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 March 31, 2013
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 000-54825
ESSENTIAL TELECOMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
BEACHGATE ACQUISITION CORPORATION
(Former Name at the period covered by this Report)
Delaware 46-1856006
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
705 Commerce Street, Southlake, Texas 76092
(Address of principal executive offices) (zip code)
(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
March 31, 2013
Common Stock, par value $0.0001 1,500,000
Documents incorporated by reference: None
______________________________________________________________________
FINANCIAL STATEMENTS
Balance Sheets as of March 31, 2013 (unaudited) and
December 31, 2012 1
Statements of Operations for the Three Months Ended
March 31, 2013 and for the Period from July 23, 2012
(Inception) to March 31, 2013 (unaudited) 2
Statements of Cash Flows for the Three Months Ended
March 31, 2013 and for the Period from July 23, 2012
(Inception) to March 31, 2013 (unaudited) 3
Notes to Financial Statements (unaudited) 4-8
______________________________________________________________________
ESSENTIAL TELECOMMUNICATIONS, INC.
(FORMERLY BEACHGATE ACQUISITION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
ASSETS
March 31, December 31,
2013 2012
------------ ----------
(unaudited)
Current assets
Cash $ 150 $ 2,000
------------ -----------
Total assets $ 150 $ 2,000
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ - $ 350
------------ -----------
Total liabilities - 350
------------ -----------
Stockholders' equity
Preferred stock, $0.0001 par value,
20,000,000 shares authorized; none
issued and outstanding - -
Common stock, $0.0001 par value, 100,000,000
shares authorized; 20,000,000 and 1,500,000
shares issued and outstanding as of
December 31, 2012 and March 31, 2013,
respectively 150 2,000
Additional paid-in capital 2,699 1,007
Accumulated deficit (2,699) (1,357)
------------ -----------
Total stockholders' equity 150 1,650
------------ -----------
Total liabilities and stockholders'
equity $ 150 $ 2,000
============ ===========
The accompanying notes are an integral part of these financial statements
2
______________________________________________________________________
ESSENTIAL TELECOMMUNICATIONS, INC.
(FORMERLY BEACHGATE ACQUISITION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(unaudited)
For the period from
For the three July 23, 2012
months ended (Inception) to
March 31, 2013 March 31, 2013
-------------- -----------------
Revenue $ - $ -
Operating expenses 1,342 2,699
Income tax - -
-------------- -----------------
Net loss $ (1,342) $ (2,699)
============== =================
Loss per share -
basic and diluted $ (0.00) $ (0.00)
============== =================
Weighted average shares-
basic and diluted 1,500,000 20,000,000
============== =================
The accompanying notes are an integral part of these financial statements
3
______________________________________________________________________
ESSENTIAL TELECOMMUNICATIONS, INC.
(FORMERLY BEACHGATE ACQUISITION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
(unaudited)
For the
period from
For the three July 23, 2012
months ended (Inception) to
March 31, 2013 March 31, 2013
------------- --------------
OPERATING ACTIVITIES
Net loss $ (1,342) $ (2,699)
Changes in operating assets and
liabilities
Accrued liablities (350) -
------------- --------------
Net cash used in operating activities (1,692) (2,699)
------------- --------------
FINANCING ACTIVITIES
Proceeds from issuance of common stock 100 2,100
Redemption of common stock (1,950) (1,950)
Stockholders' contributions 1,692 2,699
------------- --------------
Net cash provided by financing
activities (158) 2,849
------------- --------------
Net increase in cash (1,850) 2,849
Cash, beginning of period 2,000 -
============= =============
Cash, end of period $ 150 $ 150
============= =============
The accompanying notes are an integral part of these financial statements
4
______________________________________________________________________
ESSENTIAL TELECOMMUNICATIONS, INC.
(FORMERLY BEACHGATE ACQUISITION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Essential Telecommunications, Inc. (formerly Beachgate Acquisition)
("the Company") was incorporated on July 23, 2012 under the laws of
the State of Delaware to engage in any lawful corporate undertaking,
including, but not limited to, selected mergers and acquisitions.
