UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
Under Section 12(b) or (g) of The Securities Exchange Act of 1934
BETHESDA C0801, INC.
(Name of Small Business Issuer in its charter)
| Nevada | | |
| (State or other jurisdiction of | | (I.R.S. Employer |
| incorporation or organization) | | Identification No.) |
| 2519 McMullen Booth Road, Suite 510-308, Clearwater, FL | | 33761 |
| (Address of principal executive offices) | | (Zip Code) |
Issuer’s telephone number: (727) 365-0327
Securities to be registered under Section 12(b) of the Act:
| Title of each class | | Name of each exchange on which |
| to be so registered | | each class is to be registered |
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Securities to be registered under Section 12(g) of the Act:
common stock, par value $.0001 per share
(Title of class)
(Title of class)
Item 1. Description of Business.
Introduction.
Bethesda C0801, Inc. (“we”, “us”, the “Company” or like terms) was incorporated in the State of Nevada on January 22, 2008. We are a developmental stage company and have not generated any revenues to date. Since inception, we have not engaged in any business operations other than in connection with our organization and the preparation and filing of this registration statement on Form 10 (the “Registration Statement”). We have no full-time employees and do not own or lease any property.
We were organized to serve as a vehicle for a business combination through a merger, capital stock exchange, asset acquisition or other similar business combination (a “Business Combination”) with an operating or development stage business (the “Target Business”) which desires to utilize our status as a reporting company under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Though our sole officer and director currently serves as an officer and director and owns all of the shares of capital stock of a development stage public company with the business purpose of acquiring a Target Business, he has never successfully consummated a Business Combination.
Effecting a Business Combination.
General.
We are not presently engaged in, and we will not engage in, any substantive commercial business for an indefinite period of time following the effective date of this Registration Statement until we identify a Target Business and enter into a Business Combination, if ever. A Business Combination may involve the acquisition of, or merger with, a company which desires to have a class of securities registered under the Exchange Act, while avoiding what it may deem to be adverse consequences of undertaking a public offering itself. These include time delays, significant expenses, possible loss of voting control and compliance with various federal and state securities laws. As more fully described below under the heading “Form of acquisition; Opportunity for stockholder approval,” the proposed structure of any Business Combination may not require that we seek stockholder approval for the transaction and holders of our common stock may not have the opportunity to vote upon any such Business Combination transaction.
We have not identified a target business or target industry.
To date, we have not selected any Target Business or target industry on which to concentrate our search for a Business Combination. Our sole officer and director has not engaged in discussions on our behalf with representatives of other companies regarding the possibility of a potential merger, capital stock exchange, asset acquisition or other similar Business Combination with us, nor have we been approached by any candidates (or representatives of any candidates) with respect to a possible Business Combination with us. Additionally, we have not, nor has anyone on our behalf, taken any measure, directly or indirectly, to identify or locate any suitable Target Business, nor have we engaged or retained any agent or other representative to identify or locate such a Target Business. We have not conducted any research with respect to identifying the number and characteristics of the potential Target Business candidates. As a result, we cannot assure you that we will be able to locate a Target Business or that we will be able to engage in a Business Combination with a Target Business on favorable terms.
We will have virtually unrestricted flexibility in identifying and selecting a prospective Target Business. We have not established any specific attributes or criteria (financial or otherwise) for prospective Target Businesses. To the extent we affect a Business Combination with a financially unstable company or an entity in its early stage of development or growth, including entities without established records of sales or earnings, we may be affected by numerous risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies. Although our management will endeavor to evaluate the risks inherent in a particular Target Business, we cannot assure you that we will properly ascertain or assess all significant risk factors.
Sources of target businesses.
Management expects that Target Business candidates could be brought to our attention from various unaffiliated sources, including members of the financial community, as well as accountants and attorneys who represent potential Target Business candidates. Target Business candidates may be brought to our attention by these unaffiliated sources as a result of being solicited by us through calls or mailings. These sources may also introduce us to Target Businesses candidates they think we may be interested in on an unsolicited basis. Our sole officer and director, as well as his affiliates, may also bring to our attention Target Business candidates of which they become aware through their business contacts, as a result of formal or informal inquiries or discussions they may have, as well as attending trade shows or conventions. In no event will our existing officer and director or stockholders, or any entity with which any of them is affiliated, be paid any finder’s fee, consulting fee or other compensation prior to, or for any services they may render in order to effectuate, the consummation of a Business Combination. After the effective date of this Registration Statement, we may engage the services of professional firms or other individuals that specialize in business acquisitions, in which event we may pay a finder’s fee, consulting fee or other compensation to be determined in an arm’s length negotiation. We have not adopted any policies with respect to utilizing the services of consultants or advisors to assist in the identification of a Target Business, the criteria to be used in selecting such consultants or advisors, the services to be provided, the term of service, or regarding the total amount of fees that may be paid. However, because of our limited resources, it is likely that any such fee we agree to pay would be paid in shares of our common stock.
Selection criteria of a Target Business.
Our management will have virtually unrestricted flexibility in identifying and selecting a prospective Target Business. We have not established any specific attributes or criteria (financial or otherwise) for prospective Target Businesses. In evaluating a prospective Target Business, our management will consider, among other factors, the following:
| · | financial condition and results of operations; |
| · | experience and skill of management and availability of additional personnel; |
| · | stage of development of the products, processes or services; |
| · | degree of current or potential market acceptance of the products, processes or services; |
| · | proprietary features and degree of intellectual property or other protection of the products, processes or services; |
| · | regulatory environment of the industry; and |
| · | costs associated with affecting the Business Combination. |
These criteria are not intended to be exhaustive or to in any way limit the board of director’s unrestricted discretion to enter into a Business Combination with any Target Business. Any evaluation relating to the merits of a particular Business Combination will be based, to the extent relevant, on the above factors as well as other considerations deemed relevant by our management. In evaluating a prospective Target Business, we will conduct as extensive a due diligence review of potential targets as possible given the lack of information which may be available regarding private companies, our limited personnel and financial resources and the inexperience of our management with respect to such activities. We expect that our due diligence will encompass, among other things, meetings with the Target Business’s incumbent management and inspection of its facilities, as well as a review of financial and other information which is made available to us. This due diligence review will be conducted either by our management or by unaffiliated third parties we may engage. Our limited funds and the lack of full-time management will likely make it impracticable to conduct a complete and exhaustive investigation and analysis of a Target Business candidate before we consummate a Business Combination. Management decisions, therefore, will likely be made without detailed feasibility studies, independent analysis, market surveys and the like which, if we had more funds available to us, would be desirable. We will be particularly dependent in making decisions upon information provided by the promoters, owners, sponsors, or others associated with the Target Business seeking our participation.
The time and costs required to select and evaluate a Target Business and to structure and complete the Business Combination cannot presently be ascertained with any degree of certainty. Any costs incurred with respect to the identification and evaluation of a prospective Target Business with which a Business Combination is not ultimately completed will result in a loss to us.
Lack of diversification.
We expect that we will be able to consummate a Business Combination with only one candidate given that, among other considerations, we will not have the resources to diversify our operations. Therefore, at least initially, the prospects for our success may be entirely dependent upon the future performance of a single business and we will not be benefit from the possible spreading of risks or offsetting of losses. By consummating a Business Combination with a single entity, our lack of diversification may:
| | · | subject us to numerous economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact upon the particular industry in which we may operate subsequent to a Business Combination, and |
| | · | result in our dependency upon the development or market acceptance of a single or limited number of products, processes or services. |
Limited ability to evaluate the Target Business.
To a significant degree, our security holders will rely on management’s evaluation of a Target Business in making the decision to enter into a Business Combination. Management’s assessment of a Target Business will be based upon discussions with management of the Target Business and a review of due diligence material relating to the Target Business available to it during the evaluation period. Any such assessment may not be accurate.
