SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2011
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 000-54426
DRIFTWOOD ACQUISITION CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 45-1876246
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9454 Wilshire Boulevard, Suite 612
Beverly Hills, California 90212
(Address of principal executive offices) (zip code)
202/387-5400
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
Indicate by check mark 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 Accelerated Filer
Non-accelerated filer Smaller reporting company X
(do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of stock, as of the latest practicable date.
Class Outstanding at
September 30, 2011
Common Stock, par value $0.0001 20,000,000
Documents incorporated by reference: None
FINANCIAL STATEMENTS
Balance Sheet as of September 30, 2011 F-1
Statements of Operations for the Period from April 20, 2011
(Inception) to September 30, 2011 F-2
Statement of Cash Flows for the Period from April 20, 2011
(Inception) to September 30, 2011 F-3
Notes to Financial Statements F4-F7
DRIFTWOOD ACQUISITION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
ASSETS
September 30,
2011
----------
(Unaudited)
Current Assets
Cash $ 2,000
--------
Total Assets $ 2,000
========
STOCKHOLDERS' EQUITY
Stockholders' Equity
Preferred stock, $0.0001 par value,
20,000,000 shares authorized;
none outstanding $ -
Common Stock, $0.0001 par value,
100,000,000 shares authorized;
20,000,000 shares issued and
outstanding 2,000
Additional paid-in capital 750
Deficit accumulated during the
development stage (750)
---------
Total Stockholders' Equity $ 2,000
=========
See accompanying notes to financial statements
F-1
DRIFTWOOD ACQUISITION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
Three months For the period from
ended April 20, 2011
September 30, (inception) to
2011 September 30, 2011
(Unaudited) (Unaudited)
------------- -----------------
Operating expenses $ - $ 750
------------ ------------
Net loss $ - $ (750)
============ ============
Loss per share -
basic and diluted $ - $ (0.00)
------------ ------------
Weighted average shares - 20,000,000 20,000,000
basic and diluted ============== =============
See accompanying notes to financial statements
F-2
DRIFTWOOD ACQUISITION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
------------------------
For the Period from
April 20, 2011
(inception) to
September 30, 2011
(Unaudited)
------------------
OPERATING ACTIVITIES
Net loss $ (750)
--------------
Cash used in operating activities (750)
--------------
FINANCING ACTIVITIES
Proceeds from the issuance of common stock 2,000
Proceeds from stockholders' additional
paid-in capital 750
--------------
Cash provided by financing activities 2,750
--------------
Net increase in cash 2,000
Cash, beginning of period -
-------------
Cash, end of period $ 2,000
=============
See accompanying notes to financial statements
F-3
Driftwood Acquisition Corporation
(A Development Stage Company)
Notes to Financial Statements
NOTE 1 NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT POLICIES
NATURE OF OPERATIONS
Driftwood Acquisition Corporation ("Driftwood" or "the Company") was
incorporated on April 20, 2011 under the laws of the State of Delaware
to engage in any lawful corporate undertaking, including, but not
limited to, selected mergers and acquisitions. Driftwood has been in
the developmental stage since inception and its operations to date
have been limited to issuing shares to its original shareholders
and filing a registration statement. Driftwood will attempt to locate
and negotiate with a business entity for the combination of that target
company with Driftwood. The combination will normally take the form of
a merger, stock-for-stock exchange or stock-for-assets exchange. In
most instances the target company will wish to structure the business
combination to be within the definition of a tax-free reorganization
under Section 351 or Section 368 of the Internal Revenue Code of 1986,
as amended. No assurances can be given that Driftwood will be successful
in locating or negotiating with any target company. Driftwood has been
formed to provide a method for a foreign or domestic private company to
become a reporting company with a class of securities registered under
the Securities Exchange Act of 1934. The Company selected December 31
as its fiscal year end.
BASIS OF PRESENTATION
The summary of significant accounting policies presented below is
designed to assist in understanding the Company's financial statements.
