0.25
Third Quarter 0.88 0.20
Fourth Quarter (through 0.75 0.26
November 18, 2005)
DIVIDENDS
We presently intend to retain future earnings, if any, to provide funds for use
in the operation and expansion of our business. Accordingly, we have not
declared or paid any dividends to our common shareholders and do not presently
intend to do so. Any future decision whether to pay dividends will depend on our
financial condition and any other factors that our Board of Directors deems
relevant.
ITEM 2. LEGAL PROCEEDINGS
We are currently not involved in any litigation that we believe could have a
material adverse effect on our financial condition or results of operations.
There is no action, suit, proceeding, inquiry or investigation before or by any
court, public board, government agency, self-regulatory organization or body
pending or, to the knowledge of the executive officers of our company or any of
our subsidiaries, threatened against or affecting our company, our common stock,
any of our subsidiaries or of our company's or our company's subsidiaries'
officers or directors in their capacities as such, in which an adverse decision
could have a material adverse effect.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
On October 12, 2005, the Board of Directors of the Company appointed Clancy &
Co., P.L.L.C., Certified Public Accountants and Consultants to take over the
audit responsibilities from, Madsen & Associates CPA's, Inc.; Madsen &
Associates CPA's, Inc. was dismissed on that same date.
During the Company's two most recent fiscal years and any subsequent interim
period prior to the engagement of Clancy & Co., Certified Public Accountants and
Consultants, the Company (or someone on its behalf) has not consulted with,
Clancy & Co., Certified Public Accountants and Consultants, or any other
auditor, regarding any accounting or audit concerns, to include, but not by way
of limitation, those stated in Item 304(a)(2) of Regulation S-B.
During the Company's two most recent fiscal years and the subsequent interim
period through the date of dismissal, the Company has not had any disagreements
with its former accountant, whether resolved or not resolved, on any matter of
accounting principals or practices, financial statement disclosure, or auditing
scope or procedure, which, if not resolved to said accountants' satisfaction,
would have caused it to make reference to the subject matter of the
disagreements(s) in connection with its report.
During the Company's two most recent fiscal years, the Company had a lack of
recurring revenues from existing operations with losses from prior operations, a
working capital deficit and an accumulated deficit that raised and resulted in
the former accountants qualifying their opinion to indicate that this raised
substantial doubt about the Company's ability to continue as a going concern.
The Company's plans as to these matters were described in Note 1 to the
financial statements and the consolidated financial statements did not include
any adjustments that might result from the outcome of said uncertainty. The
reports of the Company's former accountants relating to such periods do not
include any adverse opinion or disclaimer of opinion, nor were such reports
modified as to uncertainty, audit scope, or accounting principles.
The Company provided Madsen & Associates, CPA's, Inc. with a copy of this
disclosure and requested that Madsen & Associates CPA's, Inc. furnish it with a
letter addressed to the Securities and Exchange Commission stating whether it
agreed with the above statements.
On November 7, 2005, Madsen was reengaged to take over the audit
responsibilities from Clancy and and Clancy was dismissed on that same date.
No audit reports have ever been issued by Clancy during the period they served
as the Company's independent auditor, as Clancy served as the Company's auditor
for less than thirty days. Clancy had been appointed on October 12, 2005 as the
Company's independent auditor in connection with a proposed merger on August 15,
2005 with Newfair Associates Limited that was rescinded on October 28, 2005. As
a result of the rescinded merger, the Company's Board of Directors approved the
change of accountants to Madsen, who had been the Company's preceding auditor
prior to the change to Clancy.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
On August 15, 2005, pursuant to the NewFair Share Exchange Agreement, the
Company issued a total of 21,614,000 shares of common stock under Section 4(2)
of the Securities Act of 1933, as amended, and appropriate legends were affixed
to the share certificates and other instruments issued in such transaction as
the consideration of the share exchange.
Immediately after closing of the transaction, the Company issued 200,000 shares
of common stock to Alan Lew (who immediately transferred it to PNC) as
consideration for disposal of PNC to Alan Lew. Such issuance was effectuated
under Section 4(2) of the Securities Act of 1933, as amended, and an appropriate
legend was affixed to the share certificate and other instruments issued in such
transaction.
On October 28, 2005, the Company entered into the Rescission Agreement
pertaining to the NewFair Share Exchange Agreement dated August 15, 2005 with
NewFair. As a result, the Company cancelled 21,614,000 shares of Newfair
Exchange Shares issued during the transaction.
