U.S.
SECURITIES AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 Form
10-K/A
 
 (Mark
One)
 
 |X|
ANNUAL REPORT UNDER SECTION 13 OR 15(d)
 OF
THE SECURITIES EXCHANGE ACT OF 1934
 
 For
the fiscal year ended December 31, 2008
 
 |_|
TRANSITION REPORT UNDER SECTION 13 OR 15(d)
 OF
THE SECURITIES EXCHANGE ACT OF 1934
 
 For
the transition period from ______________ to ______________
 
 Commission
File Number 000-53075
 _______________________________________________
 
 DATONE
, INC.
 
 (Exact
name of registrant as specified in its charter)
 ______________________________________________
 
 Delaware
              
              16-1591157(State
      or other jurisdiction of
              
              (I.R.S.
      Employerincorporation
      or organization)
              
              Identification
      No.)7325
      Oswego RoadLiverpool
      , N.Y.
              
              13090(Address
      of principal executive offices)
              
              (zip
      code)
 
 Registrant's
      telephone number, including area code:
                
                (315)
      451-7515
 
 _____________________________________________
 
 Securities
registered under Section 12(b) of the Exchange Act:
 
 None.
 
 Securities
registered under Section 12(g) of the Exchange Act:
 
 Common
Stock, $.0001 par value per share
 
 (Title
of Class)
   1
  
 Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes [  ]  No [X]
  Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes [  ]  No
[X]
  Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.  Yes [X]  No [  ]
 
 Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405) is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.  [  ]
  Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.  (Check one):
 
 Large
      accelerated filer [  ]
              Accelerated
      filer [  ]Non-accelerated
      filer [  ]
              Smaller
      reporting company [ X ](Do
      not check if a smaller reporting company)
  Indicate
by checkmark whether the registrant is a shell company (as defined in Rule 12b-2
of the Act). Yes
[  ]   No [ X ]
  The
Company has no non-voting common stock.  The aggregate market value of
the Company's voting common stock held by non-affiliates as of January 29, 2010 could not be determined because there
have been no recent sales of such stock and there is no established public
trading market.
  As
of January 29, 2010 ,
4,963,226 shares of the Company's $.0001 par value common stock were issued and
outstanding.
  State
issuer’s revenues for its most recent fiscal year: $121,436.
  As
of January 29, 2010 , there were 4,963,226 shares of
common stock outstanding.
  Documents
incorporated by reference: None.
  Transitional
Small Business Disclosure Format: Yes [  ]    No [
X ]
  
  2
  TABLE
OF CONTENTS
 
 PagePART
      IItem
      1.
              Business
              4Item
      1A.
              Risk
      Factors
              8Item
      2.
              Properties
              11Item
      3.
              Legal
      Proceedings
              11Item
      4.
              Submission
      of Matters to a Vote of Security Holders
              11PART
      IIItem
      5.
              Market
      for Registrant’s Related Stockholder Matters and Small Business Issuer
      Purchases of Equity Securities
              12Item
      6.
              Selected
      Financial Data
              12Item
      7.
              Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
              12Item
      7A.
              Quantitive
      and Qualitative Disclosures About Market Risk
              15Item
      8.
              Financial
      Statements and Supplementary Data
              16Item
      9.
              Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
              28Item 9A(T).
              Controls
      and Procedures
              28Item
      9B.
              Other
      Information
              28PART IIIItem
      10.
              Directors,
      Executive Officers and Corporate Governance
              28Item
      11.
              Executive
      Compensation
              29Item
      12.
              Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
              31Item
      13.
              Certain
      Relationships and Related Transactions, and Director
      Independence
              31Item
      14.
              Principal
      Accountant Fees and Services
              31Item
      15.
              Exhibits
      and Financial Statement Schedules
              32Signatures
              