The Company 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.
The Company will attempt to locate and negotiate with a business
entity for the combination of that target company with Essential
Telecommunications. 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
The Company will be successful in locating or negotiating with any
target company. The Company 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.
On February 4, 2013, the shareholders of the Company and the Board
of Directors unanimously approved the change of the Company's name
to Essential Telecommunications, Inc. and file such change with the
State of Delaware.
On March 25, 2013, David F. Martin and Bassam Abdalla were appointed
Chief Executive Officer and Chief Operating Officer, respectively.
BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared
pursuant to the rules and regulations of the Securities and Exchange
Commission ("SEC") for interim financial information. Accordingly,
they do not include all of the information and notes required by
U.S. GAAP for complete financial statements. The accompanying
unaudited financial statements include all adjustments, composed
of normal recurring adjustments, considered necessary by management
to fairly state our results of operations, financial position and
cash flows. The operating results for interim periods are not
necessarily indicative of results that may be expected for any
other interim period or for the full year.
USE OF ESTIMATES
The preparation of financial statements in conformity with GAAP
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 of the financial
statements, and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from
those estimates.
5
______________________________________________________________________
ESSENTIAL TELECOMMUNICATIONS, INC.
(FORMERLY BEACHGATE ACQUISITION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
CONCENTRATION OF RISK
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of cash. The
Company places its cash with high quality banking institutions.
The Company did not have cash balances in excess of the Federal
Deposit Insurance Corporation limit as of March 31, 2013.
INCOME TAXES
Under ASC 740, "Income Taxes", deferred tax assets and liabilities
are recognized for the future tax consequences attributable to
temporary differences between the financial statement carrying
amounts of existing assets and liabilities and their respective
tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in
the years in which those temporary differences are expected to
be recovered or settled. Valuation allowances are established
when it is more likely than not that some or all of the deferred
tax assets will not be realized. As of March 31, 2013, there
were no deferred taxes.
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 March 31, 2013,
there are no outstanding dilutive securities.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company follows guidance for accounting for fair value measurements
of financial assets and financial liabilities and for fair value
measurements of nonfinancial items that are recognized or disclosed
at fair value in the financial statements on a recurring basis. The
guidance establishes a fair value hierarchy that prioritizes the
inputs to valuation techniques used to measure fair value. The
hierarchy gives the highest priority to unadjusted quoted prices
in active markets for identical assets or liabilities (Level 1
measurements) and the lowest priority to measurements involving
significant unobservable inputs (Level 3 measurements). The three
levels of the fair value hierarchy are as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for
identical assets or liabilities that the Company has the ability to
access at the measurement date.
Level 2 inputs are inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly or indirectly.
Level 3 inputs are unobservable inputs for the asset or liability.
6
______________________________________________________________________
ESSENTIAL TELECOMMUNICATIONS, INC.
(FORMERLY BEACHGATE ACQUISITION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
The Company monitors the market conditions and evaluates the fair
value hierarchy levels at least quarterly. For any transfers in and
out of the levels of the fair value hierarchy, the Company elects to
disclose the fair value measurement at the beginning of the reporting
period during which the transfer occurred.
NOTE 2 - GOING CONCERN
The Company has sustained losses since its inception on July 23, 2013.
It has an accumulated deficit of $2,699 from inception through March
31, 2013. 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.
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.
Management plans to use their personal funds to pay all expenses
incurred by the Company in 2013. There is no assurance that the Company
will ever be profitable. These unaudited 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
Adopted
Effective January 2013, we adopted FASB ASU No. 2011-11, Balance
Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities
(ASU 2011-11). The amendments in ASU 2011-11 require the disclosure of
information on offsetting and related arrangements for financial and
derivative instruments to enable users of its financial statements to
understand the effect of those arrangements on its financial position.
