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EXCEL - IDEA: XBRL DOCUMENT - DIGILITI MONEY GROUP, INC.Financial_Report.xls
EX-32.1 - CERTIFICATION OF THE COMPANY?S PRINCIPAL EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002. - DIGILITI MONEY GROUP, INC.f10q1112ex32i_deacquisition.htm
EX-32.2 - CERTIFICATION OF THE COMPANY?S PRINCIPAL FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002. - DIGILITI MONEY GROUP, INC.f10q1112ex32ii_deacquisition.htm
EX-31.2 - CERTIFICATION OF THE COMPANY?S PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002, WITH RESPECT TO THE REGISTRANT?S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED NOVEMBER 30, 2012. - DIGILITI MONEY GROUP, INC.f10q1112ex31ii_deacquisition.htm
EX-31.1 - CERTIFICATION OF THE COMPANY?S PRINCIPAL EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002, WITH RESPECT TO THE REGISTRANT?S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED NOVEMBER 30, 2012. - DIGILITI MONEY GROUP, INC.f10q1112ex31i_deacquisition.htm


FORM 10-Q

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

For the quarterly period ended November 30, 2012
 
OR

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

For the transition period from ________ to ________

Commission file number 000-53925

DE Acquisition 2, Inc.
(Exact name of registrant as specified in its charter)
 
Delaware
 
27-2205650
(State or other jurisdiction
of incorporation or organization)
 
 
(I.R.S. Employer
 Identification Number)
 
3017 W. 97th St., Suite 117, Minneapolis, MN 55431
(Address of principal executive offices)

(612) 889-8729
(Registrant’s telephone number, including area code)

c/o New Asia Partners, LLC, US Bancorp Center, Suite 2690, 800 Nicollet Mall, Minneapolis, MN 55402
(Former name, former address and former fiscal year, if changed since last report)
 
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 o No x.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No x

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 definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

  Large accelerated filer        o
Accelerated filer                          o
  Non-accelerated filer          o
Smaller reporting company        x
(Do not check if a smaller reporting company)
 
 
 
 

 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes No o.
 
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes o No o.

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 5,000,000 shares of common stock, par value $.0001 per share, outstanding as of July 2, 2013.
 
 
 

 
 
DE ACQUISITION 2, INC.

- INDEX -
 
 
Page
PART I – FINANCIAL INFORMATION:
 
   
Item 1.
Financial Statements (unaudited):
 
     
 
Balance Sheets as of November 30, 2012 and February 29, 2012
 4
     
 
Statements of Operations for the Three and Nine Months Ended November 30, 2012 and 2011 and for the Cumulative Period from February 24, 2010 (Inception) to November 30, 2012
 5
     
 
Statement of Shareholders' Deficit from February 24, 2010 (Inception) to November 30, 2012
 6
     
 
Statements of Cash Flows for the Nine Months Ended November 30, 2012 and 2011 and for the Cumulative Period from February 24, 2010 (Inception) through November 30, 2012
 7
     
 
Notes to Condensed Financial Statements
 8
     
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
 10
     
Item 3.
Quantitative and Qualitative Disclosures About Market Risk 
 13
     
Item 4.
Controls and Procedures 
 13
     
PART II – OTHER INFORMATION:
 
   
Item 1.
Legal Proceedings
 13
     
Item 1A.
Risk Factors
 13
     
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
 14
     
Item 3.
Defaults Upon Senior Securities
 14
     
Item 4.
Mine Safety Disclosures
 14
     
Item 5.
Other Information
 14
     
Item 6.
Exhibits
 14
     
Signatures 
 15
 
 
 

 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

DE ACQUISITION 2, INC.
(A Development Stage Company)
Balance Sheets
 
   
November 30,
2012
   
February 29,
2012
 
             
ASSETS
           
Cash and cash equivalents
  $ -     $ 1,230  
                 
TOTAL ASSETS
  $ -     $ 1,230  
                 
LIABILITIES
               
Accrued expenses
  $ -     $ 5,150  
Loan payable - related parties
    1,584       7,956  
Loan payable
    -       1,000  
                 