The Company entered into the Tagalder Share Exchange Agreement on November 1,
2005 and effective on the same date, the Company issued 19,946,000 shares of
common stock, in the aggregate, to the Shareholders pursuant to the terms of the
Tagalder Share Exchange Agreement. Such issuances were effected under Section
4(2) of the Securities Act of 1933, as amended, and appropriate legends were
affixed to the share certificates and other instruments issued in such
transaction.
Certain warrant holders exercised their warrants for 550,000 shares of the
Company's common stock for the cancellation of $80,000 against a note payable.
As mentioned above, under the spin-off of PNC Labs on August 14, 2005, the
Company issued 200,000 shares of its common stock for the assumption of net
liabilities. This issuance of common stock was valued at $0.88 per share, or
$176,000.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our articles of incorporation limit the liability of directors to the maximum
extent permitted by Nevada law. This limitation of liability is subject to
exceptions including intentional misconduct, obtaining an improper personal
benefit and abdication or reckless disregard of director duties. Our articles of
incorporation and bylaws provide that we may indemnify our directors, officers,
employees and other agents to the fullest extent permitted by law. Our bylaws
also permit us to secure insurance on behalf of any officer, director, employee
or other agent for any liability arising out of his or her actions in such
capacity, regardless of whether the bylaws would permit indemnification. We
currently do not have such an insurance policy.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted for our directors, officers and controlling 1934 persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: November 22, 2005 NT HOLDINGS CORP.
/s/ Chun Ka Tsun
-----------------------
By: Chun Ka Tsun
Its: Chief Executive Officer
TAGALDER C3 HOLDINGS, INC.
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
FROM MAY 27, 2005 (INCEPTION) TO JUNE 30, 2005
TAGALDER C3 HOLDINGS, INC.
AND SUBSIDIARIES
CONTENTS
PAGE 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PAGE 2 CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2005
PAGE 3 CONSOLIDATED STATEMENT OF OPERATIONS FOR THE PERIOD
FROM MAY 27, 2005 (INCEPTION) TO JUNE 30, 2005
PAGE 4 CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT FOR THE
PERIOD FROM MAY 27, 2005 (INCEPTION) TO JUNE 30, 2005
PAGE 5 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE PERIOD FROM MAY 27, 2005
(INCEPTION) TO JUNE 30, 2005
PAGE 6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2005
Child, Sullivan & Company
A Professional Corporation of CERTIFIED PUBLIC ACCOUNTANTS
1284 W. FLINT MEADOW DR., SUITE D, KAYSVILLE, UT 84037
PHONE: (801) 927-1337 FAX: (801) 927-1344
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Tagalder C3 Holdings, Inc.
Hong Kong
We have audited the accompanying balance sheet of Tagalder C3 Holdings, Inc. as
of June 30, 2005, and the related statements of operations, changes in
stockholders' equity, and cash flows for the period from May 27, 2005
(inception) to June 30, 2005. 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 of America). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. 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 Tagalder C3 Holdings, Inc. as
of June 30, 2005, and the results of its operations and its cash flows for the
period from May 27, 2005 (inception) to June 30, 2005, in conformity with
accounting principles generally accepted in the United States of America.
Child, Sullivan & Company
Kaysville, Utah
November 7, 2005
1
TAGALDER C3 HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2005
ASSETS
2005
---------
CURRENT ASSETS
Cash and cash equivalents $ 18,952
Prepayments and deposits 2,440
---------
Total current assets 21,392
Construction in progress 296,209
---------
TOTAL ASSETS $ 317,601
=========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Other payables $ 294,285
Accrued expenses 652
Due to stockholders 25,495
Due to employees 1,868
---------
Total current liabilities 322,300
---------
TOTAL LIABILITIES 322,300
MINORITY INTEREST 18,577
STOCKHOLDERS' DEFICIT
Common stock, $1.00 par value; 50,000 shares authorized;
1,000 shares issued and outstanding 1,000
Accumulated deficit (24,276)
---------
Total stockholders' deficit (23,276)
---------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 317,601
=========
See accompanying notes to the consolidated financial statements.
2
TAGALDER C3 HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
FROM MAY 27, 2005 (INCEPTION) TO JUNE 30, 2005
PERIOD FROM
MAY 27, 2005
(INCEPTION)
TO JUNE 30,
2005
------------
REVENUES $ 0
COST OF GOODS SOLD 0
------------
GROSS PROFIT 0
General and administrative expenses 24,276
------------
LOSS FROM OPERATIONS (24,276)
------------
LOSS BEFORE INCOME TAXES (24,276)
INCOME TAXES 0
------------
NET LOSS $ (24,276)
============
See accompanying notes to the consolidated financial statements.