              33
  
  3
 
  ITEM
1.  BUSINESS.
  GENERAL
OVERVIEW
  Datone,
Inc. was originally incorporated on August 9, 2000 under the laws of the State
of Delaware.  We operated as a wholly-owned subsidiary of USIP. On
August 24, 2006 USIP decided to spin-off it’s subsidiary companies one of which
was Datone Inc. On February 1,   2008 Datone filed a Form
10-SB registration statement. On November 13,
2008 , Datone went effective.
  SMART
PAYPHONE TECHNOLOGY
  Our
payphones utilize “smart” technology which provides oral calling instructions,
detects and counts coins deposited during each call, informs the caller at
certain intervals of the time remaining on each call, identifies the need for
and the amount of an additional deposit in order to continue the call, and
provides other functions associated with the completion of calls. Through the
use of programmable memory chips, the payphones can also be programmed and
reprogrammed from our central computer facilities to update rate information or
to direct different types of calls to particular carriers. Our payphones can
also distinguish coins by size and weight, report to our central host computer
the total amount of coin in the coin box, perform self-diagnosis and
automatically report problems to a pre-programmed service number.
  CUSTOMER
SERVICE
  The
technology we use enables us to (i) respond quickly to equipment malfunctions
and (ii) maintain accurate records of payphone activity, which can be verified
by customers. We strive to minimize “downtime” on our payphones by identifying
service problems as quickly as possible. We employ both advanced
telecommunications technology and trained field technicians as part of our
commitment to provide superior customer service. The records generated through
our technology also allow for more timely and accurate payment of commissions to
Location Owners.
  OPERATIONS
  As
of December 31, 2008, we owned and operated approximately
148 payphones in New York.
  COIN
CALLS
  Our
payphones generate coin revenues primarily from local calls. Historically, the
maximum rate that could be charged for local calls was generally set by state
regulatory authorities and in most cases was $0.25 through October 6, 1997. We
charge $0.35, and $0.50. In ensuring “fair compensation” for all calls, the FCC
determined that local coin rates from payphones should be generally deregulated
by October 7, 1997, but provided for possible modifications or exemptions from
deregulation upon a detailed demonstration by an individual state that there are
market failures within the state that would not allow market-based rates to
develop. On July 1, 1997, a federal court issued an order that upheld the FCC's
authority to deregulate local coin call rates. In accordance with the FCC's
ruling and the court order, certain payphones owners, began to increase rates
for local coin calls from $0.25 to $0.35.
  Long
distance carriers that have contracted to provide transmission services to our
payphones typically carry long distance coin calls. We pay a charge to the
long-distance carrier each time the carrier transports a long-distance call for
which we receive coin revenue from an end user.
  NON-COIN
CALLS
  We
also receive revenue from non-coin calls made from our payphones. Traditional
non-coin calls include credit card, calling card, prepaid calling card, collect
and third party billed calls where the caller dials “0” plus the number or
simply dials “0” for an operator. The services needed to complete a non-coin
call include providing an automated or live operator to answer the call,
verifying billing information, validating calling cards and credit cards,
routing and transmitting the call to its destination, monitoring the call's
duration and determining the charge for the call, and billing and collecting the
applicable charge. We have contracted with operator service providers to handle
these calls and perform all associated functions, while paying us a commission
on the revenues generated.
  4
  REGULATIONS
AND DIAL-AROUND COMPENSATION
  On
September 20, 1996 the Federal Communications Commission (“FCC”) adopted rules,
which became effective November 7, 1996, initially mandating dial-around
compensation for both access code calls and 800 subscriber calls at a flat rate
of $45.85 per payphone per month. Commencing October 7, 1997 and ending October
6, 1998 the $45.85 per payphone per month rate was to transition to a per-call
system at the rate of $0.35 per call. Several parties challenged certain of the
FCC regulations including the dial-around compensation rate. On July 1, 1997 a
federal court vacated certain portions of the FCC's 1996 Payphone Order,
including the dial-around compensation rate.
  In
accordance with the court's mandate, on October 9, 1997 the FCC adopted a second
order, establishing a rate of $0.284 per call for the first two years of
per-call compensation (October 7, 1997 through October 6, 1999). An
inter-exchange Carriers (“IXC”) is a common carrier providing long distance
connections between local telephone areas, and they include AT&T, MCI and
Sprint. Under the 1997 Payphone Order IXC's were required to make the per-call
payments to payphone service providers, beginning October 7, 1997. On May 15,
1998 the court again remanded the per-call compensation rate to the FCC for
further explanation without vacating the $0.284 default rate.
  On
February 4, 1999 the FCC released a third order in which the FCC abandoned its
efforts to derive a “market based” default dial-around compensation rate and
instead adopted a “cost based” rate of $0.24 per dial-around call. This rate
became effective on April 21, 1999 and served as a default rate through January
31, 2002.
  In
a decision released January 31, 2002 the FCC partially addressed the remaining
issues concerning the “true-up” required for interim and intermediate period
compensation. The FCC adjusted the per-call rate to $0.229, for the interim
period only, to reflect a different method of calculating the delay in IXC
payments to payphone services provider's (“PSPs”) for the interim period, and
determined that the total interim period compensation should be $33.89 per
payphone per month ($0.229 times an average of 148 calls per payphone per
month). A payphone service provider is a Company that installs and monitors
payphones. The 2002 Payphone Order deferred to a later order its determination
of the allocation of this total compensation rate among the various carriers
required to pay compensation for the interim period.
  On
October 23, 2002 the FCC released its Fifth Order on Reconsideration and Order
on Remand, which resolved the remaining issues surrounding the
interim/intermediate period true-up and specifically how monthly per-phone
compensation owed to PSPs is to be allocated among the relevant dial-around
carriers. The Interim Order also resolves how certain offsets to such payments
will be handled and a host of other issues raised by parties in their remaining
FCC challenges to the 1999 Payphone Order and the 2002 Payphone Order. In the
Interim Order the FCC ordered a true up for the interim period and increased the
adjusted monthly rate to $35.22 per payphone per month, to compensate for the
three-month payment delay inherent in the dial-around payment system. The new
rate of $35.22 per payphone per month is a composite rate, allocated among
approximately five hundred carriers based on their estimated dial-around traffic
during the interim period. The FCC also ordered true-up requiring PSPs, to
refund an amount equal to $0.046 (the difference between the old $0.284 rate and
the current $0.238 rate) to each carrier that compensated the PSP on a per-call
basis during the intermediate period. Interest on additional payments and
refunds is to be computed from the original payment date, at the IRS prescribed
rate applicable to late tax payments. As of this date, dial around compensation
to PSP’s is $.49 per call. As a result of these dial around compensation rules,
we received approximately $52,696 and $ 62,627 in dial-around compensation during 200 8 and 2007, respectively .
  Our
objectives are to continue to review our overall cost structure, improve route
density and service quality, monitor and take action on our under performing
telephones. We have implemented the following strategy to meet our
objectives.
  5
  CUSTOMERS,
SALES AND MARKETING
  The
Location Owners with whom we contract are a diverse group of small and medium
sized businesses, which are frequented by individuals needing payphone access.
The majority of our payphones are located at convenience stores, truck stops,
service stations, grocery stores, colleges and hospitals.
  Before
we install a phone, we search for, and utilize historical revenue information
about each payphone location. In locations where historical revenue information
is not available, we rely on our site survey to examine geographic factors,
population density, traffic patterns and other factors in determining whether to
install a payphone. We recognize, however, that recent changes in payphone
traffic volumes and usage patterns being experienced on an industry-wide basis
warrant a continued assessment of the location and deployment of our payphones.
Generally, we pay the Local Exchange Carrier (“LEC”)   approximately $40 per month per phone
line.
  SERVICE
AND EQUIPMENT SUPPLIERS
  Our
primary suppliers provide payphone components, local line access, long-distance
transmission and operator services. To promote acceptance by end users
accustomed to using RBOC or Local Exchange Carrier (“LEC”) owned payphone
equipment, we utilize payphones designed to be similar in appearance and
operation to payphones owned by LEC. A LEC is a local phone company, which can
be either a call operating company or an integrated company which traditionally
had the exclusive franchise rights and responsibilities to provide local
transmission and switching services.
  We
purchase circuit boards from various manufacturers for repair and installation
of our payphones. We primarily obtain local line access from various LECs,
including Verizon, Windstream. and various other incumbent and competitive
suppliers of local line access. Generally, we are charged approximately $40 per
month per payphone, on the average, for local line access. New sources of local
line access are expected to emerge as competition continues to develop in local
service markets. Long-distance services are provided to our company by various
long-distance and operator service providers, including AT&T,
Legacy,  and others.
  We
expect the basic availability of such products and services to continue in the
future; however, the continuing availability of alternative sources cannot be
assured. Although we are not aware of any current circumstances that would
require us to seek alternative suppliers for any material portion of the
products or services used in the operation of our business, transition from our
existing suppliers, if necessary, could have a disruptive effect on our
operations and could give rise to unforeseen delays and/or
expenses.
  ASSEMBLY
AND REPAIR OF PAYPHONES
  We
assemble and repair payphone equipment for our use. The assembly of payphone
equipment provides us with technical expertise used in the operation, service,
maintenance and repair of our payphones. We assemble, refurbish or replace
payphones from standard payphone components either obtained from our inventory
or purchased from component manufacturers. These components include a metal
case, an integrated circuit board incorporating a microprocessor, a handset and
cord, and a coin box and lock. On the occasion when components are not available
from inventory, we can purchase the components from several suppliers. We do not
believe that the loss of any single supplier would have a material adverse
effect on our assembly operations.
  Our
payphones comply with all material regulatory requirements regarding the
performance and quality of payphone equipment and have all of the operating
characteristics required by the applicable regulatory authorities, including
free access to local emergency (911) telephone numbers, dial-around access to
all available carriers, and automatic coin return capability for incomplete
calls.
  TECHNOLOGY
  The
payphone equipment we install makes use of microprocessors to provide voice
prompted calling instructions, detect and count coin deposits during each call,
inform the caller at certain intervals of the time remaining on each call,
identify the need for and the amount of an additional deposit and other
functions associated with completion of calls. Through the use of memory chips,
our payphones can also be programmed and reprogrammed from our central computer
facilities to update rate information or to direct different kinds of calls to
particular carriers.
  6
  Our
payphones can distinguish coins by size and weight, report to a remote location
the total coins in the coin box, perform self-diagnosis and automatically report
problems to a pre-programmed service number, and immediately report attempts at
vandalism or theft. Many of our payphones operate on power available from the
telephone lines, thereby avoiding the need for and reliance upon an additional
power source at the installation location.
  We
provide all technical support required to operate the payphones, such as
computers and software at our headquarters in Liverpool , N.Y. Our assembly and
repair support provides materials, equipment, spare parts and accessories to
maintain our payphones.
  MAJOR
CUSTOMERS
  We received approximately 95% of dial-around and commissions
revenue from two providers in 2007 and 2008.
  COMPETITION
  We
compete for payphone locations directly with RBOCs, LECs and other IPPs. We also
compete, indirectly, with long-distance companies, which can offer Location
Owners commissions on long-distance calls made from LEC-owned payphones. We
compete with LECs and long-distance companies who may have substantially greater
financial, marketing and other resources.
  We
believe that our principal competition is from providers of wireless
communications services for both local and long distance traffic. Certain
providers of wireless communication services have introduced rate plans that are
competitively priced with certain of the products offered by us, and have
negatively impacted the usage of payphones throughout the nation.
  We
believe that the competitive factors among payphone providers are (1) the
commission payments to a Location Owner, (2) the ability to serve accounts with
locations in several LATAs or states, (3) the quality of service and the
availability of specialized services provided to a Location Owner and payphone
users, and (4) responsiveness to customer service needs. We believe that we are
currently competitive in each of these areas.
  Additionally,
a number of domestic IPPs continue to experience financial difficulties from
various competitive and regulatory factors impacting the pay telephone industry
generally, which may impair their ability to compete prospectively. We believe
that these circumstances create an opportunity for us to obtain new location
agreements and reduced site commissions going forward, however, this may not
occur. There are no guarantees that we will be able to obtain new location
agreements that are advantageous to our company. Also, in view of this
competitive environment, we will seek opportunities to maximize shareholder
value through acquisitions, and mergers with other companies and businesses that
present attractive opportunities for us.
  We
compete with long-distance carriers that provide dial-around services that can
be accessed through our payphones. Certain national long-distance operator
service providers and prepaid calling card providers have implemented extensive
advertising promotions and distribution schemes which have increased dial-around
activity on payphones owned by LECs and IPPs, including our company, thereby
reducing traffic to our primary providers of long-distance service. While we do
receive compensation for dial-around calls placed from our payphones, regulatory
efforts are underway to improve the collection system and provide us with the
ability to collect that portion of dial-around calls that are owed.
  OUR
EMPLOYEES