Total current liabilities
    1,584       14,106  
                 
Notes and interest payable – related parties
    42,720       40,419  
                 
TOTAL LIABILITIES
    44,304       54,525  
                 
SHAREHOLDERS' DEFICIT
               
Preferred stock: $0.0001 par value; 20,000,000 shares authorized; no shares issued or outstanding
    -       -  
Common stock: $0.0001 par value; 500,000,000 shares authorized; 5,000,000 shares issued and outstanding at November 30, 2012 and February 29, 2012
    500       500  
Additional paid-in capital
    22,734       15,008  
Deficit accumulated during the development phase
    (67,538 )     (68,803 )
TOTAL SHAREHOLDERS' DEFICIT
    (44,304 )     (53,295 )
                 
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT
  $ -     $ 1,230  
 
The accompanying notes are an integral part of these financial statements.

 
4

 

DE ACQUISITION 2, INC.
(A Development Stage Company)
Statements of Operations

   
Three Months
Ended
November 30,
2012
   
Three Months
Ended
November 30,
2011
   
Nine Months
Ended
November 30,
2012
   
Nine Months
Ended
November 30,
2011
   
From
Inception
(February 24,
2010) to
November 30,
2012
 
                               
                               
Revenues
  $ -     $ -     $ -     $ -     $ -  
                                         
OPERATING EXPENSES
                                       
General and administrative expenses
    (3,816 )     1,714       (3,566 )     12,808       61,840  
                                         
Net operating income (loss)
    3,816       (1,714 )     3,566       (12,808 )     (61,840 )
                                         
Interest expense
    761       761       2,301       2,301       5,698  
                                         
NET INCOME (LOSS)
  $ 3,055     $ (2,475 )   $ 1,265     $ (15,109 )   $ (67,538 )
                                         
Net income (loss) per share, basic and fully diluted    
  $ 0.00     $ (0.00 )   $ 0.00     $ (0.00 )   $ (0.02 )
Weighted average number of shares outstanding
    5,000,000       5,000,000       5,000,000       5,000,000       3,376,152  
 
The accompanying notes are an integral part of these financial statements.
 
 
5

 

DE ACQUISITION 2, INC.
(A Development Stage Company)
Statements of Shareholders' Deficit

     
Common Stock
   
Additional
Paid In
   
Deficit
Accumulated
During the Development
   
Total
Shareholders'
 
 
Date
 
Shares
   
Amount
    Capital     Stage     Deficit  
                                 
February 24, 2010 (inception)
02/25/10
    10,000     $ 1     $ 999     $ -     $ 1,000  
                                           
Net loss
      -       -       -       (1,139 )     (1,139 )
                                           
Balance, February 28, 2010
      10,000       1       999       (1,139 )     (139 )
                                           
Expenses paid by affiliates
      -       -       2,793       -       2,793  
Repurchase shares to treasury
01/19/11
    (10,000 )     (1 )     (5,771 )     -       (5,772 )
Issue new shares to investors
01/19/11
    5,000,000       500       2,479       -       2,979  
Net loss
      -       -       -       (37,358 )     (37,358 )
                                           
Balances, February 28, 2011
      5,000,000       500       500       (38,497 )     (37,497 )
                                           
Expenses paid by affiliates
      -       -       14,508       -       14,508  
Net loss
      -       -       -       (30,306 )     (30,306 )
                                           
Balances, February 29, 2012
      5,000,000       500       15,008       (68,803 )     (53,295 )
                                           
Loan forgiveness
      -       -       7,726       -       7,726  
Net income
      -       -       -       1,265       1,265  
                                           
Balances, November 30, 2012
      5,000,000     $ 500     $ 22,734     $ (67,538 )   $ (44,304 )

The accompanying notes are an integral part of these financial statements.
 
