U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 2009
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 000-53360
(Exact name of registrant as specified in its charter)
Nevada (State or other jurisdiction of incorporation or organization) | 26-1863101 (I.R.S. Employer Identification No.) |
2519 McMullen Booth Road, Suite 510-308, Clearwater, FL 33761
(Address of principal executive offices)
(Registrant's telephone number)
(Former name, former address and former
fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
o Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer o | Accelerated filer o |
Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). x Yes o No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. o Yes o No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: At November 16, 2009, there were 1,000,000 shares of common stock outstanding.
PART I — FINANCIAL INFORMATION
| Item 1. Financial Statements. | | |
| | | |
| Balance Sheet as of September 30, 2009 (unaudited) and June 30, 2009 (audited) | | F-1 |
| | | |
Statements of Operations for the three months ended September 30, 2009 and 2008 and for the period from January 22, 2008 (date of inception) to September 30, 2009 | | F-2 |
| | | |
| Statement of Stockholders’ Deficit as of September 30, 2009 (unaudited) | | F-3 |
| | | |
Statements of Cash Flows for the three months ended September 30, 2009 and 2008 and for the period from January 22, 2008 (date of inception) to September 30, 2009 (unaudited) | | F-4 |
| | | |
| Notes to Financial Statements | | F-5 to F-7 |
BETHESDA C0801, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
As of September 30, 2009 (unaudited) and June 30, 2009 (audited)
| | | September 30 | | | June 30, | |
| | | 2009 | | | 2009 | |
| | | (unaudited) | | | (audited) | |
| ASSETS | | | | | | |
| | | | | | | |
| Current Assets | | | | | | |
| Cash and equivalents | | $ | 1,976 | | | $ | 1,976 | |
| Accounts receivable – related party | | | 169 | | | | 169 | |
| | | | | | | | | |
| TOTAL ASSETS | | $ | 2,145 | | | $ | 2,145 | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | | | | | | | | |
| | | | | | | | | |
| Current Liabilities | | | | | | | | |
| Accrued expenses | | $ | 5,566 | | | $ | 3,719 | |
| Loan payable – Related party | | | 14,850 | | | | 14,850 | |
| | | | | | | | | |
| TOTAL LIABILITIES | | | 20,416 | | | | 18,569 | |
| | | | | | | | | |
| Stockholders’ Deficit | | | | | | | | |
| Preferred Stock – $.0001 par value, 10,000,000 shares authorized, -0- shares issued and outstanding | | | 0 | | | | 0 | |
| Common Stock – $.0001 par value, 100,000,000 shares authorized, 1,000,000 shares issued and outstanding | | | 100 | | | | 100 | |
| Deficit accumulated during the development stage | | | (18,371 | ) | | | (16,524 | ) |
| Total stockholders’ deficit | | | (18,271 | ) | | | (16,424 | ) |
| | | | | | | | | |
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | | $ | 2,145 | | | $ | 2,145 | |
See accompanying notes to financial statements.
BETHESDA C0801, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS (unaudited)
Three months ended September 30, 2009 and 2008
Period from January 22, 2008 (Inception) to September 30, 2009
| | | Three months ended September 30, 2009 | | | Three months ended September 30, 2008 | | | Period from January 22, 2008 (Date of Inception) to September 30, 2009 | |
| | | | | | | | | | |
| REVENUES | | $ | 0 | | | $ | 0 | | | $ | 0 | |
| | | | | | | | | | | | | |
| EXPENSES: | | | | | | | | | | | | |
| Professional fees | | | 1,550 | | | | 550 | | | | 16,300 | |
| Interest expense | | | 297 | | | | 200 | | | | 1,516 | |
| General and administrative expenses | | | 0 | | | | 0 | | | | 555 | |
| | | | | | | | | | | | | |
| NET LOSS | | $ | (1,847 | ) | | $ | (750 | ) | | $ | (18,371 | ) |
| | | | | | | | | | | | | |
| NET LOSS PER SHARE: | | | | | | | | | | | | |
| Basic and diluted | | $ | (0.01 | ) | | $ | (0.00 | ) | | | | |
| | | | | | | | | | | | | |
| WEIGHTED AVERAGE SHARES OUTSTANDING | | | | | | | | | | | | |
| Basic and diluted | | | 1,000,000 | | | | 1,000,000 | | | | | |
See accompanying notes to financial statements.