Amendments under ASU 2011-11 will be applied retrospectively for fiscal
years, and interim periods within those years, beginning after January 1,
2013. The adoption of this update did not have a material impact on the
financial statements.
7
______________________________________________________________________
ESSENTIAL TELECOMMUNICATIONS, INC.
(FORMERLY BEACHGATE ACQUISITION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
Effective January 2013, we adopted FASB ASU No. 2013-02, Reporting
of Amounts Reclassified Out of Accumulated Other Comprehensive
(ASU 2013-02). This guidance is the culmination of the FASB's
deliberation on reporting reclassification adjustments from
accumulated other comprehensive income (AOCI). The amendments
in ASU 2013-02 do not change the current requirements for reporting
net income or other comprehensive income. However, the amendments
require disclosure of amounts reclassified out of AOCI in its
entirety, by component, on the face of the statement of operations
or in the notes thereto. Amounts that are not required to be
reclassified in their entirety to net income must be cross-referenced
to other disclosures that provide additional detail. This standard
is effective prospectively for annual and interim reporting periods
beginning after December 15, 2012. The adoption of this update did
not have a material impact on the financial statements.
Not Adopted
In February 2013, the FASB issued ASU No. 2013-04, Liabilities (Topic 405):
Obligations Resulting from Joint and Several Liability Arrangements for
Which the Total Amount of the Obligation Is Fixed at the Reporting Date.
The amendments in ASU 2013-04 provide guidance for the recognition,
measurement, and disclosure of obligations resulting from joint and
several liability arrangements for which the total amount of the
obligation within the scope of this Update is fixed at the reporting
date, except for obligations addressed within existing guidance in
U.S. GAAP. The guidance requires an entity to measure those obligations
as the sum of the amount the reporting entity agreed to pay on the basis
of its arrangement among its co-obligors and any additional amount the
reporting entity expects to pay on behalf of its co-obligors. The guidance
in this Update also requires an entity to disclose the nature and amount
of the obligation as well as other information about those obligations.
The amendment in this standard is effective retrospectively for fiscal
years, and interim periods within those years, beginning after December
15, 2013. We are evaluating the effect, if any, adoption of ASU No. 2013-04
will have on our financial statements.
In April 2013, the FASB issued ASU No. 2013-07, Presentation of Financial
Statements (Top 205): Liquidation Basis of Accounting. The objective of
ASU No. 2013-07 is to clarify when an entity should apply the liquidation
basis of accounting and to provide principles for the measurement of assets
and liabilities under the liquidation basis of accounting, as well as any
required disclosures. The amendments in this standard is effective
prospectively for entities that determine liquidation is imminent during
annual reporting periods beginning after December 15, 2013, and interim
reporting periods therein. We are evaluating the effect, if any,
adoption of ASU No. 2013-07 will have on our financial statements.
Other recent accounting pronouncements issued by the FASB (including its
Emerging Issues Task Force), the American Institute of Certified Public
Accountants, and the United States Securities and Exchange Commission
did not or are not believed by management to have a material impact on
the Company's present or future financial statements.
7
______________________________________________________________________
ESSENTIAL TELECOMMUNICATIONS, INC.
(FORMERLY BEACHGATE ACQUISITION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 5 -- EQUITY
The Company is authorized to issue 100,000,000 shares of common stock and
20,000,000 shares of preferred stock. As of December 31, 2012, 20,000,000
shares of common stock and no preferred stock were issued and outstanding.
On July 31, 2012, the Company issued 20,000,000 common shares to two
directors and officers for $2,000 in cash.
On March 25, 2013, the Company redeemed an aggregate of 19,500,000 of
the then 20,000,000 shares of outstanding stock at a redemption price
of $.0001 per share for an aggregate redemption price of $1,950.
On March 26, 2013, Essential Telecommunications, Inc. (formerly Beachgate
Acquisition Corporation) (the "Company") issued 1,000,000 shares of its
common stock pursuant at par representing 67% of the total outstanding
1,500,000 shares of common stock.