Although we intend to scrutinize the management of a prospective Target Business when evaluating the desirability of effecting a Business Combination, we cannot assure you that our assessment of the Target Business’s management will prove accurate. In addition, we cannot assure you that future management will have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of our sole officer and director, if any, in the Target Business following a Business Combination cannot presently be stated with any certainty.
Given our current resources, we will likely seek a Business Combination with a privately-held company. Generally, very little public information exists about these companies and we will be required to rely on the ability of our management to obtain adequate information to evaluate the potential returns from entering into a Business Combination with such a company. If we do not uncover all material information about a Target Business prior to a Business Combination, we may not make a fully informed investment decision and we may lose money on our investment.
Form of acquisition; Opportunity for stockholder approval.
The manner in which we participate in a Business Combination will depend upon, among other things, the nature of the opportunity and the respective requirements and desires of management of our Company and of the Target Business. In addition, the structure of any Business Combination will be dispositive as to whether stockholder approval of the Business Combination is required.
It is likely that we will acquire our participation in a business opportunity by the acquisition of Target Company through the issuance of our common stock or other securities to the principals of the Target Business in exchange for all of the outstanding stock of the Target Company. Upon the consummation of such a transaction, the Target Company would be a wholly owned subsidiary of our Company. In the case of an acquisition, the transaction may be accomplished in the sole determination of management without any vote or approval by stockholders.
Although the terms of an acquisition of a Target Business cannot be predicted, it is likely that we will seek to structure a Business Combination to qualify as a tax free transaction under the Internal Revenue Code of 1986, as amended (the "Code"). One such form of “tax free” transaction, if structured properly, entails the exchange of capital stock of the Target Business for our capital stock. Under Section 368(a)(1) of the Code, in order for a stock exchange transaction to qualify as a "tax free" reorganization, the holders of the stock of the target must receive a number of shares of our capital stock equal to 80% or more of the voting stock of our Company. If a transaction were structured to take advantage of these provisions rather than other "tax free" provisions provided under the Code, our existing stockholders would in such circumstances retain 20% or less of the total issued and outstanding shares of the surviving entity. Depending upon the relative negotiating strength of the parties, stockholders at the time of the Business Combination may retain substantially less than 20% of the total issued and outstanding shares of our Company. This could result in substantial additional dilution to the equity of those persons who were stockholders of our Company prior to such Business Combination.
In the case of a statutory merger or consolidation directly involving the Company, it might be necessary to call a stockholders' meeting and obtain the approval of the holders of a majority of the outstanding shares of common stock. The necessity to obtain stockholder approval may result in delay and additional expense in the consummation of any proposed transaction, which we may not be able to fund, and will also give rise to certain appraisal rights to dissenting stockholders. Accordingly, management will seek to structure any Business Combination so as not to require stockholder approval.
In the case of either an acquisition or merger, our stockholders prior to the consummation of a Business Combination likely will not have control of a majority of the voting shares of the Company following a Business Combination. As part of such a transaction, all or a majority of the Company's then directors may resign and new directors may be appointed without any vote by stockholders.
It is anticipated that the investigation of specific business opportunities and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention and substantial cost for accountants, attorneys and others. If a decision is made not to participate in a specific business opportunity, the costs incurred in the related investigation would not be recoverable. Furthermore, even if an agreement is reached for a Business Combination, the failure to consummate that transaction may result in the loss to the Company of the related costs incurred.
Competition.
Our ability to consummate a Business Combination will be constrained by our lack of financial resources to provide to the Target Business. We expect that in the course of identifying, evaluating and selecting a Target Business, we may encounter intense competition from other entities having a business objective similar to ours. These include blank check companies that may have raised significant sums through sales of securities registered under federal securities laws that are seeking to carry out a business plan similar to ours and possess a significant competitive advantage over us both from a financial and personnel perspective. Additionally, we may be subject to competition from entities other than blank check companies having a business objective similar to ours, including venture capital firms, leverage buyout firms and operating businesses looking to expand their operations through acquisitions. Many of these entities are well established and have extensive experience identifying and affecting business combinations directly or through affiliates. Moreover, nearly all of these competitors possess greater technical, human and other resources than us. In addition, we will experience direct competition from other modestly capitalized shell companies that are seeking to enter into business combinations with targets similar to those we expect to pursue, including a shell company managed by our sole officer and director that currently is in registration with the SEC and that will be effective under the Exchange Act before our Registration Statement. In order to minimize the potential conflict of interest which may arise from multiple corporate affiliations, we, our sole officer and director and the other shell company with which our officer and director is involved and such company’s stockholders have agreed that our sole officer and director will offer any opportunity for a business combination to this other, pre-existing shell company first until such other shell company has completed a business combination, if ever.
While we believe there may be numerous potential target candidates with which we could affect a Business Combination, our ability to compete in affecting a Business Combination with prime candidates will be limited by our lack of financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of a Target Business.
If we succeed in effecting a Business Combination, there will be, in all likelihood, intense competition from competitors of the Target Business. We cannot assure you that, subsequent to a Business Combination, we will have the resources or ability to compete effectively.
Employees.
We have one executive officer. This individual is not obligated to devote any specific number of hours to our matters and intend to devote only as much time as he deems necessary to our affairs. The amount of time he will devote in any time period will vary based on whether a Target Business has been selected for the Business Combination and the particular stage of the Business Combination process. Accordingly, once our officer identifies a suitable Target Business, we expect that he will spend more time investigating such Target Business and negotiating and processing the Business Combination than he would prior to locating a suitable Target Business. We do not intend to have any full time employees prior to the consummation of a Business Combination.
Our sole officer and director devotes the preponderance of is business time to his full time occupation. Currently, he serves as an officer and director and is the sole stockholder of another shell company that has a business purpose identical to ours and that already has filed a Form 10 with the SEC to register its class of common stock. Our Company has agreed that our officer and director is entitled to present any potential Target Business to the other shell company with which he is affiliated prior to offering such opportunity to our Company. Accordingly, it is likely that he will allocate his time to the identification of a Target Business for his other shell company prior to allotting time to our affairs. In addition, he may in the future become involved in other business activities similar and dissimilar to those in which we are engaged without any limitations or restrictions applicable to such activities. To the extent that our officer and director engages in such other activities, he will have possible conflicts of interest in diverting opportunities which would be appropriate for our Company to other companies, entities or persons with which he is or may be associated or have an interest, rather than diverting such opportunities to us.
As a condition to, or in connection, with a Business Combination, our stockholders may direct our management to negotiate for the disposition of all or any portion of the shares of common stock owned by them, which could raise issues relating to a possible conflict of interest with any other security holders at the time of a Business Combination.
Periodic Reporting and Audited Financial Statements; Disclosure of Business Combination.
Upon the effective date of this Registration Statement, our class of common stock will be registered under the Exchange Act and we will have reporting obligations, including the requirement that we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, our annual reports will contain financial statements audited and reported on by our independent registered public accountants.
We will not acquire a Target Business if audited financial statements based on United States generally accepted accounting principles cannot be obtained for the Target Business. We cannot assure you that any particular Target Business identified by us as a potential acquisition candidate will have financial statements prepared in accordance with United States generally accepted accounting principles or that the potential Target Business will be able to prepare its financial statements in accordance with United States generally accepted accounting principles. To the extent that this requirement cannot be met, we may not be able to acquire the proposed Target Business. While this may limit the pool of potential acquisition candidates, we do not believe that this limitation will be material.
