UNITED
STATES SECURITIES AND EXCHANGE


COMMISSION


Washington, DC
20549


FORM 10-Q


þ
              
              QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d)OF
      THE SECURITIES EXCHANGE ACT OF
1934


For
the quarterly period ended March 31, 2009


o
              
              TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d)OF
      THE SECURITIES EXCHANGE ACT OF
1934


Commission
file number 001-33799


2020
CHINACAP ACQUIRCO, INC.


(Exact
name of registrant as specified in its charter)





Delaware
            
            20-5500605(State
      or other jurisdiction of
              Incorporation
      or organization)
            
            (I.R.S.
      Employer Identification No.)c/o
      Surfmax Corporation221
      Boston Post Road East
              Suite
      410
              Marlborough,
      Massachusetts
            
            01752(Address
      of principal executive offices)
            
            (Zip
      Code)


(508)
624-4948


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 Exchange Act during the past
12 months (or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes þ 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 during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files). Yes o No þ


Indicate
by check mark whether the registrant is large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See definition
of “large accelerated filer”, “accelerated filer” and “smaller reporting
company” in Rule 12b-2 of the Exchange Act. (Check one):


Large
accelerated filed o
          Accelerated filer
o


Non-accelerated
filer o          Smaller
reporting company þ


Indicate
by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).Yes þ No o


As of
March 31, 2009, 10,500,000 shares of the registrant’s common stock, par value
$0.0001 per share, were outstanding.









2020
CHINACAP ACQUIRCO, INC.


(a
development stage company)


Table
of Contents





PagePART
      I — FINANCIAL INFORMATIONItem
      1. Financial StatementsBalance
      Sheets as of March 31, 2009 (unaudited) and December 31,
    2008
                
                3Statements
      of Operations (unaudited) for the three months ended March 31, 2009 and
      2008, and from August 21, 2006 (date of inception) to March 31,
      2009
                
                4Statements
      of Cash Flows (unaudited) for the three months ended March 31, 2009 and
      2008, and from August 21, 2006 (date of inception) to March 31,
      2009
                
                5Notes
      to Financial Statements (unaudited)
                
                6Item
      2. Management’s Discussion and Analysis of Financial Condition and Results
      of Operations
                
                14Item
      3. Quantitative and Qualitative Disclosures about Market
    Risk
                
                16Item
      4. Controls and Procedures
                
                16PART
      II – OTHER INFORMATIONItem
      1. Legal Proceedings
                
                18Item
      1A. Risk Factors
                
                18Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
                
                18Item
      3. Defaults upon Senior Securities
                
                18Item
      4. Submission of Matters to a Vote of Security Holders
                
                18Item
      5. Other Information
                
                18Item
      6. Exhibits
                
                18SIGNATURES
                
                19INDEX
      TO EXHIBITSCertification
      by Principal Executive Officer Pursuant to Section 302Certification
      by Principal Financial Officer Pursuant to Section 302Certification
      by Principal Executive Officer and Principal Financial Officer Pursuant to
      Section 906




2




Item 1.
Financial Statements





2020
CHINACAP ACQUIRCO, INC.


(a development stage
company)


BALANCE
SHEETS




UnauditedMarch
      31,
                            
                            December
      31,2009
                            
                            2008ASSETSCurrent
      AssetsCash
      and cash equivalents
                            $
                            64,270
                            
                            $
                            45,878Interest
      receivable
                            
                            —
                            
                            
                            1,248Prepaid
      expenses
                            
                            4,083
                            
                            
                            16,333Income
      tax receivable
                            
                            2,000
                            
                            
                            2,000Cash
      held in trust fund
                            
                            68,529,239
                            
                            
                            68,533,339TOTAL
      ASSETS
                            $
                            68,599,592
                            
                            $
                            68,598,798LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      LiabilitiesAccrued
      offering costs
                            $
                            413,066
                            
                            $
                            413,066Accrued
      expenses
                            
                            438,975
                            
                            
                            414,144Notes
      payable to stockholders
                            
                            500,000
                            
                            
                            300,000Deferred
      underwriters’ fee
                            
                            2,415,000
                            
                            
                            2,415,000TOTAL
      LIABILITIES
                            
                            3,767,041
                            
                            
                            3,542,210Common
      stock, subject to possible redemption, 2,586,638 shares, at redemption
      value
                            
                            19,761,913
                            
                            
                            19,761,913STOCKHOLDERS’
      EQUITYPreferred
      stock — $0.0001 par value; 1,000,000 shares authorized; nil issued and
      outstanding
                            
                            —
                            
                            
                            —Common
      stock - par value of $0.0001 per share, 25,000,000 shares authorized,
      10,500,000 shares issued and outstanding
                            
                            1,050
                            
                            
                            1,050Additional
      paid-in capital
                            
                            45,562,823
                            
                            
                            45,562,823Deficit
      accumulated during the development stage
                            
                            (493,235)
                            
                            
                            (269,198)Total
      stockholders’ equity
                            
                            45,070,638
                            
                            
                            45,294,675TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
                            $
                            68,599,592
                            
                            $
                            68,598,798




See
accompanying notes to financial statements




3




2020
CHINACAP ACQUIRCO, INC.


(a development stage
company)


STATEMENTS
OF OPERATIONS


(Unaudited)




August
      21,2006January
      1,
                    
                    
                    January
      1,
                    
                    
                    (date
      of inception)2009
      to
                    
                    
                    2008
      to
                    
                    
                    to
      March 31,March
      31,
                    
                    
                    March
      31,
                    
                    
                    20092009
                    
                    
                    2008
                    
                    
                    (Cumulative)Interest
      income
                    
                    $
                    652
                    
                    
                    
                    454,285
                    
                    
                    $
                    1,095,454General
      & administrative expenses
                    
                    
                    224,689
                    
                    
                    
                    234,975
                    
                    
                    
                    1,236,270Abandoned
      project costs
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    349,262(Loss)
      profit before income taxes
                    
                    
                    (224,037
                    )
                    
                    
                    219,310
                    
                    
                    
                    (490,078
                    )Income
      tax provision
                    
                    
                    —
                    
                    
                    
                    88,316
                    
                    
                    
                    3,157Net
      (loss) profit
                    
                    $
                    (224,037
                    )
                    
                    
                    130,994
                    
                    
                    $
                    (493,235
                    )Net
      (loss) profit per share – basic and diluted
                    
                    $
                    (0.02
                    )
                    
                    
                    0.01
                    
                    
                    $
                    (0.08
                    )Weighted
      average number of shares outstanding – basic and diluted
                    
                    
                    10,500,000
                    
                    
                    
                    10,500,000
                    
                    
                    
                    6,089,247




See
accompanying notes to financial statements




4




2020
CHINACAP ACQUIRCO, INC.


(a
development stage company)


STATEMENTS OF CASH
FLOWS


(Unaudited)


