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 September 30, 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 o





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).





 ̈Yes                            ̈ No





Indicate
by check mark whether the registrant is 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 þNo o




As of
September 30, 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. Consolidated Financial StatementsConsolidated
      Balance Sheets as of September 30, 2009 (unaudited) and December 31,
      2008
              3Consolidated
      Statements of Operations (unaudited) for the three and nine months ended
      September 30, 2009 and 2008, and from August 21, 2006 (date of inception)
      to September 30, 2009
              4Consolidated
      Statements of Cash Flows (unaudited) for the nine months ended September
      30, 2009 and 2008, and from August 21, 2006 (date of inception) to
      September 30, 2009
              5Notes
      to Consolidated Financial Statements (unaudited)
              6Item
      2. Management’s Discussion and Analysis of Financial Condition and Results
      of Operations
              17Item
      3. Quantitative and Qualitative Disclosures about Market
    Risk
              21Item
      4. Controls and Procedures
              21PART
      II – OTHER INFORMATIONItem
      1. Legal Proceedings
              22Item
      1A. Risk Factors
              22Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
              22Item
      3. Defaults upon Senior Securities
              22Item
      4. Submission of Matters to a Vote of Security Holders
              22Item
      5. Other Information
              22Item
      6. Exhibits
              22SIGNATURES
              23INDEX
      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.
Consolidated Financial Statements







2020
CHINACAP ACQUIRCO, INC.


(a development stage
company)


CONSOLIDATED
BALANCE SHEETS




Unaudited
                                                                
                                                                
                                                                AuditedSeptember 30,
                                                                
                                                                
                                                                December 31,2009
                                                                
                                                                
                                                                2008ASSETSCurrent
      AssetsCash
      and cash equivalents
                                                                
                                                                $
                                                                84,393
                                                                
                                                                
                                                                $
                                                                45,878Interest
      receivable
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                1,248Prepaid
      expenses
                                                                
                                                                
                                                                17,904
                                                                
                                                                
                                                                
                                                                16,333Income
      tax receivable
                                                                
                                                                
                                                                2,000
                                                                
                                                                
                                                                
                                                                2,000Cash
      held in trust fund
                                                                
                                                                
                                                                68,095,252
                                                                
                                                                
                                                                
                                                                68,533,339TOTAL
      ASSETS
                                                                
                                                                $
                                                                68,199,549
                                                                
                                                                
                                                                $
                                                                68,598,798LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      LiabilitiesAccrued
      offering costs
                                                                
                                                                $
                                                                413,066
                                                                
                                                                
                                                                $
                                                                413,066Accrued
      expenses
                                                                
                                                                
                                                                1,564,304
                                                                
                                                                
                                                                
                                                                414,144Notes
      payable to stockholders
                                                                
                                                                
                                                                700,000
                                                                
                                                                
                                                                
                                                                300,000Deferred
      underwriters’ fee
                                                                
                                                                
                                                                2,415,000
                                                                
                                                                
                                                                
                                                                2,415,000TOTAL
      LIABILITIES
                                                                
                                                                
                                                                5,092,370
                                                                
                                                                
                                                                
                                                                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
                                                                
                                                                
                                                                (2,218,607
                                                                )
                                                                
                                                                
                                                                (269,198
                                                                )Total
      stockholders’ equity
                                                                
                                                                
                                                                43,345,266
                                                                
                                                                
                                                                
                                                                45,294,675TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
                                                                
                                                                $
                                                                68,199,549
                                                                
                                                                
                                                                $
                                                                68,598,798





See
accompanying notes to consolidated financial statements


3


2020
CHINACAP ACQUIRCO, INC.


(a development stage
company)


CONSOLIDATED
STATEMENTS OF OPERATIONS


(Unaudited)





August 21,2006July 1,
                  
                  
                  July 1,
                  
                  
                  January 1,
                  
                  
                  January 1,
                  
                  
                  (date of inception)2009 to
                  
                  
                  2008 to
                  
                  
                  2009 to
                  
                  
                  2008 to
                  
                  
                  to September 30,September
      30,
                  
                  
                  September
      30,
                  
                  
                  September
      30,
                  
                  
                  September
      30,
                  
                  
                  20092009
                  
                  
                  2008
                  
                  
                  2009
                  
                  
                  2008
                  
                  
                  (Cumulative)Interest
      income
                  
                  $
                  6
                  
                  
                  $
                  295,474
                  
                  
                  $
                  665
                  
                  
                  $
                  983,734
                  
                  
                  $
                  1,095,467General
      & administrative expenses
                  
                  
                  1,163,799
                  
                  
                  
                  270,435
                  
                  
                  
                  1,950,074
                  
                  
                  
                  764,318
                  
                  
                  
                  2,961,655Abandoned
      project costs
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  349,262(Loss)
      profit before income taxes
                  
                  
                  (1,163,793
                  )
                  
