10KSB 1 f41706ctcc10ksbfinaldraft.htm FORM 10-KSB

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-KSB

[ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2005

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to ______________

Commission File Number 33-55254-01

CHINA TITANIUM &CHEMICAL CORP.

(Name of small business issuer in its charter)

Nevada	87-0467339
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1530-9^th Ave S.E., Calgary, Alberta Canada	T2G0T7
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (403) 693-8000

Securities registered under Section 12(b) of the Exchange Act:

Title of each class			Name of each exchange on which registered
None			None

Securities registered under Section 12(g) of the Exchange Act:

None

(Title of Class)

Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.

[ ]

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections.

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.

[ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ]

State issuer's net revenues for its most recent fiscal year:

Nil

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of a specified date within the past 60 days. (See definition of affiliate in Rule 12b-2 of the Exchange Act):

Aggregate market value of voting and non-voting common equity held by non-affiliates is $8,140,750 based on the bid price of $1.01 per share and the ask price of $12.00 per share on April 6, 2006.

Note: If determining whether a person is an affiliate will involve an unreasonable effort and expense, the issuer may calculate the aggregate market value of the common equity held by non-affiliates on the basis of reasonable assumptions, if the assumptions are stated.

(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST 5 YEARS)

Check whether the issuer has filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.

Yes [ ] No [ ]

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:

As of March 28, 2006, the Issuer had a total of 6,366,849 shares of Class A common stock issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

If the following documents are incorporated by reference, briefly describe them and identify the part of the Form 10-KSB (e.g. Part I, Part II, etc.) into which the document is incorporated: (1) any annual report to security holders; (2) any proxy or information statement; and (3) any prospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1990).

Transitional Small Business Disclosure Format (Check one): _________Yes

__________No

ITEM 1. DESCRIPTION OF BUSINESS.

(a)

Business Development

China Titanium & Chemical Corp. (Nevada), (formerly W-Waves USA, Inc.) (formerly Arrow Management, Inc.) (the “Company”) was incorporated under the laws of the State of Nevada on January 14, 1988.

As a result of a merger of November 19, 1999, the Company became the owner of certain audio technology developed by W-Waves USA, Inc. (Delaware). As of September 2003 all operations in the Company and its subsidiaries relating to the audio technology ceased due to a lack of available capital to continue operations.

On August 30, 2004 the Company filed a Certificate of Amendment with the Nevada Secretary of State to change its name to China Titanium & Chemical Corp. and to effect a reverse split of its Class A common shares on the basis of 1 share for each 100 shares held.

On October 7, 2004, the Company entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with the shareholders of China Titanium & Chemical Corp. ("CTCC"), a privately held Bahamian corporation. The Company could not raise the required funding under the terms of the Share Exchange Agreement and the transaction was abandoned by the Company.

The Company has not ever declared bankruptcy, has not ever been in receivership, or similar proceedings.

(b) Business of Issuer

Present Operations

The Company presently has no business operations. The Company’s intends to seek, investigate and, if such investigation warrants, acquire an interest in business opportunities presented to it by persons or firms who or which desire to seek the perceived advantages of a corporation registered under the Securities Act of 1934. The Company will not restrict its search to any specific business or industry, but the Company does intend to seek acquisition opportunities in China. The Company may participate in a business venture of virtually any kind or nature. This discussion of the proposed business is purposefully general and is not meant to be restrictive of the Company’s virtually unlimited discretion to search for and enter into potential business opportunities. Management anticipates that it may be able to participate in only one potential business venture because the Company has nominal assets and limited financial resources. This lack of diversification should be considered a substantial risk to shareholders of the Company because it will not permit the Company to offset potential losses from one venture against gains from another.

The Company may seek a business opportunity with entities which have recently commenced operations, or which wish to utilize the public marketplace in order to raise additional capital in order to expand into new products or markets, to develop a new product or service, or for other corporate purposes. The Company may acquire assets and establish wholly-owned subsidiaries in various businesses or acquire existing businesses as subsidiaries.

The Company anticipates that the selection of a business opportunity in which to participate will be complex and extremely risky. Due to general economic conditions, rapid technological advances being made in some industries, and shortages of available capital, management believes that there are numerous firms seeking the perceived benefits of a publicly registered corporation. Such perceived benefits may include facilitating or improving the terms on which additional equity financing may be sought, providing liquidity for incentive stock options or similar benefits to key employees, providing liquidity (subject to restrictions of applicable statutes), for all shareholders and other factors. Potentially, available business opportunities 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.

The Company presently has limited capital with which to provide the owners of business opportunities with any significant cash or other assets. However, management believes the Company will be able to raise additional capital for an acquisition of merit. The Company may incur significant legal and accounting costs in connection with the acquisition of a business opportunity, including the costs of preparing Form 8-K’s, 10-QSB’s or 10-KSB’s, agreements and related reports and documents. The Exchange Act specifically requires that any merger or acquisition candidate comply with all applicable reporting requirements, which include providing audited financial statements to be included within the numerous filings relevant to complying with the Exchange Act.

The analysis of new business opportunities will be undertaken by, or under the supervision of, the officers and directors of the Company.

Antonio Care, a consultant retained by the Company and a shareholder of the Company will be the key person in the search, review and negotiation with potential acquisition or merger candidates. In analyzing prospective business opportunities, management will consider such matters as the available technical, financial and managerial resources; working capital and other financial requirements; history of operations, if any; prospects for the future; nature of present and expected competition; the quality and experience of management services which may be available and the depth of that management; the potential for further research, development, or exploration; specific risk factors not now foreseeable but which then may be anticipated to impact the proposed activities of the Company; the potential for growth or expansion; the potential for profit; the perceived public recognition of acceptance of products, services, or trades; name identification; and other relevant factors. The Company will not acquire or merge with any company for which audited financial statements cannot be obtained within a reasonable period of time after closing of the proposed transaction.

The Company will not restrict its search for any specific kind of firms, but may acquire a venture which is in its preliminary or development stage, which is already in operation, or in essentially any stage of its corporate life. It is impossible to predict at this time the status of any business in which the Company may become engaged, in that such business may need to seek additional capital, may desire to have its shares publicly traded, or may seek other perceived advantages which the Company may offer.