Upon the consummation of a Business Combination, the Company will file with the Securities and Exchange Commission a current report on Form 8-K to disclose the Business Combination, the terms of the transaction and a description of the business and management of the Target Business, among other things, and will include audited consolidated financial statements of the Company giving effect to the Business Combination. Holders of the Company’s securities will be able to access the Form 8-K and other filings made by the Company on the EDGAR Company Search page of the Securities and Exchange Commission’s Web site, the address for which is “www.sec.gov.”
Item 1A. Risk Factors
An investment in the Company is highly speculative in nature and involves an extremely high degree of risk.
There may be conflicts of interest between our management and our minority stockholders.
Conflicts of interest create the risk that management may have an incentive to act adversely to the interests of other investors. A conflict of interest may arise between our management's personal pecuniary interest and its fiduciary duty to our stockholders. Further, our management's own pecuniary interest may at some point compromise its fiduciary duty to our stockholders. In addition, our officer and director currently is involved with another shell company and conflicts in the pursuit of business combinations with such other shell company with which he is, and may be the future be, affiliated with may arise. In order to minimize the potential conflict of interest which may arise from multiple corporate affiliations, we, our sole officer and director and the other shell company with which our officer and director is involved and such company’s stockholders have agreed that our sole officer and director is entitled to present any opportunity for a business combination to this other, pre-existing shell company first until such other shell company has completed a business combination, if ever.
We are a newly formed, development stage company with no operating history and no revenues and, accordingly, you will not have any basis on which to evaluate our ability to achieve our business objective.
We are a recently incorporated development stage company with no operating results to date. Because we do not have an operating history, you will have no basis upon which to evaluate our ability to achieve our business objective, which is to acquire an operating business. We have not conducted any discussions and we have no plans, arrangements or understandings with any prospective acquisition candidates and may be unable to complete a Business Combination. We will not generate any revenues until, at the earliest, after the consummation of a Business Combination, if at all.
Our future success is highly dependent on the ability of management to complete a Business Combination with a Target Business that generates revenue and otherwise operates profitably.
The nature of our operations is highly speculative. The future success of our plan of operation will depend entirely on the operations, financial condition and management of the Target Business we may acquire. While management intends to seek to enter into a Business Combination with an entity having an established operating history, we cannot assure you that we will be successful in consummating a Business Combination with a candidate that meets that criterion.
The Company has no existing agreement for a Business Combination or other transaction.
We have no arrangement, agreement or understanding with respect to engaging in a Business Combination with an operating entity. We cannot assure you that we will successfully identify and evaluate suitable business opportunities or that we will conclude a Business Combination. Management has not identified any particular industry or specific business within an industry for evaluation. We cannot guarantee that we will be able to negotiate a Business Combination on favorable terms.
The time and cost of preparing a private company to become a public reporting company may preclude us from entering into a Business Combination with the most attractive private companies.
Target companies that fail to comply with SEC reporting requirements may delay or preclude a Business Combination. Sections 13 and 15(d) of the Exchange Act require reporting companies to provide certain information about significant acquisitions, including audited financial statements for the company acquired. The time and additional costs that may be incurred by some target entities to prepare these statements may significantly delay or essentially preclude consummation of a Business Combination. Otherwise suitable acquisition prospects that do not have or are unable to obtain the required audited statements may be inappropriate for acquisition so long as the reporting requirements of the Exchange Act are applicable.
Our Company will have no revenues unless and until we enter into a Business Combination with an operating company that is generating revenues and otherwise is operating profitably.
We are a development stage company and have had no revenues from operations. We will not realize any revenues or generate any income unless and until we enter into a Business Combination with a Target Business that is generating revenues and otherwise is operating profitably, if ever.
Our sole officer and director currently is a principal of a company having a business purpose similar to ours though he has never consummated a Business Combination.
Though our sole officer and director currently serves as an officer and director and owns all of the shares of capital stock of a development stage public company with the business purpose of acquiring a Target Business, he has never successfully consummated a Business Combination. Accordingly, you may not be able to adequately evaluate his ability to consummate successfully a Business Combination.
We likely will complete only one Business Combination, which will cause us to be dependent solely on a single business and a limited number of products, services or assets.
Given our limited financial resources and other considerations, it is likely we will complete a Business Combination with only one Target Business. Accordingly, the prospects for our success may be solely dependent upon the performance of a single business and dependent upon the development or market acceptance of a single or limited number of products, processes or services. In this case, we will not be able to diversify our operations or benefit from the possible diversification of risks or offsetting of losses, unlike other entities which may have the resources to complete several Business Combinations or asset acquisitions in different industries or different areas of a single industry so as to diversify risks and offset losses.
Given our limited resources and the significant competition for Target Businesses, we may not be able to consummate an attractive Business Combination. Moreover, our sole officer and director serves as an officer and director and is the sole stockholder of another shell company with a business purpose identical to ours and to which he is entitled to offer business opportunities prior to presenting them to our Company.
We will encounter intense competition from other entities having business objectives similar to ours, including blank check companies, finance companies, banks, venture capital funds, leveraged buyout funds, operating businesses and other financial buyers competing for acquisitions. Many of these entities are well established and have extensive experience in identifying and affecting Business Combinations directly or through affiliates. Nearly all of these competitors possess greater technical, human and other resources than we do and our financial resources will be negligible when contrasted with those of many of these competitors. In addition, we will experience direct competition from other modestly capitalized shell companies that are seeking to enter into business combinations with targets similar to those we expect to pursue, including a shell company managed by our sole officer and director that currently files reports under the Securities Exchange Act of 1934, as amended. We, our sole officer and director and the other shell company with which our officer and director is involved and such company’s stockholders have agreed that our sole officer and director will offer any opportunity for a business combination to this other, pre-existing shell company first until such other shell company has completed a business combination, if ever. Accordingly, the other shell company with which our officer is involved may have access to a preferred opportunity.
It is likely that we will consummate a Business Combination with a private company for which limited information will be available to conduct due diligence.
We likely will seek a Business Combination with a privately-held company. Generally, very little public information exists about these companies or their management, and we will be required to rely on the ability of our management to obtain adequate information to evaluate the potential success of entering into a transaction with such a company. In addition, our management will only devote limited time to the business of the Company and will have available to it extremely limited financial resources with which to conduct due diligence. If our assessment of the Target Business’s operations and management is inaccurate or we are unable to uncover all material information about these companies, then we may not make a fully informed investment decision, and we may lose money.
If we consummate a Business Combination by way of an acquisition, we will not be required to submit such transaction to a vote of our stockholders.
If we consummate a Business Combination by way of an acquisition of the capital stock or assets of the Target Business, the transaction may be accomplished in the sole determination of management without any vote or approval by stockholders. Accordingly, holders of our securities at the time of any Business Combination may not have an opportunity to evaluate the Target Business or its management and will have to rely on the judgment of management in assessing the future profitability and viability of the Target Business.
A Business Combination with a foreign company may subject us to additional risks.
If we enter into a Business Combination with a foreign entity, we will be subject to risks inherent in business operations outside of the United States. These risks include:
| | · | unexpected changes in, or impositions of, legislative or regulatory requirements; |
| | · | foreign currency exchange rate fluctuations; |
| | · | potential hostilities and changes in diplomatic and trade relationships; |
| | · | changes in duties and tariffs, taxes, trade restrictions, license obligations and other non-tariff barriers to trade; |
| | · | burdens of complying with a wide variety of foreign laws and regulations; |
| | · | longer payment cycles and difficulties collecting receivables through foreign legal systems; |
| | · | difficulties in enforcing or defending agreements and intellectual property rights; |
| | · | reduced protection for intellectual property rights in some countries; |
| | · | potentially adverse tax consequences; |
| | · | the ability of our stockholders to obtain jurisdiction over non-US based directors and officers; and |
| | · | political and economic instability. |
If the Target Business is not successful managing these risks among others, the Company’s business after the Business Combination may be negatively impacted.