3
TAGALDER C3 HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE PERIOD FROM MAY 27, 2005 (INCEPTION) TO JUNE 30, 2005
Common Stock
------------------- Additional
Par Paid-In Accumulated
Shares Value Capital Deficit Total
-------- -------- ----------------- ----------- --------
BALANCE AT MAY 27, 2005 (INCEPTION) -- $ -- $ -- $ -- $ --
Stock issued for cash 1,000 1,000 -- -- 1,000
Net loss for the period -- -- -- (24,276) (24,276)
-------- -------- ----------------- ---------- --------
BALANCE AT JUNE 30, 2005 1,000 $ 1,000 $ -- $ (24,276) $(23,276)
======== ======== ================= ========== ========
See accompanying notes to the consolidated financial statements.
4
TAGALDER C3 HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM MAY 27, 2005 (INCEPTION) TO JUNE 30, 2005
2005
--------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(24,276)
Changes in operating assets and liabilities,
excluding the effects of the acquisition:
(Increase) Decrease in
Other payable 20,000
--------
Net cash used in operating activities (4,276)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash used in purchase of subsidiary (12)
Cash acquired in purchase of subsidiaries 7,405
--------
Net cash provided by investing activities 7,393
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock 1,000
Cash provided by shareholders 14,835
--------
Net cash provided by financing activities 15,835
--------
NET INCREASE IN CASH AND CASH EQUIVALENTS 18,952
Cash and cash equivalents, beginning of period 0
--------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 18,952
========
SUPPLEMENTARY CASH FLOW INFORMATION 2005
--------
1. Interest paid $ 0
========
2. Income taxes paid $ 0
========
3. On June 30, 2005 the Company completed the
acquisition of Hopeful Asia Limited. The
following represents the assets purchased
and liabilities assumed at the acquisition date:
Cash $ 7,405
Prepayments and deposits 2,440
Construction in progress 296,209
--------
Total assets purchased 306,054
Other payables 228,057
Accrued expenses 652
Due to stockholder 10,660
Due to employees 1,868
--------
Total liabilities assumed 241,237
Minority interest in subsidiary 18,577
--------
Net assets acquired 46,240
--------
Net purchase price included in other payables $ 46,240
========
See accompanying notes to the consolidated financial statements.
5
TAGALDER C3 HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2005
1. ORGANIZATION AND PRINCIPAL ACTIVITIES
Our company, Tagalder C3 Holdings, Inc. ("we", "us", "our", "C3" or "our
Company"), was formed as a privately owned company incorporated under the
laws of British Virgin Islands on May 27, 2005. The Company has no
full-time employees and owns no real estate.
On June 27, 2005, the Company entered into an Agreement for Share Exchange
with Tagalder Global Investment, Inc. (Formerly Golden Media Inc.), a
company incorporated under the laws of the State of Delaware on September
14, 2004, pursuant to which Tagalder Global Investment, Inc. agreed to
acquire all of the issued and outstanding shares of C3 in exchange for the
issuance of 50,000,000 shares of the Tagalder Global Investment, Inc.'s
issued and outstanding common stock. The transaction was completed on June
30, 2005 and following the acquisition C3 became a wholly-owned subsidiary
of Tagalder Global Investment, Inc.
Through its wholly-owned subsidiary Hopeful Asia Limited, a Hong Kong
corporation ("Hopeful"), C3 owns 75% of the drilling rights and operations
of a coke mine property located in Shanxi, China through Fujia Coking and
Chemical Company Limited, a company incorporated in China ("FJCC").
2. BASIS OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company,
Hopeful Asia Limited and Fujia Coking and Chemical Company Limited. All
material inter-company accounts and transactions have been eliminated in
consolidation.
6
TAGALDER C3 HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2005
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Economic and Political Risks
The Company's operations are conducted in China. Accordingly, the
Company's business, financial condition and results of operations
may be influenced by the political, economic and legal environments
in China, and by the general state of China's economy.
The Company's operations in China are subject to special
considerations and significant risks not typically associated with
companies in North America and Western Europe. These include risks
associated with, among others, the political, economic and legal
environment and foreign currency exchange. The Company's results may
be adversely affected by changes in the political and social
conditions in China, and by changes in governmental policies with
respect to laws and regulations, anti-inflationary measures,
currency conversion, remittances abroad, and rates and methods of
taxation, among other things.