Acquisition of Opportunities

In implementing a structure for a particular business acquisition, the Company may become a party to a merger, consolidation, reorganization, joint venture, or licensing agreement with another corporation or entity. It may also acquire stock or assets of an existing business. On the consummation of a transaction, it is probable that the present management and shareholders of the Company will no longer be in control of the Company. In addition, the Company's directors may, as part of the terms of the acquisition transaction, resign and be replaced by new directors without a vote of the Company's shareholders or may sell their stock in the Company. Any and all such sales will only be made in compliance with the securities laws of the United States and any applicable state.

It is anticipated that any securities issued in any such reorganization would be issued in reliance upon exemption from registration under applicable federal and state securities laws. In some circumstances, however, as a negotiated element of its transaction, the Company may agree to register all or a part of such securities immediately after the transaction is consummated or at specified times thereafter. If such registration occurs, of which there can be no assurance, it will be undertaken by the surviving entity after the Company has successfully consummated a merger or acquisition and the Company is no longer considered a "shell" company. Until such time as this occurs, the Company does not intend to register any additional securities. The issuance of substantial additional securities and their potential sale into any trading market which may develop in the Company's securities may have a depressive effect on the value of the Company's securities in the future, if such a market develops, of which there is no assurance.

While the actual terms of a transaction to which the Company may be a party cannot be predicted, it may be expected that the parties to the business transaction will find it desirable to avoid the creation of a taxable event and thereby structure the acquisition in a so-called "tax-free" reorganization under Sections 368(a)(1) or 351 of the Internal Revenue Code (the "Code"). In order to obtain tax-free treatment under the Code, it may be necessary for the owners of the acquired business to own 80% or more of the voting stock of the surviving entity. In such event, the shareholders of the Company, would retain less than 20% of the issued and outstanding shares of the surviving entity, which would result in significant dilution in the equity of such shareholders.

As part of the Company's investigation, officers and directors of the Company may personally meet with management and key personnel, may visit and inspect material facilities, obtain analysis of verification of certain

information provided, check references of management and key personnel, and take other reasonable investigative measures, to the extent of the Company's limited financial resources and management expertise. The manner in which the Company participates in an opportunity will depend on the nature of the opportunity, the respective needs and desires of the Company and other parties, the management of the opportunity and the relative negotiation strength of the Company and such other management.

With respect to any merger or acquisition, a negotiation with target company management is expected to focus on the percentage of the Company which the target company shareholders would acquire in exchange for all of their shareholdings in the target company. Depending upon, among other things, the target company's assets and liabilities, the Company's shareholders will in all likelihood hold a substantially lesser percentage ownership interest in the Company following any merger or acquisition. The percentage ownership may be subject to significant reduction in the event the Company acquires a target company with substantial assets. Any merger or acquisition effected by the Company can be expected to have a significant dilutive effect on the percentage of shares held by the Company's then shareholders.

The Company will participate in a business opportunity only after the negotiation and execution of appropriate written agreements. Although the terms of such agreements cannot be predicted, generally such agreements will require some specific representations and warranties by all of the parties thereto, will specify certain events of default, will detail the terms of closing and the conditions which must be satisfied by each of the parties prior to and after such closing, will outline the manner of bearing costs, including costs associated with the Company's attorneys and accountants, will set forth remedies on default and will include miscellaneous other terms.

As stated hereinabove, the Company will not acquire or merge with any entity which cannot provide independent audited financial statements within a reasonable period of time after closing of the proposed transaction. The Company is subject to all of the reporting requirements included in the Exchange Act. Included in these requirements is the affirmative duty of the Company to file independent audited financial statements as part of its Form 8-K to be filed with the Securities and Exchange Commission upon consummation of a merger or acquisition, as well as the Company's audited financial statements included in its annual report on Form 10-K (or 10-KSB, as applicable).

The Company does not intend to provide the Company's security holders with any complete disclosure documents, including audited financial statements, concerning an acquisition or merger candidate and its business prior to the consummation of any acquisition or merger transaction.

Competition

The Company will remain an insignificant participant among the firms which engage in the acquisition of business opportunities. There are many established venture capital and financial concerns which have significantly greater financial and personnel resources and technical expertise than the Company. In view of the Company's combined limited financial resources and limited management availability, the Company will continue to be at a significant competitive disadvantage compared to the Company's competitors.

Regulation and Taxation

The Investment Company Act of 1940 defines an "investment company" as an issuer which is or holds itself out as being engaged primarily in the business of investing, reinvesting or trading of securities. While the Company does not intend to engage in such activities, the Company could become subject to regulation under the Investment Company Act of 1940 in the event the Company obtains or continues to hold a minority interest in a number of development stage enterprises. The Company could be expected to incur significant registration and compliance costs if required to register under the Investment Company Act of 1940. Accordingly, management will continue to review the Company's activities from time to time with a view toward reducing the likelihood the Company could be classified as an "investment company."

The Company intends to structure a merger or acquisition in such manner as to minimize federal and state tax consequences to the Company and to any target company.

Patents

The Company owns no patents and no Internet domain names.

Research and Development

The Company has not undertaken any research and development activities during each of its last two fiscal years.

Employees

As of March 30, 2006, the Company had no employees.

ITEM 2. DESCRIPTION OF PROPERTY.

The Company does not own any plant or properties or any real estate. The Company does not lease any property.

ITEM 3. LEGAL PROCEEDINGS.

The Company is not a party to any legal proceedings and is not aware of any pending legal proceedings as of the date of this registration statement.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Not Applicable

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

(a)

The Company's common stock previously traded on the OTC/BB under the symbol "WAVSA". On May 6, 2004 the Company’s common stock ceased being quoted on the OTC/BB due to the Company’s inability to file its annual report for the period ended December 31, 2003. The Company had hoped that its stock would re-commence being quoted on the OTC/BB following the filing of the Form 10-KSB for the period ended December 31, 2003 and its Form 10-QSB for the period ended March 31, 2004, however this did not occur. Following is a report of high and low bid prices for the fiscal year 2005 and 2004. From June 30, 2004 to the end of March 31, 2005, the Company did not have any market makers that were bidding the stock on the pink sheets.

Year 2005	High	Low
4^th Quarter ended 12/31/05	1.01	0.10
3^rd Quarter ended 9/30/05	0.10	0.05
2^nd Quarter ended 6/30/05	0.10	0.01
1^st Quarter ended 3/31/05	0.00	0.00

Year 2004	High	Lo
4^th Quarter ended 12/31/2004	0.00	0.00
3^rd Quarter ended 9/30/2004	0.00	0.00
2^nd Quarter ended 6/30/04	3.00	1.00
1^st Quarter ended 3/31/04	3.50	3.00

The information as provided above for the fiscal year ended 2004 was provided by MicrocapTrade, Inc. The information as provided above for the fiscal year ended 2005 was provided by Pink Sheets. The quotations

provided herein may reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions and have not been adjusted for stock dividends or splits.