Since we have not yet selected a particular industry or Target Business with which to complete a Business Combination, we are unable to currently ascertain the merits or risks of the industry or business in which we may ultimately operate.
Our plan of operation permits our board of directors to consummate a Business Combination with a company in any industry it chooses and is not limited to any particular industry or type of business. Accordingly, there is no current basis to evaluate the possible merits or risks of the particular industry in which we may ultimately operate or the Target Business which we may ultimately acquire. To the extent we complete a Business Combination with a company that does not have a stable history of earnings and growth or an entity in a relatively early stage of its development, we may be affected by numerous risks inherent in the business operations of those entities. If we complete a Business Combination with an entity in an industry characterized by a high level of risk, we may be affected by the currently unascertainable risks of that industry. Although our management will endeavor to evaluate the risks inherent in a particular industry or Target Business, we cannot assure you that we will properly ascertain or assess all of the significant risk factors. Even if we properly assess those risks, some of them may be outside of our control.
Our long-term success will likely be dependent upon a yet to be identified management team which may be difficult to fully evaluate.
In the event we complete a Business Combination, the success of our operations will be dependent upon management of the Target Business and numerous other factors beyond our control. Although it is possible that our management will remain associated with the Target Business following a Business Combination, it is likely that the management team of the Target Business at the time of the Business Combination will remain in place given that they will have greater knowledge, experience and expertise than our management in the industry in which the Target Business operates as well as in managing the Target Business. Thus, even though our management may continue to be associated with us after a Business Combination, it is likely that we will be dependent upon a yet to be identified management team for our long-term success. As a result, you will not be able to fully evaluate the management team that we will likely be dependent upon for our long-term success prior to any Business Combination. Although we intend to scrutinize management of a prospective Target Business as closely as possible in connection with evaluating the desirability of affecting a Business Combination, we cannot assure you that our assessment of the management team will prove to be correct. These individuals may be unfamiliar with the requirements of operating a public company and the securities laws, which could increase the time and resources we must expend to assist them in becoming familiar with the complex disclosure and financial reporting requirements imposed on U.S. public companies. This could be expensive and time-consuming and could lead to various regulatory issues that may adversely affect our operations.
If we affect a Business Combination with a financially unstable company or an entity in the early stage of development or growth, we will be subject to greater risks than if we were to affect a Business Combination with a more established company with a proven record of earnings and growth.
Given our financial and personnel resources compared to our competitors, we may be limited to consummating a Business Combination with a company that is financially unstable or is in the early stage of development or growth, including an entity without established records of sales or earnings. To the extent we affect a Business Combination with a financially unstable or early stage or emerging growth company, we may be impacted by numerous risks inherent in the business and operations of such company that we would not be subject to if we were to effect a Business Combination with a more established company with a proven record of earnings and growth.
If we are unable to structure the Business Combination as a “tax free” transaction, potential Target Businesses could be deterred from entering into such a transaction.
We may not be able to structure our acquisition to result in tax-free treatment for the companies or their stockholders, which could deter third parties from entering into certain Business Combinations with us. Currently, a transaction may be structured so as to result in tax-free treatment to both companies, as prescribed by various federal and state tax provisions. We intend to structure any Business Combination so as to minimize the federal and state tax consequences to both us and the Target Business; however, we cannot guarantee that the Business Combination will meet the statutory requirements of a tax-free reorganization or that the parties will obtain the intended tax-free treatment upon a transfer of stock or assets. A non-qualifying reorganization could result in the imposition of both federal and state taxes that may have an adverse effect on both parties to the transaction.
We intend to issue more shares of our capital stock in a Business Combination, which will result in substantial dilution and a change in control of ownership of the Company.
Our Articles of Incorporation authorizes the issuance of a maximum of 100,000,000 shares of common stock and a maximum of 10,000,000 shares of preferred stock. Any Business Combination effected by us may result in the issuance of additional securities without stockholder approval and may result in substantial dilution in the percentage of our common stock held by our then existing stockholders. In order to structure a Business Combination as a tax free transaction, federal tax laws require that the holders of the stock of the target must receive a number of shares of our capital stock equal to 80% or more of the voting stock of our Company, in which case our existing stockholders would in such circumstances retain 20% or less of the total issued and outstanding shares of the surviving entity, though it is likely they could own far less than 20% of our outstanding common stock after giving effect to a Business Combination. Moreover, the common stock issued in any such merger or acquisition transaction may be valued on an arbitrary or non-arm's-length basis by our management, resulting in an additional reduction in the percentage of common stock held by our then existing stockholders. Our board of directors has the power to issue any or all of such authorized but unissued shares without stockholder approval. To the extent that additional shares of common stock or preferred stock are issued in connection with a Business Combination or otherwise, dilution to the interests of our stockholders will occur and the rights of the holders of common stock might be materially adversely affected
We have not conducted any market research or identification of business opportunities, which may affect our ability to identify a Target Business.
We have neither conducted nor have others made available to us results of market research concerning prospective business opportunities. Therefore, we have no assurances that market demand exists for a Business Combination as contemplated by us. Our management has not identified any specific Business Combination or other transactions for formal evaluation by us, such that it may be expected that any such target business or transaction will present such a level of risk that conventional private or public offerings of securities or conventional bank financing will not be available. There is no assurance that we will be able to enter into a Business Combination on terms favorable to us. Decisions as to which business opportunity to participate in will be unilaterally made by our management, which may, in many instances, act without the consent, vote or approval of our stockholders.
Our sole officer and director currently is and may in the future become affiliated with other entities engaged in business activities similar to those conducted by us and accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented.
Our sole officer and director currently is the sole director, officer and stockholder of another shell company seeking to enter into a Business Combination such as that contemplated by our Company and may in the future become affiliated with entities, including other shell companies, engaged in business activities similar to those intended to be conducted by us. Accordingly, as a result of multiple business affiliations, our sole officer and director may have similar legal obligations relating to presenting business opportunities meeting the above-listed criteria to multiple entities. In order to avert a conflict of interest with this previously existing shell company, our Company has agreed that our officer and director is entitled to present any potential Target Business to the other shell company with which he is affiliated prior to offering such opportunity to our Company until such other shell company has completed a business combination, if ever. If our sole officer and director becomes affiliated with other shell companies in the future to which he may owe fiduciary duties, he may have conflicts of interest in determining to which entity a particular business opportunity should be presented. We cannot assure you that these conflicts will be resolved in our favor. As a result, a potential Target Business may be presented to another entity prior to its presentation to us and we may not be able to pursue a potential transaction.
Our sole officer and director will apportion his time to other businesses, including his primary occupation and another shell company for which he serves as a director and officer and in which he owns all of the capital stock, which may cause conflicts of interest in his determination as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to consummate a Business Combination.
Our sole officer and director engages in other businesses, including his primary occupation and as management and the sole stockholder of another shell company, and is not required to devote his full time or any specific number of hours to our affairs, which could create a conflict of interest when allocating his time between our operations and his other commitments. We do not have and do not expect to have any full time employees prior to the consummation of a Business Combination. If our officer’s and director’s other business affairs require him to devote more substantial amounts of time to such affairs, it could limit his ability to devote time to our affairs and could have a negative impact on our ability to consummate a Business Combination. We cannot assure you that these conflicts will be resolved in our favor.
Limitations on liability and indemnification matters.
As permitted by the corporate laws of the State of Nevada, we have included in our Articles of Incorporation a provision to eliminate the personal liability of our directors for monetary damages for breach or alleged breach of their fiduciary duties as directors, subject to certain exceptions. In addition, our By-Laws provide that we are required to indemnify our officers and directors under certain circumstances, including those circumstances in which indemnification would otherwise be discretionary, and we will be required to advance expenses to our officers and directors as incurred in connection with proceedings against them for which they may be indemnified.