(b) Land Use Rights
According to the law of China, the government owns all the land in
China. Companies or individuals are authorized to possess and use
the land only through land use rights granted by the Chinese
government. Land use rights are amortized using the straight-line
method over the lease term of 40 to 50 years.
(c) Plant and Equipment
Plant and equipment are carried at cost less accumulated
depreciation. Depreciation is provided over their estimated useful
lives, using the straight-line method. Estimated useful lives of the
plant and equipment are as follows:
Buildings 40 years
Machinery and equipment 10 years
Leasehold improvements 10 years
Motor vehicles 5 years
Office equipment and furniture 5 years
Other equipment 5 years
The cost and related accumulated depreciation of assets sold or
otherwise retired are eliminated from the accounts and any gain or
loss is included in the statement of operations. The cost of
maintenance and repairs is charged to income as incurred, whereas
significant renewals and betterments are capitalized.
7
TAGALDER C3 HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2005
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(d) Accounting for the Impairment of Long-Lived Assets
The long-lived assets held and used by the Company are reviewed for
impairment whenever events or changes in circumstances indicate that
the carrying amount of assets may not be recoverable. It is
reasonably possible that these assets could become impaired as a
result of technology or other industry changes. Determination of
recoverability of assets to be held and used is done by comparing
the carrying amount of an asset to future net undiscounted cash
flows to be generated by the assets. If such assets are considered
to be impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the assets exceeds the fair
value of the assets. Assets to be disposed of are reported at the
lower of the carrying amount or fair value less costs to sell. There
were no impairments of long-lived assets for the period ended June
30, 2005.
(e) Construction In Progress
Construction in progress represents direct costs of construction or
acquisition and design fees incurred. Capitalization of these costs
ceases and the construction in progress is transferred to plant and
equipment when substantially all the activities necessary to prepare
the assets for their intended use are completed. No depreciation is
provided until construction is completed and the asset is ready for
its intended use.
(f) Inventories
Inventories consisting of raw materials, work-in-progress and
finished goods are stated at the lower of weighted average cost or
market value. Finished goods are comprised of direct materials,
direct labor and an appropriate proportion of overhead.
(g) Accounts Receivable
Trade receivables are recognized and carried at the original invoice
amount less allowance for any uncollectible amounts. An estimate for
doubtful accounts is made when collection of the full amount is no
longer probable. Bad debts are written off as incurred. There were
no bad debts for the period ended June 30, 2005.
(h) Deposits to Suppliers
Deposits to suppliers represent the cash paid in advance for
purchasing raw materials and equipment.
8
TAGALDER C3 HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2005
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(i) Research and Development
Research and development costs are expensed as incurred. There is no
capitalization of any research and development cost for the period
ended June 30, 2005.
(j) Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with
original maturities of three months or less to be cash equivalents.
The Company does not maintain any bank accounts in the United States
of America.
(k) Fair Value of Financial Instruments
The Company's financial instruments include cash and cash
equivalents, accounts receivable, advances to suppliers, other
receivables, accounts payable, short-term bank loans, customer
deposits, taxes payable, other payables and accrued expenses and due
to stockholders. Management has estimated that the carrying amount
approximates their fair value due to their short-term nature.
(l) Revenue Recognition
Revenue represents the invoiced value of goods sold recognized upon
the delivery of goods to customers and service income is recognized
when services are provided.
Sales transactions not meeting all the conditions of the full
accrual method are accounted for using the deposit method of
accounting. Under the deposit method, all costs are capitalized as
incurred, and payments received from the buyer are recorded as a
deposit liability.
(m) Advertising Costs
The Company expenses advertising costs as incurred or the first time
advertising takes place. Point of sale materials are accounted for
as inventory and charged to expense as utilized.
9
TAGALDER C3 HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2005
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(n) Foreign Currency Translation
The accompanying financial statements are presented in United States
dollars. The functional currency of the Company is the Renminbi
(RMB) and Hong Kong Dollar (HK$). The financial statements are
translated into United States dollars from RMB and HK$ at the single
rate of exchange of HK$1.00:RMB1.04 and US$1.00:HK$7.80,
respectively.
HK$ is freely convertible into foreign currency. However, the RMB is
not freely convertible into foreign currency and all foreign
exchange transactions must take place through authorized
institutions. No representation is made that the RMB and HK$ amounts
could have been, or could be, converted into US dollars at the rates
used in translation.