As of the date of this filing there are 4 market makers in the Company’s stock which is presently quoted on the pink sheets. The last available reported trade by the Pink Sheets was May 31, 2005 at $3.00 per share. As of March 28, 2006, there were 498 record holders of the Company’s Class A common stock.

During the last two fiscal years, no dividends have been declared on the Company's stock.

Securities Authorized for Issuance under Equity Compensation Plans

The Company does not have any securities authorized for issuance under equity compensation plans.

(b)

RECENT SALES OF UNREGISTERED SECURITIES

During the quarter ended December 31, 2005, the Company issued a total of 451,286 units of Class A common stock, each unit consisting of one share and one warrant to purchase one share of Class A common stock at $0.75 per share, exercisable for a period of two years for cash consideration of $225,643 and a total of 121,927 units of Class A common stock, each unit consisting of one share and one warrant to purchase one share of Class A common stock at $1.50 per share for cash consideration of $121,927.

Each of the foregoing issuances of securities was exempt from registration due to the exemption found in Regulation S promulgated by the Securities and Exchange Commission under the Securities Act of 1933. These sales were offshore transactions since all of the offerees were not in the United States and the purchasers were outside the United States at the time of the purchase. Moreover, there were no directed selling efforts of any kind made in the Untied States neither by us nor by any affiliate or any person acting on our behalf in connection with any of these offerings. All offering materials and documents used in connection with the offers and sales of the securities included statements to the effect that the securities have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States or to U.S. persons unless the securities are registered under the Act or an exemption therefrom is available and that no hedging transactions involving those securities may not be conducted unless in compliance with the Act. Each purchaser under Regulation S certified that it is not a U.S. person and is not acquiring the securities for the account or benefit of any U.S. person and agreed to resell such securities only in accordance with the provisions of Regulation S, pursuant to registration under the Act or pursuant to an available exemption from registration. The shares sold are restricted securities and the certificates representing these shares have been affixed with a standard restrictive legend, which states that the securities cannot be sold without registration under the Securities Act of 1933 or an exemption there from and we are required to refuse to register any transfer that does not comply with such requirements.

ITEM 6. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

Plan of Operation

At present, the Company has no operations and is seeking a merger or acquisition. The Company will not restrict its search to any specific business or industry, but the Company does intend to seek acquisition opportunities in China. The Company may participate in a business venture of virtually any kind or nature. Management anticipates that it may be able to participate in only one potential business venture because the Company has nominal assets and limited financial resources.

The Company presently has cash reserves of approximately $500,000.00. Based on present operations the Company will be able to satisfy its cash requirements during the next twelve months. However, should the Company enter into an agreement for a merger or acquisition, the Company may be required to raise additional funds for the project. There can be no assurance that the Company will be able to raise the additional funds that may be required. The Company at this time cannot predict what the amount of funds required may be for any acquisition or merger. The Company cannot accurately state at this time whether it will be required to purchase any plant or equipment or have any significant changes in the number of employees. If, however, it does not anticipate making any such purchases or hiring any employees until such time as it has completed an acquisition or a merger.

Off Balance Sheet Arrangements

The Company presently does not have any off-balance sheet arrangements.

ITEM 7. FINANCIAL STATEMENTS

Consolidates financial statements as of the fiscal years ended December 31, 2005 and 2004 can be found on pages F-1 through F-16 of this document.

CHINA TITANIUM & CHEMICAL CORP.

CONSOLIDATED FINANCIAL STATEMENTS

AS OF THE FISCAL YEARS ENDED DECEMBER 31, 2005 AND 2004

with

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

F-1

INDEX TO FINANCIAL STATEMENTS

CHINA TITANIUM & CHEMICAL CORP.

with

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

	Page

Report of Independent REGISTERED PUBLIC ACCOUNTING FIRM	F-3

Financial Statements:

Consolidated Balance Sheet	F-4

Consolidated Statements of Operations	F-5

Consolidated Statement of Stockholders’ Deficit	F-6 to F-8

Consolidated Statements of Cash Flows	F-9 to F-10

Notes to Consolidated Financial Statements	F-11 to F-16

F-2

Child Van Wagoner &

Bradshaw, PLLC

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors

China Titanium & Chemical Corp.

(A Development Stage Company)

We have audited the accompanying consolidated balance sheets of China Titanium & Chemical Corp. (“CTCC”) (a Nevada development stage company) as of December 31, 2005 and 2004, and the related consolidated statements of operations, changes in stockholders' equity, and cash flows for the years ended December 31, 2005 and 2004, and for the period of March 21, 2004 (date of inception) to December 31, 2005. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these 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 the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of CTCC as of December 31, 2005 and 2004, and the results of its operations, changes in stockholders' equity, and its cash flows for the years ended December 31, 2005 and 2004, and for the period of March 21, 2004 (date of inception) to December 31, 2005 and 2004 in conformity with accounting principles generally accepted in the United States.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company currently has cash flow constraints, an accumulated deficit and has no operations. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Child, Van Wagoner & Bradshaw

CERTIFIED PUBLIC ACCOUNTANTS

Salt Lake City, Utah

April 15, 2006

1284 W. Flint Meadow Dr. #D

Kaysville, Utah 84037

Telephone 801.927.1337

Facsimile 801.927.1344

5296 S. Commerce Dr. #300

(53^rd So. @ 1-15)

Salt Lake City, Utah 84107

Telephone 801.281.4700

Facsimile 801.281.4701

Suite B. 4F,

North Cape Commercial Bldg,

388 King’s Road

North Point, Hong Kong

www.cpaone.net

F-3

CHINA TITANIUM & CHEMICAL CORP.

(A Development Stage Company)

Consolidated Balance Sheet

	December 31, 2005

CURRENT ASSETS
Cash		$	458,799
TOTAL CURRENT ASSETS			458,799

CAPITAL ASSETS			-

TOTAL ASSETS		$	458,799

CURRENT LIABILITIES
Accounts payable and accrued liabilities		$	59,172
Payable – related parties (Note 5)			105,000

TOTAL CURRENT LIABILITIES			164,172

STOCKHOLDERS’ EQUITY
Common Stock (Note 6) $0.001 par value, authorized 100,000,000 shares Issued and outstanding 5,366,849 Class A common shares			5,367
Additional paid-in capital			3,857,397
Additional paid in capital - warrants			607,167
Accumulated deficit			(4,175,304)
			294,627

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	458,799

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

F-4

CHINA TITANIUM & CHEMICAL CORP.