August
      21, 2006January
      1,
                                                                                
                                                                                
                                                                                January
      1,
                                                                                
                                                                                
                                                                                (date
      of inception)2009
      to
                                                                                
                                                                                
                                                                                2008
      to
                                                                                
                                                                                
                                                                                to
      March 31,March
      31,
                                                                                
                                                                                
                                                                                March
      31,
                                                                                
                                                                                
                                                                                20092009
                                                                                
                                                                                
                                                                                2008
                                                                                
                                                                                
                                                                                (Cumulative)Cash
      Flows from Operating ActivitiesNet
      (loss) profit
                                                                                
                                                                                $
                                                                                (224,037
                                                                                )
                                                                                
                                                                                
                                                                                130,994
                                                                                
                                                                                
                                                                                $
                                                                                (493,235
                                                                                )Adjustments
      to reconcile net (loss) profit to net cash (used in) provided by operating
      activitiesChange
      in assets and liabilities:Accrued
      expenses
                                                                                
                                                                                
                                                                                24,831
                                                                                
                                                                                
                                                                                
                                                                                39,534
                                                                                
                                                                                
                                                                                
                                                                                438,975Accrued
      income taxes
                                                                                
                                                                                
                                                                                —
                                                                                
                                                                                
                                                                                
                                                                                88,316
                                                                                
                                                                                
                                                                                -Interest
      receivable
                                                                                
                                                                                
                                                                                1,248
                                                                                
                                                                                
                                                                                -
                                                                                
                                                                                
                                                                                
                                                                                —Prepaid
      expenses
                                                                                
                                                                                
                                                                                112,250
                                                                                
                                                                                
                                                                                
                                                                                12,250
                                                                                
                                                                                
                                                                                
                                                                                (4,083
                                                                                )Income
      tax receivable
                                                                                
                                                                                
                                                                                —
                                                                                
                                                                                
                                                                                
                                                                                —
                                                                                
                                                                                
                                                                                
                                                                                (2,000
                                                                                )Net
      cash (used in) provided by operating activities
                                                                                
                                                                                
                                                                                (185,708
                                                                                )
                                                                                
                                                                                
                                                                                271,094
                                                                                
                                                                                
                                                                                
                                                                                (60,343
                                                                                )Net
      Cash provide by (used in) Investing ActivitiesCash
      held in trust fund
                                                                                
                                                                                
                                                                                4,100
                                                                                
                                                                                
                                                                                
                                                                                (80,563
                                                                                )
                                                                                
                                                                                
                                                                                (68,529,239
                                                                                )Cash
      Flows from Financing ActivitiesProceeds
      from issuance of common stock
                                                                                
                                                                                
                                                                                —
                                                                                
                                                                                
                                                                                
                                                                                —
                                                                                
                                                                                
                                                                                
                                                                                25,000Proceeds
      from the issuance of notes payable to stockholders
                                                                                
                                                                                
                                                                                200,000
                                                                                
                                                                                
                                                                                
                                                                                —
                                                                                
                                                                                
                                                                                
                                                                                630,000Proceeds
      from issuance of warrants
                                                                                
                                                                                
                                                                                —
                                                                                
                                                                                
                                                                                
                                                                                —
                                                                                
                                                                                
                                                                                
                                                                                2,265,000Gross
      proceeds from public offering
                                                                                
                                                                                
                                                                                —
                                                                                
                                                                                
                                                                                
                                                                                —
                                                                                
                                                                                
                                                                                
                                                                                60,000,000Gross
      proceeds from exercise of overallotment options in the
      offering
                                                                                
                                                                                
                                                                                —
                                                                                
                                                                                
                                                                                
                                                                                —
                                                                                
                                                                                
                                                                                
                                                                                9,000,000Proceeds
      from issuance of option
                                                                                
                                                                                
                                                                                —
                                                                                
                                                                                
                                                                                
                                                                                —
                                                                                
                                                                                
                                                                                
                                                                                100Payments
      to stockholders
                                                                                
                                                                                
                                                                                —
                                                                                
                                                                                
                                                                                
                                                                                —
                                                                                
                                                                                
                                                                                
                                                                                (20,244
                                                                                )Payments
      for underwriters’ discount and offering costs
                                                                                
                                                                                
                                                                                —
                                                                                
                                                                                
                                                                                
                                                                                (133,008
                                                                                )
                                                                                
                                                                                
                                                                                (3,116,004
                                                                                )Principal
      payments on notes payables
                                                                                
                                                                                
                                                                                —
                                                                                
                                                                                
                                                                                
                                                                                (127,291
                                                                                )
                                                                                
                                                                                
                                                                                (130,000
                                                                                )Net
      cash provided by (used in) financing activities
                                                                                
                                                                                
                                                                                200,000
                                                                                
                                                                                
                                                                                
                                                                                (260,299
                                                                                )
                                                                                
                                                                                
                                                                                68,653,852Net
      increase (decrease) in cash
                                                                                
                                                                                
                                                                                18,392
                                                                                
                                                                                
                                                                                
                                                                                (69,768
                                                                                )
                                                                                
                                                                                
                                                                                64,270Cash
      and cash equivalents, beginning of the period
                                                                                
                                                                                
                                                                                45,878
                                                                                
                                                                                
                                                                                
                                                                                269,040
                                                                                
                                                                                
                                                                                
                                                                                —Cash
      and cash equivalents, end of the period
                                                                                
                                                                                $
                                                                                64,270
                                                                                
                                                                                
                                                                                $
                                                                                199,272
                                                                                
                                                                                
                                                                                $
                                                                                64,270Supplemental
      schedule of non-cash financing activities:Accrual
      of deferred offering costs
                                                                                
                                                                                $
                                                                                —
                                                                                
                                                                                
                                                                                $
                                                                                (129,813
                                                                                )
                                                                                
                                                                                $
                                                                                542,879Deferred
      offering costs advanced by stockholders
                                                                                
                                                                                $
                                                                                —
                                                                                
                                                                                
                                                                                $
                                                                                (20,244
                                                                                )
                                                                                
                                                                                $
                                                                                20,244Deferred
      underwriters’ fee
                                                                                
                                                                                $
                                                                                —
                                                                                
                                                                                
                                                                                $
                                                                                —
                                                                                
                                                                                
                                                                                $
                                                                                2,415,000Income
      Tax Paid
                                                                                
                                                                                $
                                                                                —
                                                                                
                                                                                
                                                                                $
                                                                                —
                                                                                
                                                                                
                                                                                $
                                                                                —





See
accompanying notes to financial statements




5




2020
CHINACAP ACQUIRCO, INC.


(A Development Stage
Company)


NOTES
TO FINANCIAL STATEMENTS





Note 1 – Interim Financial
Information


The
financial statements at March 31, 2009 and for the period ended March 31, 2009
have been prepared by the Company and are unaudited. In the opinion of
management, all adjustments (consisting of normal accruals and recurring items)
have been made that are necessary to present fairly the financial position of
2020 ChinaCap Acquirco, Inc. (the “Company”) as of March 31, 2009 and the
results of its operations and cash flows for the periods ended March 31, 2009
and 2008. Operating results presented for the interim periods are not
necessarily indicative of the results to be expected for any other interim
period or for the full year.