BETHESDA C0801, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS’ DEFICIT (unaudited)
Period from January 22, 2008 (Date of Inception) to September 30, 2009
| | | Common stock | | | Additional paid-in | | | Deficit accumulated during the development | | | | |
| | | Shares | | | Amount | | | capital | | | stage | | | Total | |
| | | | | | | | | | | | | | | | |
| Issuance of common stock | | | 1,000,000 | | | $ | 100 | | | $ | - | | | $ | - | | | $ | 100 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net loss for the period ended June 30, 2008 | | | - | | | | - | | | | - | | | | (9,337 | ) | | | (9,337 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Balance, June 30, 2008 | | | 1,000,000 | | | | 100 | | | | - | | | | (9,337 | ) | | | (9,237 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net loss for the year ended June 30, 2009 | | | - | | | | - | | | | - | | | | (7,187 | ) | | | (7,187 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Balance, June 30, 2009 | | | 1,000,000 | | | | 100 | | | | - | | | | (16,524 | ) | | | (16,424 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net loss for the three months ended September 30, 2009 | | | - | | | | - | | | | - | | | | (1,847 | ) | | | (1,847 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Balance, September 30, 2009 | | | 1,000,000 | | | $ | 100 | | | $ | - | | | $ | (18,371 | ) | | $ | (18,271 | ) |
See accompanying notes to financial statements.
BETHESDA C0801, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS (unaudited)
Three months ended September 30, 2009 and 2008
Period from January 22, 2008 (Date of Inception) to September 30, 2009
| | | Three months ended September 30, 2009 | | | Three months ended September 30, 2008 | | | Period from January 22, 2008 (Date of Inception) to September 30, 2009 | |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | | | |
| Net loss for the period | | $ | (1,847 | ) | | $ | (750 | ) | | $ | (18,371 | ) |
| Change in non-cash working capital items: | | | | | | | | | | | | |
| (Increase) in accounts receivable – related party | | | 0 | | | | 0 | | | | (169 | ) |
| Increase in accrued expenses | | | 1,847 | | | | 750 | | | | 5,566 | |
| CASH FLOWS USED BY OPERATING ACTIVITIES | | | 0 | | | | 0 | | | | (12,974 | ) |
| | | | | | | | | | | | | |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | | | | | |
| Sale of common stock | | | 0 | | | | 0 | | | | 100 | |
| Note payable from related party | | | 0 | | | | 0 | | | | 14,850 | |
| CASH FLOWS PROVIDED BY FINANCING ACTIVITIES | | | 0 | | | | 0 | | | | 14,950 | |
| | | | | | | | | | | | | |
| NET INCREASE IN CASH | | | 0 | | | | 0 | | | | 1,976 | |
| | | | | | | | | | | | | |
| Cash, beginning of period | | | 1,976 | | | | 1,000 | | | | - | |
| Cash, end of period | | $ | 1,976 | | | $ | 1,000 | | | $ | 1,976 | |
| | | | | | | | | | | | | |
| SUPPLEMENTAL CASH FLOW INFORMATION | | | | | | | | | | | | |
| Interest paid | | $ | 0 | | | $ | 0 | | | $ | 0 | |
| Income taxes paid | | $ | 0 | | | $ | 0 | | | $ | 0 | |
See accompanying notes to financial statements.
BETHESDA C0801, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
September 30, 2009
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Bethesda C0801, Inc. (“Bethesda” and 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 generally accepted accounting principles related to development stage companies. A development-stage company 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 September 30 and June 30, 2009 the Company had $1,976 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.
BETHESDA C0801, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
September 30, 2009
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Comprehensive Income (Loss)
The Company has established 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.
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. During the year ended June 30, 2009, additional funds totaling $4,850 were loaned at the same terms. On September 30, 2009 the loan payable and accrued interest totaled $14,850 and $1,516, respectively. 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 – SUBSEQUENT EVENTS
The Company has analyzed its operations subsequent to September 30, 2009 through November 16, 2009 and has determined that it does not have any material subsequent events to disclose in these financial statements
NOTE 4 – INCOME TAXES
For the periods ended September 30, 2009, 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 $18,371 at September 30, 2009, and will begin to 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:
| | | 2009 | |
| Deferred tax asset attributable to: | | | |
| Net operating loss carryover | | $ | 6,246 | |
| Valuation allowance | | | (6,246 | ) |
| Net deferred tax asset | | $ | - | |
BETHESDA C0801, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
September 30, 2009
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 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Overview.