 
6

 
 
DE ACQUISITION 2, INC.
(A Development Stage Company)
Statements of Cash Flows
 
   
Nine Months
Ended
November 30,
2012
   
Nine Months
Ended
November 30,
2011
   
From
Inception
(February 24,
2010) to
November 30,
2012
 
                   
CASH FLOWS FROM OPERATING ACTIVITIES
                 
Net income (loss)
  $ 1,265     $ (15,109 )   $ (67,538 )
                         
Adjustments to reconcile net loss with cash used in operations:
                       
Common stock issued for services
    -       -       1,000  
Reimbursement of expenses by affiliate
    -       12,917       17,301  
Compensation expense related to stock repurchase
    -       -       34,228  
                         
Changes in operating assets and liabilities:
                       
Accrued expenses
    (5,150 )     (141 )     -  
Related-party interest
    2,301       2,301       5,699  
                         
Net cash used in operating activities
    (1,584 )     (32 )     (9,310 )
                         
CASH FLOWS FROM INVESTING ACTIVITIES
                       
                         
Net cash provided by (used in) investing activities
    -       -       -  
                         
CASH FLOWS FROM FINANCING ACTIVITIES
                       
                         
Proceeds from loans payable - related parties
    1,584       1,000       9,540  
Repayment of loans from related parties
    (291 )     -       (291 )
Proceeds from loans payable
    -       -       1,000  
Repayment of loans payable
    (939 )     -       (939 )
                         
Net cash provided by (used in) financing activities
    354       1,000       9,310  
                         
NET DECREASE IN CASH
    (1,230 )     968       -  
                         
Cash and cash equivalent at beginning of period
    1,230       -       -  
Cash and cash equivalent at end of period
  $ -     $ 968     $ -  
                         
SUPPLEMENTAL CASH FLOW DISCLOSURES
                       
Cash paid for interest
  $ -     $ -     $ -  
Cash paid for income taxes
  $ -     $ -     $ -  
                         
NON-CASH FINANCING ACTIVITIES
                       
Reimbursement of expenses by affiliate through additional paid-in capital
  $ -     $ 12,917     $ 17,301  
 
The accompanying notes are an integral part of these financial statements.

 
7

 
 
DE ACQUISITION 2, INC.
(A Development Stage Company)
Notes to Financial Statements
Three and Nine Months Ended November 30, 2012 and 2011
(Unaudited)

Note 1 – Basis of Presentation

DE Acquisition 2, Inc. (a development stage company) (the “Company”) was incorporated in Delaware on February 24, 2010, with an objective to acquire, or merge with, an operating business.  
 
The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s most recent Annual Financial Statements filed with the SEC on Form 10K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form 10K, have been omitted.

Note 2 – Change in Control

On January 19, 2011, the Company entered into an arrangement with our previous sole shareholder, Ruth Shepley, to acquire all 10,000 of her shares in exchange for $40,000 in cash.  Simultaneously, the Company entered into an agreement with five accredited investors to issue 5,000,000 shares for a total of $2,979.  In addition, these investors loaned the Company $37,021 in order to affect the transaction with Ms. Shepley.  We accounted for the repurchase of the 10,000 shares as a reduction in Additional Paid-in Capital in the amount of $5,771, a reduction in common stock of $1 and compensation expense of $34,228.

Concurrent with the change of control, Ruth Shepley, the Company’s previous sole officer and director prior to the closing date appointed Dennis Nguyen to serve as the President and Treasurer and Todd Vollmers to serve as the Vice President and Secretary of the Company, effective upon Ms. Shepley’s resignation from all officer positions held with the Company immediately after the consummation of the transactions contemplated by the purchase agreement.  Additionally, Ms. Shepley appointed Mr. Nguyen to serve as the sole director of the Company effective immediately upon Ms. Shepley’s resignation as director, such resignation to be effective ten days following the filing of the Company’s Schedule 14f-1 with the Securities and Exchange Commission on January 19, 2011 (the “Effective Date”).  Mr. Nguyen is the Chairman of New Asia Partners, LLC (“NAP”), with voting and investment control over 90% of the shares of common stock owned by NAP and therefore may be deemed to beneficially own 3,776,850 of the Company’s common stock, representing 75.53% of the issued and outstanding common stock of the Company as of January 19, 2011.  Mr. Vollmers serves as General Counsel to NAP with voting and investment control over 10% of the shares of Common Stock owned of record by NAP and therefore, may be deemed to beneficially own 419,650 of the Company’s common stock, representing 8.39% of the issued and outstanding shares of the Company’s common stock as of January 19, 2011.