These
unaudited financial statements should be read in conjunction with the financial
statements and notes thereto for the year ended December 31, 2008 included in
the Company’s Annual Report on Form 10-K filed with the Securities and Exchange
Commission (the “SEC”) on March 30, 2009. The accounting policies used in
preparing these unaudited financial statements are consistent with those
described in such filing.





Note
2 – Organization, Business Operations and Summary of Significant Accounting
Policies


2020
ChinaCap Acquirco, Inc. (the “Company”) was incorporated in Delaware on August
21, 2006 as a public acquisition company whose objective is to acquire an
operating business that either: (1) is located in the People’s Republic of
China, the Hong Kong Special Administrative Region or the Macau Special
Administrative Region (collectively, “China”), (2) has its principal operations
located in China, or, (3) in the view of the Board of Directors of the Company,
would benefit from establishing operations in China. Upon formation, the
authorized share capital was 3,000 shares of common stock with par value of
$0.01 per share. According to the preorganization subscription agreement dated
August 18, 2006 with the director and stockholder, the Company issued 100 shares
of common stock with a par value of $0.01 per share to the stockholder at $1.00
each. On January 31, 2007, the stockholder and the director effected several
changes to the Company’s corporate structure by consent in lieu of a special
meeting, and amended its Certificate of Incorporation as follows:





•
              
              Increased
      the number of the authorized shares of the Company’s common stock from
      3,000 to 25,000,000, with par value of $0.0001 per
  share;




•
              
              Authorized
      1,000,000 shares of preferred stock, with par value of $0.0001 per share;
      and




•
              
              Provided
      that, absent a duly authorized amendment to the Certificate of
      Incorporation upon the consummation of a Business Combination, the Company
      will continue in existence only to November 8,
  2009.





In
addition to effecting the proceeding amendments to the Company’s Certificate of
Incorporation, the Company also issued an additional 1,874,900 shares of common
stock with par value of $0.0001 per share for $24,900 by unanimous written
consent in lieu of a special meeting of the Board of Directors dated as of
January 31, 2007.





At March
31, 2009, the Company had not yet commenced any operations. All activities
through March 31, 2009 were related to the Company’s formation, the public
offering described below in Note 2 (the “Offering”), the search for a Business
Combination opportunity and the general administration of the Company. The
Company has selected December 31 as its fiscal year-end.





The
Company’s management has broad discretion with respect to the specific
application of the net proceeds of the Offering. Although substantially all of
the net proceeds of the Offering are intended to be generally applied toward
consummating a business combination with an operating business that has its
principal operations located in China (“Business Combination”), there is no
assurance that the Company will be able to successfully effect a Business
Combination. Upon closing of the Offering, $7.92 per Unit of the proceeds from
the Offering, net of all applicable discounts and commissions but inclusive of
$0.28 per Unit in deferred underwriting compensation and the proceeds from the
sale of the Insider Warrants (as defined below) were deposited and held in a
trust account for the benefit of the Company. The corpus of the Trust Account is
invested in United States “government securities” within the meaning of Section
2(a)(16) of the Investment Company Act having a maturity of 180 days or less or
in money market funds meeting certain conditions under Rule 2a-7 promulgated
under the Investment Company Act until the earlier of (i) the consummation of
its first Business Combination or (ii) liquidation of the Company. The placing
of funds in the Trust Account may not protect those funds from third party
claims against the Company. Although the Company will seek to have all vendors,
prospective target businesses or other entities it engages execute agreements
with the Company waiving any right, title, interest or claim of any kind in or
to any monies held in the Trust Account, there is no guarantee that they will
execute such agreements.




6


The
Company’s executive officers and Dr. Jianming Yu, one of the Company’s
directors, and certain entities controlled by these executive officers and Dr.
Jianming Yu have agreed that they will be personally liable under certain
circumstances to ensure that the proceeds in the Trust Account are not reduced
by the claims of target businesses or vendors or other entities that are owed
money by the Company for services rendered or contracted or for products sold to
the Company. However, there can be no assurance that they will be able to
satisfy those obligations. The remaining net proceeds (not held in the Trust
Account) may be used to pay for business, legal and accounting due diligence on
prospective acquisitions and continuing general and administrative expenses.
Additionally, up to an aggregate of $1,350,000 of interest earned on the Trust
Account balance, net of taxes, may be released to the Company to fund working
capital requirements, of which $650,902 has been released to the Company as of
March 31, 2009. The Company, after signing a definitive agreement for the
acquisition of a target business, is required to submit such transaction for
stockholder approval. In the event that stockholders owning 30% or more of the
shares sold in the Offering vote against the Business Combination and exercise
their conversion rights described below, the Business Combination will not be
consummated. All of the Company’s stockholders prior to the Offering, including
all of the officers and directors of the Company (“Initial Stockholders”), have
agreed to vote their 1,875,000 founding shares of common stock in accordance
with the vote of the majority in interest of all other stockholders of the
Company (“Public Stockholders”) with respect to any Business Combination. After
consummation of a Business Combination, these voting safeguards will no longer
be applicable.





With
respect to a Business Combination that is approved and consummated, any Public
Stockholder who voted against the Business Combination may demand that the
Company convert his or her shares. The per share conversion price will equal the
amount in the Trust Account, calculated as of two business days prior to the
consummation of the proposed Business Combination, divided by the number of
shares of common stock held by Public Stockholders at the consummation of the
Offering. Accordingly, Public Stockholders holding up to 29.99% of the aggregate
number of shares owned by all Public Stockholders may seek conversion of their
shares in the event of a Business Combination. Such Public Stockholders are
entitled to receive their per share interest in the Trust Account computed
without regard to the shares held by Initial Stockholders.





The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. The Company’s Amended and Restated
Certificate of Incorporation provides that if the Company is not able to
complete a business combination by November 8, 2009, its corporate existence
will cease, except for the process of winding up and liquidating. The Company
cannot assure its investors that it will be able to find a suitable business
combination by November 8, 2009. This condition raises substantial doubt about
the Company’s ability to continue as a going concern. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.





In the
event of liquidation, it is likely that the per share value of the residual
assets remaining available for distribution (including Trust Account assets)
will be less than the initial public offering price per share in the Offering
(assuming no value is attributed to the Warrants contained in the Units offered
in the Offering discussed in Note 3).




7




Summary
of Significant Accounting Policies




Development
stage company:


The
Company complies with the reporting requirements of Statements of Financial
Accounting Standards (“SFAS”) No. 7, “Accounting and Reporting by Development
Stage Enterprises.”