There is currently no trading market for our common stock.
All outstanding shares of our common stock are “restricted securities,” as that term is defined under Rule 144 promulgated under the Securities Act, because they were issued in a private transaction not involving a public offering, and cannot be offered, sold, pledged or otherwise transferred unless subsequently registered pursuant to, or exempt from registration under, the Securities Act of 1933, as amended, (the "Securities Act") and any other applicable federal or state securities laws or regulations. . As to shares of our common stock held by affiliates and their permitted transferees, the Securities and Exchange Commission has taken the position that Rule 144 is not available for the resale of securities in shell companies held by those persons, either before and after a Business Combination, despite technical compliance with the requirements of Rule 144 because those persons would be acting as "underwriters" under the Securities Act when reselling their securities. Accordingly, resale transactions of shares held by our affiliates and their permitted transferees, would need to be made through a registered offering of such securities. These restrictions will limit the ability of our current stockholders to liquidate their investment.
We cannot assure you that following a Business Combination with an operating business, our common stock will be listed or admitted to quotation on any securities exchange or other trading medium.
Following a Business Combination, then management of the Company may seek to develop a public market for our common stock. However, we cannot assure you that following such a transaction, the Company will be able to meet the initial listing standards of any stock exchange or that our common stock will be admitted for quotation on the over the counter bulletin board or any other trading medium. If the Company’s common stock does not trade publicly, holders may not be able to sell their common stock. Moreover, our common stock may be deemed to be a “penny stock” and subject to the SEC’s penny stock rule which provides that, if our common stock failed to meet the criteria set forth in such rule, brokers would be subject to various practice requirements which would limit the sale of our stock only to persons who were established customers and accredited investors. Consequently, such rule may deter broker-dealers from recommending or selling our common stock, which may further affect its liquidity. This would also make it more difficult for us to raise additional capital following a Business Combination.
We have never paid dividends on our common stock.
We have never paid dividends on our common stock and do not presently intend to pay any dividends in the foreseeable future. In the unlikely event we generated profits prior to a Business Combination, we expect to retain such earnings and re-invest them into the Company to further its business strategy.
Authorization of Preferred Stock.
Our Articles of Incorporation authorize the issuance of up to 10,000,000 shares of preferred stock with such designations, rights and preferences determined from time to time by the board of directors. Accordingly, our board of directors is empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting, or other rights which could adversely affect the voting power or other rights of the holders of the common stock. In the event of issuance, the preferred stock could be utilized, under certain circumstances, as a method of discouraging, delaying or preventing a change in control of the Company. Although we have no present intention to issue any shares of authorized preferred stock, there can be no assurance that the Company will not do so in the future.
There are risks associated with forward-looking statements made by us and actual results may differ.
Some of the information in this Registration Statement contains forward-looking statements that involve substantial risks and uncertainties. These statements can be identified by the use of forward-looking words such as “may”, “will”, “expect”, “anticipate”, “believe”, “estimate”, and “continue”, or similar words. Statements that contain these words should be read carefully because they:
| | · | discuss our future expectations; |
| | · | contain projections of our future results of operations or of our financial condition; and |
| | · | state other “forward-looking” information. |
We believe it is important to communicate our expectations. However, there may be events in the future that we are not able to accurately predict and/or over which we have no control. The risk factors listed in this section, other risk factors about which we may not be aware, as well as any cautionary language in this Registration Statement, provide examples of risks, uncertainties, and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. The occurrence of the events described in these risk factors could have an adverse effect on our business, results of operations, and financial condition.
Item 2. Financial Information.
Management’s Discussion and Analysis of Financial Statements and Results of Operations.
Business Overview.
The Company was organized as a vehicle to enter into a Business Combination with a Target Business that is seeking the advantages of having a class of stock registered under federal securities laws. The Company does not currently engage in any business activities that provide cash flow. Our principal business objective for the next twelve months and beyond will be to achieve long-term growth potential through a combination with an operating business rather than immediate, short-term earnings. The Company will not restrict its potential candidate Target Businesses to any specific business, industry or geographical location and, thus, may acquire any type of business.
As of the date of this Registration Statement, we have not selected any Target Business or target industry on which to concentrate our search for a Business Combination. Our sole officer and director has not engaged in discussions on our behalf with representatives of other companies regarding the possibility of a potential Business Combination with us, nor have we been approached by any candidates (or representatives of any candidates) with respect to a possible Business Combination with us. Additionally, we have not, nor has anyone on our behalf, taken any measure, directly or indirectly, to identify or locate any suitable Target Business, nor have we engaged or retained any agent or other representative to identify or locate such a Target Business. We have not conducted any research with respect to identifying the number and characteristics of the potential Target Business candidates.
Management will have virtually unrestricted flexibility in identifying and selecting a prospective Target Business and may consider entering into a Business Combination with virtually any business, including a business which has recently commenced operations, has no established record of growth or earnings and which is subject to all of the risks attendant to a development stage operation, including requiring additional capital, or which operates in an industry that is characterized by an unusually high element of risk. In the alternative, a Business Combination may involve the acquisition of, or merger with, an established company which does not require 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. 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.
We expect that we will be able to consummate a Business Combination with only one candidate given that, among other considerations, we will not have the resources to diversify our operations 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.
Management expects that the selection of a Target Business will be a complex, competitive and extremely risky matter. Because of general economic conditions, rapid technological advances being made in some industries and shortages of available capital, our management believes that there are numerous firms seeking even the limited additional capital which we will have and/or the perceived benefits of becoming a publicly traded corporation. Such perceived benefits of having a class of securities registered under federal securities laws which include, among other things, facilitating or improving the terms on which additional equity financing may be obtained, 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 capital stock. Target Businesses may be available 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.
Liquidity and Capital Resources.
To date, we have funded our operations through loans from our stockholders. During the next twelve months we anticipate incurring costs and expenses related to filing of Exchange Act reports and investigating and consummating a Business Combination. Management expects to fund additional costs and expenses which may be incurred in connection with due diligence activities and a Business Combination through further loans or investment in the Company, as and when necessary. We cannot provide investors with any assurance that we will have sufficient capital resources to identify a suitable Target Business, to conduct effective due diligence as to any Target Business or to consummate a Business Combination.
Results of Operations.
Since our inception, we have not engaged in any activities other than in connection with our organization and preparing and filing this Registration Statement and have not generated any revenues to date. We do not expect to engage in any activities, other than seeking to identify a Target Business, unless and until such time as we enter into a Business Combination with a Target Business, if ever. We cannot provide investors with any assessment as to the nature of a Target Business’s operations or speculate as to the status of its products or operations, whether at the time of the Business Combination it will be generating revenues or its future prospects.
Item 3. Properties.
We maintain our principal executive offices at 2519 McMullen Booth Road, Suite 510-308, Clearwater, Florida 33761, where our President maintains a business office. We use this office space free of charge. We believe that this space is sufficient for our current requirements. The Company does not own or lease any properties at this time and does not anticipate owning or leasing any properties prior to the consummation of a Business Combination, if ever.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth, as of the date of this Registration Statement, the number of shares of common stock owned of record and beneficially by our sole executive officer and director and holders of 10% or more of outstanding shares of our common stock:
Name and Address of Beneficial Owner (1) | | Amount of Beneficial Ownership | | Percent of Outstanding Shares of Class Owned (2) | |
| David McNamee | | | 500,000 | (3) | | 50 | % |
| Scott Roper | | | 500,000 | | | 50 | % |
| All officers and directors as a group (1 person) | | | 500,000 | | | 50 | % |
(1) The address for each of the persons named in the table above is c/o the Company.