On September 27, 2012, Pinnacle Investment Group, LLC ("Pinnacle"), an existing stockholder of the Company purchased an aggregate of 4,196,500 shares (the "Shares") of the Company's common stock, par value $0.0001 per share (the "Common Stock") from New Asia Partners, LLC (the "Seller" or "NAP") for an aggregate purchase price equal to $15,000 (the "Purchase Price") pursuant to the terms and conditions of a securities purchase agreement (the "Purchase Agreement") dated as of such date. On October 10, 2012, upon the closing of the transactions set forth in the Purchase Agreement (the "Closing"), and as a result of the acquisition by Pinnacle of the Shares, it owns an aggregate of 4,839,500 shares of the Company's Common Stock, representing 96.79% of the total issued and outstanding Common Stock of the Company.
 
Concurrent with this transaction:
 
NAP forgave loans due to them in the amount of $7,665.  This was recorded as additional paid in capital.
Outstanding accrued expenses of $5,150 were forgiven and recorded as a part of general and administrative expenses.

Note 3 – Related Party Notes Payable and Loan Payable

On January 19, 2011, the Company issued promissory notes payable to four new shareholders of the Company in the amount of $37,021 in exchange for those investors’ paying Ms. Shepley for her outstanding shares, thereby affecting a change in control of the Company.
 
 
8

 

These notes bear interest at 8.25% annually and are due at the earlier of (a) January 19, 2016 or (b) the date that the Company, or any wholly-owned subsidiary of the Company, consummates a business combination with an operating company in a reverse merger or reverse takeover transaction, or enters into any transaction that would cause the Company to cease being a shell as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended. In addition to the principal amount of $37,021, there was $5,699 and $3,398 of accrued interest on these notes as of November 30, 2012 and February 29, 2012, respectively.

During the year ended February 29, 2012, a shareholder paid expenses on behalf of the Company of $7,956.  During the three months ended May 31, 2012, the Company repaid $291 of the loan.  The loan had a balance of $7,665 when it was forgiven by the shareholder in October 2012. The loan had a balance of $7,956 as of February 29, 2012.  This loan was unsecured, non-interest bearing and payable on demand.

Note 4 – Loan Payable

The Company had an unsecured loan payable of $1,000 at February 29, 2012.  The Company repaid $939 of this loan in the April 2012 and the remaining $61 was forgiven in October 2012.  The loan was due upon demand and was non-interest bearing.

Note 5 – Going Concern
 
The Company's financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  The Company has had no revenues and has generated from operations an accumulated loss of $67,538 from February 24, 2010 (inception) to November 30, 2012.

In order to continue as a going concern and achieve a profitable level of operations, the Company will need, among other things, additional capital resources and developing a consistent source of revenues.  Management's plans include seeking a merger with an existing operating company.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plan described in the preceding paragraph and eventually attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
 
 
9

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

Forward Looking Statement Notice

Certain statements made in this Quarterly Report on Form 10-Q are “forward-looking statements” (within the meaning of the Private Securities Litigation Reform Act of 1995) in regard to the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of DE Acquisition 2, Inc. (“we”, “us”, “our” or the “Company”) to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties.  The Company's plans and objectives are based, in part, on assumptions involving the continued expansion of business.  Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company.  Although the Company believes its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance the forward-looking statements included in this Quarterly Report will prove to be accurate.  In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved.

Description of Business

DE Acquisition 2, Inc. (a development stage company) (the “Company”) was incorporated in Delaware on February 24, 2010 (Inception), with an objective to acquire, or merge with, an operating business.  The Company filed a registration statement on Form 10 with the U.S. Securities and Exchange Commission (the “SEC”) on April 6, 2010, and since its effectiveness, the Company has focused its efforts to identify a possible business combination.  As of November 30, 2012, the Company had not yet commenced any operations.