Net
profit (loss) per common share:


The
Company complies with accounting and disclosure requirements of SFAS No. 128,
“Earnings Per Share.” Net (loss) profit per common share is computed by dividing
net (loss) profit by the weighted average number of common shares outstanding
for the period. Except where the result would be antidilutive, net (loss) profit
per share of common stock, assuming dilution, reflects the maximum potential
dilution that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock and would then share in the net
(loss) profit of the Company.




Concentration
of credit risk:


Financial
instruments that potentially subject the Company to concentrations of credit
risk consist of cash accounts in a financial institution, which for the three
months ended March 31, 2009 has never exceeded the Federal depository insurance
coverage of $250,000 through December 31, 2009. The Company has not experienced
losses on these accounts and management believes the Company is not exposed to
significant risks on such accounts.




Fair
value of financial instruments:


The fair
value of the Company’s assets and liabilities, which qualify as financial
instruments under SFAS No. 107, “Disclosure About Fair Value of Financial
Instruments,” approximates the carrying amounts represented in the balance
sheet.




Use
of estimates:


The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.




Reclassification:


During
the quarter ended March 31, 2009, the Company corrected the redemption
obligation of common stock, subject to possible redemption and additional
paid-in capital in accordance to the terms thereof. (See footnote 9 for
additional information.) Under Staff Accounting Bulletin (“SAB”) 99,
Materiality, and SAB 108, Considering the Effects of Prior Year Misstatements
when Quantifying Misstatements in Current Year Financial Statements, the Company
evaluated the quantitative and qualitative aspects of the adjustment and
determined the correction was not material. There was no impact on the Cash held
in trust fund as of December 31, 2008, and the Company’s results of operations
or cash flow statements for the fiscal year ended December 31,
2008.




Income
taxes:


The
Company complies with SFAS No. 109, “Accounting for Income Taxes,” which
requires an asset and liability approach to financial accounting and reporting
for income taxes. Deferred income tax assets and liabilities are computed for
differences between the financial statement and tax bases of assets and
liabilities that will result in future taxable or deductible amounts, based on
enacted tax laws and rates applicable to the periods in which the differences
are expected to affect taxable income. Valuation allowances are established,
when necessary, to reduce deferred tax assets to the amount expected to be
realized.




Effective
January 1, 2007, the Company adopted the provisions of the Financial Accounting
Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in
Income Taxes - an interpretation of FASB Statement No. 109” (“FIN 48”). There
were no unrecognized tax benefits as of January 1, 2007 and as of December 31,
2007, December 31, 2008 and March 31, 2009. FIN 48 prescribes a recognition
threshold and a measurement attribute for the financial statement recognition
and measurement of tax positions taken or expected to be taken in a tax return.
For those benefits to be recognized, a tax position must be more-likely-than-not
to be sustained upon examination by taxing authorities. The Company recognizes
accrued interest and penalties related to unrecognized tax benefits as income
tax expense. No amounts were accrued for the payment of interest and penalties
at March 31, 2008 or March 31, 2009. Management is currently unaware of any
issues under review that could result in significant payments, accruals or
material deviations from its position. The adoption of the provisions of FIN 48
did not have a material impact on the Company’s financial position, results of
operations and cash flows. The Company currently files income tax returns in the
United States, and is subject to tax examinations by tax authorities for tax
years since inception in 2006.




8




Recently
issued accounting standards:




In
September 2006, FASB issued SFAS No. 157, “Fair Value Measurements,” which is
effective for fiscal years beginning after November 15, 2007, and for interim
periods within those years. SFAS No. 157 defines fair value, establishes a
framework for measuring fair value under U.S. GAAP, and enhances disclosures
about fair value measurements. SFAS No. 157 applies when other accounting
pronouncements require fair value measurements; it does not require any new fair
value measurements. In February 2008, the FASB issued FASB Staff Position
(“FSP”) No. FAS 157-2, “Effective Date of FASB Statement No. 157,” which defers
the effective date of SFAS No. 157 for non-financial assets and liabilities,
except those that are recognized or disclosed at fair value in the financial
statements on a recurring basis (at least annually), until fiscal years and
interim periods beginning after November 15, 2008. The Company adopted FSP No.
FAS 157-2 as of January 1, 2008 which defers the application of FAS 157 for the
non financial assets and liabilities to January 1, 2009.





In
December 2007, FASB issued SFAS No. 141R, Business Combinations. SFAS No. 141R
replaces SFAS No. 141, Business Combinations. SFAS No. 141R establishes
principles and requirements for determining how an enterprise recognizes and
measures the fair value of certain assets and liabilities acquired in a business
combination, including non-controlling interests, contingent consideration and
certain acquired contingencies. SFAS No. 141R also requires acquisition-related
transaction expenses and restructuring costs be expensed as incurred rather than
capitalized as a component of the business combination. This Statement shall 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. Management is currently evaluating the impact of the
adoption of this statement; however, it is not expected to have a material
impact on the Company’s financial position, results of operation or cash
flows.





In
December 2007, FASB issued SFAS No. 160, Non-controlling Interests in
Consolidated Financial Statements — an amendment of Accounting Research Bulletin
(“ARB”) No. 51. SFAS No. 160 requires that accounting and reporting for minority
interests will be recharacterized as non-controlling interests and classified as
a component of equity. SFAS No. 160 also establishes reporting requirements that
provide sufficient disclosures that clearly identify and distinguish between the
interests of the parent and the interests of the non-controlling owners. SFAS
No. 160 applies to all entities that prepare consolidated financial statements,
except not-for-profit organizations, but will affect only those entities that
have an outstanding non-controlling interest in one or more subsidiaries or that
deconsolidate a subsidiary. This Statement is effective for fiscal years, and
interim periods within those fiscal years, beginning on or after December 15,
2008. Management is currently evaluating the impact of the adoption of this
statement; however, it is not expected to have a material impact on our
financial position, results of operation or cash flows.





In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities.” SFAS No. 161 requires disclosures of how and why an
entity uses derivative instruments; how derivative instruments and related
hedged items are accounted for; and how derivative instruments and related
hedged items affect an entity’s financial position, financial performance and
cash flows. SFAS No. 161 is effective for the company beginning January 1, 2009.
The Company adopted SFAS No.161 on January 1, 2009 and it is not expected to
have a material impact on the Company’s financial position, results of operation
or cash flows.




9







As a
result of the recent credit crisis, on October 10, 2008, the FASB issued FSP No.
FAS 157-3, “Determining the Fair Value of a Financial Asset in a Market That is
Not Active.” This FSP clarifies the application of SFAS No. 157 in a market that
is not active. The FSP addresses how management should consider measuring fair
value when relevant observable date does not exist. The FSP also provides
guidance on how observable market information in a market that is not active
should be considered when measuring fair value, as well as how the use of market
quotes should be considered when assessing the relevance of observable and
unobservable data available to measure fair value. This FSP is effective upon
issuance, including prior periods for which financial statements have not been
issued. Revisions resulting from a change in the valuation technique or its
application shall be accounted for as a change in accounting estimate in
accordance with SFAS No. 154, “Accounting Changes and Error Corrections.”
Adoption of this standard had no effect on our results of operations, cash flows
or financial position.