Such financial statements and accompanying notes are the
representations of the Company's management, who are responsible for
their integrity and objectivity. These accounting policies conform to
accounting principles generally accepted in the United States of
America ("GAAP") in all material respects, and have been consistently
applied in preparing the accompanying financial statements.
USE OF ESTIMATES
These unaudited condensed financial statements should be read in
conjunction with the audited financial statements and notes thereto in
the Company's Form 10 filed on June 2, 2011 with the SEC. In
preparing these condensed financial statements, management is required
to make estimates and assumptions that affect the reported amount of
asset as of the date of the condensed financial statements and the
reported amount of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.
F-4
Driftwood Acquisition Corporation
(A Development Stage Company)
Notes to Financial Statements
NOTE 1 NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT POLICIES
(CONTINUED)
LOSS PER COMMON SHARE
Basic loss per common share excludes dilution and is computed by
dividing net loss by the weighted average number of common shares
outstanding during the period. Diluted loss per common share reflects
the potential dilution that could occur if securities or other contracts
to issue common stock were exercised or converted into common stock or
resulted in the issuance of common stock that then shared in the loss
of the entity. As of September 30, 2011 there were no outstanding
dilutive securities.
FAIR VALUE OF FINANCIAL INSTRUMENTS
FASB ASC 820 "Fair Value Measurements and Disclosures" establishes a
three-tier fair value hierarchy, which prioritizes the inputs in
measuring fair value. The hierarchy prioritizes the inputs into three
levels based on the extent to which inputs used in measuring fair value
are observable in the market.
These tiers include:
Level 1: defined as observable inputs such as quoted prices in
active markets;
Level 2: defined as inputs other than quoted prices in active
markets that are either directly or indirectly observable;
and
Level 3: defined as unobservable inputs in which little or no
market data exists, therefore requiring an entity to develop
its own assumptions
NOTE 2 - GOING CONCERN
The Company has a sustained net loss of $750 since inception of the
Company on April 20, 2011. Additionally, the Company has an
accumulated deficit of $750 on September 30, 2011. The Company's
continuation as a going concern is dependent on its ability to generate
sufficient cash flows from operations to meet its obligations, which it
has not been able to accomplish to date, and /or obtain additional
financing from its stockholders and/or other third parties.
F-5
Driftwood Acquisition Corporation
(A Development Stage Company)
Notes to Financial Statements
NOTE 2 - GOING CONCERN (CONTINUED)
These financial statements have been prepared on a going concern
basis, which implies the Company will continue to meet its obligations
and continue its operations for the next fiscal year. The continuation
of the Company as a going concern is dependent upon financial support
from its stockholders, the ability of the Company to obtain necessary
equity financing to continue operations, successfully locating and
negotiating with a business entity for the combination of that target
company with the Company.
Tiber Creek Corporation, a company affiliated with management, will
pay all expenses incurred by the Company until a business combination
is effected, without repayment. There is no assurance that the Company
will ever be profitable. The financial statements do not include any
adjustments to reflect the possible future effects on the recoverability
and classification of assets or the amounts and classifications of
liabilities that may result should the Company be unable to continue as
a going concern.
NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS
In December 2010, the Financial Accounting Standards Board ("FASB")
issued ASU 2010-29, Disclosure of Supplementary Pro Forma Information
for Business Combinations. This proposed ASU reflects the consensus-for-
exposure in EITF Issue No. 10-G, "Disclosure of Supplementary Pro Forma
Information for Business Combinations." The Amendments in this proposed
ASU specify that if a public entity presents comparative financial
statements, the entity would disclose revenue and earnings of the
combined entity as though the business combination(s) that occurred
during the current year had occurred as of the beginning of the
comparable prior annual reporting period only. This ASU would also
expand the supplemental pro forma disclosures under Codification Topic
805, Business Combinations, to include a description of the nature and
amount of material, nonrecurring pro forma adjustments directly
attributable to the business combination. This proposed ASU would
be effective prospectively for business combinations that are
consummated on or after the beginning of the first annual reporting
period beginning on or after December 15, 2010. Early adoption would
be permitted. The adoption of this ASU did not have a material impact
to our financial statements. The new disclosures and clarifications
of existing disclosures are effective now, except for the disclosures
about purchases, sales, issuances, and settlements in the roll forward
of activity in Level 3 fair value measurements. Those disclosures
are effective for fiscal years beginning after December 15, 2010,
and for interim periods within those fiscal years. The adoption of
this guidance did not have a material impact on the Company's
financial statements and related disclosures.