                  
                  25,039
                  
                  
                  
                  (1,949,409
                  )
                  
                  
                  219,416
                  
                  
                  
                  (2,215,450
                  )Income
      tax provision
                  
                  
                  —
                  
                  
                  
                  10,084
                  
                  
                  
                  —
                  
                  
                  
                  88,359
                  
                  
                  
                  3,157Net
      (loss) profit
                  
                  $
                  (1,163,793
                  )
                  
                  $
                  14,955
                  
                  
                  $
                  (1,949,409
                  )
                  
                  $
                  131,057
                  
                  
                  $
                  (2,218,607
                  )Net
      (loss) profit per share – basic and diluted
                  
                  $
                  (0.11
                  )
                  
                  $
                  —
                  
                  
                  $
                  (0.19
                  )
                  
                  $
                  0.01
                  
                  
                  $
                  (0.33
                  )Weighted
      average number of shares outstanding – basic and diluted
                  
                  
                  10,500,000
                  
                  
                  
                  10,500,000
                  
                  
                  
                  10,500,000
                  
                  
                  
                  10,500,000
                  
                  
                  
                  6,799,157





See
accompanying notes to consolidated financial statements


4


2020
CHINACAP ACQUIRCO, INC.


(a
development stage company)


CONSOLIDATED STATEMENTS OF CASH
FLOWS


(Unaudited)





August 21, 2006January 1,
                                      
                                      
                                      January 1,
                                      
                                      
                                      (date of inception)2009 to
                                      
                                      
                                      2008 to
                                      
                                      
                                      to September 30,September 30,
                                      
                                      
                                      September 30,
                                      
                                      
                                      20092009
                                      
                                      
                                      2008
                                      
                                      
                                      (Cumulative)Cash
      Flows from Operating ActivitiesNet
      (loss) profit
                                      
                                      $
                                      (1,949,409
                                      )
                                      
                                      $
                                      131,057
                                      
                                      
                                      $
                                      (2,218,607
                                      )Adjustments
      to reconcile net (loss) profit to net cash (used in) provided by operating
      activitiesChange
      in assets and liabilities:Accrued
      expenses
                                      
                                      
                                      1,150,160
                                      
                                      
                                      
                                      313,481
                                      
                                      
                                      
                                      1,564,304Accrued
      income taxes
                                      
                                      
                                      —
                                      
                                      
                                      
                                      83,053
                                      
                                      
                                      
                                      (2,000
                                      )Interest
      receivable
                                      
                                      
                                      1,248
                                      
                                      
                                      
                                      (56,415
                                      )
                                      
                                      
                                      —Prepaid
      expenses
                                      
                                      
                                      (1,571
                                      )
                                      
                                      
                                      12,250
                                      
                                      
                                      
                                      (17,904
                                      )Deferred
      acquisition costs
                                      
                                      
                                      —
                                      
                                      
                                      
                                      (227,512
                                      )
                                      
                                      
                                      —Net
      cash (used in) provided by operating activities
                                      
                                      
                                      (799,572
                                      )
                                      
                                      
                                      255,914
                                      
                                      
                                      
                                      (674,207
                                      )Net
      Cash provided by (used in) Investing ActivitiesCash
      held in trust fund
                                      
                                      
                                      438,087
                                      
                                      
                                      
                                      (357,783
                                      )
                                      
                                      
                                      (68,095,252
                                      )Cash
      Flows from Financing ActivitiesProceeds
      from issuance of common stock
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      25,000Proceeds
      from the issuance of notes payable to stockholders
                                      
                                      
                                      400,000
                                      
                                      
                                      
                                      150,000
                                      
                                      
                                      
                                      830,000Proceeds
      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
                                      )
                                      
                                      
                                      (20,244
                                      )Payments
      for underwriters’ discount and offering costs
                                      
                                      
                                      —
                                      
                                      
                                      
                                      (129,813
                                      )
                                      
                                      
                                      (3,116,004
                                      )Principal
      payments on notes payables
                                      
                                      
                                      —
                                      
                                      
                                      
                                      (127,291
                                      )
                                      
                                      
                                      (130,000
                                      )Net
      cash provided by (used in) financing activities
                                      
                                      
                                      400,000
                                      
                                      
                                      
                                      (127,348
                                      )
                                      
                                      
                                      68,853,852Net
      increase (decrease) in cash
                                      
                                      
                                      38,515
                                      
                                      
                                      
                                      (229,217
                                      )
                                      
                                      
                                      84,393Cash
      and cash equivalents, beginning of the period
                                      
                                      
                                      45,878
                                      
                                      
                                      
                                      269,040
                                      
                                      
                                      
                                      —Cash
      and cash equivalents, end of the period
                                      
                                      $
                                      84,393
                                      
                                      
                                      $
                                      39,823
                                      
                                      
                                      $
                                      84,393Supplemental
      schedule of non-cash financing activities:Accrual
      of deferred offering costs
                                      