Management
does not believe that any recently issued, but not yet effective, accounting
standards if currently adopted would have a material effect on the accompanying
financial statements.





Note
3 – Public Offering


On
November 15, 2007, the Company consummated the sale of 7,500,000 units (“Units”)
at a price of $8.00 per Unit in the Offering. Each Unit consists of one share of
the Company’s common stock, $0.0001 par value, and one redeemable common stock
purchase warrant (“Warrants”). Each Warrant entitles the holder to purchase from
the Company one share of common stock at an exercise price of $5.25 commencing
on the later of (i) November 8, 2008 or (ii) the completion of a Business
Combination with a target business, and expires on November 8, 2011. The
Warrants are redeemable at a price of $0.01 per Warrant upon 30 days prior
notice after the Warrants become exercisable, only in the event that the last
sale price of the common stock is at least $11.50 per share for any 20 trading
days within a 30 trading day period ending on the third business day prior to
the date on which notice of redemption is given. In accordance with the warrant
agreement relating to the Warrants sold and issued in the Offering, the Company
is only required to use its best efforts to maintain the effectiveness of the
registration statement covering the Warrants. The Company will not be obligated
to deliver securities, and there are no contractual penalties for failure to
deliver securities, if a registration statement is not effective at the time of
exercise. Additionally, in the event that a registration is not effective at the
time of exercise, the holder of such Warrants shall not be entitled to exercise
such Warrants and in no event (whether in the case of a registration statement
not being effective or otherwise) will the Company be required to net cash
settle the warrant exercise. Consequently, the Warrants may expire unexercised
and unredeemed.





On
November 26, 2007, the underwriters of the Offering exercised their
over-allotment option to the extent of 1,125,000 Units. The 8,625,000 Units sold
in the Offering, including the 1,125,000 Units subject to the over-allotment
option, were sold at an offering price of $8.00 per Unit, generating gross
proceeds of $69,000,000, $68,090,685, including $2,265,000 of proceeds from the
previously-announced private placement of the warrants issued to entities
affiliated with the management team, has been placed in the Trust
Account.





The
Company paid the underwriters in the Offering an underwriting discount of 3.5%
of the gross proceeds of the Offering. The underwriters have agreed that an
additional 3.5% of the underwriting discount will not be payable unless and
until the Company completes a Business Combination and have waived their right
to receive such payment upon the Company’s liquidation if it is unable to
complete a Business Combination. The Company has also issued a unit purchase
option for $100 to Morgan Joseph to purchase 550,000 Units at an exercise price
of $10.00 per Unit. The Units issuable upon exercise of this option are
identical to the Units offered in the Offering. The Company accounted for the
fair value of the unit purchase option, inclusive of the receipt of the $100
cash payment, as an expense of the Offering resulting in a charge directly to
stockholders’ equity. The Company estimates that the fair value of this unit
purchase option is approximately $1,657,226 ($3.01 per Unit) using a
Black-Scholes option-pricing model. The fair value of the unit purchase option
granted to the underwriters is estimated as of the date of grant using the
following assumptions: (1) expected volatility of 45.46%, (2) risk-free interest
rate of 3.67%, and (3) expected life of 5 years. The unit purchase option may be
exercised for cash or on a “cashless” basis, at the
holder’s option, such that the holder may use the appreciated value of the unit
purchase option (the difference between the exercise prices of the unit purchase
option and the underlying Warrants and the market price of the Units and
underlying securities) to exercise the unit purchase option without the payment
of any cash. The Company will have no obligation to net cash settle the exercise
of the unit purchase option or the Warrants underlying the unit purchase option.
If the holder is unable to exercise the unit purchase option or underlying
Warrants, the unit purchase option or Warrants, as applicable, will expire
worthless.




10




Note 4 – Deferred and Accrued
Offering Costs


Deferred
and accrued offering costs consist principally of legal fees, underwriting fees
and other costs incurred through the balance sheet date that are directly
related to the Offering described in Note 2 and that were charged to
stockholders’ equity upon the receipt of the capital raised.





The
Company’s legal counsel agreed to cap legal fees due by the Company at the
closing of the Offering to $350,000, provided that any excess fees shall be paid
by the Company upon the completion of a Business Combination. Total legal fees
payable included in accrued offering costs directly related to the Offering were
$409,908 as of March 31, 2009 and December 31, 2008.





Upon
completion of the Offering of 8,625,000 Units (including 1,125,000 Units
pursuant to the underwriters’ over-allotment option sold on November 26, 2007)
at a price of $8 per unit, the Company received net proceeds of approximately
$68,240,685 from the Offering, after deducting offering expenses of
approximately $5,439,315 which included underwriting discounts of $4,830,000.
This amount includes $2,415,000 of the underwriting discounts and commissions
due (deferred underwriters’ fees) which the underwriters have agreed will not be
payable unless and until the Company consummates a Business
Combination.





Note
5 – Notes Payable to Stockholders


In
December 2006, the Company issued a $50,000 unsecured promissory note to one of
its Initial Stockholders, who is also an officer and director of the Company.
Under the terms of the note, as amended, the Company may reduce the amount of
the note payable by offsetting any funds advanced by the Company to third
parties at the direction of the lender. The amount of the note payable was
reduced in this manner to $47,291 as of December 31, 2007. The note payable was
non-interest bearing and was initially payable on the earlier of December 17,
2007 or the consummation of the Offering. On November 15, 2007, the holders of
the $50,000 unsecured promissory note and the Company agreed to extend the
repayment date of the unsecured promissory note to March 31, 2008. Due to the
short-term nature of the note, the fair value of the note approximates its
carrying amount.





In April 2007, the Company issued a
$80,000 unsecured promissory note to 2020 International Capital Group Limited, the
beneficial owner of a majority of the outstanding shares of stock of the
Companyat the time such
promissory note was issued. The note payable was non-interest
bearing and was payable on the earlier of April 5, 2008or the consummation of the Offering. On
November 15, 2007, the holders of the $80,000 unsecured promissory note and the
Company agreed to change the repayment date of the unsecured promissory note
to March31, 2008.





Both
notes were repaid in full by the Company on March 31, 2008.





In August
2008, December 2008 and January 2009, the Company issued unsecured promissory
notes of $150,000, $150,000 and $200,000, respectively, to 2020 International
Capital Group Limited, a company controlled by certain directors and executive
officers of the Company. The notes payable are non-interest bearing and are due
in August and December 2009, and January 2010, respectively, or at which time
2020 International Capital Group Limited demands full or partial payment of any
balance outstanding. The proceeds from the notes have been used by the Company
for working capital purposes.