(A Development Stage Company)

Consolidated Statements of Operations

		YEAR ENDED DECEMBER 31, 2005		YEAR ENDED DECEMBER 31, 2004		FROM INCEPTION (MARCH 19, 1999) TO DECEMBER 31, 2005

Revenue	$	0	$	0	$	0
Cost of sales		0		0		0

GROSS PROFIT		0		0		0

OPERATING EXPENSES
Salaries and consulting		0		0		0
Interest expense		0		23,022		98,486
General and administrative		163,633		298,280		770,471
		163,633		321,302		868,957

LOSS FROM OPERATIONS		(163,633)		(321,302)		(868,957)


GAIN (LOSS) ON DISPOSAL OF ASSETS		0		0		(224,136)
DISCONTINUED OPERATIONS- SUBSIDIARIES				0		(3,612,359)
GAIN (LOSS) ON EXTINGUISHEMENT OF DEBT		44,613		485,535		530,148
NET INCOME (LOSS)	$	(119,020)	$	164,233	$	(4,175,304)
BASIC AND DILUTED INCOME LOSS PER SHARE Net income (loss) per weighted average share

Operations	$	(0.04)	$	(1.23)
Debt extinguishment		0.01		1.86

Net income (loss)	$	(.03)	$	.63

WEIGHTED AVERAGE NUMBER OF COMMON SHARES		3,846,109		261,703

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

F-5

CHINA TITANIUM & CHEMICAL CORP.

(A Development Stage Company)

Consolidated Statements of Stockholders’ Deficit

FOR THE PERIOD MARCH 19, 1999 (DATE OF INCEPTION) TO DECEMBER 31, 2005

	Common Stock
	Shares		Amount		Additional Paid in Capital	Additional Paid in Capital- Warrants		Treasury Stock		Accumulated Deficit		Total
Balance at March 19, 1999	0	$	0	$	0	0	$	0	$	0	$	0
Disposition of Subsidiary	0		0		0	0		(2,885)		0		(2,885)
Acquisition of Arrow Management, Inc.	55,814		56		5,525	0		0		0		5,581
Issuance of treasury stock upon reorganization	0		0		0	0		2,885		0		2,885
Issuance of 54,500 shares upon reorganization	54,500		54		5,396	0		0		0		5,450
Net Loss	0		0		0	0		0		(897,986)		(897,986)
Balance at December 31, 1999	110,314		110		10,921	0		0		(897,986)		(886,955)
Additional paid-in capital	0		0		1,050,000	0		0		0		1,050,000
Net loss	0		0		0	0		0		(1,723,395)		(1,723,395)
Balance at December 31, 2000	110,314		110		1,060,921	0		0		(2,621,381)		(1,560,350)
Issuance of restricted shares at $35.00 for debt	55,695		56		1,949,271	0		0		0		1,949,327
Net loss	0		0		0			0		(948,195)		(948,195)
Balance at December 31, 2001	166,009		166		3,010,192	0		0		(3,569,576)		(559,218)
Issuance of restricted shares at $35.00 for debt	201		0		7,025	0		0		0		7,025

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

F-6

CHINA TITANIUM & CHEMICAL CORP.

(A Development Stage Company)

Consolidated Statements of Stockholders’ Deficit

FOR THE PERIOD MARCH 19, 1999 (DATE OF INCEPTION) TO DECEMBER 31, 2005 (CONTINUED)

Net loss	0	0	0	0	(171,594)	(171,594)
Balance at December 31, 2002	166,210	166	3,017,217	0	(3,741,170)	(723,787)
Net Loss	0	0	0	0	(479,347)	(479,347)
Balance at December 31, 2003	166,210	166	3,017,217	0	(4,220,517)	(1,203,134)
Issuance of shares for debt	222,006	222	21,978	0	0	22,200
Debt Cancellation Contributed	0	0	334,014	0	0	334,014
Interest Expense Contributed	0	0	23,022	0	0	23,022
Net Income	0	0	0	0	164,233	164,233
Balance at December 31, 2004	388,216	388	3,396,231	0	(4,056,284)	(659,665)
Issuance of shares for debt	1,926,820	1,927	190,755	0	0	192,682
Issuance of shares for debt	2,050,600	2,051	0	203,009	0	205,060
Issuance of shares for private placement @ $0.50 per share (See Note 4)	200,000	200	91,257	8,543	0	100,000
Issuance of shares for private placement @$1.00 per share (See Note 4)	228,000	228	220,815	6,957	0	228,000

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

F-7

CHINA TITANIUM & CHEMICAL CORP.

(A Development Stage Company)

Consolidated Statements of Stockholders’ Deficit

FOR THE PERIOD MARCH 19, 1999 (DATE OF INCEPTION) TO DECEMBER 31, 2005 (CONTINUED)

Issuance of shares for private placement @$0.50 per share ( See Note 4)	451,286	451	191,586	33,606	0	225,643
Issuance of shares for private placement @$1.00 per share (See Note 4)	121,927	122	116,598	5,207	0	121,927
Paid up capital –warrant valuation	0	0	(349,845)	349,845	0	0
Net Loss	0	0	0	0	(119,020)	(119,020)
Balance at December 31, 2005	5,366,849	5,367	3,857,397	607,167	(4,175,304)	294,627

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

F-8

CHINA TITANIUM & CHEMICAL CORP.