  Our
President, Craig Burton, is our only full time employee. In addition, we also
hire advisers and temporary employees on an as needed basis. We may, from time
to time, supplement our regular work force as necessary with temporary and
contract personnel. We have no part-time employees at this time.  None
of our employees are represented by a labor union. We believe we have a good
relationship with our employees.
  7
  A
NOTE ABOUT FORWARD-LOOKING STATEMENTS
  This
report (including the foregoing “Description of Business” and the section below
entitled “Management’s Discussion and Analysis of Financial Condition and
Results of Operations”) contains forward-looking statements that involve risks
and uncertainties. You should exercise extreme caution with respect to all
forward-looking statements contained in this report. Specifically, the following
statements are forward-looking:
  •
statements regarding our overall strategy for expansion of our company,
including without limitation our intended markets and future
products;
  •
statements regarding our research and development efforts;
  •
statements regarding the plans and objectives of our management for future
operations, including, without limitation, plans to explore other non
telecommunication business along with the size and nature of the costs we expect
to incur and the people and services we may employ;
  •
statements regarding the future of our company, our competition or regulations
that may affect us;
  •
statements regarding our ability to compete with third parties;
  •
any statements using the words “anticipate,” “believe,” “estimate,” “expect,”
“intend,” and similar words; and
  •
any statements other than historical fact.
  We
believe that it is important to communicate our future expectations to our
shareholders. Forward-looking statements reflect the current view of management
with respect to future events and are subject to numerous risks, uncertainties
and assumptions, including, without limitation, the factors listed in “Risks
Associated with Our Business.” Although we believe that the expectations
reflected in such forward-looking statements are reasonable, we can give no
assurance that such expectations will prove to be correct. Should any one or
more of these or other risks or uncertainties materialize or should any
underlying assumptions prove incorrect, actual results are likely to vary
materially from those described in this report. There can be no assurance that
the projected results will occur, that these judgments or assumptions will prove
correct or that unforeseen developments will not occur.
  Any
person or entity may read and copy our reports filed with the Securities and
Exchange Commission at the SEC’s Public Reference Room at 100 F Street NE,
Washington, D.C. 20549. The public may obtain information on the operation of
the Public Reference Room by calling the SEC toll free at 1-800-SEC-0330. The
SEC also maintains an Internet site at HTTP://WWW.SEC.GOV
where reports, proxies and informational statements on public companies may be
viewed by the public.
  ITEM 1A.  RISK FACTORS
  UNLESS
WE CAN REVERSE OUR HISTORY OF LOSSES, WE MAY HAVE TO DISCONTINUE
OPERATIONS.
  If
we are unable to achieve or sustain profitability, or if operating losses
increase in the future, we may not be able to remain a viable company and may
have to discontinue operations. Our expenses have historically exceeded our
revenues and we have had losses in all fiscal years of operation, including
those in fiscal years 2007 through 2008, and the losses are projected to
continue in 2009. Our net losses were $14,204 and $118,791 for the fiscal years ended 2007 and 2008
respectively.
  WE
MAY NOT SUCCEED OR BECOME PROFITABLE.
  We
will need to generate significant revenues to achieve profitability and we may
be unable to do so. Even if we do achieve profitability, we may not be able to
sustain or increase profitability in the future. We expect that our expenses
will continue to increase and there is no guarantee that we will not experience
operating losses and negative cash flow from operations for this fiscal year or
for the foreseeable future. If we do not achieve or sustain profitability, then
we may be unable to continue our operations.
  8
   WE
WILL NEED ADDITIONAL CAPITAL FINANCING IN THE FUTURE.
  We
may be required to seek additional financing in the future to respond to
increased expenses or shortfalls in anticipated revenues, accelerate product
development and deployment, respond to competitive pressures, develop new or
enhanced products, or take advantage of unanticipated acquisition opportunities.
We cannot be certain we will be able to find such additional financing on
reasonable terms, or at all. If we are unable to obtain additional financing
when needed, we could be required to modify our business plan in accordance with
the extent of available financing.
  IF
WE ENGAGE IN ACQUISITIONS, WE MAY EXPERIENCE SIGNIFICANT COSTS AND DIFFICULTY
ASSIMILATING THE OPERATIONS OR PERSONNEL OF THE ACQUIRED COMPANIES, WHICH COULD
THREATEN OUR FUTURE GROWTH.
  If
we make any acquisitions, we could have difficulty assimilating the operations,
technologies and products acquired or integrating or retaining personnel of
acquired companies. In addition, acquisitions may involve entering markets in
which we have no or limited direct prior experience. The occurrence of any one
or more of these factors could disrupt our ongoing business, distract our
management and employees and increase our expenses. In addition, pursuing
acquisition opportunities could divert our management’s attention from our
ongoing business operations and result in decreased operating performance.
Moreover, our profitability may suffer because of acquisition-related costs or
amortization of acquired goodwill and other intangible assets. Furthermore, we
may have to incur debt or issue equity securities in future acquisitions. The
issuance of equity securities would dilute our existing
stockholders.
  WE
MAY BE UNABLE TO ADEQUATELY PROTECT OUR PROPRIETARY RIGHTS OR MAY BE SUED BY
THIRD PARTIES FOR INFRINGEMENT OF THEIR PROPRIETARY RIGHTS.
  The
telecommunications industry is characterized by the existence of a large number
of patents and frequent litigation based on allegations of trade secret,
copyright or patent infringement. We may inadvertently infringe a patent of
which we are unaware. In addition, because patent applications can take many
years to issue, there may be a patent application now pending of which we are
unaware that will cause us to be infringing when it is issued in the future. If
we make any acquisitions, we could have similar problems in those industries.
Although we are not currently involved in any intellectual property litigation,
we may be a party to litigation in the future to protect our intellectual
property or as a result of our alleged infringement of another’s intellectual
property, forcing us to do one or more of the following:
  •
Cease selling, incorporating or using products or services that incorporate the
challenged intellectual property;
  •
Obtain from the holder of the infringed intellectual property right a license to
sell or use the relevant technology, which license may not be available on
reasonable terms; or
  •
Redesign those products or services that incorporate such
technology.
  A
successful claim of infringement against us, and our failure to license the same
or similar technology, could adversely affect our business, asset value or stock
value. Infringement claims, with or without merit, would be expensive to
litigate or settle, and would divert management resources.
  BECAUSE
OUR OFFICERS AND DIRECTORS ARE INDEMNIFIED AGAINST CERTAIN LOSSES, WE MAY BE
EXPOSED TO COSTS ASSOCIATED WITH LITIGATION.
  If
our directors or officers become exposed to liabilities invoking the
indemnification provisions, we could be exposed to additional unreimbursable
costs, including legal fees. Our articles of incorporation and bylaws provide
that our directors and officers will not be liable to us or to any shareholder
and will be indemnified and held harmless for any consequences of any act or
omission by the directors and officers unless the act or omission constitutes
gross negligence or willful misconduct. Extended or protracted litigation could
have a material adverse effect on our cash flow.
  9
   WE
WILL DEPEND ON OUTSIDE MANUFACTURING SOURCES AND SUPPLIERS.
  We
may contract with third party manufacturers to produce our products and we will
depend on third party suppliers to obtain the raw materials necessary for the
production of our products. We do not know what type of contracts we will have
with such third party manufacturers and suppliers. In the event we outsource the
manufacture of our products, we will have limited control over the actual
production process. Moreover, difficulties encountered by any one of our third
party manufacturers, which result in product defects, delayed or reduced product
shipments, cost overruns or our inability to fill orders on a timely basis,
could have an adverse impact on our business. Even a short-term disruption in
our relationship with third party manufacturers or suppliers could have a
material adverse effect on our operations. We do not intend to maintain an
inventory of sufficient size to protect ourselves for any significant period of
time against supply interruptions, particularly if we are required to obtain
alternative sources of supply.
  THE REPORT OF OUR INDEPENDENT
AUDITORS INDICATES UNCERTAINTY CONCERNING OUR ABILITY TO CONTINUE AS A GOING
CONCERN.
  Our
independent auditors have raised substantial doubt about our ability to continue
as a going concern. This may impair our ability to implement our business plan,
and we may never achieve significant revenues and therefore remain a going
concern.
  RISKS
ASSOCIATED WITH POTENTIAL ACQUISITIONS
  As
part of our business strategy, we may make acquisitions of, or investments in,
companies, businesses, products or technologies. Any such future acquisitions
would be accompanied by the risks commonly encountered in such acquisitions.
Those risks include, among other things:
  -
the difficulty of assimilating the operations and personnel of the acquired
companies,
 -
the potential disruption of our business or business plan,
 -
the diversion of resources from our existing businesses, and
products,
 -
the inability of management to integrate acquired businesses or assets into our
business plan, and
 -
additional expense associated with acquisitions.
  We
may not be successful in overcoming these risks or any other problems
encountered with such acquisitions, and our inability to overcome such risks
could have a material adverse effect on our business, financial condition and
results of operations.
  POSSIBLE
ISSUANCE OF ADDITIONAL SHARES WITHOUT STOCKHOLDER APPROVAL COULD DILUTE
STOCKHOLDERS
  We
currently have approximately 4,963,226 Shares of common stock outstanding. There
are currently no other material plans, agreements, commitments or undertakings
with respect to the issuance of additional shares of common stock or securities
convertible into shares of our common stock. Additional shares could be issued
in the future, and the result of the issuance of additional shares would be to
further dilute the percentage ownership of our common stock held by our
stockholders.
  IF
A MARKET FOR OUR COMMON STOCK DOES NOT DEVELOP, SHAREHOLDERS MAY BE UNABLE TO
SELL THEIR SHARES.
  There
is currently no market for our common stock and no market may develop. We
currently plan to apply for listing of our common stock on the OTC Bulletin
Board. However, our shares may not be traded on the bulletin board or, if
traded, a public market may not materialize. If no market is ever developed for
our shares, it will be difficult for shareholders to sell their stock. In such a
case, shareholders may find that they are unable to achieve benefits from their
investment.
  10
   THE
BOARD OF DIRECTORS POWER TO ISSUE PREFERRED STOCK, COULD DILUTE THE OWNERSHIP OF
EXISTING SHAREHOLDERS AND THIS MAY INHIBIT POTENTIAL ACQUIRES OF THE
COMPANY.
  Our
articles of organization grant the board of directors the power to issue
preferred stock with terms and conditions, including voting rights that they
deem appropriate. The exercise of the discretion of the board to issue preferred
stock and/or common stock could dilute the ownership rights and the voting
rights of current shareholders. In addition, this power could be used by the
Board to inhibit potential acquisitions by a third party.
  THE
ADVENT OF WIRELESS PHONES HAS LESSENED THE DEMAND FOR PAYPHONES.
  The
proliferation of wireless phones has significantly reduced the demand for
payphones and we expect that trend to continue. Certain rate plans that provide
unlimited long distance service and calling fees that are fixed or minimal have
and are expected to continue to negatively affect our revenues and opportunity
for growth.
  DIAL AROUND
SERVICES.
  We
compete with long distance carriers that provide dial around services that can
be accessed through our payphones. The popularity of these services is
increasing, and the use of these services reduces the fees we receive for long
distance calls placed from our phones.
  THERE
IS NO PUBLIC ARKET FOR OUR COMMON STOCK.
  Our
common stock currently is not publicly traded. However, a trading market for the
shares may develop in the future. If a public market does develop the public
market will establish trading prices for our common stock. An active public
market for our common stock may not develop or be sustained.
  WE
DO NOT INTEND TO PAY DIVIDENDS ON OUR COMMON STOCK.
  We
have never declared or paid any cash dividend on our capital stock. We currently
intend to retain any future earnings and do not expect to pay any dividends in
the foreseeable future. Any determination to pay dividends in the future will be
made at the discretion of our board of directors and will depend on our results
of operations, financial conditions, contractual restrictions, restrictions
imposed by applicable law and other factors our board deems relevant.
Shareholders must be prepared to rely on sales of their common stock after price
appreciation to earn an investment return, which may never occur. If our common
stock does not appreciate in value, or if our common stock loses value, our
stockholder may lose some or all of their investment in our shares.
  ITEM 2.PROPERTIES.
  Our principal administrative, sales,   marketing,   product
development and support facilities are located at 7325 Oswego Road, Liverpool.
N.Y. and comprise approximately 3,000 square feet. We occupy these premises to a
three year lease, the term of which expires on December 31,2009. The fixed rent
is approximately $5,000 per month plus utilities.
  ITEM 3.LEGAL
PROCEEDINGS.
  Not
Applicable.
  ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS.
  Not
Applicable.
  11
  PART II
  I TEM 5.
              MARKET FOR REGISTRANTS RELATED
      STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY
      SECURITIES.
  (a)
              MARKET
      INFORMATION. The Company's common stock is not trading on any public
      trading market or stock exchange.
  (b)
              HOLDERS.
      As of December 31, 2008, there were approximately  257 record
      holders of  4,963,226 shares of the Company's common
      stock.
  (c)
              DIVIDEND
      POLICY. We have not declared or paid any cash dividends on our common
      stock and we do not intend to declare or pay any cash dividend in the
      foreseeable future.  The payment of dividends, if any, is within
      the discretion of our Board of Directors and will depend on our earnings,
      if any, our capital requirements and financial condition and such other
      factors as our Board of Directors may
consider.
  (d)
              SECURITIES
      AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS. We have not
      authorized the issuance of any of our securities in connection with any
      form of equity compensation plan.
  (e)
              RECENT
      SALE OF UNREGISTERED SECURITIES.  During the year ended December
      31, 2008, we did not have any sales of securities that were not registered
      under the Securities Act of 1933, as
amended.
 