F-6
Driftwood Acquisition Corporation
(A Development Stage Company)
Notes to Financial Statements
NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)
In May 2011, the FASB issued a new accounting standard on fair value
measurements that clarifies the application of existing guidance and
disclosure requirements, changes certain fair value measurement
principles and requires additional disclosures about fair value
measurements. The standard is effective for interim and annual
periods beginning after December 15, 2011. Early adoption is not
permitted. The Company does not expect the adoption of this accounting
guidance to have a material impact on its financial statements and
related disclosures.
NOTE 4 - COMMON STOCK
On April 20, 2011, the Company issued 20,000,000 common shares to
two directors and officers for $2,000 in cash. The Company has not
issued any additional common shares as of September 30, 2011.
NOTE 5 SUBSEQUENT EVENTS
In preparing these financial statements, the Company has evaluated
events and transactions for potential recognition or disclosure through
November 9, 2011, the date the financial statements were available to
be issued.
F-7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Driftwood Acquisition Corporation ("Driftwood") was incorporated
on April 20, 2011 under the laws of the State of Delaware to engage in any
lawful corporate undertaking, including, but not limited to, selected
mergers and acquisitions. Driftwood has been in the developmental stage
since inception and its operations to date have been limited to issuing
shares to its original shareholders and filing this registration statement.
Driftwood has been formed to provide a method for a foreign or domestic
private company to become a reporting company with a class of securities
registered under the Securities Exchange Act of 1934.
The president of Driftwood is the president, director and
shareholder of Tiber Creek Corporation. Tiber Creek Corporation assists
companies in becoming public reporting companies and with introductions
to the financial community. To become a public company, Tiber Creek
Corporation may recommend that a company file a registration statement,
most likely on Form S-1, or alternatively that a company first effect a
business combination with Driftwood and then subsequently file a
registration statement. A company may choose to effect a business
combination with Driftwood before filing a registration statement as such
method may be an effective way to obtain exposure to the brokerage
community.
Tiber Creek will typically enter into an agreement with the target
company for assisting it to become a public reporting company and for the
preparation and filing of a registration statement and the introduction to
brokers and market makers. The target company pays Tiber Creek
Corporation for such services. Such services include, if appropriate, the
use of Driftwood. Driftwood will only be used as part of such process
and is not offered for sale. If the target company chooses to enter into
business combination with Driftwood, the registration statement will be
prepared after such business combination. The terms of a business
combination may provide for redemption of all or part of their stock in
Driftwood, usually at par.
The most likely target companies are those seeking the perceived
benefits of a reporting corporation. Such perceived benefits may include
facilitating or improving the terms on which additional equity financing
may be sought, providing liquidity for incentive stock options or similar
benefits to key employees, increasing the opportunity to use securities
for acquisitions, providing liquidity for shareholders and other factors.
Business opportunities 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 difficult and complex.
In analyzing prospective business opportunities, Driftwood may consider
such matters as the available technical, financial and managerial
resources; working capital and other financial requirements; history of
operations, if any; prospects for the future; nature of present and
expected competition; the quality and experience of management services
which may be available and the depth of that management; the potential
for further research, development, or exploration; specific risk factors
not now foreseeable but which may be anticipated; the potential for growth
or expansion; the potential for profit; the perceived public recognition
or acceptance of products, services, or trades; name identification; and
other relevant factors. This discussion of the proposed criteria is not
meant to be restrictive of the virtually unlimited discretion of Driftwood
to search for and enter into potential business opportunities.