(o) Retirement Benefits
The Company is required to provide retirement benefits for its China
operations through FJCC. It is in the form of contributions under
defined contribution retirement plans to the relevant authorities
that are charged to the consolidated statements of income as
incurred. There was no retirement benefit expense for the period
ended June 30, 2005 as the Company has not commenced its operations.
(p) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles 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 periods. Management makes these estimates using the
best information available at the time the estimates are made;
however actual results could differ materially from those estimates.
(q) Income Taxes
The Company accounts for income tax using an asset and liability
approach and allows for recognition of deferred tax benefits in
future years. Under the asset and liability approach, deferred taxes
are provided for the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. A
valuation allowance is provided for deferred tax assets if it is
more likely than not these items will either expire before the
Company is able to realize their benefits, or that future
realization is uncertain.
In accordance with the relevant tax laws and regulations of China,
the corporation income tax rate is 33%.
10
TAGALDER C3 HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2005
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(r) Segments
The Company operates in only one business segment, namely coke mine
drilling in China.
(s) Loss Per Share
Basic loss per share is computed by dividing net loss for the period
by the weighted-average number of common shares outstanding during
the period. Diluted loss per share is computed similar to basic loss
per share except that the denominator is increased to include the
number of additional common shares that would have been outstanding
if the potential common shares had been issued and if the additional
common shares were dilutive. There were no outstanding dilutive
securities at June 30, 2005.
(t) Recent Accounting Pronouncements
SOP 03-3 Accounting for Certain Loans or Debt Securities Acquired in
a Transfer
This SOP addresses accounting for differences between contractual
cash flows and cash flows expected to be collected from an
investor's initial investment in loans or debt securities (loans)
acquired in a transfer if those differences are attributable, at
least in part, to credit quality. This pronouncement is effective
for loans acquired in fiscal years beginning on or after December
14, 2004.
EITF 02-14 Whether an Investor Should Apply the Equity Method of
Accounting to Investments Other Than Common Stock (May 2004)
The consensus of the task force is that the equity method of
accounting for an investment should be used when the investment is
in-substance common stock. When the investment is not in-substance
common stock the equity method is not to be used. This pronouncement
is effective for reporting periods beginning after September 15,
2004.
SFAS 151 Inventory Costs (November 2004)
This statement amended ARB 43 to require items such as idle facility
expense, excessive spoilage, double freight, and rehandling costs to
be recognized as current period charges and that allocation of fixed
production overheads to the costs of conversion be based on the
normal capacity of the production facilities. This pronouncement is
effective for fiscal years beginning after June 15, 2005.
SFAS 152 Accounting for Real Estate Time-Sharing Transactions
(December 2004)
This statement adopted the AICPA's SOP 04-2 "Accounting for Real
Estate Time-Sharing Transactions", providing guidance on a seller's
accounting for real estate time-sharing transactions. This
pronouncement is effective for fiscal years beginning after June 15,
2005.
11
TAGALDER C3 HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2005
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
SFAS 153 Exchange of Non-Monetary Assets (December 2004)
This statement confirms that exchanges of nonmonetary assets are to be
measured based on the fair value of the assets exchanged except for
exchanges of nonmonetary assets that do not have commercial substance.
Those are measured at entity specific values. This pronouncement is
effective for exchanges occurring in fiscal periods beginning after June
15, 2005.
SFAS 123 (revised 2004)--Share-Based Payment (December 2004)
The statement requires public entities to measure the cost of employee
services received in exchange for an award of equity instruments based on
the grant-date fair value of the award. The cost will be recognized over
the period during which an employee is required to provide service in
exchange for the award. No compensation cost is recognized for equity
instruments for which employees do not render the requisite service. This
pronouncement is effective for non-SB issuers on the first interim or
annual period beginning after June 15, 2005, and effective for SB issuers
on the first interim or annual period beginning after December 15, 2005.
It is effective for non-public entities on the first annual reporting
period beginning after December 15, 2005.
The implementations of the above pronouncements are not expected to have a
material effect on the Company's consolidated financial statements.
12
TAGALDER C3 HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2005
4. BUSINESS COMBINATIONS
On June 26, 2005, the Company entered into an Agreement for Share Purchase
to purchase 100% ownership of Hopeful Asia Limited (Formerly Sound (Asia)
Limited and has its name changed on February 16, 2005), a Hong Kong
corporation ("Hopeful"), which is the owner of 75% of the drilling rights
of a coke mine property located in Shanxi, China through Fujia Coking and
Chemical Company Limited, a company incorporated in China on March 23,
2005 ("FJCC"). Pursuant to the Agreement for Share Purchase, the Company
purchased 100 shares of Hopeful Asia Limited from its 3 shareholders at
US$ $0.13 per share and for a period of 12 months from Closing, upon Fujia
Coking and Chemical Company Limited distributing a dividend in cash to the
Company, the Company is obligated to remit 10% of the dividend received to
Sellers in cash.