 ITEM 6.
                SELECTED FINANCIAL
      DATA.
  Not
Applicable.
 
 
  12
  ITEM
      7.
              MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATION
 
 Forward
Looking Statements
 
 Some
of the information in this section contains forward-looking statements that
involve substantial risks and uncertainties. You can identify these statements
by forward-looking words such as "may," "will," "expect," "anticipate,"
"believe," "estimate" and "continue," or similar words. You should read
statements that contain these words carefully because they:
 
 ●
              discuss
      our future expectations;
 
 ●
              contain
      projections of our future results of operations or of our financial
      condition; and
 
 ●
              state
      other "forward-looking"
information.
 
 We
believe it is important to communicate our expectations. However, there may be
events in the future that we are not able to accurately predict or over which we
have no control. Our actual results and the timing of certain events could
differ materially from those anticipated in these forward-looking statements as
a result of certain factors, including those set forth under "Risk Factors,"
"Business" and elsewhere in this prospectus. See "Risk Factors."
 
  13
  Organization and Basis of
Presentation
 
 Datone,
Inc. is currently a provider of both privately owned and company owned payphones
(COCOT’s) and stations in New York. The Company receives revenues from the
collection of the payphone coinage, a portion of usage of service from each
payphone and a percentage of long distance calls placed from each payphone from
the telecommunications service providers. In addition, the Company also receives
revenues from the service and repair of privately owned payphones, sales of
payphone units.
  Critical Accounting
Policies
 
 The
preparation of financial statements and related disclosures in conformity with
accounting principles generally accepted in the United States of America
requires management to make judgments, assumptions and estimates that affect the
amounts reported in our consolidated financial statements and accompanying
notes. We base our estimates and judgments on historical experience and on
various other assumptions that we believe are reasonable under the
circumstances. However, future events are subject to change, and the best
estimates and judgments routinely require adjustment. The amounts of assets and
liabilities reported in our consolidated balance sheet, and the amounts of
revenues and expenses reported for each of our fiscal periods, are affected by
estimates and assumptions which are used for, but not limited to, the accounting
for allowance for doubtful accounts, goodwill and intangible asset impairments,
restructurings, inventory and income taxes. Actual results could differ from
these estimates. The following critical accounting policies are significantly
affected by judgments, assumptions and estimates used in the preparation of our
consolidated financial statements.
 
 Revenue Recognition
Policies
 
 The
Company derives its primary revenue from the sources described below, which
includes dial around revenues, coin collections, and telephone equipment repairs
and sales. Other revenues generated by the company include
commissions.
  Dial
around revenues are generated from calls to gain access to a different long
distance carrier than is already programmed into the phone. Revenues from dial
around calls are recorded based upon estimates until the coin collection
revenues are generated when callers deposit coins into the phones to make calls.
Coin revenues are recorded in an amount equal to the coins
collected.  Revenues on commissions and telephone equipment repairs
and sales are realized when the services are provided.
 
 TWELVE
MONTHS ENDED DECEMBER 31, 2008 COMPARED WITH TWELVE MONTHS ENDED DECEMBER 31,
2007
 
 Revenue
 
 Our
total revenue decreased by $15,052 or approximately 11%, from $136,448 in the
twelve months ended December 31, 2007 to $121,436 in the twelve months ended
December 31, 2008.  This decrease was primarily attributable to a
decrease in dial-around revenue as well as a reduced number of payphones coupled
with increased competition from wireless communication service.
 
 Our
commissions increase by $2,106 or approximately 29%, from $7,310 in the twelve
months ended December 31, 2007 to $9,416 in the twelve months ended December 31,
2008. This increase was primarily attributable to a higher volume of payphones
usage resulting in increased commission on calls.
 
 Our coin call revenue increased by $701
or approximately 2%, from $36,200 in the twelve months ended December 31, 2007
to $36,901 in the twelve months ended December 31, 2008. The increase in coin call
revenue was primarily attributable to an increase in number of phone calls
made.
 
 Our non-coin call revenue, which
consists primarily of dial-around revenue, decreased $9,931 or approximately 16%
from $62,627 in the twelve months ended December 31, 2007 to $52,696 in the
twelve months ended December 31, 2008.   This decrease was
primarily attributed to a lower volume of toll free calling calls during
2008.
 
  14
  Service
and Repair Sales decreased by $1,778 or approximately 8% to $21,678 for the
twelve months ended December 31, 2008 from $23,456 for the same period in 2007.
This decrease is due to less payphones to repair and service because the number
of payphones have decreased, the number of payphones breaking down and requiring
repair is consequently less.
 
 For the twelve months ended December
31, 2008, we have a total of 148 company-owned payphones. We only receive
service revenue for company-owned payphones and repair revenue for
privately-owned payphones. Some privately-owned payphones represent unprofitable
locations that we previously owned but have since sold to the site
owner.
 
 Cost of
Revenue
 
 Our
overall cost of sales decreased by $44,318 or approximately 62%, from
$71,664  in the twelve months ended December 31, 2007 to
$27,346  in the twelve months ended December 31, 2008.  This
decrease in our overall cost of revenue is primarily due to less depreciation
being recorded due to our assets being fully depreciated.
 
 Our
telecommunication costs decreased by $31,917 or approximately 54% from $58,609
in the twelve months ending December 31, 2007 to $26,692 for the twelve months
ending December 31, 2008. This was due to some new payphones being installed in
new locations.  This increase from the new payphones was offset by our
strategy to remove unprofitable payphones, resulting in lower revenue and
commissions and also, lower telecommunication costs.
 
 Our
ongoing strategy is to identify and remove unprofitable payphones. Once a low
revenue payphone is identified, we offer the site owner an opportunity to
purchase the equipment. If the site owner does not purchase the payphone, we
remove it from the site
 
 Depreciation
expense decreased by $12,401or approximately 95% to $654 in the twelve months
ending December 31, 2008 from $13,055  for the twelve months ending
December 31, 2007. This decrease is due to certain assets being fully
depreciated and our on going strategy of identifying unprofitable payphones, and
selling them to the site owners.  Once a payphone is sold to the site
owner, it is removed from our assets and depreciation schedules.  We
own telephone equipment and motor vehicles, which provide a service for a number
of years.  The term of service is commonly referred to as the “useful
life” of the asset.  Because an asset such as telephone equipment or
motor vehicle is expected to provide service for many years, it is recorded as
an asset, rather than an expense, in the year acquired.   A
portion of the cost of the long-lived asset is reported as an expense during the
cost of an asset to expense over its life in a rational and systematic
manner.
 
 Operating
Expenses
 
 Operating
expenses increased by $84,760 or approximately 87% to $182,698 for the twelve
months ended December 31, 2008 compared to $97,938 for the same period in 2007.
This was due mainly to an increase in the fees we pay our accountants and
attorneys for performing they’re services As well as a gain on the sale of
equipment of $34,233 during 2007. There was no such gain during
2008.
 
 Salaries
and related payroll taxes increased by $11,401 or approximately 31% to $48,701
for the twelve months ended December 31, 2008 compared to $37,300 for the same
period in 2007. This increase is due to employee taking payroll on a regular
basis in 2008.
 
 Our
insurance expense decreased by $6,079 or approximately 48% to $6,715 for the
twelve months ended December 31, 2008 compared to $12,794 for the same period in
2007.  This decrease was due to decreases in premiums.
 
 Rent
remained the same at $60,000 for the twelve months ended December 31, 2008
compared to $60,000 for the same period in 2007.
 
 Professional
fees increased by $40,053 or approximately 561% to $47,192 for the twelve months
ended December 31, 2008 compared to $7,139 for the same period in
2007.  These are fees we pay to accountants and attorneys throughout
the year for performing various tasks.
 
  15
  Our
telephone, utilities, office, and vehicle expenses, together account for an
increase of $4,728 or approximately 32% from $14,938 for the twelve months ended
December 31, 2007 compared to $19,666 for the same period in 2008.
 
