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 June 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 þ  No o


As of
June 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 Statements
                
                3Consolidated
      Balance Sheets as of June 30, 2009 (unaudited) and December 31,
      2008
                
                3Consolidated
      Statements of Operations (unaudited) for the three and six months ended
      June 30, 2009 and 2008, and from August 21, 2006 (date of inception) to
      June 30, 2009
                
                4Consolidated
      Statements of Cash Flows (unaudited) for the six months ended June 30,
      2009 and 2008, and from August 21, 2006 (date of inception) to June 30,
      2009
                
                5Notes
      to Consolidated Financial Statements (unaudited)
                
                6Item
      2. Management’s Discussion and Analysis of Financial Condition and Results
      of Operations
                
                16Item
      3. Quantitative and Qualitative Disclosures about Market
    Risk
                
                20Item
      4. Controls and Procedures
                
                20PART
      II – OTHER INFORMATIONItem
      1. Legal Proceedings
                
                21Item
      1A. Risk Factors
                
                21Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
                
                21Item
      3. Defaults upon Senior Securities
                
                21Item
      4. Submission of Matters to a Vote of Security Holders
                
                21Item
      5. Other Information
                
                21Item
      6. Exhibits
                
                21SIGNATURES
                
                22INDEX
      TO EXHIBITS
                
                22Certification
      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
                                      
                                      
                                      AuditedJune
      30,
                                      
                                      
                                      December
      31,2009
                                      
                                      
                                      2008ASSETSCurrent
      AssetsCash
      and cash equivalents
                                      
                                      $
                                      307,769
                                      
                                      
                                      $
                                      45,878Interest
      receivable
                                      
                                      
                                      —
                                      
                                      
                                      
                                      1,248Prepaid
      expenses
                                      
                                      
                                      17,775
                                      
                                      
                                      
                                      16,333Income
      tax receivable
                                      
                                      
                                      2,000
                                      
                                      
                                      
                                      2,000Cash
      held in trust fund
                                      
                                      
                                      68,095,245
                                      
                                      
                                      
                                      68,533,339TOTAL
      ASSETS
                                      
                                      $
                                      68,422,789
                                      
                                      
                                      $
                                      68,598,798LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      LiabilitiesAccrued
      offering costs
                                      
                                      $
                                      413,066
                                      
                                      
                                      $
                                      413,066Accrued
      expenses
                                      
                                      
                                      623,752
                                      
                                      
                                      
                                      414,144Notes
      payable to stockholders
                                      
                                      
                                      700,000
                                      
                                      
                                      
                                      300,000Deferred
      underwriters’ fee
                                      
                                      
                                      2,415,000
                                      
                                      
                                      
                                      2,415,000TOTAL
      LIABILITIES
                                      
                                      
                                      4,151,818
                                      
                                      
                                      
                                      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
                                      
                                      
                                      (1,054,815)
                                      
                                      
                                      
                                      (269,198)Total
      stockholders’ equity
                                      
                                      
                                      44,509,058
                                      
                                      
                                      
                                      45,294,675TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
                                      
                                      $
                                      68,422,789
                                      
                                      
                                      $
                                      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
      21,2006April
      1,
                                    
                                    
                                    April
      1,
                                    
                                    
                                    January
      1,
                                    
                                    
                                    January
      1,
                                    
                                    
                                    (date
      of inception)2009
      to
                                    
                                    
                                    2008
      to
                                    
                                    
                                    2009
      to
                                    
                                    
                                    2008
      to
                                    
                                    
                                    to
      June 30,June
      30,
                                    
                                    
                                    June
      30,
                                    
                                    
                                    June
      30,
                                    
                                    
                                    June
      30,
                                    
                                    
                                    20092009
                                    
                                    
                                    2008
                                    
                                    
                                    2009
                                    
                                    
                                    2008
                                    
                                    
                                    (Cumulative)Interest
      income
                                    
                                    $
                                    6
                                    
                                    
                                    $
                                    233,975
                                    
                                    
                                    $
                                    658
                                    
                                    
                                    $
                                    688,260
                                    
                                    
                                    $
                                    1,095,460General
      & administrative expenses
                                    
                                    
                                    561,586
                                    
                                    
                                    
                                    258,909
                                    
                                    
                                    