(2) Based on 1,000,000 shares outstanding as of the date of this Registration Statement.
(3) Mr. McNamee owns these shares through Bethesda Marketing Group, LLC, over which he exercises sole ownership and control.
Item 5. Directors and Executive Officers.
The following table lists our officers and directors as of the date of this Registration Statement:
| Name | | Age | | Title |
| David McNamee | | 59 | | President, Secretary and Director |
Mr. McNamee has been our President, Secretary and a member of our board of directors since inception. He also is the sole officer and director of Bethesda C0701, Inc., a shell company that has filed a Form 10 with the SEC to register that company’s class of common stock under the Exchange Act and which has the same business purpose as we do, that is, to seek a combination with an operating entity. Since 2002, he has served in several capacities with Alliance Holding Company, Ltd., a Nevis West Indies company, which owns two trust companies, an insurance company, an administrative services company and a mutual fund company. From 2002 to 2004, Mr. McNamee served as the president of the administrative services company, Offshore Trust Services, that provides accounting, legal and administrative services to Alliances other companies. From 2004 to early 2007, he served as the president of Alliance’s insurance company, Fidelity Insurance Company. Since the beginning of 2007, Mr. McNamee has been the president of Citadel Insurance Company, an affiliate of Alliance.
The term of office of our director expires at the Company's annual meeting of stockholders or until his successor is duly elected and qualified. Directors are not compensated for serving as such. Officers serve at the discretion of the board of directors.
The Company has no employees other than Mr. McNamee.
Prior Shell Company Experience
As indicated below, David McNamee, our sole officer and director, also serves as an officer and directors of another shell company which is identified in the following table:
Name | | Filing Date Registration Statement | | Operating Status | | SEC File Number | | Pending Business Combinations | | Additional Information |
| Bethesda C0701, Inc. | | January 18, 2008 | | Files reports under the Securities Exchange Act and is actively seeking a business combination partner. | | 0-53032 | | None | | Our President, Secretary and sole director, David McNamee, serves as the president, secretary and the sole director of Bethesda C0701, Inc., and is the corporation’s sole stockholder. |
Conflicts of Interest
Potential investors should be aware of the following potential conflicts of interest:
| | · | Our sole officer and director is required not to nor will he commit his full time to our affairs and, accordingly, he may have conflicts of interest in allocating management time among various business activities. |
| | · | In the course of his other business activities, our sole officer and director may become aware of business opportunities which may be appropriate for presentation to us as well as for the other shell company with which he is affiliated, which would result in a conflict of interest in determining to which shell company a particular business opportunity should be presented. |
| | · | Our sole officer and director may in the future become affiliated with entities, including other shell companies, engaged in business activities similar to those intended to be conducted by us. |
| | · | the corporation could financially undertake the opportunity; |
| | · | the opportunity is within the corporation's line of business; and |
| | · | it would not be fair to the corporation and its stockholders for the opportunity not to be brought to the attention of the corporation. |
Accordingly, as a result of multiple business affiliations, our sole officer and director may have similar legal obligations relating to presenting business opportunities meeting the above-listed criteria to multiple entities. In addition, conflicts of interest may arise when our board evaluates a particular business opportunity with respect to the above-listed criteria. We cannot assure you that any of the above mentioned conflicts will be resolved in our favor. Under Nevada law and our articles of incorporation, our board of directors has the power to renounce in advance, our interest or expectancy in specified business opportunities or specified classes or categories of business opportunities that are presented to us or to any of our officers, directors or stockholders and may from time to time do.
In order to minimize the potential conflict of interest which may arise from multiple corporate affiliations, we, our sole officer and director and the other shell company with which our officer and director is involved and such company’s stockholders have agreed that our sole officer and director is entitled to present any opportunity for a business combination to this other, pre-existing shell company first until such other shell company has completed a business combination, if ever.
Item 6. Executive Compensation.
The Company has not paid any cash compensation to any person since inception and will not pay any cash compensation until it affects a Business Combination, at which time compensation shall be in the discretion of then current management. Current management expects to devote only such time to the affairs of the Company as required to affect the Company’s business plan.
It is possible that, after the Company successfully consummates a Business Combination with an unaffiliated entity, that entity may desire to employ or retain our management for the purposes of providing services to the surviving entity.
The Company has not adopted any retirement, pension, profit sharing, stock option or insurance programs or other similar programs for the benefit of its employees.
There are no understandings or agreements regarding compensation our management will receive after a Business Combination.
Item 7. Certain Relationships and Related Transactions and Director Independence.
Related Party Transactions.
The Company utilizes office space provided free of charge by David McNamee, our President, Secretary and a member of our board of directors. The Company will continue to maintain its offices at this address until the consummation of a Business Combination, if ever.
On February 12, 2008, the Company executed a promissory note in favor of Bethesda Financial Group, our sole stockholder of the Company, in the principal amount of $10,000, payable on demand with interest calculated at the rate of 8% per annum, which evidences funds loaned evidencing loans to the Company since inception. The proceeds from the loan were utilized by the Company to cover the costs and expenses incurred and to be incurred in connection with the organization of the Company, the preparation and filing of this Registration Statement and the due diligence process.
Corporate Governance and Director Independence.
The Company has not:
| | · | established its own definition for determining whether its directors and nominees for directors are “independent” nor has it adopted any other standard of independence employed by any national securities exchange or inter-dealer quotation system, though our current director would not be deemed to be “independent” under any applicable definition given that he is an officer of the Company; nor |
| | · | established any committees of the board of directors. |
Current management cannot predict whether incoming management of a Target Business upon the consummation of a Business Combination, if such transaction occurs, will adopt a definition of “independence” or establish any committees of the board, such as an audit committee, a compensation committee or nominating committee. As of the date hereof, the entire board serves as the Company’s audit committee.
Item 8. Legal Proceedings.
The Company presently is not a party to, nor is management aware of any pending, legal proceedings.
Item 9. Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters.
Market Information
As of the date of this Registration Statement, there were two holders of record of 1,000,000 outstanding shares of our common stock.
The Company's common stock does not trade, nor is it admitted to quotation, on any stock exchange or other trading facility. Management has no present plan, proposal, arrangement or understanding with any person with regard to the development of a trading market in any of our securities. We cannot assure you that a trading market for our common stock will ever develop. The Company has not registered its class of common stock for resale under the blue sky laws of any state and current management does not anticipate doing so. The holders of shares of common stock, and persons who may desire to purchase shares of our common stock in any trading market that might develop in the future, should be aware that significant state blue sky law restrictions may exist which could limit the ability of stockholders to sell their shares and limit potential purchasers from acquiring our common stock.
The Company is not obligated by contract or otherwise to issue any securities and there are no outstanding securities which are convertible into or exchangeable for shares of our common stock. All outstanding shares of our common stock are “restricted securities,” as that term is defined under Rule 144 promulgated under the Securities Act, because they were issued in a private transaction not involving a public offering. All of our outstanding shares of our common stock are held by affiliates. As to shares of our common stock held by affiliates and their permitted transferees, the Securities and Exchange Commission has taken the position that Rule 144 is not available for the resale of securities held by those persons, either before and after a Business Combination, despite technical compliance with the requirements of Rule 144 because those persons would be acting as "underwriters" under the Securities Act when reselling their securities. Accordingly, resale transactions of shares held by our affiliates and their permitted transferees, would need to be made through a registered offering of such securities. The Company is not obligated to register any shares of capital stock for public resale under the Securities Act of 1933, as amended.