Bethesda C0801, Inc. (“we”, “us” or the “Company”) was organized in the State of Nevada on January 22, 2008. We are a developmental stage company and have not generated any revenues to date. We were organized to serve as a vehicle for a business combination through a capital stock exchange, merger, reverse acquisition, 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”). We are currently in the process of identifying and evaluating targets for a Business Combination. We are not presently engaged in, and will not engage in, any substantive commercial business operations unless and until we consummate a Business Combination.
Our management has broad discretion with respect to identifying and selecting a prospective Target Business. We have not established any specific attributes or criteria (financial or otherwise) for prospective Target Businesses. Our sole officer and director has never served as an officer or director of a development stage public company that has affected a Business Combination. Accordingly, he may not successfully identify a Target Business or conclude a Business Combination. Our officer and director currently serves as an officer and director and is the sole stockholder of another shell company that has a class of stock registered under the Exchange Act which has the same business purpose as us. Our officer's/director's affiliation with two shell companies raises the possibility of conflicts of interest, in that both companies may have a right to take advantage of the same business opportunity. Neither our Company nor the other shell company with which our management is affiliated has adopted any policy with respect to resolving any potential conflict of interest and it is possible that any conflict or interest that arises between the two companies may not be decided in our favor.
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. If we consummate a Business Combination with a foreign entity, we will be subject to all of the risks attendant to foreign operations. 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.
We expect that in connection with any Business Combination, we will issue a significant number of shares of our common stock (equal to at least 80% of the total number of shares outstanding after giving effect to the transaction and likely, a significantly higher percentage) in order to ensure that the Business Combination qualifies as a “tax free” transaction under federal tax laws. The issuance of additional shares of our capital stock will:
| · | significantly reduce the equity interest of our stockholders; and |
| · | cause a change and likely result in the resignation or removal of our officer and director. |
Our management anticipates that our Company likely will affect only one Business Combination, due primarily to our financial resources 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 potential gains from another.
Liquidity and Capital Resources.
At September 30, 2009, we had cash on hand of $1,976. We do not expect that these funds will be sufficient to cover our operating costs and expenses. During the next twelve months we anticipate that we will incur costs and expenses in connection with the preparation and filing of reports under the Exchange Act and the identification and evaluation of targets for 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 loans or further 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. As a result of our negative working capital, our losses since inception, and failure to generate revenues from operations, our financial statements include a note in which our auditor has expressed doubt about our ability to continue as a "going concern."
Results of Operations.
Since our inception, we have not generated any revenues. We reported a net loss for the periods ended September 30, 2009 and 2008 of $1,847 and $750 and a net loss since inception of $18,371. Our quarterly expenses have consisted mainly of professional fees and interest expense.
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. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
Item 4(T). Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As of September 30, 2009, the Company’s management carried out an evaluation, under the supervision and with the participation of the Company’s Chief Executive Officer, who is the Company’s principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15 and 15d-15 under the Exchange Act), pursuant to Exchange Act Rule 13a-15. Based on such evaluation, the Company’s Chief Executive Officer has concluded that the Company's disclosure controls and procedures were effective.
Changes in Internal Controls
There have been no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15 and 15d-15 under the Exchange Act) during the three months ended September 30, 2009 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II — OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is not a party to any legal proceeding or litigation.
Item 1A. Risk Factors.
Smaller reporting companies are not required to provide the information required by this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
(a) During the three months ended September 30, 2009, the Company did not issue any securities.
(b) Not applicable.
(c) During the three months ended September 30, 2009, neither the issuer nor any "affiliated purchaser," as defined in Rule 10b-18(a)(13), purchased any shares or other units of any class of the issuer's equity securities.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits.
| Exhibit | Description |
| | |
| 31.1 | Certification of the Company’s Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009. |
| | |
| 32.1* | Certification of the Company’s Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002. |
* Pursuant to Commission Release No. 33-8238, this certification will be treated as “accompanying” this Quarterly Report on Form 10-Q and not “filed” as part of such report for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of Section 18 of the Securities Exchange Act of 1934, as amended, and this certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused the Report to be signed on its behalf by the undersigned thereunto duly authorized.
| | | BETHESDA C0801, INC. |
| Dated: November 16, 2009 | By: | /s/ David M. McNamee |
| | Name: | David M. McNamee |
| | Title: | President, Principal Executive Officer and Principal Financial Officer |