 Interest
Expense
 
 Interest
expense, increased $6,712 or approximately 29% to $30,183 for the twelve months
ended December 31, 2008 from $23,471 for the twelve months ended December 31,
2007. This increase was due to more interest-rate debt.
 
 Net Loss from
Operations
 
 We
had a net loss of $118,791 for the twelve months ended December 31, 2008 as
compared to a net loss of $14,204 for the twelve months ended December 31, 2007.
This increase in net loss was attributable to the reasons listed
above.
 
 LIQUIDITY
AND CAPITAL RESOURCES
 
 Our
primary liquidity and capital resource needs are to finance the costs of our
operations and to make capital expenditure.
 
 We
had no cash on hand as of December 31, 2008 and 2007.
 
 We
believe that we will continue to need investing and financing activities to fund
operations.
 
 Net
cash used in operating activities was $37,527 during the twelve months ended
December 31, 2008 consisting of a net loss and a decrease in accounts payable
offset by depreciation, imputed interest, related party debt issued for rent and
interest expense, an increase in accrued liabilities and decreases in
receivables and prepaid expenses. This compares to net cash used in operating
activities of $3,101 for the twelve months ended December 31, 2007.
 
 Net
cash provided by investing activities was $0 during twelve months ended December
31, 2008. This compares to net cash provided by investing activities of $27,691
for the twelve months ended December 31, 2007.
 
 Net
cash provided by financial activities was $37,527 during twelve months ended
December 31, 2008 consisting of proceeds from the issuance of debt and an
increase in the bank overdraft offset by payments made on debt and related party
debt.  This compares to net cash used by financing activities of
$25,366 the twelve months ended December 31, 2007.
 
 We
believe that our results of financing activities will provide us with the
necessary funds to satisfy our liquidity needs for the next 6 months. To the
extent that such funds are insufficient, our principal stockholder has agreed to
fund our operations for the next twelve-month period and beyond in the form of a
loan or loans.  However, there is no formal agreement with our
principal stockholder, Greenwich Holdings LLC in writing or otherwise to do so
and accordingly may not be enforced against Greenwich Holdings, Inc. in the
event that it decides not to continue to fund the Company.
 
 Working
Capital
 
 As of December 31, 2008, we had total
current assets of $29,151 and total current liabilities of $455,547 resulting in
a working capital deficit of $537,506 compared to a working capital deficit of
$504,422 as of December 31, 2007.
   ITEM 7A.   QUANTATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
  Not
Applicable.
  16
   ITEM 8.   FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA.
 
 
 CONTENTS
 
 
 PageReport
      of Independent Registered Public Accounting Firm
              18Consolidated
      Balance SheetsDecember
      31, 2008 and 2007
              19Consolidated
      Statements of OperationsFor
      the Years Ended December 31, 2008 and 2007
              20Consolidated
      Statements of Stockholders’ DeficitFor
      the Years Ended December 31, 2008 and 2007
              21Consolidated
      Statements of Cash FlowsFor
      the Years Ended December 31, 2008 and 2007
              22Notes
      to Consolidated Financial Statements
              23
 
 
 
  17
  REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 To
the Board of Directors and Stockholders of
 Datone,
Inc.
 Liverpool,
NY
 
 We
have audited the accompanying consolidated balance sheets of Datone, Inc. and
Subsidiary (the “Company”) as of December 31, 2008 and 2007, and the related
consolidated statements of operations, stockholders’ deficit, and cash flows for
the years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our
audits.
 
 We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform an audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
 
 In
our opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of the Company as of December 31, 2008
and 2007 and the results of its operations and cash flows for the years then
ended, in conformity with accounting principles generally accepted in the United
States of America.
 
 The
accompanying financial statements have been prepared assuming that Datone, Inc.
will continue as a going concern. As discussed in Note 2 to the consolidated
financial statements, the Company has a working capital deficit and has incurred
losses since inception, which raises substantial doubt about its ability to
continue as a going concern. Management’s plans regarding those matters also are
described in Note 2. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
 
 As discussed in Note 3 to the consolidated financial statements,
the previously filed consolidated financial statements for 2008 and 2007 have
been restated for errors discovered when those periods were
re-audited.
 
 
 /s/  MaloneBailey,
LLP
 www.malonebailey.com
 Houston,
Texas
 
 January
29,
2010
  18
 
 DATONE,
INC. AND SUBSIDIARY
 CONSOLIDATED
BALANCE SHEETS
 
 December
      31,2008
              
              
              2007ASSETSCurrent
      Assets:Cash
              
              $
              -
              
              
              $
              -Commissions
      and sales receivables
              
              
              29,151
              
              
              
              35,983Prepaid
      expenses
              
              
              -
              
              
              
              35Total
      Current Assets
              
              
              29,151
              
              
              
              36,018Telephone
      and office equipment, net of accumulated depreciationof
      $1,459,766 and $1,459,736, respectively
              
              
              -
              
              
              
              30Vehicles,
      net of accumulated depreciation of $65,606 and$64,983,
      respectively
              
              
              5,669
              
              
              
              6,292TOTAL
      ASSETS
              
              $
              34,820
              
              
              $
              42,340LIABILITIES
      AND STOCKHOLDERS' DEFICITCurrent
      Liabilities:Accounts
      payable
              
              $
              148,447
              
              
              $
              172,286Bank
      overdraft
              
              
              8,313
              
              
              
              3,540Accrued
      liabilities
              
              
              64,572
              
              
              
              51,020Short-term
      debt
              
              
              7,091
              
              
              
              8,091Short-term
      debt - related parties
              
              
              338,234
              
              
              
              305,503Total
      Current Liabilities
              
              
              566,657
              
              
              
              540,440Long-term
      debt
              
              
              -
              
              
              
              2,246Total
      Liabilities
              
              
              566,657
              
              
              
              542,686Stockholders'
      Deficit:Common
      Stock, $0.0001 par value, 100,000,000 shares authorized,4,963,226
      shares issued and outstanding
              
              
              496
              
              
              
              496Additional
      paid-in capital
              
              
              1,687,871
              
              
              
              1,600,571Accumulated
      deficit
              
              
              (2,220,204
              )
              
              
              (2,101,413
              )Total
      Stockholders' Deficit
              
              
              (531,837
              )
              
              
              (500,346
              )TOTAL
      LIABILITIES AND STOCKHOLDERS' DEFICIT
              
              $
              34,820
              
              
              $
              42,340The
      accompanying notes are an integral part of these consolidated financial
      statements.
   19
  DATONE,
INC. AND SUBSIDIARY
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 
 Years
      EndedDecember
      31,2008
              
              
              2007REVENUE
              
              $
              121,436
              
              
              $
              136,488COST
      OF REVENUE:Depreciation
              
              
              654
              
              
              
              13,055Cost
      of revenue
              
              
              26,692
              
              
              
              58,609Total
      cost of revenue
              
              
              27,346
              
              
              
              71,664Gross
      profit
              
              
              94,090
              
              
              
              64,824OPERATING
      EXPENSES:Gain
      on sale of equipment
              
              
              -
              
              
              
              (34,233
              )General
      and administrative
              
              
              182,698
              
              
              
              132,171Total
      operating expenses
              
              
              182,698
              
              
              
              97,938Loss
      from operations
              
              
              (88,608
              )
              
              
              (33,114
              )OTHER
      INCOME (EXPENSES):Other
      expenses
              
              
              -
              
              
              
              (60
              )Interest
      expense
              
              
              (30,183
              )
              
              
              (23,471
              )Extinguishment
      of debt
              
              
              -
              
              
              
              42,441Total
      other income (expenses)
              
              
              (30,183
              )
              
              
              18,910NET
      LOSS
              
              $
              (118,791
              )
              
              $
              (14,204
              )Net
      Loss Per Share - Basic and Diluted
              
              $
              (0.02
              )
              
              $
              (0.00
              )Weighted
      Average Common Shares Outstanding -Basic
      and Diluted
              
              
              4,963,226
              
              
              
              4,963,226The
      accompanying notes are an integral part of these consolidated financial
      statements.
   20
  DATONE,
INC. AND SUBSIDIARY
 CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' DEFICIT
 
 Additional
              
              
              
              
              
              TotalCommon
      Stock
              
              
              Paid-in
              
              
              Retained
              
              
              Stockholders'Shares
              
              
              Amount
              
              
              Capital
              
              
              Deficit
              
              
              DeficitBalances
      at December 31, 2006
              
              
              4,963,226
              
              
              $
              496
              
              
              $
              1,580,830
              
              
              $
              (2,087,209
              )
              
              $
              (505,883
              )Imputed
      Interest
              
              
              -
              
              
              
              -
              
              
              
              17,242
              
              
              
              -
              
              
              
              17,242Contributions
              
              
              -
              
              
              
              -
              
              
              
              2,499
              
              
              
              -
              
              
              
              2,499Net
      Loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (14,204
              )
              
              
              (14,204
              )Balances
      at December 31, 2007
              
              
              4,963,226
              
              
              
              496
              
              
              
              1,600,571
              
              
              
              (2,101,413
              )
              
              
              (500,346
              )Imputed
      Interest
              
              
              -
              
              
              
              -
              
              
              
              21,300
              
              
              
              -
              
              
              
              21,300Extinguishment
      of related party debt
              
              
              -
              
              
              
              -
              
              
              
              66,000
              
              
              
              -
              
              
              
              66,000Net
      Loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (118,791
              )
              
              
              (118,791
              )Balances
      at December 31, 2008
              
              
              4,963,226
              
              
              $
              496
              
              
              $
              1,687,871
              
              
              $
              (2,220,204
              )
              
              $
              (531,837
              )The
      accompanying notes are an integral part of these consolidated financial
      statements.
 