Neither the Company nor its sole officer and director has any present plan, proposal, arrangement, understanding or intention of selling any unissued or outstanding shares of common stock in the public market subsequent to a Business Combination. Nevertheless, in the event that a substantial number of shares of our common stock were to be sold in any public market that may develop for our securities subsequent to a Business Combination, such sales may adversely affect the price for the sale of the Company's common stock securities in any such trading market. We cannot predict what effect, if any, market sales of currently restricted shares of common stock or the availability of such shares for sale will have on the market prices prevailing from time to time, if any.
Dividends
We have not paid any dividends on our common stock to date and do not presently intend to pay cash dividends prior to the consummation of a Business Combination. It is the present intention of our management to retain all earnings, if any, for use in our business operations.
The payment of any dividends subsequent to a Business Combination will be within the discretion of our then seated board of directors. Current management cannot predict the factors which any future board of directors would consider when determining whether or when to pay dividends.
Item 10. Recent Sales of Unregistered Securities.
Since inception, the Company has issued and sold the following securities without the benefit of registration under the Securities Act of 1933, as amended:
Issuances Pursuant to Section 4(2) of the Securities Act:
On February 1, 2008, the Company sold and issued 1,000,000 shares of common stock to the persons named in the table below at a price equal to the par value per share pursuant to the exemption from the registration provisions under the Securities Act afforded by Section 4(2) thereof
| Name | | No. of Shares | | Purchase Price | |
| Bethesda Marketing Group, LLC (1) | | | 500,000 | | $ | 50 | |
| Scott Roper | | | 500,000 | | $ | 50 | |
(1) This entity is beneficially owned by David McNamee, our sole officer and director.
Item 11. Description of Securities.
The following description of our common stock and our preferred stock is a summary. You should refer to our Articles of Incorporation and our By-laws for the actual terms of our capital stock. These documents are filed as exhibits to this Registration Statement.
Authorized Capital Stock
We are authorized to issue up to 100,000,000 shares of common stock and 10,000,000 shares of blank check preferred stock, each with a par value of $0.0001 per share. As of the date of this Registration Statement, there are 1,000,000 shares of common stock and no shares of preferred stock issued and outstanding. Our common stock is held of record by three registered stockholders.
Common Stock
The holders of our common stock are entitled to one vote per share on all matters to be voted on by the stockholders. All shares of common stock are entitled to participate in any distributions or dividends that may be declared by the board of directors, subject to any preferential dividend rights of outstanding shares of preferred stock. Subject to prior rights of creditors, all shares of common stock are entitled, in the event of our liquidation, dissolution or winding up, to participate ratably in the distribution of all our remaining assets, after distribution in full of preferential amounts, if any, to be distributed to holders of preferred stock. There are no sinking fund provisions applicable to the common stock. Our common stock has no preemptive or conversion rights or other subscription rights.
Preferred Stock
Our board of directors has the authority, without further action by our stockholders, to designate and issue up to 10,000,000 shares of preferred stock in one or more series and to fix the designation, powers, preferences and rights of each series and the qualifications, limitations or restrictions thereof. These rights may include a preferential return in the event of our liquidation, the right to receive dividends if declared by the board of directors, special dividend rates, conversion rights, redemption rights, superior voting rights to the common stock, the right to protection from dilutive issuances of securities or the right to approve corporate actions. Any or all of these rights may be superior to the rights of the common stock. As a result, preferred stock could be issued with terms that could delay or prevent a change in control or make removal of our management more difficult. Additionally, our issuance of preferred stock may decrease the market price of our common stock in any market that may develop for such securities.
The board of directors has the authority to issue the authorized but unissued shares of our capital stock without action by the stockholders. The issuance of any such shares would reduce the percentage ownership held by existing stockholders and may dilute the book value of their shares.
There are no provisions in our Articles of Incorporation or By-laws which would delay, defer or prevent a change in control of the Company.
Item 12. Indemnification of Directors and Officers.
Our Articles of Incorporation provide for the indemnification of our directors, officers, employees and agents to the fullest extent permitted by the laws of the State of Nevada. Section 78.7502 of the Nevada Revised Statutes permits a corporation to indemnify any of its directors, officers, employees or agents against expenses actually and reasonably incurred by such person in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (except for an action by or in right of the corporation) by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, provided that it is determined that such person acted in good faith and in a manner which he reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.
Section 78.751 of the Nevada Revised Statutes requires that the determination that indemnification is proper in a specific case must be made by (a) the stockholders, (b) the board of directors by majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding or (c) independent legal counsel in a written opinion (i) if a majority vote of a quorum consisting of disinterested directors is not possible or (ii) if such an opinion is requested by a quorum consisting of disinterested directors.
Article VII of our By-laws provides that:
| | · | no director shall be liable to the Company or any of its stockholders for monetary damages for breach of fiduciary duty as a director except with respect to (i) a breach of the director’s loyalty to the Company or its stockholders, (ii) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) liability which may be specifically defined by law or (iv) a transaction from the director derived an improper personal benefit; and |
| | · | the Company shall indemnify to the fullest extent permitted by law each person that such law grants to the Company power to indemnify. |
Any amendment to or repeal of our Articles of Incorporation or by-laws shall not adversely affect any right or protection of any of our directors or officers for or with respect to any acts or omissions of such director or officer occurring prior to such amendment or repeal.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
Item 13. Financial Statements and Supplementary Data
The Company submits with this Registration Statement the financial statements listed in the Index to Financial Statements appearing on the following page.
BETHESDA C0801, INC.
FINANCIAL STATEMENTS
MAY 31, 2008
BETHESDA C0801, INC.
TABLE OF CONTENTS
MAY 31, 2008
Report of Independent Registered Public Accounting Firm | 1 |
| | |
Balance Sheet as of May 31, 2008 | 2 |
| | |
Statement of Operations for the Period from January 22, 2008 (date of inception) to May 31, 2008 | |
| | 3 |
| | |
Statement of Stockholder’s Deficit as of May 31, 2008 | 4 |
| | |
Statement of Cash Flows for the Period from January 22, 2008 (date of inception) to May 31, 2008 | 5 |
| | |
Notes to Financial Statements | 6 - 8 |
Maddox Ungar Silberstein, PLLC CPAs and Business Advisors
Phone (248) 203-0080
Fax (248) 281-0940
30600 Telegraph Road, Suite 2175
Bingham Farms, MI 48025-4586
www.maddoxungar.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
Bethesda C0801, Inc.
Clearwater, Florida
We have audited the accompanying balance sheet of Bethesda C0801, Inc. (a development stage company) as of May 31, 2008 and the related statements of operations, stockholders’ deficit and cash flows for the period from January 22, 2008 (date of inception) to May 31, 2008. 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 audit.
We conducted our audit 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 financial statements are free of material misstatement. The Company has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bethesda C0801, Inc. as of May 31, 2008, and the results of its operations and its cash flows for the period from January 22, 2008 (date of inception) to May 31, 2008, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 5 to the financial statements, the Company has limited working capital, has not yet received revenue from sales of products or services, and has incurred losses from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans with regard to these matters are described in Note 5. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Maddox Ungar Silberstein PLLC
Maddox Ungar Silberstein, PLLC
Bingham Farms, Michigan
July 10, 2008
BETHESDA C0801, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
As of May 31, 2008
ASSETS | | | | |
| | | | | |
| Current Assets | | | | |
| Cash and equivalents | | $ | 3,600 | |
| | | | | |
TOTAL ASSETS | | $ | 3,600 | |
| | | | | |
LIABILITIES AND STOCKHOLDERS’ DEFICIT | | | | |
| | | | | |
| Current Liabilities | | | | |
| Accrued expenses | | $ | 2,837 | |
| Loan payable – Related party | | | 10,000 | |
| | | | | |
| TOTAL LIABILITIES | | | 12,837 | |
| | | | | |
| Stockholders’ Deficit | | | | |
| Preferred Stock – $.0001 par value, 10,000,000 shares authorized, -0- shares issued and outstanding | | | 0 | |
| Common Stock – $.0001 par value, 100,000,000 shares authorized, 1,000,000 shares issued and outstanding | | | 100 | |
| Deficit accumulated during the development stage | | | (9,337 | ) |
| Total stockholders’ deficit | | | (9,237 | ) |
| | | | | |
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | | $ | 3,600 | |
See accompanying notes to financial statements.