(A Development Stage Company)

Consolidated Statements of Cash Flows

Year Ended						FROM INCEPTION (MARCH 19, 1999) THROUGH DECEMBER 31, 2005
		December 31, 2005		December 31, 2004		FROM INCEPTION (MARCH 19, 1999) THROUGH DECEMBER 31, 2005
OPERATING ACTIVITIES
Net income (loss)	$	(119,020)	$	164,233	$	(4,175,304)
Adjustment to reconcile net loss to net cash used by operating activities
Debt cancellation contributed		0		334,014		334,014
Interest expense contributed		0		23,022		23,022
Loss on write down of assets		0		0		224,136
Depreciation and amortization		0		0		242,744
		(119,020)		521,269		(3,351,388)
Changes in assets and liabilities:
Sales tax receivable		0		2,116		0
Intangible and other assets		0		0		(125,903)
Accounts payable and accruals		(11,739)		(355,901)		496,990
Payables-related parties		(100,060)		(288,014)		(293,844)
Income taxes		0		(497)		0
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES		(230,819)		(121,027)		(3,274,145)

FINANCING ACTIVITIES
Issue of capital stock for cash		675,570		22,200		697,770
Cash of subsidiary		0		0		1,152

Issue of capital stock for debt		397,742				397,742
Note payable acquisition		0		(90,030)		0
Note payable-related corporations		(383,694)		205,060		1,917,755
Bank loan		0		(16,031)		0
Bank overdraft		0		(172)		0
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES		689,618		121,027		4,064,419

INVESTING ACTIVITIES
Goodwill on acquisition of subsidiaries		0		0		(162,087)
Disposition of assets		0		0		52,606
Acquisition of capital assets		0		0		(221,994)
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES		0		0		(331,475)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		458,799		0		458,799
Cash and cash equivalents at beginning of year		0		0		0
CASH & CASH EQUIVALENTS AT END OF YEAR	$	458,799	$	0	$	458,799

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

F-9

CHINA TITANIUM & CHEMICAL CORP.

Formerly known as W-WAVES USA, INC.

(A Development Stage Company)

Consolidated Statements of Cash Flows (Continued)

Year Ended						FROM INCEPTION (MARCH 19, 1999) THROUGH DECEMBER 31, 2005
		December 31, 2005		December 31, 2004
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest	$	0	$	0	$	125,166
Income taxes		0		0		1,493

NON-CASH INVESTING AND FINANCING ACTIVITIES
Issuance of 54,500 shares upon reorganization	$	0	$	0	$	5,450
Issuance of shares to retire debt		397,742		22,200		1,978,552

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

F-10

CHINA TITANIUM & CHEMICAL CORP.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2005 and 2004

1. ORGANIZATION AND BUSINESS ACTIVITIES

Arrow Management, Inc. (Arrow) was incorporated under the laws of the State of Nevada on January 14, 1988. On September 30, 1993, Arrow issued 52,507 shares of its common stock to acquire 99.45% of the outstanding stock of Panorama, an affiliated company. The transaction was accounted for under the pooling-of-interests method of accounting, thus, the financial statements were restated as if the Companies had been consolidated for all periods presented. In December 1996, Arrow cancelled 3,500 shares of its common stock held for issuance to a shareholder of Panorama. As a result of this transaction, Arrow's ownership of Panorama was reduced from 99.45% to 90.73%. On November 19, 1999, Arrow exchanged its interest in Panorama for 30,947 shares held as treasury stock. At approximately the same time, Arrow entered into a plan of reorganization with W-Waves USA, Inc. (W-Waves) (a Delaware corporation) to issue the 30,947 shares of treasury stock and an additional 54,500 previously un-issued shares to acquire 100% of the outstanding stock of W-Waves.

The transaction was accounted for as a reverse acquisition. On October 21, 1999, Arrow filed a Certificate of Name Change with the State of Nevada changing its name to W-Waves USA, Inc. On

August 27, 2004, W-Waves USA, Inc. filed a Certificate of Name Change with the State of Nevada changing its name to China Titanium & Chemical Corp. (the Company). The Company also effected a reverse split of its shares on the basis of one share for each 100 shares issued on August 27, 2004 and increased its authorized capital to 100,000,000 common shares.

As of September 2003, the Company and its subsidiaries ceased operations relating to the marketing of its technologies and products in the audio industry and as of the year ended December 31, 2004, the Company had divested itself of all of its subsidiaries.

On October 7, 2004, the Company entered into a share exchange agreement with China Titanium & Chemical Corp., a private Bahamian company. The agreement did not close.

The Company is presently seeking other acquisitions in China.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

Revenues are recognized in accordance with SEC Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial Statements." Under SAB 101, product revenues (or service revenues) are recognized when persuasive evidence of an arrangement exists, delivery has occurred (or service has been performed), the sales price is fixed and determinable and collectibility is reasonably assured.

Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with original maturities of less than three months to be cash equivalents.

Comprehensive Income

Since 1999, the Company adopted Statement of Financial Accounting Standard ("SFAS") No. 130, "Reporting Comprehensive Income". This statement establishes rules for the reporting of comprehensive income and its components. The adoption of SFAS No.130 had no significant impact on total stockholders’ deficit as of December 31, 2005.

F-11

CHINA TITANIUM & CHEMICAL CORP.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2005 and 2004

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income Taxes

Income taxes are computed using the asset and liability method. Under this method, deferred income tax assets and liabilities are determined based on the differences between the financial and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. Statement of Financial Accounting Standards No.109, requires recording a valuation allowance against deferred tax assets if based on the weight of available evidence, it is more likely than not that some or all of its deferred tax assets will not be realized.

Depreciation and Amortization

Property and equipment are stated at cost. Depreciation is calculated on a diminishing balance basis over the estimated useful lives of the assets, generally five to seven years. Trademarks and patents are depreciated on a straight-line basis over a period of twenty years. Maintenance and repairs are charged to operations when incurred. Betterments and renewals are capitalized.

Estimates and Assumptions

Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing the financial statements.

Basic and Diluted Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net loss available to common stockholders by the weighted average number of shares outstanding during the period. Diluted net income (loss) per share is computed using the weighted average number of common shares and common equivalent shares outstanding during the period. Common equivalent shares consist of shares issuable upon the exercise of stock warrants. At December 31, 2005, 402 warrants were outstanding and were exercisable at $60.00 per share. Due to the large exercise price, it is not expected that the warrants will ever be exercised. There are also a total of 2,050,500 warrants outstanding exercisable at $0.25, 651,286 warrants outstanding exercisable at $0.75 and 349,927 warrants outstanding exercisable at $1.50. Warrants issued during 2005 are exercisable for two years. None of the warrants have been included in basic or diluted calculations as the effect is antidilutive.

Allowance for Doubtful Accounts

The Company provides an allowance for uncollectible accounts which are doubtful of collection. The allowance is based upon management's periodic analysis of receivables, evaluation of current economic conditions and other pertinent factors. Ultimate losses may vary from current estimates and, as additions to the allowance become necessary, they are charged against earnings in the period they become known. Losses are charged and recoveries are credited to the allowance.