  21
  DATONE,
INC. AND SUBSIDIARY
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 
 Years
      EndedDecember
      31,2008
              
              
              2007CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      Loss
              
              $
              (118,791
              )
              
              $
              (14,204
              )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation
      expense
              
              
              653
              
              
              
              13,055Imputed
      interest
              
              
              21,300
              
              
              
              17,242Related
      party debt issued for rent expense
              
              
              60,000
              
              
              
              60,000Related
      party debt issued for interest expense
              
              
              2,731
              
              
              
              739Gain
      on sale of equipment
              
              
              -
              
              
              
              (34,233
              )Gain
      on extinguishment of debt
              
              
              -
              
              
              
              (41,641
              )Changes
      in operating assets and liabilities:Receivables
              
              
              6,832
              
              
              
              4,948Inventory
              
              
              -
              
              
              
              496Prepaid
      expenses
              
              
              35
              
              
              
              (35
              )Accounts
      payable
              
              
              (23,839
              )
              
              
              (21,088
              )Accrued
      liabilities
              
              
              13,552
              
              
              
              11,620Net
      Cash Used in Operating Activities
              
              
              (37,527
              )
              
              
              (3,101
              )CASH
      FLOWS FROM INVESTING ACTIVITIES:Cash
      paid for purchase of equipment
              
              
              -
              
              
              
              (6,542
              )Proceeds
      from sale of equipment
              
              
              -
              
              
              
              34,233Net
      Cash Provided by Financing Activities
              
              
              -
              
              
              
              27,691CASH
      FLOWS FROM FINANCING ACTIVITIES:Bank
      Overdraft
              
              
              4,773
              
              
              
              (1,171
              )Proceeds
      from related party debt
              
              
              42,000
              
              
              
              -Payments
      on related party debt
              
              
              (6,000
              )
              
              
              (18,216
              )Proceeds
      from debt
              
              
              -
              
              
              
              6,542Payments
      on debt
              
              
              (3,246
              )
              
              
              (12,521
              )Net
      Cash Provided by (Used in) Financing Activities
              
              
              37,527
              
              
              
              (25,366
              )Net
      Change in Cash
              
              
              -
              
              
              
              (776
              )Cash
      at Beginning of Period
              
              
              -
              
              
              
              776Cash
      at End of Period
              
              $
              -
              
              
              $
              -SUPPLEMENTAL
      DISCLOSURES:Cash
      paid for interest
              
              $
              5,585
              
              
              $
              3,126Cash
      paid for taxes
              
              
              -
              
              
              
              -NON-CASH
      INVESTING AND FINANCING ACTIVITIES:Forgiveness
      of related party debt
              
              $
              66,000
              
              
              $
              -Related
      party contributions
              
              
              -
              
              
              
              2,499The
      accompanying notes are an integral part of these consolidated financial
      statements.
  22
  DATONE,
INC. AND SUBSIDIARY
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 
 Note
1 – Organization, Nature of Business and Summary of Significant Accounting
Policies
 
 Organization and Nature of
Business
  Datone,
Inc. was originally incorporated on August 9, 2000 under the laws of the State
of Delaware.  We operated as a wholly-owned subsidiary of USIP. On
August 24, 2006 USIP decided to spin-off its subsidiary companies , one of which was Datone Inc. On February 1,   2008 , Datone filed
a Form 10-SB registration statement. On November 13,
2008 ,  Datone went effective. Datone has
100,000,000 shares of stock authorized and a wholly owned Subsidiary Datone
Tel., Inc.
  Datone,
Inc. and subsidiary (“Datone”) is currently a provider of both privately owned
and company owned payphones (COCOT’s) and stations in New York. Datone receives
revenues from the collection of the payphone coinage, a portion of usage of
service from each payphone and a percentage of long distance calls placed from
each payphone from the telecommunications service providers. In addition, Datone
also receives revenues from the service and repair of privately owned payphones,
sales of payphone units.
  Summary of Significant
Accounting Policies
 
 Use
of Estimates
 
 The
preparation of financial statements in conformity with generally accepted
accounting principals requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
  Concentrations
of Credit Risk
  Datone’s
payphones are located primarily in New York and usage of those phones may be
affected by economic conditions in those areas.
  Cash
and Cash Equivalents
  Datone
considers all highly liquid instruments with a maturity of three months or less
when purchased to be cash equivalents for purposes of classification in the
balance sheets and statement of cash flows. Cash and Cash equivalents consists
of cash in bank (checking) accounts.
  Property
and Equipment
  Property
and equipment is stated at cost. Depreciation is calculated on a straight-line
basis over the useful lives of the related assets, which range from five to
seven years.
 
 Income
Taxes
 
 Income
taxes are accounted for in accordance with Statement of Financial Accounting
Standards No. 109, “Accounting for Income Taxes”. Under SFAS No. 109, deferred
income taxes are recognized using the asset and liability method by applying tax
rates to cumulative temporary differences based on when and how they are
expected to affect the tax return. Deferred tax assets and liabilities are
adjusted for income tax rate changes.
 
  23
  Revenue
Recognition
 
 Datone
derives its primary revenue from the sources described below, which includes
dial around revenues, coin collections, and telephone equipment repairs and
service. Other revenues generated by Datone include commissions.
 
 Dial
around revenues are generated from calls to gain access to a different long
distance carrier than is already programmed into the phone. Datone records a
monthly accrual and adjusts the revenue to actual earned on a quarterly basis.
The revenue is estimated monthly, based on prior quarter’s actual receipts.
Datone uses prior quarter receipts as estimates because there has not been a
significant change to total payphones in the previous few quarters. Also,
historical figures have shown the revenue earned is not far different than
estimates made.  Revenues on commissions and telephone equipment
repairs and service are recognized when the services are provided.
 
 The
proceeds from the sales of pay telephones and other equipment are excluded from
revenues and reported as other operating income.
 
 Basic
and Diluted Net Loss per Share
 
 Basic
and diluted loss per share is calculated by dividing net loss by the
weighted-average number of shares of common stock outstanding during the
year.
 
 Recently
Issued Accounting Pronouncements
 
 Datone
does not expect the adoption of any recently issued accounting pronouncements to
have a significant impact on its financial position, results of operations or
cash flows.
 
 Note
2 – Going Concern
 
 The
accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States, which
contemplates Datone as a going concern.  However, Datone has sustained
substantial operating losses in recent years and has a working capital deficit
of $537,506 and an accumulated deficit of $2,220,204 as of December 31, 2008.
These conditions raise substantial doubt as to Datone’s ability to continue as a
going concern. Datone’s ability to continue as a going concern is dependent upon
obtaining the additional capital as well as additional revenue to be successful
in its planned activity.  Datone is actively pursuing alternative
financing and has had discussions with various third parties, although no firm
commitments have been obtained.  In the interim, shareholders of
Datone have committed to meeting its minimal operating
expenses.  Management believes that actions presently being taken to
revise Datone’s operating and financial requirements provide them with the
opportunity to continue as a going concern.
 
 These
financial statements do not reflect adjustments that would be necessary if
Datone were unable to continue as a going concern.  While management
believes that the actions already taken or planned, will mitigate the adverse
conditions and events which raise doubt about the validity of the going concern
assumption used in preparing these financial statements, there can be no
assurance that these actions will be successful.
 
 If
Datone were unable to continue as a going concern, substantial adjustments would
be necessary to the carrying values of assets, the reported amounts of its
liabilities, the reported revenues and expenses, and the balance sheet
classifications used.
 
 
 
  24
  Note
3 – Restatement
 
 The consolidated financial statements of Datone for fiscal 2008
and 2007 were previously audited by Moore & Associates Chartered. On August
27, 2009 the PCAOB revoked the registration of Moore & Associates due to
violations of PCAOB rules and standards.  As a result, new auditors
were engaged and the consolidated financial statements for fiscal 2008 and 2007
were re-audited.  The new audits discovered certain errors in the
previously presented financial statements.  An
error was identified in the
accounting for dial-around receivable s and revenue.  The value of receivables was
estimated and recorded on a monthly basis and adjusted at the end each quarter
based on the amount to be received through direct deposit in the first month
following the quarter end.  This was erroneous in that there is a four
month delay in the receipt of the accrued revenue .
 