                                      $
                                      —
                                      
                                      
                                      $
                                      —
                                      
                                      
                                      $
                                      413,066Deferred
      offering costs advanced by stockholders
                                      
                                      $
                                      —
                                      
                                      
                                      $
                                      —
                                      
                                      
                                      $
                                      —Deferred
      underwriters’ fee
                                      
                                      $
                                      —
                                      
                                      
                                      $
                                      —
                                      
                                      
                                      $
                                      2,415,000Income
      Tax Paid
                                      
                                      $
                                      —
                                      
                                      
                                      $
                                      —
                                      
                                      
                                      $
                                      —





See
accompanying notes to consolidated financial statements




5




2020
CHINACAP ACQUIRCO, INC.


(A Development Stage
Company)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)





Note 1 – Interim Financial
Information


The
consolidated financial statements at September 30, 2009 and for the three-month
and nine-month periods ended September 30, 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”) and its subsidiary as of September 30, 2009 and the results
of their operations and cash flows for the three-month and nine-month periods
ended September 30, 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 consolidated 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 consolidated 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.





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 affect 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 $1,090,902 has been released to the
Company as of September 30, 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.





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).





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 incorporated Exceed Company Limited (“Exceed”), a
wholly-owned subsidiary formed in the British Virgin Islands, on April 21, 2009
for the purpose of completing a business combination.  Exceed is a
limited company with 1,000 issued ordinary shares of $1 each. Later on, as more
fully described under note 10, Exceed, along with the Company, has entered into
an agreement to acquire a company with its principal place of business in
China.





On May
11, 2009, the Company issued a press release announcing that it and Exceed had
entered into a definitive share purchase agreement dated May 8, 2009 (the
“Purchase Agreement”) with Windrace International Company Limited
(“Windrace”).  Windrace is one of the largest branded sportswear
companies in China that is engaged in the design, manufacturing, trading and
distribution of sporting goods, including footwear, apparel and accessories, in
China. As a result of the transaction, Exceed will merge with the Company with
Exceed as the surviving entity and Windrace will become a wholly-owned
subsidiary of Exceed.


7


Windrace’s
current management team will remain in place to run the business following
consummation of the acquisition.




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.”




Principles
of consolidation:




The
accompanying consolidated financial statements include the accounts of the
Company and its subsidiary, referred to collectively as "the Group." All
significant intercompany accounts and transactions have been eliminated in
consolidation.




Net
(loss) profit 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 and cash held in trust fund in a financial
institution, which at September 30, 2009 had a total balance of $84,393 and
$68,095,252, respectively.  Although the balances in aggregate exceeded the
Federal Depository Insurance Coverage of $250,000 through September 30, 2009,
the management believes the Company is not exposed to significant risks on such
accounts as the Company has never experienced any loss on the account to
date..Moreover, the funds were placed in a financial institution of high credit
quality and were invested in U.S. government securities.




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 consolidated 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 consolidated 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, or the
Company’s results of operations or cash flow statements for the fiscal year
ended December 31, 2008.


8




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 September 30, 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 December 31, 2008 or
September 30, 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.




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 consolidated
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 deferred 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. The Company adopted this Statement for its fiscal year
ending December 31, 2009.





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.


9


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.





As a
result of the recent credit crisis, on October 10, 2008, the FASB issued SFAS
No. 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 data 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.




In May
2009, the FASB issued SFAS No. 165, “Subsequent Events,” which establishes
general standards of accounting for and disclosure of events that occur after
the balance sheet date but before financial statements are issued or are
available to be issued. The Company evaluated subsequent events after the
balance sheet date of September 30, 2009 through the filing of this report with
the SEC on October 16, 2009.





In June
2009, FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets,
an amendment of FASB Statement No. 140.” SFAS 166 is applied to financial asset
transfers on or after the effective date, which is January 1, 2010 for the
Company’s financial statements. SFAS 166 limits the circumstances in which a
financial asset may be de-recognized when the transferor has not transferred the
entire financial asset or has continuing involvement with the transferred
asset.  The concept of a qualifying special-purpose entity, which had
previously facilitated sale accounting for certain asset transfers, is
removed by SFAS 166. The Company expects that adoption of SFAS 166 will not have
a material effect on its financial position or results of
operations.




In June
2009, FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 
46(R)”, which deals with accounting for variable interest entities and is
effective for reporting periods beginning after November 15, 2009. The
amendments change the process for how an enterprise determines which party
consolidates a variable interest entity (VIE) to a primarily qualitative
analysis. SFAS 167 defines the party that consolidates the VIE (the primary
beneficiary) as the party with (1) the power to direct activities of the VIE
that most significantly affect the VIE’s economic performance and (2) the
obligation to absorb losses of the VIE or the right to receive benefits from the
VIE.  Upon adoption of SFAS 167, reporting enterprises must reconsider
their conclusions on whether an entity should be consolidated and should a
change result, the effect on net assets will be recorded as a cumulative effect
adjustment to retained earnings. The Company expects that adoption of SFAS 167
will not have a material effect on its financial position or results of
operations.