A combination will normally take the form of a merger, stock-for-stock
exchange or stock-for-assets exchange. In most instances the target
company will wish to structure the business combination to be within the
definition of a tax-free reorganization under Section 351 or Section 368
of the Internal Revenue Code of 1986, as amended.
Driftwood has, and will continue to have, no capital with which to
provide the owners of business entities with any cash or other assets.
However, Driftwood offers owners of acquisition candidates the
opportunity to acquire a controlling ownership interest in a reporting
company.
As of September 30, 2011, Driftwood has not generated revenues and has
no income or cash flows from operations since inception. The continuation
of Driftwood as a going concern is dependent upon financial support from
its stockholders, its ability to obtain necessary equity financing to
continue operations, to successfully locate and negotiate with a business
entity for the combination of that target company with Driftwood . Tiber
Creek Corporation will pay all expenses incurred by Driftwood until a
business combination is effected, without repayment.
In February 2010, the FASB issued ASU 2010-09, "Subsequent Events
(Topic 855): Amendments to Certain Recognition and Disclosure
Requirements." This update addresses both the interaction of the
requirements of Topic 855, Subsequent Events, with the SEC's reporting
requirements and the intended breadth of the reissuance disclosures
provision related to subsequent events (paragraph 855-10-50-4). The
amendments in this update have the potential to change reporting by both
private and public entities, however, the nature of the change may vary
depending on facts and circumstances. The adoption of ASU 2010-09
did not have a material impact on the Company's results of operations
or financial condition.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.
Information not required to be filed by Smaller reporting companies.
ITEM 4. Controls and Procedures.
Disclosures and Procedures
Pursuant to Rules adopted by the Securities and Exchange Commission,
the Company carried out an evaluation of the effectiveness of the design
and operation of its disclosure controls and procedures pursuant to
Exchange Act Rules. This evaluation was done as of the end of the
period covered by this report under the supervision and with the
participation of the Company's principal executive officer (who is
also the principal financial officer).
Based upon that evaluation, he believes that the Company's
disclosure controls and procedures are effective in gathering, analyzing
and disclosing information needed to ensure that the information
required to be disclosed by the Company in its periodic reports is
recorded, processed, summarized and reported, within the time periods
specified in the Commission's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed
to ensure that information required to be disclosed by an issuer in the
reports that it files or submits under the Act is accumulated and
communicated to the issuer's management, including its principal executive
and principal financial officers, or persons performing similar functions,
as appropriate to allow timely decisions regarding required disclosure.
This Quarterly Report does not include an attestation report of
the Company's registered public accounting firm regarding internal
control over financial reporting. Management's report was not subject
to attestation by the Company's registered public accounting firm
pursuant to temporary rules of the Securities and Exchange
Commission that permit the Company to provide only management's
report in this Quarterly Report.
Changes in Internal Controls
There was no change in the Company's internal control over
financial reporting that was identified in connection with such
evaluation that occurred during the period covered by this report
that has materially affected, or is reasonably likely to materially
affect, the Company's internal control over financial reporting.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no legal proceedings against the Company and the Company
is unaware of such proceedings contemplated against it.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the past three years, Driftwood has issued 20,000,000
common shares pursuant to Section 4(2) of the Securities Act of 1933
for an aggregate purchase price of $2,000:
On April 20, 2011 Driftwood issued the following shares of its
common stock:
Name Number of Shares Consideration
Tiber Creek Corporation 10,000,000 $1,000
MB Americus LLC 10,000,000 $1,000
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
(a) Not applicable.
(b) Item 407(c)(3) of Regulation S-K:
During the quarter covered by this Report, there have not been
any material changes to the procedures by which security holders
may recommend nominees to the Board of Directors.
ITEM 6. EXHIBITS
(a) Exhibits
31 Certification of the Chief Executive Officer and Chief
Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
32 Certification of the Chief Executive Officer and Chief
Financial Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
DRIFTWOOD ACQUISITION CORPORATION
By: /s/ James M. Cassidy
President, Chief Financial Officer
Dated: November 9, 2011