 The effects of this and the other errors noted are presented in the tables below for the years ended December
31, 2008 and 2007:
  As of December 31, 2008As Reported
              
              
              Adjustment s
              
              
              As  RestatedCURRENT
      ASSETSCommissions
      and s ales r eceivable
              
              $
              30,503
              
              
              $
              (1,352
              )
              
              $
              29,151Total
      Current Assets
              
              
              30,503
              
              
              
              (1,352
              )
              
              
              29,151-Property and equipment, net
              
              
              5,668
              
              
              
              1
              
              
              
              5,669TOTAL
      ASSETS
              
              $
              36,17 1
              
              
              $
              (1,35 1
              )
              
              $
              34,820TOTAL LIABILITIES
              
              $
              566,655
              
              
              $
              2
              
              
              $
              566,657STOCKHOLDERS'
      DEFICITAdditional-paid in
    capital
              
              
              1,727,460
              
              
              
              (39,589
              )
              
              
              1,687,871Accumulated Deficit
              
              
              (2,258,440
              )
              
              
              38,236
              
              
              
              (2,220,204
              )Total
      Stockholders’ Deficit
              
              
              (530,48 5
              )
              
              
              (1,35 3
              )
              
              
              (531,837
              )TOTAL LIABILITIES AND STOCKHOLDERS'
      DEFICIT
              
              $
              36,171
              
              
              $
              (1,351
              )
              
              $
              34,820
 
 Year Ended December 31, 2008As Reported
              
              
              Adjustment s
              
              
              As  RestatedREVENUE
              
              $
              142,602
              
              
              $
              (21,166
              )
              
              $
              121,436Cost
      of revenue
              
              
              38,932
              
              
              
              (12,240
              )
              
              
              26,692Total c ost
      of revenue
              
              
              39,586
              
              
              
              (12,240
              )
              
              
              27,346Gross
      p rofit
              
              
              103,016
              
              
              
              (8,926
              )
              
              
              94,090OPERATING EXPENSESGeneral and
    administrative
              
              
              184,649
              
              
              
              (1,951
              )
              
              
              182,698Loss from operations
              
              
              (81,633
              )
              
              
              (6,975
              )
              
              
              (88,608
              )OTHER
      EXPENSE SInterest expense
              
              
              (28,511
              )
              
              
              (1,672
              )
              
              
              (30,183
              )NET
      LOSS
              
              $
              (110,144
              )
              
              $
              (8,647
              )
              
              $
              (118,791
              )
 
  25
  
 As of December 31, 2007As Reported
              
              
              Adjustment s
              
              
              As  RestatedCURRENT
      ASSETSCommissions
      and s ales r eceivable
              
              $
              17,261
              
              
              $
              18,722
              
              
              $
              35,983Inventory
              
              
              11,425
              
              
              
              (11,425
              )
              
              
              -Total Current
      Assets
              
              
              17,296
              
              
              
              18,722
              
              
              
              36,018Property and equipment, net
              
              
              6,323
              
              
              
              (1
              )
              
              
              6,322TOTAL ASSETS
              
              $
              35,044
              
              
              $
              7,296
              
              
              $
              42,340TOTAL LIABILITIES
              
              $
              542,684
              
              
              $
              2
              
              
              $
              542,686STOCKHOLDERS'
      DEFICITAdditional -p aid in c apital
              
              
              1,640,160
              
              
              
              (39,589
              )
              
              
              1,600,571Accumulated d eficit
              
              
              (2,148,296
              )
              
              
              46,883
              
              
              
              (2,101,413
              )Total
      Stockholders’ Deficit
              
              
              (507,640
              )
              
              
              7,294
              
              
              
              (500,346
              )TOTAL
      LIABILITIES AND STOCKHOLDERS' DEFICIT
              
              $
              35,044
              
              
              $
              6,800
              
              
              $
              42,340
 
 Year Ended December 31, 2007As Reported
              
              
              Adjustment s
              
              
              As  RestatedREVENUE
              
              $
              155,293
              
              
              $
              (18,805
              )
              
              $
              136,488Cost
      of revenue
              
              
              60,843
              
              
              
              (2,234
              )
              
              
              58,609Total cost of revenue
              
              
              73,898
              
              
              
              (2,234
              )
              
              
              71,664Gross
      Profit
              
              
              81,395
              
              
              
              (16,571
              )
              
              
              64,824OPERATING EXPENSESGeneral and
    administrative
              
              
              127,172
              
              
              
              4,999
              
              
              
              132,171Loss from operations
              
              
              (11,544
              )
              
              
              (21,570
              )
              
              
              (33,114
              )OTHER
      INCOME (EXPENSE S )Other
      i ncome
              
              
              6,911
              
              
              
              (6,911
              )
              
              
              -Bad
      d ebt e xpense
              
              
              (44,534
              )
              
              
              44,534
              
              
              
              -Extinguishment of d ebt
              
              
              -
              
              
              
              42,441
              
              
              
              42,441Interest
      e xpense
              
              
              (27,529
              )
              
              
              4,058
              
              
              
              (23,471
              )Total other income
      (expenses)
              
              
              (65,212
              )
              
              
              84,122
              
              
              
              18,910NET
      LOSS
              
              $
              (76,756
              )
              
              $
              62,552
              
              
              $
              (14,204
              )
 
  26
  Note
4 – Property and Equipment
 
 Property
and equipment consisted of the following as of December 31, 2008 and
2007:
  December
      31,2008
              
              
              2007ATM
      equipment
              
              $
              5,288
              
              
              $
              5,288Office
      equipment
              
              
              7,619
              
              
              
              7,619Telephone
      equipment
              
              
              1,446,859
              
              
              
              1,446,859Vehicles
              
              
              71,275
              
              
              
              71,275Total
      equipment
              
              
              1,531,041
              
              
              
              1,531,041Less:
      accumulated depreciation
              
              
              (1,525,372
              )
              
              
              (1,524,719
              )Net
      property and equipment
              
              $
              5,669
              
              
              $
              6,322
 
  Depreciation
is computed on a straight-line basis over estimated useful lives of 5 - 7 years.
Depreciation expense for the years ended December 31, 2008 and 2007 was $654 and
$13,055, respectively.
  Note
5 – Related Party Transactions
 
 As
of December 31, 2008, Datone has five outstanding notes payable to Joseph C.
Passalaqua, a shareholder of Datone.  The notes are due on demand and
carry interest rates ranging from 10% to 18% per annum which is compounded on
the unpaid principal and interest. The aggregate outstanding principal balance
on the notes was $38,731 at December 31, 2008.
 
 As
of December 31, 2007 Datone had an outstanding note payable to USIP.Com, Inc.,
an affiliate of Datone, in the amount of $66,000. The loan bears no interest and
is due on demand. During 2008, the entire principal balance of $66,000 was
forgiven by USIP.com, Inc. and recorded as additional paid-in
capital.
 
 Datone
leases office space from the wife of Joseph Passalaqua (Callaway Properties) at
a monthly rate of $5,000. The rent expense is accrued as a related party note
payable that is due on demand and does not bear interest. Datone imputed
interest on the note payable at a rate of 10% per annum. Imputed interest
expense was $21,300 and $17,242 for the years ended December 31, 2008 and 2007,
respectively. The unpaid principal balance on the loan was $299,503 and $239,503
as of December 31, 2008 and 2007, respectively.
 
 Note
6 – Debt
 
 Outstanding
debt consisted of the following at December 31, 2008 and December
2007:
 
 December
      31,2008
              
              
              2007Related
      Parties:Note
      payable to Callaway Properties, no interest, due on demand
              
              $
              299,503
              
              
              $
              239,503Notes
      payable to Joseph Passalaqua, interest of 10% to 18% per annum, due on
      demand
              
              
              38,731
              
              
              
              -Note
      payable to USIP.com, Inc., no interest, due on demand
              
              
              -
              
              
              
              66,000Third
      Parties:Note
      payable to bank, monthly installments of $261, interest of 4.5% per annum,
      maturing August 2009.
              
              
              2,246
              
              
              
              5,492Note
      payable to Key Bank, interest of 9.25% per annum, due on
      demand.
              
              
              4,845
              
              
              
              4,845Total
      Debt
              
              $
              345,325
              
              
              $
              315,840
 
  27
  Note
7  – Major Dial -a round Compensation Providers
 
 Datone
received approximately 95% of total dial - around and
commissions revenue from two providers.
 
 Note
8 – Income Taxes
 
 Deferred
taxes are provided on a liability method whereby deferred tax assets are
recognized for deductible temporary differences and operating loss and tax
credit carryforwards and deferred tax liabilities are recognized for taxable
temporary differences. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax basis. Deferred tax
assets are reduced by a valuation allowance when, in the opinion of management,
it is more likely than not that some portion or all of the deferred tax assets
will be realized. Deferred tax assets and liabilities are adjusted for the
effects of changes in tax laws and rates.
 
 Net
deferred tax assets consisted of the following as of December 31, 2008 and
2007:
 
 December
      31,2008
              
              
              2007Deferred
      tax assets
              
              $
              (865,880
              )
              
              $
              (819,551
              )Valuation
      allowance
              
              
              865,880
              
              
              
              819,551Net
      deferred tax assets
              
              $
              -
              
              
              $
              -
 
 At December 31, 2008 and 2007, Datone had net operating
loss carry forwards of approximately $2,220,204 and $2,101,413,
respectively that may be offset against future taxable income through
2027.
  Note
9 – Subsequent Events
 
 On
February 26, 2009, Datone borrowed $5,000 Joseph C. Passalaqua, a shareholder of
Datone. The note is due on demand and bears interest of 18% per annum which is
compounded on the unpaid principal and interest.
 
 Between
April and November 2009, Datone entered into six convertible notes payable with
Joseph C. Passalaqua for an aggregate principal amount of $34,000. The notes
bear interest at 8% per annum which is compounded on the unpaid principal and
interest and are due between November 2009 and May 2010. The notes are
convertible into common shares of Datone at a rate of $0.001 per
share.
 
  28
  ITEM 9.  CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUTING AND FINANCIAL
DISCLOSURE.
 
 None.
 
 ITEM 9A(T).  CONTROLS AND
PROCEDURES.
  This
annual report does not include a report of management’s assessment regarding
internal control over financial reporting or an attestation report of the
Company’s registered public accounting firm due to a transition period
established by Rules of the Securities and Exchange Commission for newly public
companies.
 
 ITEM 9B.  OTHER
INFORMATION.
 