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
consolidated financial statements.


10


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 statement 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.





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 3 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 September 30, 2009 and December 31, 2008.


11


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 could 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 an$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-interestbearing
and was payable on the earlier of April 5, 2008 or 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, January 2009 and April 2009 the Company issued unsecured
promissory notes of $150,000, $150,000, $200,000 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
and April 2010, respectively, or at such 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.





On August
6, 2009, the Company reached an agreement with 2020 International Capital Group
Limited to extend the due date of the first $150,000 of the above-mentioned
promissory notes from August 1, 2009 to December 31, 2009.





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 $67,500 for each of the nine months ended September 30, 2009
and 2008, respectively, and $172,500 from August 21, 2006 (date of
inception) to September 30, 2009.




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 September 30, 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.


12




Note
8 – Income Tax


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


Nine months
                
                
                Nine months
                
                
                August 21, 2006,Ended
                
                
                Ended
                
                
                (date of inception)September 30,
                  2009
                
                
                September 30,
                  2008
                
                
                to September 30,
                  2009 (Cumulative)(unaudited)
                
                
                (unaudited)
                
                
                (unaudited)Current:Federal
      taxes
                
                $
                —
                
                
                $
                74,602
                
                
                $
                1,034State
      taxes
                
                
                —
                
                
                
                13,757
                
                
                
                2,123Total
      provision for income taxes
                
                $
                —
                
                
                $
                88,359
                
                
                $
                3,157





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


Nine months
                
                
                Nine months
                
                
                August 21, 2006,Ended
                
                
                Ended
                
                
                (date of inception)September30,
                  2009
                
                
                September 30,
                  2008
                
                
                to September 30,
                  2009 (Cumulative)(unaudited)
                
                
                (unaudited)
                
                
                (unaudited)Statutory
      Federal income tax rate
                
                
                —
                
                
                $
                34.00
                %
                
                
                —Effective
      Mass income tax rate
                
                
                —
                
                
                
                6.27
                %
                
                
                —Effective
      income tax rate
                
                
                —
                
                
                $
                40.27
                %
                
                
                —





As of
September 30, 2009, unused net operating losses equal to approximately
$2,219,000 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 current status as a special purpose acquisition
company, the Company provided a full valuation allowance against the deferred
tax asset at September 30, 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 affect a
Business Combination if the public stockholders owning up to approximately
29.99% of the shares sold in the Offering exercise their redemption
rights.


13


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 – Agreement to acquire Windrace International Company Limited


On May
11, 2009, the Company issued a press release announcing that it and its
wholly-owned subsidiary Exceed, had entered into a definitive share purchase
agreement dated May 8, 2009 with Windrace (the “Purchase Agreement”). Windrace
is one of the largest branded sportswear companies in China that is engaged in
the design, manufacturing, trading and distribution of sporting goods, including
footwear, apparel and accessories, in China. As a result of the transaction,
Exceed will merge with the Company with Exceed as the surviving entity and
Windrace will become a wholly-owned subsidiary of
Exceed.   Windrace’s current management team will remain in place
to run the business following consummation of the acquisition.





Windrace
designs, develops and engages in wholesale of footwear, apparel and accessories
under its own brand, XIDELONG, in China. It is one of the leading China sports
and leisurewear brands in China in terms of market share by sales revenue. Since
operations began in 2002, Windrace has experienced significant growth in the
mass market concentrated in the second and third tier cities in China and has
established a market leading position as one of the top five China sportswear
brands. Windrace has three principal categories of products: (i) footwear, which
comprises running, leisure, basketball, skateboarding and canvas 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.
Windrace’s primary footwear offering is running footwear, which represented over
23% of total revenue in 2008, the market for which has been rapidly growing in
China due to the increasing demand for lifestyle and leisure products and
heightened interest in health consciousness among Chinese customers. Windrace’s
footwear is primarily manufactured at its own production facility in Jinjiang,
Fujian province, China. Products are sold through independent distributors who
operate, directly or indirectly via third parties, retail stores and
outlets.





A summary
of the material items of acquisition was also set forth in the Form S-4 filed
with the Securities and Exchange Commission, as amended, containing a prospectus
for the transactions contemplated by the merger agreement and a proxy for the
special meeting of the Company’s stockholders to vote on the proposed business
combination.