BETHESDA C0801, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
Period from January 22, 2008 (Inception) to May 31, 2008
| | | Period from | |
| | | January 22, 2008 | |
| | | (Date of Inception) to May 31, 2008 | |
| | | | |
| Revenues | | $ | 0 | |
| | | | | |
| Expenses : | | | | |
| Professional fees | | | 9,100 | |
| Interest expense | | | 237 | |
| | | | | |
| Net Loss | | $ | (9,337 | ) |
| | | | | |
| Net loss per share: | | | | |
| Basic and diluted | | | (0.01 | ) |
| | | | | |
| Weighted average shares outstanding: | | | | |
| Basic and diluted | | $ | 1,000,000 | |
See accompanying notes to financial statements.
BETHESDA C0801, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS’ DEFICIT
Period from January 22, 2008 (Date of Inception) to May 31, 2008
| | | | | | | | | Deficit | | | |
| | | | | | | | | accumulated | | | |
| | | | | | | Additional | | during the | | | |
| | | Common stock | | paid-in | | development | | | |
| | | Shares | | Amount | | capital | | stage | | Total | |
| Issuance of common stock | | | 1,000,000 | | $ | 100 | | $ | - | | $ | - | | $ | 100 | |
| Net loss for the period | | | - | | | - | | | - | | | (9,337 | ) | | (9,337 | ) |
| Balance, May 31, 2008 | | | 1,000,000 | | $ | 100 | | $ | - | | $ | (9,337 | ) | $ | (9,237 | ) |
See accompanying notes to financial statements.
BETHESDA C0801, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
Period from January 22, 2008 (Date of Inception) to May 31, 2008
| | | Period From | |
| | | January 22, 2008 | |
| | | (Date of Inception) to | |
| | | May 31, 2008 | |
CASH FLOWS FROM OPERATING ACTIVITIES | | | | |
| Net loss | | $ | (9,337 | ) |
| Change in non-cash working capital items: | | | | |
| Increase in accrued expenses | | | 2,837 | |
CASH FLOWS USED BY OPERATING ACTIVITIES | | | (6,500 | ) |
| | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES | | | | |
| Sale of common stock | | | 100 | |
| Note payable from related party | | | 10,000 | |
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES | | | 10,100 | |
| | | | | |
NET INCREASE IN CASH | | | 3,600 | |
| | | | | |
| Cash, beginning of period | | | - | |
Cash, end of period | | $ | 3,600 | |
| | | | | |
SUPPLEMENTAL CASH FLOW INFORMATION | | | | |
| Interest paid | | $ | 0 | |
| Income taxes paid | | $ | 0 | |
See accompanying notes to financial statements.
BETHESDA C0801, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
Period from January 22, 2008 (Date of Inception) to May 31, 2008
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Bethesda C0801, Inc. (“The Company”) was organized under the laws of the State of Nevada on January 22, 2008 as a corporation. The Company’s objective is to acquire or merge with a target business or company in a business combination.
Development Stage Company
The accompanying financial statements have been prepared in accordance with the Statement of Financial Accounting Standards No. 7 ”Accounting and Reporting by Development-Stage Enterprises”. A development-stage enterprise is one in which planned principal operations have not commenced or if its operations have commenced, there has been no significant revenues there from.
Cash and Cash Equivalents
Bethesda considers all highly liquid investments with maturities of three months or less to be cash equivalents. At May 31, 2008 the Company had $3,600 of unrestricted cash to be used for future business operations.
Fair Value of Financial Instruments
Bethesda’s financial instruments consist of cash, accrued expenses, and a note payable. The carrying amount of these financial instruments approximates fair value due to either length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
Income Taxes
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Comprehensive Income (Loss)
The Company adopted Statement of Financial Accounting Standards (SFAS) No. 130, “Reporting Comprehensive income”, which establishes standards for the reporting and display of comprehensive income and its components in the financial statements. There were no items of comprehensive income (loss) applicable to the Company during the period covered in these financial statements.
BETHESDA C0801, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
Period from January 22, 2008 (Inception) to May 31, 2008
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Recent Accounting Pronouncements
Bethesda does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.
NOTE 2 – LOAN PAYABLE - RELATED PARTY
Bethesda received an unsecured loan in the amount of $10,000 on February 12, 2008 from Bethesda Financial Group, which was used to fund its corporate bank account. The loan accrues interest at a rate of 8% annually with principal and interest due and payable on demand by the holder. At May 31, 2008 accrued interest totaled $237. Bethesda Marketing Group, LLC dba Bethesda Financial Group is a shareholder of the Company, and its member is President and a board member of the Company.
NOTE 3 – PROFESSIONAL FEE EXPENSES
Professional fees consisted of legal and accounting fees associated with the incorporation and setup of the Company and the initial audit of the Company. Legal fees and accounting fees totaled $6,500 and $2,600, respectively.
NOTE 4 – INCOME TAXES
For the period ended May 31, 2008, Bethesda has incurred net losses and, therefore, has no tax liability. The net deferred tax asset generated by the loss carry-forward has been fully reserved. The cumulative net operating loss carry-forward is $9,337 at May 31, 2008, and will expire in the year 2028.
The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows:
| | | 2008 | |
| Deferred tax asset attributable to: | | | | |
| Net operating loss carryover | | $ | 3,175 | |
| Valuation allowance | | | (3,175 | ) |
| Net deferred tax asset | | $ | - | |
BETHESDA C0801, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
Period from January 22, 2008 (Inception) to May 31, 2008
NOTE 5 – LIQUIDITY AND GOING CONCERN
Bethesda has not generated any revenues, has negative working capital and has suffered a loss from operations. These factors create substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustment that might be necessary if the Company is unable to continue as a going concern.
The ability of Bethesda to continue as a going concern is dependent on the Company generating cash from the sale of its common stock and/or obtaining debt financing and attaining future profitable operations or acquiring or merging with a profitable company. Management’s plans include selling its equity securities and obtaining debt financing to fund its capital requirements until it is able to enter into a business combination with another company; however, there can be no assurance the Company will be successful in these efforts.
Item 14. Changes in and Disagreements with Accountants.
There are not and have not been any disagreements between the Company and its independent accountants on any matter of accounting principles, practices or financial statement disclosure.
Item 15. Financial Statements and Exhibits.
(a) The following financial statements of the registrant are filed as a part of this Registration Statement:
(i) Balance Sheet as of May 31, 2008.
(ii) Statement of Operations for the period from inception (January 22, 2008) through May 31, 2008.
(iii) Statement of Cash Flows for the period from inception (January 22, 2008) through May 31, 2008.
(iv) Statement of Stockholders’ Deficit for the period from inception (January 22, 2008) through May 31, 2008.
(v) Notes to financial statements.
(b) The following exhibits are filed with this Registration Statement:
| Exhibit No. | | Description of Exhibit |
| 3.1 | | Articles of Incorporation. |
| 3.2 | | By-laws. |
| 4.1 | | Form of demand promissory note executed by the registrant in favor of Bethesda Marketing Group, LLC. |
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.
| | BETHESDA C0801, INC. |
| | | |
| By: | /s/ David McNamee |
| | | David McNamee, President |