 None.
  PART
III
  ITEM 10.DIRECTORS EXECUTIVE OFFICERS, AND
CORPORATE GOVERNANCE.
  MANAGEMENT
  The
following persons shall serve in the following capacities for one year or until
their respective successors are elected and qualified:
 
 Name
              Age
              PositionCraig
      H. Burton
              46
              President
      and DirectorJoseph
      J. Passalaqua
              36
              Secretary
      and Director
  Craig
Burton, is the Chief Executive Officer and a Director of Datone, Inc. He has
held these positions since August, 2000. Mr. Burton attended the University of
South Carolina-Coastal and was a licensed real estate agent in the State of New
York. He began working in marketing for a long distance carrier in 1996 and in
1999, Mr. Burton became Director of Marketing for Datone Communications, Inc.,
an owner of payphones and distributor of prepaid calling cards. Datone was
acquired by USIP in January, 2000. Mr. Burton served as President and a director
of USIP.Com from January 2000-2006. Additionally, Mr. Burton was secretary and
director of NB Telecom,Inc. from December 2005-2008.
  Joseph
Passalaqua, is our secretary and director since August 2000. Since 1999, Mr.
Passalaqua has worked as a trainer at Sports Karate and fitness training company
located in Cicero, New York. Mr. Passalaqua is a high school
graduate.
  Section
16(a) Beneficial Ownership Reporting Compliance.
  Section 16(a)
of the Exchange Act requires the Company's directors and officers, and persons
who beneficially own more than 10% of a registered class of the Company's equity
securities, to file reports of beneficial ownership and changes in beneficial
ownership of the Company's securities with the SEC on Forms 3, 4 and 5.
Officers, directors and greater than 10% stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms
they file.
  Based
solely on the Company's review of the copies of the forms received by it during
the fiscal year ended December 31, 2008 and representations that no
other reports were required, the Company believes that no persons who, at any
time during such fiscal year, was a director, officer or beneficial owner of
more than 10% of the Company's common stock failed to comply with all
Section 16(a) filing requirements during such fiscal year.
  29
   Code
of Ethics
  We
have not adopted a Code of Business Conduct and Ethics that applies to our
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions because our stock
is not trading and we are not a member of any exchange that would require such a
code.
  Nominating
Committee
  We
have not adopted any procedures by which security holders may recommend nominees
to our Board of Directors.
  Audit
Committee
  Our
Board of Directors acts as our audit committee. We do not have a qualified
financial expert at this time, because we have not been able to hire a qualified
candidate. Further, we believe that we have inadequate financial resources at
this time to hire such an expert.
  ITEM
11.    EXECUTIVE
COMPENSATION
  The
following is a summary of the compensation paid to our executive officers for
the two years ending December 31, 2008.
  SUMMARY
      COMPENSATION TABLEName
      and Principal Position
              Year
              Salary
              Bonus
              Stock
                Awards
              Option
                Awards
              Nonequity
                Incentive
                Plan
                Compensation
              Nonqualified
                Deferred
                Compensation
                Earnings
              All
      Other
                Compensation
              Total
      ($)Craig
      Burton
                President
              2007
              $40,040
              $0
              $0
              $0
              0
              $0
              $0
              $_______2008
              $40,040
              $0
              $0
              $0
              0
              $0
              $0
              $_______Joseph
      Passalaqua
              2007
              $0
              $0
              $0
              $0
              0
              $0
              $0
              $0Secretary
              2008
              $0
              $0
              $0
              $0
              0
              $0
              $0
              $0
  (1)
              As
      of December 31,   2008, we owe Mr. Burton
      approximately $56,346 in unpaid and accrued
  salary.
  (2)
              As
      of January 2006, Mr. Passalaqua ceased working for us on a full-time basis
      despite retaining his position as secretary. He presently works for us on
      a as needed basis.
   30
  The
following is a summary of all options, unvested stock and equity incentive plans
for our Executive Officers for the year ending December 31, 2008.
  OUTSTANDING
      EQUITY AWARDS AT FISCAL YEAR-ENDOption
      Awards
              Stock
      AwardsName
              Number
      of Securities Underlying Unexercised Options Exercisable
              Number
      of Securities Underlying Un-Exercised Options
    Un-Exercisable
              Equity
      Incentive Plan Awards: Number of Securities Underlying Unexercised
      Unearned Options
              Option
      Exercise Price
              Option
      Expiration Date
              Number
      of Shares or Units of Stock That Have Not Vested
              Market
      Value of Shares or Units of Stock That Have Not Vested
              Equity
      Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights
      That Have Not Vested
              Equity
      Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or
      Other Rights That Have Not VestedCraig
      Burton
              0
              0
              0
              N/A
              N/A
              0
              0
              0
              0Joseph Passalaqua
              0
              0
              0
              N/A
              N/A
              0
              0
              0
              0
  The
following is a summary of the compensation paid to our Directors for the period
ending December 31, 2008.
  
 DIRECTOR
      COMPENSATIONName
              Fees
      Earned or Paid in Cash
              Stock
      Awards
              Option
      Awards
              Non-Equity
      Incentive Plan Compensation
              Nonqualified
      Deferred Compensation Earnings
              All
      Other Compensation
              TotalCraig
      Burton
              0
              0
              0
              0
              0
              0
              0Joseph Passalaqua
              0
              0
              0
              0
              0
              0
              00
              0
              0
              0
              0
              0
              0
  
  31
  ITEM 12.SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS.
  The
following table sets forth information regarding the beneficial ownership of our
common stock as of December 31, 2008 by: (i) each person known by us to
beneficially own 5% or more of our outstanding shares of common stock, (ii) each
of our executive officers and directors, and (iii) all of our executive officers
and directors as a group. Except as otherwise indicated, all Shares are
beneficially owned, and investment and voting power is held by, the persons
named as owners.
  
 Name and Address of
                Beneficial
      Owner
              Amount
      and Nature of Common Stock Beneficially Owned Before
    Spinoff
              Percentage
      Ownership of
                Common
      Stock(1)Craig
      Burton
              115,000
              2.3%Greenwich
      Holdings, LLC (2)
              3,656,013
              73.6%Joseph
      J. Passalaqua
              120,000
              2.4%All
      Officers and Directors as a Group (3 persons)
              235,000
              4.7%
 ________________
  (1)
              Based
      on  4,963,226  shares of common stock outstanding as
      of December 31, 2008.
  (2)
              Greenwich
      Holdings, LLC is a New York limited liability company that is owned by
      Joseph Passalaqua, a resident of Liverpool, New
  York.
  ITEM 13.  CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPDENCE.
  None.
  ITEM 14.  PRINCIPAL
ACCOUNTANT FEES AND SERVICES.
  We
became a reporting Company when our registration statement became effective
on  November 13, 2008. Moore & Associates is the Company's
independent registered public accountant.
  Audit
Fees
  The
aggregate fees billed by Moore & Assoc. for professional services rendered
for the audits of our annual financial statements and reviews of financial
statements included in our quarterly reports on Form 10-Q or services that are
normally provided in connection with statutory and regulatory filings were
$15,000 for the fiscal year ended December 31, 2008.
  Audit-Related
Fees
  The
aggregate fees billed by Moore & Assoc. for assurance and related services
that are reasonably related to the performance of the audit or review of the
Company's financial statements were $15,000  for the fiscal year ended
December 31, 2008.
  Tax
Fees
  The
aggregate fees billed for professional services for tax compliance, tax advice
and tax planning were $0 for the fiscal year ended December 31,
2008.
  32
  All
Other Fees
  The
aggregate fees billed by Moore & Assoc. for other products and services were
$0 for the fiscal year ending December 31, 2008.
  Pre-approval Policy
  We
do not currently have a standing audit committee. The services described above
were approved by our Board of Directors.
  ITEM 15.EXHIBITS AND FINANCIAL STATEMENT
SCHEDULES.
 
 (a)
Exhibits
 
 Exhibit
              Description*3.1
              Certificate
      of Incorporation*3.2
              Amended
      and Restated Certificate of Incorporation*3.3
              By-laws*4.0
              Stock
      Certificate31.1
              Certification
      of the Company's Principal Executive Officer pursuant to Section 302 of
      the Sarbanes-OxleyAct
      of 2002, with respect to the registrant's Annual Report on Form 10-K for
      the year endedDecember
      31, 2008.31.2
              Certification
      of the Company's Principal Financial Officer pursuant to Section 302 of
      the Sarbanes-OxleyAct
      of 2002, with respect to the registrant's Annual Report on Form 10-K for
      the year endedDecember
      31, 2008.32.1
              Certification
      of the Company's Principal Executive Officer pursuant to 18 U.S.C. Section
      1350, as adoptedPursuant
      to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
              Certification
      of the Company's Principal Financial Officer pursuant to 18 U.S.C. Section
      1350, as adoptedpursuant
      to Section 906 of the Sarbanes-Oxley Act of
  2002. ______________________________________
 *
              Filed
      as an exhibit to the Company's registration statement on Form 10-SB, as
      filed with the Securities and Exchange Commission on February 1, 2008, and
      incorporated herein by this
reference.
 
  33
  SIGNATURES
 
 Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
 
 
 DATONE
      , INC.Dated:
      January 29, 2010
              By:
              /s/
      Craig BurtonName:
              Craig
      BurtonTitle:
              President,
      Chief Executive Officer and
Director
 
 In
accordance with the Exchange Act of 1934, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
 
 Title
              
              Date/s/
      Craig Burton
              
              President,
      Chief Executive Officer and Director
              
              January
      29, 2010Craig
      Burton/s/
      Joseph J Passalaqua
              
              Secretary,
      Principal Financial Officer and Director
              
              January
      29, 2010Joseph
      J Passalaqua
 
 
  34