14




On July
27, 2009, Windrace entered into an Investment Agreement (the “Investment
Agreement”) and an Escrow Agreement (the “Escrow Agreement”) with Wisetech
Holdings Limited (“Wisetech”), Windtech Holdings Limited (“Windtech” and,
collectively with Wisetech, the “Investors”) and Shuipan Lin, the CEO and a
principal stockholder of Windrace (“Lin”).  Pursuant to the terms of
the Investment Agreement, the Investors will invest an aggregate of $30,000,000
in Windrace in two installments:





Ÿ
            An
      initial investment of $2,500,000, paid into escrow pursuant to the Escrow
      Agreement. Pursuant to the Investment Agreement, Windrace may use the
      proceeds of this installment to purchase up to 2,500,000 warrants to
      purchase common stock of the Company (the “Warrants”) in the open
      market.  The funds will be released from escrow upon the
      entrance by Windrace into agreements to purchase the
    Warrants.





Ÿ
            A
      subsequent investment of $27,500,000 payable upon the closing of the
      Investment Agreement (the
“Closing”).





The
Closing of the Investment Agreement is conditioned upon the satisfaction of the
conditions for closing the transactions contemplated by the Purchase
Agreement.  Upon the Closing, Windrace will transfer the Warrants to
the Investors, and, upon the closing of transactions contemplated by the
Purchase Agreement, Exceed shall issue to the Investors that number of Exceed
ordinary shares equal to the aggregate investment made by the Investors less the
amount spent by Windrace to acquire the Warrants divided by $7.58 per
share.  The maximum amount of Exceed ordinary shares issuable to the
Investors assuming no purchase of Warrants by Windrace is 3,957,784 shares
($30,000,000/$7.58).





On July
27, 2009, the Company, Exceed, Windrace and the Sellers entered into a
Supplemental Agreement to Agreement for Sale and Purchase of Windrace (the
“Supplemental Agreement”) amending the Purchase Agreement in two
respects:





The
Supplemental Agreement limits the maximum number of New Investor Shares (as
defined below) issuable under the Purchase Agreement to approximately 3,957,784
shares, which number was not capped in the original Purchase
Agreement.  The Purchase Agreement provided that if, subsequent to the
execution of the Purchase Agreement, Windrace sells to third parties, and has
received consideration for, any of its ordinary shares, at closing Exceed 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 aggregate amount paid for shares 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, which is $7.58 per share.





The
Supplemental Agreement also provides that the Sellers, who will control Exceed
upon the consummation of the transactions contemplated by the Purchase
Agreement, will cause Exceed to promptly register for resale under the federal
securities laws all outstanding ordinary shares of Exceed excluding the shares
that will be held in escrow at closing.





On
September 9, 2009, the Company, Exceed, Windrace, and the Sellers entered into a
letter agreement (the “Letter Agreement”) further amending the Purchase
Agreement. Under the Letter Agreement, the parties extended the deadline for
meeting the conditions of the Purchase Agreement until November 7, 2009 and
agreed that the shares of Exceed following the contemplated transactions could
be listed on the Nasdaq Capital Market, subject to the approval of
Nasdaq.


15


In order
to ensure that the Acquisition is approved by the shareholders of the Company,
the Company, Windrace, Exceed and/or such entity’s respective affiliates, may
enter into transactions to purchase or facilitate the purchase of shares sold in
the Company’s November 2007 initial public offering (“Public Shares”), or other
securities of the Company from shareholders who have indicated their intention
to vote against the Acquisition and seek redemption of their shares for cash.
Such transactions may be entered into prior to the meeting of shareholders to
approve the Acquisition, but would not be completed until immediately after the
Acquisition was consummated. Such transactions could also include loan
arrangements, the granting of put options, and the transfer to holders of Public
Shares of shares or warrants owned by the Company’s affiliates for nominal
value. The purpose of such arrangements would be to increase the likelihood of
satisfaction of the requirements that holders of a majority of the Public Shares
present and entitled to vote on the Acquisition Proposal and the Redomestication
Proposal vote in favor of the proposals and that holders of fewer than 30% of
the Public Shares vote against the Acquisition Proposal and the Redomestication
Proposal and demand redemption of their Public Shares for cash. Accordingly, to
secure approval of the Acquisition Proposal and the Redomestication Proposal, it
may be necessary to acquire or repurchase as much as an additional approximately
70% of the Public Shares. Any arrangements that are entered into may involve any
or all of payment of significant fees, interest payments, and the issuance of
additional Exceed shares to the persons providing the financial or other
assistance in the transactions. The impact of any such arrangements on the
financial statements of the combined companies will depend on the ultimate
structure of the arrangements. However, without regard to the foregoing, the
Company intends to redeem for cash all shares that are properly presented for
redemption at closing. Purchases pursuant to such arrangements ultimately paid
for with funds in the Company’s trust account would diminish the funds available
to Exceed after the Acquisition and Redomestication for debt repayment, working
capital and general corporate purposes. No such arrangements or agreements with
respect to such transactions have occurred or been entered into.