                                    786,275
                                    
                                    
                                    
                                    493,884
                                    
                                    
                                    
                                    1,797,856Abandoned
      project costs
                                    
                                    
                                    —
                                    
                                    
                                    
                                    —
                                    
                                    
                                    
                                    —
                                    
                                    
                                    
                                    —
                                    
                                    
                                    
                                    349,262(Loss)
      profit before income taxes
                                    
                                    
                                    (561,580
                                    )
                                    
                                    
                                    (24,934
                                    )
                                    
                                    
                                    (785,617
                                    )
                                    
                                    
                                    194,376
                                    
                                    
                                    
                                    (1,051,658
                                    )Income
      tax provision
                                    
                                    
                                    —
                                    
                                    
                                    
                                    (10,041
                                    )
                                    
                                    
                                    —
                                    
                                    
                                    
                                    78,275
                                    
                                    
                                    
                                    3,157Net
      (loss) profit
                                    
                                    $
                                    (561,580
                                    )
                                    
                                    $
                                    (14,893
                                    )
                                    
                                    $
                                    (785,617
                                    )
                                    
                                    $
                                    116,101
                                    
                                    
                                    $
                                    (1,054,815
                                    )Net
      (loss) profit per share – basic and diluted
                                    
                                    $
                                    (0.05
                                    )
                                    
                                    $
                                    0.00
                                    
                                    
                                    $
                                    (0.07
                                    )
                                    
                                    $
                                    0.01
                                    
                                    
                                    $
                                    (0.16
                                    )Weighted
      average number of shares outstanding – basic and diluted
                                    
                                    
                                    10,500,000
                                    
                                    
                                    
                                    10,500,000
                                    
                                    
                                    
                                    10,500,000
                                    
                                    
                                    
                                    10,500,000
                                    
                                    
                                    
                                    6,473,341





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 June 30,June 30,
                                        
                                        
                                        June 30,
                                        
                                        
                                        20092009
                                        
                                        
                                        2008
                                        
                                        
                                        (Cumulative)Cash
      Flows from Operating ActivitiesNet
      (loss) profit
                                        
                                        $
                                        (785,617
                                        )
                                        
                                        $
                                        116,101
                                        
                                        
                                        $
                                        (1,054,815
                                        )Adjustments
      to reconcile net (loss) profit to net cash (used in) provided by operating
      activitiesChange
      in assets and liabilities:Accrued
      expenses
                                        
                                        
                                        209,608
                                        
                                        
                                        
                                        124,884
                                        
                                        
                                        623,752Accrued
      income taxes
                                        
                                        
                                        —
                                        
                                        
                                        
                                        72,968
                                        
                                        
                                        (2,000
                                        )Interest
      receivable
                                        
                                        
                                        1,248
                                        
                                        
                                        
                                        —
                                        
                                        
                                        —Prepaid
      expenses
                                        
                                        
                                        (1,442
                                        )
                                        
                                        
                                        —
                                        
                                        
                                        
                                        (17,775
                                        )Net
      cash (used in) provided by operating activities
                                        
                                        
                                        (576,203
                                        )
                                        
                                        
                                        313,953
                                        
                                        
                                        
                                        (450,838
                                        )Net
      Cash provided by (used in) Investing ActivitiesCash
      held in trust fund
                                        
                                        
                                        438,094
                                        
                                        
                                        
                                        (267,857
                                        )
                                        
                                        
                                        (68,095,245
                                        )Cash
      Flows from Financing ActivitiesProceeds
      from issuance of common stock
                                        
                                        
                                        —
                                        
                                        
                                        
                                        —
                                        
                                        
                                        
                                        25,000Proceeds
      from the issuance of notes payable to stockholders
                                        
                                        
                                        400,000
                                        
                                        
                                        
                                        —
                                        
                                        
                                        
                                        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
                                        
                                        
                                        
                                        (277,348
                                        )
                                        
                                        
                                        68,853,852Net
      increase (decrease) in cash
                                        
                                        
                                        261,891
                                        
                                        
                                        
                                        (231,252
                                        )
                                        
                                        
                                        307,769Cash
      and cash equivalents, beginning of the period
                                        
                                        
                                        45,878
                                        
                                        
                                        