Impairment of Long-Lived Assets

The Company evaluates the recoverability of long-lived assets in accordance with "SFAS" No. 121, "Accounting for the Impairment of Long-Lived Assets to be Disposed of “SFAS” No.121 requires recognition of impairment of long-lived assets in the event the net book value of such assets exceeds the future undiscounted cash flows attributable to such assets.

F-12

CHINA TITANIUM & CHEMICAL CORP.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2005 and 2004

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Advertising Costs

The Company recognizes advertising expenses in accordance with Statement of Position 93-7, "Reporting on Advertising Costs". As such, the Company expenses the cost of communicating advertising in the period in which the advertising space or airtime is used. There were no advertising costs for the periods ended December 31, 2005 and December 31, 2004.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and accounts receivable. Cash is deposited with high credit, quality financial institutions. Accounts receivable are typically unsecured and are derived from revenues earned from customers located throughout the United States. The Company performs ongoing credit evaluations of its customers and maintains reserves for potential credit losses; historically, such losses have been within management's expectations.

Fair Value of Financial Instruments

The Company's financial instruments, including cash, accounts receivable, accounts payable, notes payable and long-term obligations are carried at cost, which approximates their fair value because of the short-term maturity of these instruments.

Goodwill

Goodwill resulting from acquisition of subsidiaries was being amortized on straight-line basis over the estimated life of the benefit of five years. During 2003, all of the assets of the subsidiaries were written off to a nominal value of $1.00.

New Accounting Pronouncements

In December of 2002, the FASB issued SFAS 148, "Accounting for Stock-Based Compensation - Transition and Disclosure - An Amendment of FASB Statement No. 123." SFAS 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, the statement amends the disclosure requirement of Statement No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results.

In April, 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities." SFAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under FASB Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 149 is generally effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003.

In May, 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." SFAS No. 150 establishes standards for how an issuer measures certain financial instruments with characteristics of both liabilities and equity and requires that an issuer classify a financial instrument within its scope as a liability (or asset in some circumstances). SFAS No. 150 was effective for financial statements entered into or modified after May 31, 2003 and otherwise was effective and adopted by the Company in 2003.

None of the above new pronouncements have current application to the Company, but may be applicable to the Company’s future financial reporting.

F-13

CHINA TITANIUM & CHEMICAL CORP.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2005 and 2004

3. NOTE PAYABLE - RELATED CORPORATIONS

At December 31, 2005, advances totalling $105,000 made to the Company by related parties are outstanding. The notes are non interest bearing with no specific terms of repayment.

4. COMMON STOCK

The Company is authorized to issue 100,000,000 shares of $.001 par value common stock. As of December 31, 2005 and 2004, the Company had 5,366,849 and 388,216 shares of common stock outstanding, respectively.

During the quarter ended September 30, 2005 the Company accepted a private placement subscription in the amount of $100,000.00 for an issuance of 200,000 units of Class A common stock, each unit consisting of one share and one warrant to purchase one share of Class A common stock at $ 0.75 per share, exercisable for a period of two years.

During the quarter ended September 30, 2005, the Company accepted two private placement subscriptions totaling $228,000.00 for the issuance of 228,000 units of Class A common stock, each unit consisting of one share and one warrant to purchase one share of common stock at $1.50 per share, exercisable for a period of two years.

On February 28, 2005, the Board of Directors approved the settlement of certain of the outstanding debts of the Company by way of the issuance of a total of 1,926,820 common shares at a deemed price of $0.10 per common share and the issuance of a total of 2,050,600 units, each unit consisting of one common share and a warrant to purchase an additional common share at $0.25 per share for a period of two years. The shares and the units were issued on March 3, 2005.

On August 27, 2004 the Company completed a reverse split of its common stock on the basis of 1 share for each 100 shares previously held and increased its authorized capital to 100,000,000. All share and per share amounts have been restated as if the split had taken place at the beginning of the earliest period presented.

On June 30, 2004 the company issued 222,006 common shares to retire $22,200 of debt from related parties.

F-14

CHINA TITANIUM & CHEMICAL CORP.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2005 and 2004

5. COMMON STOCK (continued)

The warrants issued during the year were valued at $607,167 using the Black-Scholes option pricing model and is described as “Additional paid in capital – warrants” in the stockholders’ equity section of the balance sheet. The following table summarizes the assumptions used in arriving at the valuation:

Number of Warrants Issued

Stock Price at Grant Date

Exercise Price

Term

Volatility

Annual rate of quarterly dividends

Discount Rate-Bond Equivalent Yield

2,050,600

0.01

0.25

2 year

150%

N/A

1.17%

228,000

0.05

1.50

2 year

150%

N/A

0.94%

200,000

0.05

0.75

2 year

150%

N/A

0.94%

451,286

0.10

0.75

2 year

150%

N/A

0.94%

121,927

0.10

1.50

2 year

150%

N/A

0.94%

6. INCOME TAXES

The components of the provision for income taxes at December 31, 2005 are as follows:

Current- Federal

Deferred- Federal

Income tax provision

A reconciliation of the income tax provision for the Company to the amount expected using the U.S. Federal statutory rate follows:

Expected amount using

U.S. Federal statutory rate

Use of loss carryforwards

Change in valuation

allowance

Effective tax

Deferred tax assets (liabilities) consisted of the following at December 31, 2005.

Deferred tax assets

Net operating loss

carryforwards

230,000

Deferred tax liability

230,000

Valuation allowance

(230,000)

At December 31, 2005, the Company has net operating loss (NOL) carryforwards totaling approximately $794,000. The carryforwards begin to expire in fiscal year 2014. Deferred tax assets have been reduced by a valuation allowance because of uncertainties as to future recognition of taxable income to assure realization. The net change in the valuation allowance for the year ended December 31, 2005 was $0 and $0 for the year ended December 31, 2004.

F-15

CHINA TITANIUM & CHEMICAL CORP.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2005 and 2004

7. LOSS PER SHARE

Following is a reconciliation of the numerators of the basic and diluted income (loss) per share for the years ended December 31, 2005 and 2004:

2005

2004

Net income (loss) available to

common stockholders

(119,020)

164,233

Weighted average shares:

Outstanding all year

388,216

166,203

Outstanding 74% of year

3,457,893

Outstanding 43% of year

95,500

3,846,109

271,703

Basic income (loss) per share

(based on weighted

average shares)

$ ( 0.03)

$ .63

8. GOING-CONCERN

As of December 31, 2005, the Company has an accumulated deficit of $4,175,304 and remains in development stage due to it lack of business operations. Those factors could create an uncertainty about the Company's ability to continue as a going concern.