The
Acquisition will be accounted for as a reverse recapitalization since,
immediately following completion of the transaction, the shareholders of
Windrace and investors in Windrace immediately prior to the Acquisition will
have effective control of 2020 through (1) their shareholder interest comprising
the largest control block of shares in the combined entity, in either scenario,
assuming no share redemptions and maximum share redemptions and excluding the
Escrowed Shares and the Earn-Out Shares, (2) significant representation on the
Board of Directors (initially two out of three members), with the third board
member being independent, and (3) being named to all of the senior executive
positions. For accounting purposes, Windrace will be deemed to be the accounting
acquirer in the transaction and, consequently, the transaction will be treated
as a recapitalization of Windrace, i.e., a capital transaction involving the
issuance of stock by 2020 for the stock of Windrace. Accordingly, the combined
assets, liabilities and results of operations of Windrace will become the
historical financial statements of 2020 at the closing of the transaction, and
2020’s assets (primarily cash and cash equivalents), liabilities and results of
operations will be consolidated with Windrace beginning on the acquisition date.
No step-up in basis or intangible assets or goodwill will be recorded in this
transaction. All direct costs of the transaction will be charged to operations
in the period that such costs are incurred.





The
Acquisition is subject to substantial risks, contingencies and uncertainties,
including, among others, approval by the Company's stockholders of the proposals
necessary to approve the Company’s acquisition of
Windrace and the Company’s redomestication
from Delaware to the British Virgin Islands, which must be accomplished by
November 8, 2009, compliance with federal securities laws and regulations in the
United States, compliance with various laws and regulations in the China, and
the availability of sufficient funds. Accordingly, there can be no assurances
that such transaction ultimately will occur.





The
Company’s common stock, units and warrants were quoted on the NYSE Amex under
the symbols TTY, TTY.U and TTY.WS, respectively. The Company transferred the
listing of its common stock, units and warrants to the NASDAQ Capital Market
under the symbols TTY, TTYUU and TTYWW, respectively, on October 13, 2009. The
Company's common stock, warrants and units continued to trade on the NYSE Amex
under the symbols TTY, TTY.WS and TTY.U, respectively, through the end of the
trading day on October 12, 2009. The transfer of the Company's listing was
taking place in connection with the proposed redomestication of the Company in
the British Virgin Islands through a merger with Exceed and subsequent proposed
acquisition by Exceed of Windrace, each of which is subject to approval by the
stockholders of the Company. Exceed has applied to list its securities on the
Nasdaq Stock Market upon the consummation of the redomestication and
acquisition.





On
October 2, 2009, the Form S-4 Registration Statement was declared effective by
the United States Securities and Exchange Commission – and the Special Meeting
of Shareholders to vote on the proposed business combination was scheduled for
October 19, 2009.


16




Note
11 – 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 on November 8, 2009 in accordance with its Articles
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 Consolidated
Financial Statements and footnotes thereto contained in this
report.




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, Windrace 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 $68.2 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
consolidated financial statements included in Part I, Item 1 of this Quarterly
Report on Form 10-Q.


17


On May
11, 2009, the Company issued a press release announcing that it and its
wholly-owned subsidiary, Exceed, had entered into a definitive share purchase
agreement with Windrace.  Windrace is one of the largest branded
sportswear companies in China that is engaged in the design, manufacturing,
trading and distribution of sporting goods, including footwear, apparel and
accessories, in China. As a result of the transaction, Exceed will merge with
the Company with Exceed as the surviving entity and Windrace will become a
wholly-owned subsidiary of Exceed.





TRANSACTION
SUMMARY





If
shareholder approval is obtained, Exceed will acquire all of the ordinary shares
of Windrace pursuant to the Purchase Agreement, dated May 8, 2009, as amended.
Following the Closing, Windrace will become a wholly owned subsidiary of Exceed,
and Exceed will merge with the Company with Exceed as the surviving company.
Under the terms of the Purchase Agreement, Exceed will acquire Windrace in an
all-stock transaction which includes 17,008,633 ordinary shares of Exceed stock,
excluding additional contingent shares. Pursuant to the Purchase Agreement,
2,750,000 shares will be issued to Windrace shareholders upon Closing. Up to
14,258,633 shares of the 17,008,633 shares noted above will be placed in escrow
and will be released to Windrace shareholders when, on a consolidated basis, the
surviving company achieves or exceeds after-tax net profits in the following
fiscal years of:





Fiscal Year Ending December 31
                      
                      After-Tax Net Profits ($)2009
                      
                      
                      38,067,3502010
                      
                      
                      49,487,5552011
                      
                      
                      64,333,821





If any
earnings target is not met between 2009 and 2010, all shares for that period
will be deferred until the next annual audit. If the earnings target of
$64,333,821 were achieved in 2011, all 17,008,633 shares would be released.
Furthermore, the shareholders of Windrace and their designees will be issued, on
an all or none basis, an additional 2,212,789 ordinary shares of Exceed, when,
on a consolidated basis, the surviving company achieves or exceeds after-tax net
profits in the fiscal year ended December 31, 2011 of $64,333,821. The Purchase
Agreement also provides for Windrace to seek independent third party investment
prior to Closing and allows for the issuance of, ordinary shares of Exceed at
Closing to new investors making investments in Windrace between the time of the
execution of the Purchase Agreement and the closing of the acquisition of
Windrace (“New Windrace Investors”), As provided in the Supplemental Agreement,
the maximum number of New Investors Shares is approximately 3,957,784 shares at
$7.58 per share.