The Company, based on proposed business activities, is a “blank check” company.  The SEC defines those companies as "any development stage company that is issuing a penny stock, within the meaning of Section 3(a)(51) of the Securities Exchange Act 1934, as amended (the “Exchange Act”), and that has no specific business plan or purpose, or has indicated that its business plan is to merge with an unidentified company or companies."  Many states have enacted statutes, rules and regulations limiting the sale of securities of "blank check" companies in their respective jurisdictions.  The Company is also a “shell company,” defined in Rule 12b-2 under the Exchange Act as a company with no or nominal assets (other than cash) and no or nominal operations.  Management does not intend to undertake any efforts to cause a market to develop in our securities, either debt or equity, until we have successfully concluded a business combination.  The Company intends to comply with the periodic reporting requirements of the Exchange Act for so long as we are subject to those requirements.

In addition, the Company is an “emerging growth company”, as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), and may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of section 404(b) of the Sarbanes-Oxley Act, and exemptions from the requirements of Sections 14A(a) and (b) of the Securities Exchange Act of 1934 to hold a nonbinding advisory vote of shareholders on executive compensation and any golden parachute payments not previously approved.

The Company has also elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act. This election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.

We will remain an “emerging growth company” until the earliest of (1) the last day of the fiscal year during which our revenues exceed $1 billion, (2) the date on which we issue more than $1 billion in non-convertible debt in a three year period, (3) the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common equity securities pursuant to an effective registration statement filed pursuant to the Securities Act of 1933, as amended, or (4) when the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter. To the extent that we continue to qualify as a “smaller reporting company”, as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, after we cease to qualify as an emerging growth company, certain of the exemptions available to us as an emerging growth company may continue to be available to us as a smaller reporting company, including: (1) not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes Oxley Act; (2) scaled executive compensation disclosures; and (3) the requirement to provide only two years of audited financial statements, instead of three years.
 
 
10

 

The Company was organized as a vehicle to investigate and, if such investigation warrants, acquire a target company or business seeking the perceived advantages of being a publicly held corporation.  The Company’s principal business objective for the next 12 months and beyond such time will be to achieve long-term growth potential through a combination with an operating business. The Company will not restrict its potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire any type of business.

The Company currently does not engage in any business activities that provide cash flow.  During the next twelve months we anticipate incurring costs related to:
 
(i)            filing Exchange Act reports, and
(ii)           investigating, analyzing and consummating an acquisition.

We believe we will be able to meet these costs through use of funds in our treasury, through deferral of fees by certain service providers and additional amounts, as necessary, to be loaned to or invested in us by our stockholders, management or other investors.  As of the date of the period covered by this report, the Company has no cash in its treasury. There are no assurances that the Company will be able to secure any additional funding as needed.  Currently, however, our ability to continue as a going concern is dependent upon our ability to generate future profitable operations and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due.  Our ability to continue as a going concern is also dependent on our ability to find a suitable target Company and enter into a possible reverse merger with such Company.  Management’s plan includes obtaining additional funds by equity financing through a reverse merger transaction and/or related party advances; however, there is no assurance of additional funding being available.
 
The Company may consider acquiring a business which has recently commenced operations, is a developing company in need of additional funds for expansion into new products or markets, is seeking to develop a new product or service, or is an established business which may be experiencing financial or operating difficulties and is in need of additional capital.  In the alternative, a business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital but which desires to establish a public trading market for its shares while avoiding, among other things, the time delays, significant expense, and loss of voting control which may occur in a public offering.