Continuation of the Company as a going concern is dependent upon obtaining additional capital and ultimately, upon the Company's attaining profitable operations. The management of the Company intends to seek additional funding which will be utilized to fund business acquisitions and continue operations. The Company recognizes that, if it is unable to raise additional capital, it may find it necessary to substantially reduce or cease operations.

9. RESEARCH AND DEVELOPMENT

Research and development expenses were nil for the year 2005 and 2004.

10. SUBSEQUENT EVENTS

Subsequent to the end of the fiscal year ended December 31, 2005, the Company determined not to proceed with the acquisition of China Titanium and Chemical Corp. The Company is presently negotiating on other potential joint ventures in China.

On February 16, 2006, the Company issued a total of 1,000,000 shares of Class A common stock in settlement of $100,000 in debt.

F-16

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

Not applicable

ITEM 8A. CONTROLS AND PROCEDURES.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the United States Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our President and acting Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

We carried out an evaluation, under the supervision and with the participation of our management, including our President and acting Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-14 as of the end of period covered by this report. Based upon the foregoing, our President and our acting Chief Financial Officer concluded that our disclosure controls and procedures are effective.

There were no changes in our internal control over financial reporting identified in connection with the evaluation referred to in the immediately preceding paragraph that occurred during our last fiscal quarter that has materially affected or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 8B. OTHER INFORMATION

PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

The following table sets forth the names and ages of all directors and executive officers of the Company as of the date of this report, indicating all positions and offices with the Company and its subsidiaries held by each such person:

NAME

AGE

POSITION

Michel Bourbonnais

Roger Boileau

President and Director

Secretary and Director

The Company’s directors are elected by the holders of the Company’s common stock. Cumulative voting for directors is not permitted. The term of office of directors of the Company ends at the next annual meeting of the Company’s shareholders or when their successors are elected and qualified. The annual meeting of shareholders is specified in the Company’s bylaws to be held on January 20^th, every year. Due to the lack of operations, the Company has not yet held its shareholders meeting for 2003, 2004 or 2005. The Company had expected to hold a shareholders meeting during the second quarter of 2005 however, the meeting was not held. The term of office of each officer of the Company ends at the next annual meeting of our Board of Directors, expected to take place immediately after the next annual meeting of shareholders, or when his successor is elected and qualifies. Except as otherwise indicated below, no organization by which any officer or director previously has been employed is an affiliate, parent, or subsidiary of the Company.

On December 22, 2003, Mr. Michel Bourbonnais and Mr. Boileau became the only members of the Board of Directors and the only officers of the Company. Mr. Roger Boileau was a previous member of the Board of Directors and Secretary of the Company since August 5, 2002.

MICHEL BOURBONNAIS, Mr. Bourbonnais has been a member of the Board of Directors since December 22, 2003. From May 1973 to December 1999, Mr. Bourbonnais was employed by the National Archives of Canada. His last position with National Archives of Canada was Chief, Conservation and Custody, Magnetic Media. From December 1999 to May 2002, Mr. Bourbonnais was retired. In May 2002, Mr. Bourbonnais formed his own consulting company, Seetel Management Group Inc. to provide technical expertise to various companies by way of providing research for new technologies and marketing and business plans. Mr. Bourbonnais is not a director of any other reporting companies.

ROGER BOILEAU, Mr. Boileau became a member of the Board of Directors and Secretary of the Company on August 5, 2002. He is also a director and Secretary of W-Waves USA, Inc., White Wolf Audio Video Electronic Systems Inc., XD-Lab R&D Inc., and Radison Acoustique Ltee. Mr. Boileau has been employed by Abitibi Consolidated Inc. as financial controller of the woodland and sawmill sector from January 2004 to present. From March 2003 to January 2004, he was employed by Bowater, Inc., in the capacity of financial advisor. From January 2001 to March 2003 he was a self-employed financial consultant. From January 1999 to January 2001, he was the manager of operations for Bear Bay Management Caribbean Inc. (Barbados). Mr. Boileau is not a director of any other reporting companies.

The Company does not have any significant employees at this time.

There are no family relationships among directors, executive officers, or persons nominated or chose by the Company to become directors or executive officers.

None of our executive officers or directors have been involved in any bankruptcy proceedings within the last five years, been convicted in or has pending any criminal proceeding, been subject to any order, judgment or decree enjoining, barring, suspending or otherwise limiting involvement in any type of business, securities or banking activity or been found to have violated any federal, state or provincial securities or commodities laws.

Audit Committee

The Board of Directors presently does not have an audit committee. The Board of Directors performs the same functions as an audit committee. Since there are no independent members of the Board it is not feasible at this time to have an audit committee.

Section 16(a) Beneficial Ownership Reporting Compliance

The following represents each person who did not file on a timely basis reports required by Section 16(a) of the Exchange Act during the most recent fiscal year or prior fiscal years:

Name	Reporting Person	Form 3/# of transactions	Form 4/# of transactions	Form 5/# of transactions
Michel Bourbonnais	President and Member of the Board of Directors	N/A	Late/1	N/A
Roger Boileau	Secretary and Member of the Board of Directors	N/A	N/A	N/A
Bello Investments (Nassau) Ltd.	Beneficial Owner of more than 10%	Late/1	N/A	N/A
Bic International Ltd.	Beneficial Owner of more than 10%	Late/1	N/A	N/A
4040481 Canada Ltd.	Beneficial Owner of more than 10%	Late/1	Late/1	N/A

Code of Ethics

As of the date of this report, the Company has not adopted a code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. The Company had previously targeted the second quarter of fiscal year 2005 to review and finalize the adoption of a code of ethics. This did not occur. The Company intends to review and finalize the adoption of a code of ethics at such time as it concludes a merger or acquisition and commences business operations. Upon adoption, the Company will file a copy of its code of ethics with the Securities and Exchange Commission as an exhibit to its annual report for period during which the code of ethics is adopted.

ITEM 10. EXECUTIVE COMPENSATION.

The following table sets forth information for the individuals who served as the senior executive officer of the Company during any portion of the last 3 fiscal years. No disclosure need be provided for any executive officer, other than the CEO, whose total annual salary and bonus for the last completed fiscal year did not exceed $100,000. Accordingly, no other executive officers of the Company are included in the table.