                                        269,040
                                        
                                        
                                        
                                        —Cash
      and cash equivalents, end of the period
                                        
                                        $
                                        307,769
                                        
                                        
                                        $
                                        37,788
                                        
                                        
                                        $
                                        307,769Supplemental
      schedule of non-cash financing activities:Accrual
      of deferred offering costs
                                        
                                        $
                                        —
                                        
                                        
                                        $
                                        —
                                        
                                        
                                        $
                                        542,879Deferred
      offering costs advanced by stockholders
                                        
                                        $
                                        —
                                        
                                        
                                        $
                                        —
                                        
                                        
                                        $
                                        20,244Deferred
      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 June 30, 2009 and for the period ended June
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 June 30,
2009 and the results of their operations and cash flows for the periods ended
June 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 effect a Business
Combination. Upon closing of the Offering, $7.92 per Unit of the proceeds from
the Offering, net of all applicable discounts and commissions but inclusive of
$0.28 per Unit in deferred underwriting compensation and the proceeds from the
sale of the Insider Warrants (as defined below) were deposited and held in a
trust account for the benefit of the Company. The corpus of the Trust Account is
invested in United States “government securities” within the meaning of
Section 2(a)(16) of the Investment Company Act having a maturity of 180
days or less or in money market funds meeting certain conditions under Rule 2a-7
promulgated under the Investment Company Act until the earlier of (i) the
consummation of its first Business Combination or (ii) liquidation of
the Company. The placing of funds in the Trust Account may not protect those
funds from third party claims against the Company. Although the Company will
seek to have all vendors, prospective target businesses or other entities it
engages execute agreements with the Company waiving any right, title, interest
or claim of any kind in or to any monies held in the Trust Account, there is no
guarantee that they will execute such agreements.




6




The
Company’s executive officers and Dr. Jianming Yu, one of the Company’s
directors, and certain entities controlled by these executive officers and
Dr. Jianming Yu have agreed that they will be personally liable under
certain circumstances to ensure that the proceeds in the Trust Account are not
reduced by the claims of target businesses or vendors or other entities that are
owed money by the Company for services rendered or contracted or for products
sold to the Company. However, there can be no assurance that they will be able
to satisfy those obligations. The remaining net proceeds (not held in the Trust
Account) may be used to pay for business, legal and accounting due
diligence on prospective acquisitions and continuing general and administrative
expenses. Additionally, up to an aggregate of $1,350,000 of interest earned on
the Trust Account balance, net of taxes, may be released to the Company to fund
working capital requirements, of which $1,090,902 has been released to the
Company as of June 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 a 100% owned BVI subsidiary, Exceed
Company Limited (“Exceed”) 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. During the period, as more fully
described under note 10, Exceed the wholly-owned subsidiary of the Company,
along with the Company, has entered into an agreement to acquire a company in
the People’s Republic of China.





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 (“Share 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 the People’s Republic of China (“PRC”). 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.




7




Summary
of Significant Accounting Policies




Development
stage company:




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




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 in a financial institution, which at June 30, 2009
had a total balance of $307,769.  Although the balance slightly exceeded
the Federal Depository Insurance Coverage of $250,000 through June 30,
2009,  the Company has not experienced any loss on these accounts and
management believes the Company is not exposed to significant risks on such
accounts.




Fair
value of financial instruments:


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




Use
of estimates:


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




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 June 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 June 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 FSP No.
FAS 157-3, “Determining the Fair Value of a Financial Asset in a Market That is
Not Active.” This FSP clarifies the application of SFAS No. 157 in a market that
is not active. The FSP addresses how management should consider measuring fair
value when relevant observable 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 June 30, 2009 through the filing of this report with the
SEC on August 14, 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 2 and that were charged to
stockholders’ equity upon the receipt of the capital raised.





The
Company’s legal counsel agreed to cap legal fees due by the Company at the
closing of the Offering to $350,000, provided that any excess fees shall be paid
by the Company upon the completion of a Business Combination. Total legal fees
payable included in accrued offering costs directly related to the Offering were
$409,908 as of June 30, 2009 and December 31, 2008.