Since our Registration Statement on Form 10 went effective, our management has had contact and discussions with representatives of other entities regarding a business combination with us, however, we have not entered into any definitive agreements or arrangements regarding such a transaction.  Any target business that is selected may be a financially unstable company or an entity in its early stages of development or growth, including entities without established records of sales or earnings.  In that event, we will be subject to numerous risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies.  In addition, we may effect a business combination with an entity in an industry characterized by a high level of risk, and, although our management will endeavor to evaluate the risks inherent in a particular target business, there can be no assurance that we will properly ascertain or assess all significant risks.  Our management anticipates that it will likely be able to effect only one business combination, due primarily to our limited financing and the dilution of interest for present and prospective stockholders, which is likely to occur as a result of our management’s plan to offer a controlling interest to a target business in order to achieve a tax-free reorganization.  This lack of diversification should be considered a substantial risk in investing in us, because it will not permit us to offset potential losses from one venture against gains from another.
 
The Company anticipates that the selection of a business combination will be complex and extremely risky.  Through information obtained from industry professionals including attorneys, investment bankers, and other consultants with significant experience in the reverse merger industry, and publications, such as the Reverse Merger Report, our management believes that there are numerous firms seeking even the perceived benefits of becoming a publicly traded corporation.  Such perceived benefits of becoming a publicly traded corporation include, among other things, facilitating or improving the terms on which additional equity financing may be obtained, providing liquidity for the principals of and investors in a business, creating a means for providing incentive stock options or similar benefits to key employees, and offering greater flexibility in structuring acquisitions, joint ventures and the like through the issuance of stock.  Potentially available business combinations may occur in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex.
 
 
11

 

 Liquidity and Capital Resources

As of November 30, 2012, the Company had no assets.  The Company had $1,230 of assets as of February 29, 2012 comprised of cash and cash equivalents. The Company’s liabilities as of November 30, 2012 totaled $44,304, comprised primarily of notes and interest payable to related parties and accrued expenses.  This compares with liabilities of $54,525, comprised primarily of notes and interest payable to related parties and accrued expenses, as of February 29, 2012. The Company can provide no assurance that it can continue to satisfy its cash requirements for at least the next twelve months.
 
The following is a summary of the Company's cash flows provided by (used in) operating, investing, and financing activities:

   
Nine Months
Ended
November 30,
2012
   
Nine Months
Ended
November 30,
2011
   
For the
Cumulative
Period from
February 24, 2010 (Inception) to
November 30,
2012
 
Net Cash Used In Operating Activities
 
$
(1,584
)
 
$
(32
)
 
$
(9,310
)
Net Cash Provided By Investing Activities
 
$
-
   
$
-
   
$
-
 
Net Cash Provided By Financing Activities
 
$
354
   
$
1,000
   
$
9,310
 
Net Decrease in Cash and Cash Equivalents
 
$
(1,230
)
 
$
968
   
$
-
 
 
The Company has nominal assets and has generated no revenues since inception. The Company is also dependent upon the receipt of capital investment or other financing to fund its ongoing operations and to execute its business plan of seeking a combination with a private operating company. In addition, the Company is dependent upon certain related parties to provide continued funding and capital resources. If continued funding and capital resources are unavailable at reasonable terms, the Company may not be able to implement its plan of operations.

Results of Operations

The Company has not conducted any active operations since inception, except for its efforts to locate suitable acquisition candidates.  No revenue has been generated by the Company from February 24, 2010 (Inception) though November 30, 2012.  It is unlikely the Company will have any revenues unless it is able to effect an acquisition or merger with an operating company, of which there can be no assurance.  It is management's assertion that these circumstances may hinder the Company's ability to continue as a going concern.  The Company’s plan of operation for the next twelve months shall be to continue its efforts to locate suitable acquisition candidates. 

For the three and nine months ended November 30, 2012, the Company had net income of $3,055 and $1,265, respectively, consisting of forgiveness of previously accrued professional service fees, partially offset by professional service fees incurred in relation to the preparation and filing of the Company’s periodic reports and interest expense.  This compares with a net loss of $2,475 and $15,109 for the three and nine months ended November 30, 2011, respectively, consisting of professional service fees incurred in relation to the preparation and filing of the Company’s periodic reports and interest expense.