ANNUAL COMPENSATION					LONG TERM COMPENSATION
					AWARDS		PAYOUTS
Name and Principal Position	Year	Salary	Bonus	Other Annual Compen-sation	Restricted Stock Awards	Securities Under-lying Options/ SARS	LTIP Pay-outs	All Other Compen-sation
Michel Bourbonnais, President	2005	$-0-	-0-	-0-	-0-	-0-	-0-	-0-
Michel Bourbonnais, President	2004	$-0-	-0-	-0-	-0-	-0-	-0-	-0-
Victor Lacroix, President	2003	$-0-	-0-	-0-	-0-	-0-	-0-	-0-

Options

There were no stock options granted to officers or directors of the Company during the fiscal year ended December 31, 2005.

Stock Options and Stock Award Plans

The Company presently has no stock option or stock award plans.

Compensation of Directors

The Company has made no arrangements for the remuneration of its directors, except that they will be entitled to receive reimbursement for actual, demonstrable out-of-pocket expenses, including travel expenses, if any, made on the Company’s behalf. No remuneration has been paid to the Company’s officers or directors for services to date.

Employment Contracts and Termination of Employment and Change –in –Control Arrangements

The Company does not have any employments contracts with any of its executive officers and has not termination of employment or change in control arrangements with any of its executive officers.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth information, as of March 28, 2006, with respect to the beneficial ownership of the Company’s common stock by each person known by the Company to be the beneficial owner of more than 5% of the outstanding common stock by each of the Company's officers and directors, and by the officers and directors of the Company as a group. Information is also provided regarding beneficial ownership of common stock if all outstanding options, warrants, rights and conversion privileges (to which the applicable officers and directors and 5% shareholders have the right to exercise in the next 60 days) are exercised and additional shares of common stock are issued.

TITLE OF CLASS	NAME AND ADDRESS OF BENFICIAL OWNER	AMOUNT AND NATURE OF BENEFICIAL OWNER	PERCENT OF CLASS⁽¹⁾
Class A Common	Michel Bourbonnais, officer and director of China Titanium & Chemical Corp.	400,000 Class A common shares held indirectly⁽²⁾	6.09%
Class A Common	Roger Boileau, Secretary and director of China Titanium & Chemical Corp.	-0-	-0-
Class A Common	All Officers and Directors as a group	Class A Common shares	5.91%
TITLE OF CLASS	NAME AND ADDRESS OF BENFICIAL OWNER	AMOUNT AND NATURE OF BENEFICIAL OWNER	PERCENT OF CLASS⁽¹⁾
Class A Common	Bello Investments (Nassau) Ltd.⁽³⁾ P.O. Box N-7768 Ansbacher House Bank Lane, Nassau Bahamas	1,926,820 Class A common shares held directly	30.26%
Class A Common	BIC International Ltd. The Law Building, Anguilla, BWI	4,101,200 Class A common shares held directly⁽⁴⁾	48.72 ⁽⁵⁾
Class A Common	Antonio Care 3886 Ave Des Generaux LaValle, Quebec Canada	250,000 Class A common shares held directly and 222,006 Class A common shares held indirectly⁽⁶⁾	7.41%
Class A Common	Crisis Management Inc. 12 COr Baymen Ave and Calle Al Mar Belize City, Belize	465,000 Class A common shares held directly⁽⁷⁾	7.30%

(1)Based on 6,366,849 shares of Class A common stock issued and outstanding.

(2) These shares are held by Seetel Management Group Inc., company of which Mr. Bourbonnais is the controlling shareholder. This amount includes 200,000 Class A common shares and warrants to purchase a total of 200,000 Class A common shares at $0.75 per share.

(3) Bello Investments Ltd. has advised that the beneficial owner is Hampton Insurance Ltd and the signing officer is Ian Towell.

(4) Includes 2,050,600 Class A common shares and 2,050,600 warrants to purchase Class A common shares at $0.25 per common share. BIC International Ltd. has advised that its beneficial owner is AXA Offshore Financial Services Ltd. and the signing officer is Esther Flemings.

(5) This percentage assumes the exercise of all 2,050,600 warrants presently owned by BIC International Ltd.

(6) 222,006 Class A common shares are held in the name of 404481 Canada Ltd., a company of which Mr. Care is a 50% shareholder.

(7) Crisis Management Inc. has advised that the sole director and officer is Mark Hulse.

Changes in Control

Not Applicable

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

During the fiscal year ended December 31, 2004 the Company received $94,826

from 4040481 Canada Ltd.

by way of advances. These amounts are unsecured, bear no interest and have no fixed terms of repayment. These amounts were repaid during fiscal year 2005.

During the fiscal year ended December 31, 2005, a company of which Mr. Michel Bourbonnais is the controlling shareholder completed a private placement for the purchase of 200,000 units of Class A common stock of the Company.

ITEM 13. EXHIBITS.

Exhibits:

REGULATION S-B NUMBER	EXHIBIT	REFERENCE

31.1	Section 302 Certification- Principal Executive Officer and Principal Financial Officer	Filed herewith
32.1	Certification Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith
10.1	Share Exchange Agreement dated October 15, 2004 between the Shareholders of China Titanium & Chemicals Corp., a Bahamian Corporation and the Company	Incorporated by reference to the Exhibits previously filed with the Company’s Current Report on Form 10-KSB filed with the Securities and Exchange Commission on April 15, 2005

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table sets forth the fees billed to the Company for professional services rendered by the Company's principal accountant, for the year ended December 31, 2005 and December 31, 2004:

Services	2005	2004
Audit fees	$10,500	$9,500
Audit related fees	$0	$3,814
Tax fees	$200	$600
Total fees	$10,700	$13,914

Audit fees consist of fees for the audit of the Company's annual financial statements or the financial statements of the Company’s subsidiaries or services that are normally provided in connection with the statutory and regulatory filings of the annual financial statements.

Audit-related services include the review of the Company's financial statements and quarterly reports that are not reported as Audit fees.

Tax fees included tax planning and various taxation matters.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

By: /s/ Michel Bourbonnais
Name: Michel Bourbonnais
Title: President. Principal Executive, Financial and Accounting Officer
Date: April 17, 2006

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated, who constitute the entire board of directors:

By: /s/ Michel Bourbonnais
Name: Michel Bourbonnais
Title: President. Principal Executive, Financial and Accounting Officer
Date: April 17, 2006

By: /s/ Roger Boileau
Name: Roger Boileau
Title: Secretary and Member of the Board of Directors
Date: April 17, 2006