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




11




Note
5 – Notes Payable to Stockholders


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





In April 2007, the Company issued a
$80,000unsecured
promissory note to 2020 International Capital Group Limited, the beneficial
owner of a majority of the outstanding shares of stock of the
Companyat the time such
promissory note was issued. The note payable was non-interest
bearing and was payable on
the earlier of April 5, 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 which time 2020 International Capital Group
Limited demands full or partial payment of any balance outstanding. The proceeds
from the notes have been used by the Company for working capital
purposes.





Subsequent
to June 30, 2009, the Company reached an agreement with 2020 International
Capital Group Limited to extend the due date of the first $150,000 promissory
note mentioned  above 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 $45,000 for each of the six months ended June 30, 2009 and
2008, respectively, and $150,000 from August 21, 2006 (date of
inception) to June 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 June 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:


August
      21, 2006,Six
      months
                                  
                                  
                                  Six
      months
                                  
                                  
                                  (date
      of inception)Ended
                                    June
      30, 2009
                                  
                                  
                                  Ended
                                    June
      30, 2008
                                  
                                  
                                  to
      June 30, 2009
                                    (Cumulative)(unaudited)
                                  
                                  
                                  (unaudited)
                                  
                                  
                                  (unaudited)Current:Federal
      taxes
                                  
                                  $
                                  —
                                  
                                  
                                  $
                                  66,087
                                  
                                  
                                  $
                                  2,360State
      taxes
                                  
                                  
                                  —
                                  
                                  
                                  
                                  12,188
                                  
                                  
                                  
                                  435Total
      provision for income taxes
                                  
                                  $
                                  —
                                  
                                  
                                  $
                                  78,275
                                  
                                  
                                  $
                                  2,795





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


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





As of
June 30, 2009, unused net operating losses equal to approximately $1,055,000 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 June 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 effect a
Business Combination if the public stockholders owning up to approximately
29.99% of the shares sold in the Offering exercise their redemption
rights.





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.




13




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 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 the PRC. 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 PRC 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 PRC 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 stated 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 Company will not be able to mail the registration statement to
its stockholders and schedule the special stockholder meeting to consider the
business combination until the SEC declares the Form S-4 registration statement
effective.





14




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 in accordance with its Articles of Incorporation on
November 8, 2009.




Note
12 – Subsequent Events


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.





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.  On the Closing, Exceed shall issue to the Investors that
number of Exceed ordinary shares equal to $27,500,000 divided by $7.58 per
share.  On the date being six months after the date of the Closing,
Windrace shall sell to the Investors up to 2,500,000 warrants for the purchase
of common stock of the Company (“Warrants”), which Windrace has purchased in the
open market. The sale of Warrants to the Investors shall be paid for using the
initial investment installment of $2,500,000. In the event that less than
2,500,000 Warrants are sold to the Investors or there is a residual balance of
the initial investment installment after the sale of the Warrants to the
Investors, Exceed shall issue to the Investors that number of Exceed ordinary
shares equal to the balance of unused funds divided by $7.58 per share. The
maximum amount of Exceed ordinary shares issuable to the Investors assuming no
purchase of Warrants by the Investors, 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.  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 Supplemental Agreement further provides  that
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 determined to be $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.





15




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 $68.4 million from our
Offering.





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





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





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 the PRC. 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.




16




TRANSACTION
SUMMARY





If
stockholder approval is obtained, Exceed will acquire all of the ordinary shares
of Windrace pursuant to the Share Purchase Agreement, dated May 8, 2009.
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 Share 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 Share Purchase
Agreement, at least 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 for either 2009 or 2010, all shares to be released
for that period will be deferred until the next annual audit. If the earnings
target of $64,333,821 is 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.
If the earnings target for 2011 is not met, the number of shares then held in
escrow would be reduced and cancelled by the same percentage as the shortfall
from the earnings target for 2011, and the balance would be released to Windrace
shareholders. The Share 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 Share 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 Share 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 stockholders of the Company.





Subsequent
to the end of the quarter, on July 27, 2009, the parties to the Share Purchase
Agreement entered into a Supplemental Agreement amending the Share 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 Share
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 PRC 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 PRC 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.




17




A summary
of the material items of acquisition was also stated 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 Company will not be able to mail the registration statement to
its stockholders and schedule the special stockholders meeting to consider the
business combination until the SEC declares the Form S-4 registration statement
effective.