For the period from February 24, 2010 (Inception) to November 30, 2012, the Company had a net loss of $67,538 comprised of professional service fees incurred in relation to the formation of the Company, the filing of the Company’s Registration Statement on Form 10 in April of 2010, the preparation and filing of the Company’s periodic reports on Form 10-Q and Form 10-K, and interest expense.
 
 
12

 
 
Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Contractual Obligations

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

Emerging Growth Company

As an “emerging growth company” under the Jumpstart Our Business Startups Act (the “JOBS Act”), the Company has elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act. This election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.

Item 3.        Quantitative and Qualitative Disclosures About Market Risk.

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.

Item 4.        Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures, within the meaning of Rule 13a-15 and Rule 15d-15 of the Exchange Act, are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed pursuant to the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules, regulations and related forms, and that such information is accumulated and communicated to our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

As of the end the period covered by this report, the Company had not filed annual or quarterly reports within the time periods specified in the SEC’s rules, regulations and related forms since its quarterly report on Form 10-Q for the fiscal quarter ended November 30, 2011 filed with the SEC on January 9, 2012. We carried out an evaluation, under the supervision and with the participation of our principal executive officer and our principal financial officer of the effectiveness of the design and operation of our disclosure controls and procedures as of November 30, 2012. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report.

Changes in Internal Controls

There have been no changes in our internal controls over financial reporting during the quarter ended November 30, 2012 that have materially affected or are reasonably likely to materially affect our internal controls.

PART II — OTHER INFORMATION

Item 1.        Legal Proceedings.

There are presently no pending legal proceedings to which the Company, any of its subsidiaries, any executive officer, any owner of record or beneficially of more than five percent of any class of voting securities is a party or as to which any of its property is subject, and no such proceedings are known to the Company to be threatened or contemplated against it.
 
Item 1A.     Risk Factors.

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
  
 
13

 

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

None.
  
Item 3.        Defaults Upon Senior Securities.

None.

Item 4.        Mine Safety Disclosures.

Not applicable.

Item 5.        Other Information.

As disclosed in the Company’s Current Report on Form 8-K filed with the SEC on October 16, 2012, the Company experienced a change in control and change in its board of directors (the “Board”) on October 10, 2012 as a result of the closing of the transactions contemplated by that certain securities purchase agreement, dated September 27, 2012, by and between New Asia Partners, LLC and Pinnacle Investment Group, LLC (the “Purchase Agreement”). In accordance with the terms and conditions of the Purchase Agreement, Dennis Nguyen, resigned as the Company’s sole officer and director prior to the closing and Terril Peterson was appointed to serve as President, Secretary, Treasurer and sole director of the Company, effective October 10, 2012.

Item 6.        Exhibits.

(a)  Exhibits required by Item 601 of Regulation S-K.
 
Exhibit
 
Description
     
*3.1
 
Certificate of Incorporation, as filed with the Delaware Secretary of State on February 24, 2010.
     
*3.2
 
By-Laws.
     
31.1
 
Certification of the Company’s Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q for the quarter ended November 30, 2012.
     
31.2
 
Certification of the Company’s Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q for the quarter ended November 30, 2012.
     
32.1
 
Certification of the Company’s Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
32.2
 
Certification of the Company’s Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
EX-101.INS
 
XBRL Instance Document
     
EX-101.SCH
 
XBRL Taxonomy Extension Schema
     
EX-101.CAL
 
XBRL Taxonomy Extension Calculation Linkbase
     
EX-101.DEF
 
XBRL Taxonomy Extension Definition Linkbase
     
EX-101.LAB
 
XBRL Taxonomy Extension Label Linkbase
     
EX-101.PRE
 
XBRL Taxonomy Extension Presentation Linkbase
 
*
Filed as an exhibit to the Company's Registration Statement on Form 10, as filed with the SEC on April 6, 2010, and incorporated herein by this reference.
 
 
14

 
 
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
Dated: July 2, 2013
DE ACQUISITION 2, INC.
 
       
 
By:
/s/ Terril Peterson
 
   
Terril Peterson
 
   
Principal Executive Officer
 
   
Principal Financial Officer
 
 
 
15