The acquisition date for accounting purposes was June 27, 2005. Since no
business activities were conducted by Hopeful from June 27, 2005 to June
30, 2005, no operations of Hopeful or FJCC are included in the
consolidated statement of operations.
On June 27, 2005, the Company entered into an Agreement for Share Exchange
with Tagalder Global Investment, Inc. (Formerly Golden Media Inc.), a
company incorporated under the laws of the State of Delaware on September
14, 2004, pursuant to which Tagalder Global Investment, Inc. agreed to
acquire all of the issued and outstanding shares of C3 in exchange for the
issuance of 50,000,000 shares of Tagalder Global Investment, Inc. common
stock. The transaction was completed on June 30, 2005 and following the
acquisition C3 became a wholly-owned subsidiary of Tagalder Global
Investment, Inc.
On September 30, 2005, Tagalder Global Investment, Inc. disposed of all of
its ownership of the Company. Subsequent to the disposal, the Company
ceased to be a subsidiary of Tagalder Global Investment, Inc.
13
TAGALDER C3 HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2005
5. CONSTRUCTION IN PROGRESS
Construction in progress deposits of the Company is FJCC's down payments
and upfront payments paid to three vendors for technical design of the
coke manufacturing plant facilities and coke production equipment.
6. OTHER PAYABLES
The breakdown of the other payables of the Company as of June 30, is as
follow
2005
-----------------
C3 $ 66,228
FJCC 228,057
-----------------
TOTAL $ 294,285
=================
The breakdown of other payable of C3 includes:
June 30, 2005
------------------
Audit fee payable to auditor $ 20,000
Payable to shareholders of Hopeful Asia 46,228
------------------
TOTAL $ 66,228
==================
Pursuant to the terms of the Agreement for Share Purchase to purchase 100%
ownership of Hopeful Asia Limited, for a period of 12 months from Closing,
upon Fujia Coking and Chemical Company Limited distributing dividends in
cash to the Company, the Company is obligated to remit 10% of the
dividends received to the sellers. The Company estimates that $46,228 will
be paid by the Company to the sellers of Hopeful Asia Limited as payment
for acquisition within the next 12 months and has recorded the amount as a
current liability.
Other payables of FJCC are short-term non interest bearing borrowings from
third parties with no fixed repayment terms. The breakdowns of the other
payables of FJCC from the two lenders as of June 30, 2005 are as follows:
Name of lenders 2005
--------------------------------------- ------------------
Shanxi Erpu Energy Sources Trading Ltd. $ 221,893
Taiyuen Golden Electric Fuel Ltd 6,164
------------------
TOTAL $ 228,057
==================
7. DUE TO STOCKHOLDERS
Amounts due to stockholders are unsecured, interest free, and have no
fixed repayment terms.
14
TAGALDER C3 HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2005
8. ADVANCE FROM EMPLOYEES
Advances from employees are unsecured, interest free and have no fixed
repayment terms.
9. GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses are expenses of C3 from May 27, 2005
to June 30, 2005. Detail breakdown of the expense is as follow:
From May 27,
205 to
June 30, 2005
-------------
Bank Charges $ 276
Legal an professional expenses 24,000
-------------
TOTAL $ 24,276
=============
10. STOCKHOLDERS' EQUITY
The shareholding structure of the Company as of June 30, 2005 consists of
50,000 shares of authorized common stock at par value of $1.00 and a total
of 1,000 shares issued and outstanding.
There are no preferred shares, warrants or options outstanding as of June
30, 2005.
11. SUBSEQUENT EVENT
On September 30, 2005, Tagalder Global Investment, Inc. (Formerly Golden
Media Inc.) disposed all of its shareholdings of the Company. Subsequent
to the disposal, the Company ceased to be a subsidiary of Tagalder Global
Investment, Inc.
15
TAGALDER C3 HOLDINGS, INC.
AND SUBSIDIARIES
INTERIM FINANCIAL STATEMENTS
FROM JULY 1, 2005 TO SEPTEMBER 30, 2005
TAGALDER C3 HOLDINGS, INC.