SELECTED
HISTORICAL FINANCIAL DATA OF WINDRACE





A summary
of Windrace’s selected historical financial data stated in the Form S-4 filed
with the SEC, as amended, is shown in the following tables.  The
information is presented in Renminbi (RMB) and is derived from the unaudited
consolidated financial statements as of and for the years ended December 31,
2004 and 2005 and the three months ended March 31, 2008 and 2009, and the
audited consolidated financial statements as of and for the years ended December
31, 2006, 2007 and 2008 prepared in accordance with International Financial
Reporting Standards as issued by the International Accounting Standards
Board.





Year
      ended December 31,
                                
                                Three
      months ended
                                  March
      31,2004
                                
                                2005
                                
                                2006
                                
                                2007
                                
                                2008
                                
                                2008
                                
                                2009(RMB
      in thousands)Statement
      of income dataRevenue
                                
                                
                                151,695
                                
                                
                                
                                301,554
                                
                                
                                
                                687,569
                                
                                
                                
                                1,296,402
                                
                                
                                
                                1,820,282
                                
                                
                                
                                478,951
                                
                                
                                
                                390,967Cost
      of sales
                                
                                
                                (127,839
                                )
                                
                                
                                (241,242
                                )
                                
                                
                                (511,068
                                )
                                
                                
                                (959,526
                                )
                                
                                
                                (1,323,262
                                )
                                
                                
                                (351,990
                                )
                                
                                
                                (282,451
                                )Gross
      profit
                                
                                
                                23,856
                                
                                
                                
                                60,312
                                
                                
                                
                                176,501
                                
                                
                                
                                336,876
                                
                                
                                
                                497,020
                                
                                
                                
                                126,961
                                
                                
                                
                                108,516Other
      income and gains
                                
                                
                                34
                                
                                
                                
                                214
                                
                                
                                
                                235
                                
                                
                                
                                889
                                
                                
                                
                                1,188
                                
                                
                                
                                107
                                
                                
                                
                                114Selling
      and distribution costs
                                
                                
                                (18,031
                                )
                                
                                
                                (34,520
                                )
                                
                                
                                (76,560
                                )
                                
                                
                                (137,077
                                )
                                
                                
                                (225,752
                                )
                                
                                
                                (46,711
                                )
                                
                                
                                (40,486
                                )Administrative
      expenses
                                
                                
                                (2,850
                                )
                                
                                
                                (6,208
                                )
                                
                                
                                (15,541
                                )
                                
                                
                                (29,984
                                )
                                
                                
                                (29,205
                                )
                                
                                
                                (7,111
                                )
                                
                                
                                (7,817
                                )Aborted
      IPO expenses
                                
                                
                                —
                                
                                
                                
                                —
                                
                                
                                
                                —
                                
                                
                                
                                —
                                
                                
                                
                                (31,382
                                )
                                
                                
                                —
                                
                                
                                
                                —Research
      and development expenses
                                
                                
                                (693
                                )
                                
                                
                                (2,009
                                )
                                
                                
                                (5,489
                                )
                                
                                
                                (12,784
                                )
                                
                                
                                (17,649
                                )
                                
                                
                                (3,725
                                )
                                
                                
                                (5,466
                                )Finance
      costs
                                
                                
                                (321
                                )
                                
                                
                                (1,315
                                )
                                
                                
                                (1,332
                                )
                                
                                
                                (1,352
                                )
                                
                                
                                (23,511
                                )
                                
                                
                                (521
                                )
                                
                                
                                (8,533
                                )Profit
      before tax
                                
                                
                                1,995
                                
                                
                                
                                16,474
                                
                                
                                
                                77,814
                                
                                
                                
                                156,568
                                
                                
                                
                                170,709
                                
                                
                                
                                69,000
                                
                                
                                
                                46,328Tax
                                
                                
                                —
                                
                                
                                
                                (1,990
                                )
                                
                                
                                (9,974
                                )
                                
                                
                                (21,783
                                )
                                
                                
                                (2,181
                                )
                                
                                
                                (277
                                )
                                
                                
                                —Profit
      for the year
                                
                                
                                1,995
                                
                                
                                
                                14,484
                                
                                
                                
                                67,840
                                
                                
                                