The
after-tax net profits will be determined following the completion of an audit in
accordance with International Financial Reporting Standards (IFRS), excluding
certain adjustments related to, among other things, the transactions
contemplated in the Purchase Agreement. The transaction is subject to customary
closing conditions, including completion of the IFRS audit, completion of all
necessary documentation, an effective registration statement and approval of the
shareholders of the Company.





On July
27, 2009, the parties to the Purchase Agreement entered into a Supplemental
Agreement amending the Purchase Agreement and setting the maximum number of
Exceed ordinary shares that can be issued to New Windrace Investors at closing
to approximately 3,957,784 shares and, consistent with the formula set forth in
the Purchase Agreement, set the price at which the Exceed ordinary shares would
be issued to New Windrace Investors at $7.58 per share.





BUSINESS
OVERVIEW





Windrace
designs, develops and engages in wholesale of footwear, apparel and accessories
under its own brand, XIDELONG, in China. It is one of the leading China sports
and leisurewear brands in China in terms of market share by sales revenue. Since
operations began in 2002, Windrace has experienced significant growth in the
mass market concentrated in the second and third tier cities in China and has
established a market leading position as one of the top five China sportswear
brands. Windrace has three principal categories of products: (i) footwear, which
comprises running, leisure, basketball, skateboarding and canvas 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.
Windrace’s primary footwear offering is running footwear, which represented over
23% of total revenue in 2008, the market for which has been a rapidly growing
market in China due to the increasing demand for lifestyle and leisure products
and heightened interest in health consciousness among Chinese customers.
Windrace’s footwear is primarily manufactured at its own production facility in
Jinjiang, Fujian province, China. Products are sold through independent
distributors who operate, directly or indirectly via third parties, retail
stores and outlets.


18


A summary
of the material items of acquisition was also set forth in the Form S-4 filed
with the Securities and Exchange Commission, as amended, containing a prospectus
for the transactions contemplated by the merger agreement and a proxy for the
special meeting of the Company’s stockholders to vote on the proposed business
combination. The Form S-4 was declared effective on October 2, 2009 and the
special stockholders meeting to consider the business combination was scheduled
for October 19, 2009.




Results
of Operations and Known Trends or Future Events




For the
three months ended September 30, 2009 and 2008, interest earned on the Trust
Account was $6 and $295,474, respectively; resulting in net losses of $1,163,793
and net profit of $14,955, respectively.




For the
nine months ended September 30, 2009 and 2008, interest earned on the Trust
Account was $665 and $983,734, respectively; resulting in a net loss of
$1,949,409 and a net profit of $131,057, respectively. The continued low
interest environment has had a significant impact on the Company’s interest
income. Management of the Company believes the current trend of low interest
will continue in the foreseeable future.




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




At
September 30, 2009, we had cash outside of the trust account of $84,393, cash
held in the trust account of $68,095,252 and total liabilities of $5,092,370. We
intend to use substantially all of the net proceeds of our initial public
offering, including the funds held in the trust account (excluding deferred
underwriting discounts and commissions), to complete a business combination with
a target business and to pay our expenses relating thereto. The funds used to
pay the representative of the underwriters will not be available to us to use in
connection with or following the business combination. To the extent that our
capital stock is used in whole or in part as consideration to effect a business
combination, as is the case with the Acquisition, the remaining proceeds held in
the trust account as well as any other net proceeds not expended will be used as
working capital to finance the operations of the target business. Such working
capital funds could be used in a variety of ways including continuing or
expanding the target business’ operations, for strategic acquisitions and for
marketing, research and development of existing or new products. Such funds
could also be used to repay any operating expenses or finders’ fees which we had
incurred prior to the completion of our business combination if the funds
available to us outside of the trust account were insufficient to cover such
expenses.




We
believe that the funds available to us outside of the trust account, including
the interest income to be distributed to us, will be sufficient to allow us to
operate until November 8, 2009, assuming that a business combination is not
consummated during that time. We do not believe we will need to raise additional
funds in order to meet the expenditures required for operating our business.
However, we may need to raise additional funds through a private offering of
debt or equity securities if such funds are required to consummate a business
combination that is presented to us. We would only consummate such a fund
raising simultaneously with the consummation of a business
combination.