AND SUBSIDIARIES
CONTENTS
PAGE 1 UNAUDITED CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 2005
PAGE 2 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE PERIOD FROM
JULY 1, 2005 TO SEPTEMBER 30, 2005
PAGE 3 UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLERS' DEFICIT FOR
THE PERIOD FROM JULY 1, 2005 TO SEPTEMBER 30, 2005
PAGE 4 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE PERIOD FROM JULY 1, 2005
TO SEPTEMBER 30, 2005
TAGALDER C3 HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2005
ASSETS
2005
---------
CURRENT ASSETS
Cash and cash equivalents $ 16,298
Advance to employee 247
---------
Total current assets 16,545
Construction in progress 327,020
---------
TOTAL ASSETS $ 343,565
=========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 387,849
Accrued expenses 2,222
Due to stockholders 55,375
---------
Total current liabilities 445,446
---------
TOTAL LIABILITIES 445,446
MINORITY INTEREST 18,577
STOCKHOLDERS' DEFICIT
Common stock, $1.00 par value; 50,000 shares authorized;
1,000 shares issued and outstanding 1,000
Deficit accumulated during the development stage (121,458)
---------
Total stockholders' deficit (120,458)
---------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 343,565
=========
See accompanying notes to the unaudited consolidated financial statements.
1
TAGALDER C3 HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
PERIOD FROM
PERIOD FROM MAY 27, 2005
JULY 1, 2005 TO (INCEPTION) TO
SEPTEMBER 30, 2005 SEPTEMBER 30, 2005
------------------ --------------------
REVENUES $ 0 $ 0
COST OF GOODS SOLD 0 0
------------------ --------------------
GROSS PROFIT 0 0
General and administrative
expenses 97,216 121,492
------------------ --------------------
LOSS FROM OPERATIONS (97,216) (121,492)
------------------ --------------------
LOSS BEFORE INCOME TAXES (97,216) (121,492)
INCOME TAX BENEFIT 34 34
------------------ --------------------
NET LOSS $ (97,182) $ (121,458)
================== ====================
See accompanying notes to the unaudited consolidated financial statements.
2
TAGALDER C3 HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE PERIOD FROM JULY 1, 2005 TO SEPTEMBER 30, 2005
Common Stock Additional
--------------------- Paid-In Accumulated
Shares Par Value Capital Deficit Total
--------- --------- ---------------- ----------- ---------
BALANCE AT JULY 1, 2005 1,000 $ 1,000 $ -- $ (24,276) $ (23,276)
Net loss for the period -- -- -- (97,182) (97,182)
--------- --------- ---------------- ----------- ---------
BALANCE AT SEPTEMBER 30, 2005 1,000 $ 1,000 $ -- $ (121,458) $(120,458)
========= ========= ================ =========== =========
See accompanying notes to the unaudited consolidated financial statements.
3
TAGALDER C3 HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR PERIOD FROM MAY 27, 2005 (INCEPTION) TO SEPTEMBER 30, 2005
Period from
May 27,
Three 2005
months (inception)
ended to
September September
30, 2005 30, 2005
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (97,182) $(121,458)
Adjustments to reconcile net loss to
net cash used in operations:
Changes in operating assets and liabilities:
Prepaid expenses 2,193 2,193
Accounts payable 93,564 113,564
Accrued liabilities 1,570 1,570
Due to employees (1,868) (1,868)
--------- ---------
Net cash used in operations (1,723) (5,999)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash used in purchase of subsidiaries -- (12)
Cash acquired in purchase of subsidiaries -- 7,405
Additions to construction in progress (30,811) (30,811)
--------- ---------
Net cash used in investing activities (30,811) (23,418)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock -- 1,000
Advances from stockholders 29,880 44,715
--------- ---------
Net cash provided by financing activities 29,880 45,715
EFFECT OF RATE CHANGES ON CASH: -- --
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,654) 16,298
Cash and cash equivalents, beginning of period 18,952 --
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 16,298 $ 16,298
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest $ -- $ --
========= =========
Cash paid for income taxes $ -- $ --
========= =========
See accompanying notes to the unaudited consolidated financial statements.
4
NT HOLDING CORP.