                                134,785
                                
                                
                                
                                168,528
                                
                                
                                
                                68,723
                                
                                
                                
                                46,328Income
      from continuing operations per common share
                                
                                
                                N/A
                                
                                
                                
                                N/A
                                
                                
                                
                                N/A
                                
                                
                                
                                N/A
                                
                                
                                
                                1.83
                                
                                
                                
                                N/A
                                
                                
                                
                                0.5Dividend
      declared per common share
                                
                                
                                —
                                
                                
                                
                                —
                                
                                
                                
                                —
                                
                                
                                
                                —
                                
                                
                                
                                —
                                
                                
                                
                                —
                                
                                
                                
                                —




18





As
      of December 31,
                  
                  As
      of March 31,2004
                  
                  2005
                  
                  2006
                  
                  2007
                  
                  2008
                  
                  2008
                  
                  2009(RMB
      in thousands)Balance
      sheet dataCurrent
      assets
                  
                  
                  46,494
                  
                  
                  
                  96,954
                  
                  
                  
                  163,015
                  
                  
                  
                  281,381
                  
                  
                  
                  498,644
                  
                  
                  
                  347,891
                  
                  
                  
                  631,828Non-current
      assets
                  
                  
                  21,776
                  
                  
                  
                  16,041
                  
                  
                  
                  139,169
                  
                  
                  
                  315,630
                  
                  
                  
                  316,743
                  
                  
                  
                  311,899
                  
                  
                  
                  312,345Current
      liabilities
                  
                  
                  55,222
                  
                  
                  
                  85,288
                  
                  
                  
                  206,173
                  
                  
                  
                  281,784
                  
                  
                  
                  489,549
                  
                  
                  
                  275,411
                  
                  
                  
                  569,288Shareholders’
      equity
                  
                  
                  13,049
                  
                  
                  
                  27,707
                  
                  
                  
                  96,011
                  
                  
                  
                  315,227
                  
                  
                  
                  325,838
                  
                  
                  
                  384,379
                  
                  
                  
                  374,885Long-term
      liabilitiesConstruction
      of factory buildings
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  176,480
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —Redeemable
      preferred shares
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  272,432
                  
                  
                  
                  —
                  
                  
                  
                  270,039




Results
of Operations and Known Trends or Future Events




For the
three months ended June 30, 2009 and 2008, interest earned on the Trust Account
was $6 and $233,975, respectively; resulting in net losses of $561,580 and
$14,893, respectively.




For the
six months ended June 30, 2009 and 2008, interest earned on the Trust Account
was $658 and $688,260, respectively; resulting in a net loss of $785,617 and a
net profit of $116,101, 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




On
October 15, 2008, in consideration of the current market conditions, the Company
directed LaSalle Global Trust Services to transfer the funds held in trust from
a money market fund that invests in U.S. Government obligations into the Dreyfus
Treasury Prime Cash Management Fund, which invests solely in U.S. treasuries.
The balance in the Trust Account as of June 30, 2009 was
$68,095,245.





As of
June 30, 2009, we had operating cash of $307,769, compared to $45,878 at
December 31, 2008. The increase was primarily due to the withdrawal of $434,000
from the Trust Account during the second quarter of 2009.  Until the
initial public offering, as described above, our only source of liquidity was
two loans made by two stockholders. These loans were fully repaid as of June 30,
2009. Our liabilities are mainly deferred and accrued offering costs related to
our initial public offering payable upon completion of a Business Combination
and notes payable to 2020 International Company Limited, as discussed in
Note 5 to our consolidated financial statements. Given our available
operating cash of $307,769 and our projected minimal interest income, to
complete a Business Combination the Company expects to require additional
financing for working capital and to pay for professional expenses associated
with the pending Business Combination.




19




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”.





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 June 30, 2009 was
$68,095,245.




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.




20




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:





31.1 -
Section 302 Certification by Chief Executive Officer and President





31.2 -
Section 302 Certification by Chief Financial Officer and Treasurer





32.1 -
Section 906 Certification by Chief Executive Officer and President





32.2 -
Section 906 Certification by Chief Financial Officer and
Treasurer


21




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: 
      August 14, 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.




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
  2002.32.2
            
            Certification
      of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.


22