Included
in our total liabilities are deferred and accrued offering costs consisting
principally of legal fees incurred that are directly related to the initial
public offering of our securities which was consummated on November 15, 2007
(“Offering”) and that were charged to stockholders’ equity upon the receipt of
the capital raised. Total legal fees payable included in accrued offering costs
directly related to the Offering as of September 30, 2009 were $413,066 of which
$409,908 was payable to Seyfarth Shaw and $3,158 was payable to
Deacons.


19




Accrued
expenses consist of mainly legal fees related to various projects under review
and corporate matters, audit fee, consultancy fee and printing fee. As of
September 30, 2009, accrued expenses included legal fees of $911,381 payable to
Seyfarth Shaw, legal fees of $487,930 payable to Deacons, legal fee of $20,804
payable to Maples and Calder, printing fees of $73,074 payable to Vintage
Filings, audit fee and tax consultancy fee of $54,500 payable to Crowe Horwath,
taxes payable of $8,500, and sundry expenses of $8,115.




Our
executive officers namely Mr. George Lu, Mr. Louis Koo and Mr. Yuxiao Zhang, one
of our directors, Jianming Yu (“Dr. Yu”), and certain entities controlled by our
executive officers and Dr. Yu have agreed to indemnify us, jointly and severally
for any loss, liability, claim, damage and expense to the extent necessary to
ensure that the proceeds in the trust account are not reduced by the claims of
target businesses or claims of vendors or other entities that are owed money by
us for services rendered or contracted for or products sold to us. None of our
creditors, except for Seyfarth Shaw with respect to the $409,908 in legal fees
included in deferred offering expenses, have waived any claims against the trust
account.




If we are
not able to consummate a business combination by November 8, 2009 and we are
required to liquidate, the adjusted accrued expenses and accrued offering cost
as of September 30, 2009 was $1,567,462 after deducting the portion of the legal
fees payable to Seyfarth Shaw included in the deferred offering costs, which
they have agreed would be payable only in the event of the consummation of a
business combination. As at September 30, 2009, our bank balance was $84,393
which can cover part of the adjusted accrued expenses whereas the unsettled
balance will be indemnified by our executive directors and Dr. Yu as mentioned
above. If we consummate the Acquisition before November 8, 2009, all the accrued
expenses and accrued offering costs will be paid by the combined company after
closing of the Acquisition.




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 consolidated 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 consolidated 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”.


20


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 September 30, 2009 was
$68,095,252.




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.





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.


21




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. 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:




10.1
                        Supplemental
      Agreement to Agreement for Sale and Purchase of Windrace, among the
      Company, Windrace, the Sellers and Exceed, dated July 27, 2009, attached
      as Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed with the
      Commission on July 27, 2009, incorporated herein by
    reference.10.2
                        Investment
      Agreement for Sale and Purchase of Windrace, among Windrace, the Investors
      and Lin, dated July 27, 2009, attached as Exhibit 2.2 to the Company’s
      Current Report on Form 8-K, filed with the Commission on July 27, 2009,
      incorporated herein by reference.10.3
                        Escrow Agreement,
      among Windrace, the Investors and Deacons, dated July 27, 2009, attached
      as Exhibit 2.3 to the Company’s Current Report on Form 8-K, filed with the
      Commission on July 27, 2009, incorporated herein by
    reference.10.4
                        Letter
      Agreement dated September 9, 2009, attached as Exhibit 2.1 to the
      Company’s Current Report on Form 8-K, filed with the Commission on
      September 14, 2009, incorporated herein by reference.31.1
      -
                        Section
      302 Certification by Chief Executive Officer and President31.2
      -
                        Section
      302 Certification by Chief Financial Officer and Treasurer32.1
      -
                        Section
      906 Certification by Chief Executive Officer and President


22




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:
      October 16, 2009
              By:
              /s/ G. 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.




10.1
                Supplemental
      Agreement to Agreement for Sale and Purchase of Windrace, among the
      Company, Windrace, the Sellers and Exceed, dated July 27, 2009, attached
      as Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed with the
      Commission on July 27, 2009, incorporated herein by
    reference.10.2
                Investment
      Agreement for Sale and Purchase of Windrace, among Windrace, the Investors
      and Lin, dated July 27, 2009, attached as Exhibit 2.2 to the Company’s
      Current Report on Form 8-K, filed with the Commission on July 27, 2009,
      incorporated herein by reference.10.3
                Escrow Agreement,
      among Windrace, the Investors and Deacons, dated July 27, 2009, attached
      as Exhibit 2.3 to the Company’s Current Report on Form 8-K, filed with the
      Commission on July 27, 2009, incorporated herein by
    reference.10.4
                Letter
      Agreement dated September 9, 2009, attached as Exhibit 2.1 to the
      Company’s Current Report on Form 8-K, filed with the Commission on
      September 14, 2009, incorporated herein by
  reference.


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 193432.1
                    Certification
      of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.


23