UNAUDITED PRO FORMA COMBINED
FINANCIAL STATEMENTS
----------------------------
CONTENTS
Unaudited Pro Forma Combined Balance Sheets at September 30, 2005
Unaudited Pro Forma Combined Statements of Operations for May 27, 2005
(Inception) to September 30, 2005
Notes to September 30, 2005 Unaudited Pro Forma Combined Financial Statements
----------------------------
5
PRO FORMA COMBINED FINANCIAL STATEMENTS
The accompanying unaudited pro forma combined financial statements are based
upon the historical condensed balance sheets and condensed statements of
operations of NT Holding Corp. ("NTHH" or the "Company") and Tagalder C3
Holdings, Inc. ("C3"). The unaudited pro forma combined balance sheet and the
unaudited pro forma combined financial statements of operations for the period
from May 27, 2005 to September 30, 2005 have been prepared as if the acquisition
occurred on May 27, 2005 (Date of inception of C3). The statements are based on
accounting for the business combination as a reverse acquisition, whereby the
Company will be the surviving corporate entity, but C3 is the accounting
acquirer. The pro forma information may not be indicative of the results that
actually would have occurred if the merger had been in effect from and on the
dates indicated or which may be obtained in the future.
6
NT HOLDING CORP.
UNAUDITED PRO FORMA BALANCE SHEET
As of September 30, 2005
----------------------------------------------------------------
Tagalder C3 NTHH Pro forma Pro forma
Historical Historical Adjustments Combined
----------- ----------- ----------- ----------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash $ 16,298 $ -- $ -- $ 16,298
Advance to employees 247 -- -- 247
----------- ----------- ----------- ----------
Total current assets 16,545 -- -- 16,545
PROPERTY, PLANT AND EQUIPMENT:
Net of accumulated depreciation of $0 at
December 31, 2004 -- -- -- --
Construction in progress 327,020 -- -- 327,020
----------- ----------- ----------- ----------
TOTAL ASSETS $ 343,565 $ -- $ -- $ 343,565
=========== =========== =========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 387,849 $ -- $ -- $ 387,849
Accrued expenses 2,222 -- -- 2,222
Shareholder advances 55,375 55,375
Payable to PNC -- -- 150,000 150,000
----------- ----------- ----------- ----------
Total current liabilities 445,446 -- 150,000 595,446
MINORITY INTEREST 18,577 -- -- 18,577
STOCKHOLDERS' DEFICIT:
Preferred stock; 5,000,000 shares
authorized; $.001 par value;
0 shares issued and outstanding -- -- -- --
Capital stock, $.001 par value; 100,000,000
shares authorized;
3,836,665 at September 30, 2005 3,837 19,946 (1) 23,783
Additional paid-in capital 9,081,021 (9,081,021)(2) --
Share capital 1,000 (1,000)(3)
Accumulated deficit (121,458) (9,084,858) 8,912,075 (294,24)
----------- ----------- ----------- ----------
Total stockholders' deficit (120,458) -- (150,000) (270,45)
----------- ----------- ----------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 343,565 $ -- $ -- $ 343,565
=========== =========== =========== ==========
7
NT HOLDING CORP.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
For the period May 27, 2005 to September 30, 2005
---------------------------------------------------------------------
Tagalder C3 NTHH Pro forma Pro forma
Historical Historical Adjustments Combined
------------ ------------ ------------ ------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
REVENUES $ -- $ -- $ -- $ --
OPERATING EXPENSES:
Depreciation and amortization -- 1,703 -- 1,703
General and administrative
expenses 121,492 34,960 -- 156,452
------------ ------------ ------------ ------------
TOTAL OPERATING EXPENSES 121,492 36,663 -- 158,155
------------ ------------ ------------ ------------
LOSS FROM OPERATIONS (121,492) (36,663) -- (158,155)
OTHER INCOME (EXPENSE)
Gain from liquidation of assets and
liabilities -- 170,046 (150,000) 20,046
Interest expense -- (10,283) -- (10,283)
Interest income 34 6 -- 40
------------ ------------ ------------ ------------
TOTAL OTHER INCOME (EXPENSE) 34 159,769 (150,000) 9,803
------------ ------------ ------------ ------------
NET LOSS $ (121,458) $ 123,106 $ (150,000) $ (148,352)
============ ============ ============ ============
NET LOSS PER SHARE:
BASIC AND DILUTED $ -- $ 0.04 $ (0.01) $ (0.01)
============ ============ ============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING:
BASIC AND DILUTED -- 3,212,635 19,946,000 23,158,635
============ ============ ============ ============
8
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(1) To reflect the change in common stock of NTHH as a result of issuance of
19,946,000 shares of common stock as the consideration of purchase of C3
(2) To reflect the elimination of additional paid in capital as a result of
recapitalization
(3) To remove the share capital of the accounting acquirer under reverse
takeover accounting
(4) To eliminate parent's retained deficit as a result of recapitalization
(5) To reflect the liability to PNC and reduce non-recurring income
accordingly
9