Note
6 – Related Party Transactions





Lease
from Related Party





The
Company presently occupies office space provided by a company owned by the
Company’s Chairman of the Board, Chief Executive Officer and President. Such
entity has agreed that, until the Company consummates a Business Combination, it
will make such office space, as well as utilities, administrative, technology
and secretarial services, available to the Company, as may be required by the
Company from time to time. The Company has agreed to pay such entity $7,500 per
month for such services commencing on November 8, 2007. The Company has incurred
$22,500 for each of the three months ended March 31, 2009 and 2008 and $127,500
from August 21, 2006 (date of inception) to March 31, 2009.




11




Note
7 – Preferred Stock


The
Company is authorized to issue 1,000,000 shares of preferred stock with such
designations, voting and other rights and preferences as may be determined from
time to time by the Board of Directors. As of March 31, 2009, no preferred stock
is issued or outstanding. The agreement with the underwriters prohibits the
Company, prior to a Business Combination, from issuing preferred stock that
participates in the proceeds of the Trust Account or that votes as a class with
the Common Stock on a Business Combination.




Note
8 – Income Tax


The
components of the provision for income taxes are as follows:


August
      21, 2006,Three
      months
                                
                                
                                Three
      months
                                
                                
                                (date
      of inception)Ended
                                  March
      31, 2009
                                
                                
                                Ended
                                  March
      31, 2008
                                
                                
                                to
      March 31, 2009
                                  (Cumulative)(unaudited)
                                
                                
                                (unaudited)
                                
                                
                                (unaudited)Current:Federal
      taxes
                                
                                $
                                —
                                
                                
                                $
                                74,565
                                
                                
                                $
                                1,034State
      taxes
                                
                                
                                —
                                
                                
                                
                                13,751
                                
                                
                                
                                2,123Total
      provision for income taxes
                                
                                $
                                —
                                
                                
                                $
                                88,316
                                
                                
                                $
                                3,157





The total
provision for income taxes differs from that amount which would be computed by
applying the U.S. Federal income tax rate to income before provision for income
taxes as follow:


August
      21, 2006,Three
      months
                      
                      
                      Three
      months
                      
                      
                      (date
      of inception)Ended
                        March
      31, 2009
                      
                      
                      Ended
                        March
      31, 2008
                      
                      
                      to
      March 31, 2009
                        (Cumulative)(unaudited)
                      
                      
                      (unaudited)
                      
                      
                      (unaudited)Statutory
      Federal income tax rate
                      
                      $
                      —
                      
                      
                      $
                      34.00
                      %
                      
                      $
                      34.00
                      %Effective
      Mass income tax rate
                      
                      
                      —
                      
                      
                      
                      6.27
                      %
                      
                      
                      6.27
                      %Effective
      income tax rate
                      
                      $
                      —
                      
                      
                      $
                      40.27
                      %
                      
                      $
                      40.27
                      %





As of
March 31, 2009, unused net operating losses equal to approximately $493,000 are
available to offset federal taxable income for future years through 2028. SFAS
109 requires that the tax benefit of such net operating losses be recorded using
current tax rates as an asset to the extent management assesses the utilization
of such net operating losses to be more likely than not. Based on the Company’s
short term SPAC status, the company provided a full valuation allowance against
the deferred tax asset at March 31, 2009.




Note
9 – Amount of Equity Subject to Possible Redemption





The
Company is required to obtain shareholder approval for any business combination
of a target business. In the event that public stockholders owning 30% or more
of the shares sold in the Offering vote against a Business Combination, the
Company will not proceed with a Business Combination if the public stockholders
exercise their redemption rights. That is, the Company can still effect a
Business Combination if the public stockholders owning up to approximately
29.99% of the shares sold in the Offering exercise their redemption
rights.




12




This
redemption obligation with respect to up to 29.99% of the shares sold in the
Offering will exist regardless of how a Business Combination is structured. That
is, the Company would be required to redeem up to an amount equal to the product
of approximately 29.99% of the 8,625,000 ordinary shares sold in the Offering
(or 2,586,638 ordinary shares) multiplied by an initial cash per-share
redemption price of $7.92 ,per share, which amount represents $7.64 per share
from the proceeds of the offering and $0.28 per unit of deferred underwriters’
fees. The actual per-share redemption price will be equal to the quotient of the
amount in the Trust Account plus all accrued interest not previously released to
the Company, as of two business days prior to the proposed consummation of the
Business Combination, divided by 8,625,000 shares of common stock. However, the
ability of stockholders to receive $7.92 per unit is subject to any valid claims
by the Company’s creditors which are not covered by amounts held in the Trust
Account or the indemnities provided by the Company’s officers and directors. The
expected redemption price per share is greater than each stockholder’s initial
pro rata share of the Trust Account of approximately $7.64 per share. Of the
excess redemption price, approximately $0.28 per share represents a portion of
the underwriters’ contingent fee, which they have agreed to forego for each
share that is redeemed. Accordingly, the total deferred underwriting
compensation payable to the underwriters in the event of a business combination
will be reduced by approximately $0.28 for each share that is redeemed. The
balance will be paid from proceeds held in the Trust Account, which are payable
to the Company upon consummation of a business combination. Even if less than
30% of the stockholders exercise their redemption rights, the Company may be
unable to consummate a business combination if such redemption leaves the
Company with funds insufficient to acquire or merge with a business with a fair
market value greater than 80% of the Company’s net assets at the time of such
acquisition, which would be in violation of a condition to the consummation of
the Company’s initial business combination, and as a consequence, the Company
may be forced to find additional financing to consummate such a business
combination, consummate a different business combination or
liquidate.




Accordingly,
under the provision of EITF D-98, Classification and Measurement of
Redeemable Securities, the Company has classified 29.99% of the net
proceeds from the Offering, or $19,761,913, outside permanent
equity.





During
the quarter ended March 31, 2009, the Company corrected the overstatement of the
Company’s redemption obligation of the common stock, subject to possible
redemption and additional paid-in capital in accordance to the terms thereof.
The overstatement amounted to approximately $724,000 which represents $0.28 per
share of the 2,586,638 ordinary shares sold in the Offering. As a result, the
Company’s redemption obligation was reduced by approximately $724,000, and
additional paid-in capital was increased by the same amount. Under Staff
Accounting Bulletin (“SAB”) 99, Materiality, and SAB 108, Considering the
Effects of Prior Year Misstatements when Quantifying Misstatements in Current
Year Financial Statements, the Company evaluated the quantitative and
qualitative aspects of the adjustment and determined the correction was not
material. There was no impact on the Cash held in trust fund as of December 31,
2008, and the Company’s results of operations or cash flow statements for the
fiscal year ended December 31, 2008.The effect of this change was
to increase additional paid-in capital and decrease the redemption obligation by
$724,000 as of December 31, 2008 in the accompanying balance sheet.




Note
10 – Commitments


The
Company presently occupies office space provided by a company owned by the
Company’s Chairman of the Board, Chief Executive Officer and President. Such
entity has agreed that, until the Company consummates a Business Combination, it
will make such office space, as well as utilities, administrative, technology
and secretarial services, available to the Company, as may be required by the
Company from time to time. The Company has agreed to pay such entity $7,500 per
month for such services commencing on November 8, 2007.





Pursuant
to letter agreements between each of the Initial Stockholders, the Company and
Morgan Joseph, the Initial Stockholders have waived their rights to receive
distributions with respect to the 1,875,000 founding shares in the event the
Company is liquidated in accordance with its Articles of Incorporation on
November 8, 2009.




Note
11 – Subsequent Events





On April
20, 2009, in anticipation of its forthcoming working capital requirements, the
Company issued another unsecured promissory note of $200,000 to 2020
International Capital Group Limited, a company controlled by the directors and
executive officers of the Company. The note is non-interest bearing and is due
in April 2010, or at which time 2020 International Capital Group Limited demands
full or partial payment of any balance outstanding.




13




On May 8,
2009, the Company, Exceed Company Ltd. (“Exceed”), a wholly-owned subsidiary of
the Company formed under the laws of the British Virgin Islands with limited
liability, Windrace International Company Limited, an operating company in the
People’s Republic of China (“Windrace”), and the holders of the issued and
outstanding shares of Windrace (the “Sellers”) entered into the Agreement for
Sale and Purchase of Windrace (the “Purchase Agreement”) whereby Exceed will
purchase 100% of the issued and outstanding ordinary shares of Windrace held by
the Sellers.





Windrace
designs, develops and wholesales footwear, apparel and accessories under the
“喜得龍”
(Xidelong) brand name and the  logo. Windrace has
three principal categories of products: (i) footwear, which mainly comprises
running, leisure, basketball, skateboarding, canvas, tennis and outdoor
footwear, (ii) apparel, which mainly comprises sports tops, pants, jackets,
track suits and coats, and (iii) accessories, which mainly comprise bags, socks,
hats and caps. Its products are sold entirely to customers within
China.





Pursuant
to the terms of the Purchase Agreement, Exceed will purchase all of the ordinary
shares of Windrace from the Sellers and the Sellers will receive in the
aggregate 17,008,633 ordinary shares of Exceed. Exceed will issue 2,750,000
shares of its ordinary shares to the Sellers upon the closing of the
transaction. The remaining shares will be placed into escrow pursuant to an
escrow agreement subject to release or forfeiture based on the after-tax net
profits of the combined company for the fiscal years ending December 31, 2009,
2010 and 2011. At the closing, additional shares of Exceed ordinary shares will
be released from the escrow amount if the sum of the amounts released and the
New Investor Shares (as defined below) is less than 51% of the issued and
outstanding shares of Exceed ordinary shares, which shall include any amounts
held in the escrow account. The additional amount of shares to be released from
the escrow account in such instance would be the amount necessary to make the
sum of the Exceed ordinary shares issued from the escrow account and the New
Investor Shares equal to at least 51%.





In
addition, Exceed has agreed to issue the Sellers up to an additional 2,212,789
Exceed ordinary shares pursuant to an earn-out provision in the Purchase
Agreement based on the after-tax net profits of the combined company during the
fiscal year ending December 31, 2011. Additional shares of Exceed ordinary
shares may be issuable pursuant to the Purchase Agreement in certain instances.
If Windrace sells to third parties, and has received consideration for, any of
its ordinary shares, at closing the Company will issue to such third parties
Exceed ordinary shares (the “New Investor Shares”). The amount of shares to be
issued to such new shareholders will be equal to the amount paid per share of
Windrace divided by the lowest of the closing price of the Company on each of
the last trading days of March, April and May 2009. The Company expects to issue
approximately 5,277,045 New Investor Shares.





In
connection with the purchase and pursuant to the Purchase Agreement, the Company
will merge into Exceed, with Exceed surviving the merger. This redomestication
will change the Company’s place of incorporation from Delaware to the British
Virgin Islands.





The
transaction is subject to customary closing conditions. In addition, the closing
is conditioned on (a) the affirmative vote of the holders of a majority of the
shares of Company Common Stock issued in the Company’s initial public offering
to approve the Purchase Agreement and the transactions contemplated thereunder,
and (b) fewer than thirty percent (30%) of the shares of Company Common Stock
issued in the Company’s initial public offering voting against the Merger and
electing to convert their shares into cash in accordance with the Company’s
amended and restated certificate of incorporation.




ITEM
2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations.




The
following discussion should be read in conjunction with our Financial Statements
and footnotes thereto contained in this report.




14




Forward
Looking Statements




All
statements other than statements of historical fact included in this Quarterly
Report on Form 10-Q including statements under “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” regarding our
financial position, business strategy and the plans and objectives of management
for future operations, are “forward looking statements” within the meaning of
the Private Securities Litigation Reform Act of 1995, Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
When used in this Form 10-Q, words such as “anticipate,” “believe,” “estimate,”
“expect,” “intend” and similar expressions, as they relate to us or our
management, identify forward looking statements. Such forward looking statements
are based on the beliefs of management, as well as assumptions made by, and
information currently available to, our management. Actual results could differ
materially from those contemplated by the forward looking statements as a result
of certain factors detailed in our filings with the Securities and Exchange
Commission. All subsequent written or oral forward looking statements
attributable to us or persons acting on our behalf are qualified in their
entirety by this paragraph.




Overview




We are a
public acquisition company, formed on August 21, 2006, to complete a business
combination with an operating business that either: (1) is located in China, (2)
has its principal operations located in China, or, (3) in the view of the Board
of Directors of the Company, would benefit from establishing operations in
China. Our efforts to identify a prospective target business will not be limited
to a particular industry. We intend to effect a business combination using cash
from the proceeds of our initial public offering and the private placements of
the sponsors’ warrants, our capital stock, debt or a combination of cash, stock
and debt. On November 15, 2007, we completed our initial public offering of
8,625,000 Units (including 1,125,000 Units pursuant to the underwriters’
over-allotment option sold on November 26, 2007) at a price of $8 per unit. We
received net proceeds of approximately $68.4 million from our
Offering.





Pursuant
to a warrant purchase agreement dated November 8, 2007, certain of the Initial
Stockholders and their affiliates have purchased from the Company, in the
aggregate, 2,265,000 Insider Warrants for $2,265,000. The purchase and issuance
of the Insider Warrants in a private placement occurred simultaneously with the
consummation of the Offering. All of the proceeds we received from these
purchases were placed in the Trust Account.





For a
description of the proceeds generated in our initial public offering and a
discussion of the use of such proceeds, we refer you to Note 3 of the unaudited
financial statements included in Part I, Item I of this Quarterly Report on Form
10-Q.




Results
of Operations and Known Trends or Future Events




For the
three months ended March 31, 2009 and 2008, we had a net loss of $224,037 and a
net profit of $130,994, respectively. For the three months ended March 31, 2009
and 2008, we earned interest income of $652 and $454,285, respectively. The
reason for the reduction was a significant reduction in the interest paid on the
Trust Account.





Our
entire activity from August 21, 2006 (inception) through November 15, 2007 had
been to prepare for our initial public offering. Following our initial public
offering, we began actively searching for a suitable business target to complete
a business combination.




Liquidity
and Capital Resources




On
October 15, 2008, in consideration of the current market conditions, the Company
directed LaSalle Global Trust Services to transfer the funds held in trust from
a money market fund that invests in U.S. Government obligations into the Dreyfus
Treasury Prime Cash Management Fund, which invests solely in U.S. treasuries.
The balance in the Trust Account as of March 31, 2009 was
$68,529,239.




15




As of
March 31, 2009, we had operating cash of $64,270, compared to $45,878 at
December 31, 2008. Until the initial public offering, as described above, our
only source of liquidity was two loans made by two stockholders. These loans
were fully repaid as of March 31, 2009. Our liabilities are mainly deferred and
accrued offering costs related to our initial public offering payable upon
completion of a Business Combination and notes payable to 2020 International
Company Limited, as discussed in Note 5 to our financial statements. Given our
available operating cash of $64,270 and our projected interest income, to
complete a Business Combination the Company expects to require additional
financing for working capital and to pay for expenses associated with the
identification of a target company and our due diligence review. Accordingly, in
April 2009, the Company issued another unsecured promissory note of $200,000 to
2020 International Capital Group Limited, a company controlled by the directors
and executive officers of the company. Similar to previously issued unsecured
promissory notes, this one is also non-interest bearing and is due in April
2010, or at which time 2020 International Capital Group Limited demands full or
partial payment of any balance outstanding. In addition, the Company has
withdrawn from the Trust Account $434,000 on May 1, 2009 previously reserved for
income taxes payable on the interest income earned on the Trust Account
balance.




Off-Balance
Sheet Financing Arrangements




We have
no obligations, assets or liabilities that would be considered off-balance sheet
arrangements.




Contractual
Obligations




Other than the $7,500 per
month feefor office space and general and administrative services, the
accrued offering costs of $413,066 and the $2,415,000 deferred underwriting
discounts as described in our Annual Report Form 10-K for the year ended
December 31, 2008, the Company does not have
any other long-term debt, capital lease obligations, operating lease obligations
or long-term liabilities.




Critical
Accounting Policies




The
Company’s significant accounting policies are more fully described in Note 2 to
the financial statements. However certain accounting policies are particularly
important to the portrayal of financial position and results of operations and
require the application of significant judgments by management. As a result, the
financial statements are subject to an inherent degree of uncertainty. In
applying those policies, management used its judgment to determine the
appropriate assumptions to be used in determination of certain estimates. These
estimates are based on the Company’s historical experience, terms of existing
contracts, observance of trends in the industry and information available from
outside sources, as appropriate.




Cash
Held in Trust Fund




As stated
in Note 2 – Organization, Business Operations and Summary of Significant
Accounting Policies, net proceeds from the Offering were deposited and held in
the Trust account, which were invested in United States “government
securities”.





On
October 15, 2008, in consideration of the current market conditions, the Company
directed LaSalle Global Trust Services, to transfer the funds held in trust from
a money market fund which invests in U.S. Government obligations into the
Dreyfus Treasury Prime Cash Management Fund which invests solely in U.S.
treasuries. The balance in the Trust Account as of March 31, 2009 was
$68,529,239.




ITEM
3. Quantitative and Qualitative Disclosures about Market Risk.




Not
applicable.




ITEM
4. Controls and Procedures.




Based on
their evaluation as of the end of the period covered by this Quarterly Report on
Form 10-Q, our principal executive officer and principal financial and
accounting officer have concluded that our disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were
effective as of the end of the period covered by this report.




16




There
were no changes in our internal controls over financial reporting in connection
with the evaluation required by Rule 13-a(15(d) under the Exchange Act that
occurred during the period covered by this Quarterly Report on Form 10-Q that
have materially affected, or are reasonably likely to materially affect, our
internal controls over financial reporting.





We
believe that a control system, no matter how well designed and operated, cannot
provide absolute assurance that the objectives of the control system are met,
and no evaluation of controls can provide absolute assurance that all control
issues and instances of fraud, if any, within a company have been detected. Our
disclosure controls and procedures are designed to provide reasonable assurance
of achieving their objectives, and our principal executive officer and our
principal financial officer have concluded that these controls and procedures
are effective at the reasonable assurance level.




17




PART
II – OTHER INFORMATION




ITEM
1. Legal Proceedings.




None.




ITEM
1A. Risk Factors.




Factors
that could cause our actual results to differ materially from those in this
report are any of the risks described in our Annual Report on Form 10-K for the
year ended December 31, 2008 filed with the SEC and the risks described below.
Any of the factors could result in a significant or material adverse effect on
our results of operations or financial condition. Additional risk factors not
presently known to us or that we currently deem immaterial may also impair our
business or results of operations.




ITEM
2. Unregistered Sales of Equity Securities and Use of Proceeds.




None.




ITEM
3. Defaults Upon Senior Securities.




None.




ITEM
4. Submission of Matters to a Vote of Security Holders.




None.




ITEM
5. Other Information.




None.




ITEM
6. Exhibits.




(a)
Exhibits:





31.1 -
Section 302 Certification by Chief Executive Officer and President





31.2 -
Section 302 Certification by Chief Financial Officer and Treasurer





32.1 -
Section 906 Certification by Chief Executive Officer and President





32.2 -
Section 906 Certification by Chief Financial Officer and Treasurer




18




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 thereto
duly authorized.




2020
ChinaCap Acquirco, Inc.




Dated:
      May 15, 2009
                  By:
                  /s/
      George LuG.
      George Lu
                    Chairman,
      Chief Executive Officer and
                    President
                    (Principal
      Executive Officer)By:
                  /s/
      Louis F. KooLouis
      F. Koo
                    Vice
      Chairman, Chief Financial Officer and
                    Treasurer
                    (Principal  Financial
      Officer)




EXHIBIT
INDEX




EXHIBIT
NO.




31.1
                
                Certification
      of Chief Executive Officer, pursuant to Rule 13a-14 and 15d-14 of the
      Securities Exchange Act of 1934.31.2
                
                Certification
      of Chief Financial Officer, pursuant to Rule 13a-14 and 15d-14 of the
      Securities Exchange Act of 1934.32.1
                
                Certifications
      of Chief Executive Officer and pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.




19