As of March 31, 2013, the stockholders made a capital contribution in
the total amount of $2,699 to pay for operating expenses incurred by
the Company.
______________________________________________________________________
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Essential Telecommunications, Inc. (formerly Beachgate Acquisition
Corporation) (the "Company") was incorporated on July 23, 2012 under
the laws of the State of Delaware to engage in any lawful corporate
undertaking, including, but not limited to, selected mergers and
acquisitions.
In addition to a change in control of its management and
shareholders, the Company's operations to date have been limited to issuing
shares and filing a registration statement on Form 10 pursuant to the
Securities Exchange Act of 1934. The Company was 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.
On October 10, 2012, the Company registered its common stock on a
Form 10 registration statement filed pursuant to the Securities Exchange
Act of 1934 (the "Exchange Act") and Rule 12(g) thereof which became
automatically effective 60 days thereafter.
The Company files with the Securities and Exchange Commission periodic
and current reports under Rule 13(a) of the Exchange Act, including
quarterly reports on Form 10-Q and annual reports Form 10-K.
The Company has no employees.
The Company entered into an agreement with Tiber Creek
Corporation of which the former president of the Company is the president
and controlling shareholder. Tiber Creek Corporation assists companies to
become public reporting companies and for the preparation and filing of a
registration statement pursuant to the Securities Act of 1933, and the
introduction to brokers and market makers.
On March 25, 2013, the Registrant effected a change in control by
the following transactions:
The Registrant redeemed an aggregate of 19,500,000 of the then
20,000,000 shares of outstanding stock at a redemption price
of $.0001 per share for an aggregate redemption price of $1,950.
James Cassidy and James McKillop each resigned as the Registrant's
president, secretary and director and vice president and director,
respecdtively.
The following individuals were named as the directors of the Registrant:
Louis A. White (chairman)
David F. Martin
Bassam Abdallah
David F. Martin and Bassam Abdallah were appointed Chief
Executive Officer Chief Operating Officer, respectively.
On March 26, 2013 the Company issued 1,000,000 shares of its
common stock to Louis A. White.
Business
Essential Telecommunications, Inc. (formerly Beachgate Acquisition
Corporation) ("Essenetial" or the "Company") was incorporated on July
23, 2012 under the laws of the State of Delaware to engage in
any lawful corporate undertaking, including, but not limited to, selected
mergers and acquisitions. The Company has been in the developmental stage
since inception. In addition to a change in control of its management and
shareholders, the Company's operations to date have been limited to issuing
shares and filing a registration statement on Form 10 pursuant to the
Securities Exchange Act of 1934. The Company was 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 anticipates that it will develop operations as
an wireless ETC telecommunication company. An ETC (eligible
telecommunications carrier) is a government assisted wireless
telecommunications provider offering free wireless phones and
services for low-income subscribers through a federal mandated
low-income assistance program (Lifeline).
The Company May develop its operations by marketing and internal
growth and/or by effecting a business combination with an operating
or other company in the field. The Company anticipates that if it enters
such a business combination it would likely take the form of a merger.
It is anticipated that such private company will bring with it to
such merger key operating business activities and a business plan. As of
the date of this Report, no agreements have been executed to effect any
business combination.
If and when the Company chooses to enter into a business combination,
it will likely file a registration statement after such business combination
is effected.
A combination will normally take the form of a merger, stock-for-stock
exchange or stock-for-assets exchange. The Company may 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.
As of March 31, 2013, the Company had not generated revenues and had
no income or cash flows from operations since inception.
At March 31, 2013, the Company had sustained a net loss of $1,342 and
had an accumulated deficit of $2,699.
The Company's independent auditors have issued a report raising
substantial doubt about the Company's ability to continue as a going
concern. At present, the Company has no operations and the continuation
of the Company as a going concern is dependent upon financial support from
its stockholders, its ability to obtain necessary equity financing to
continue operations and/or to successfully locate and negotiate with a
business entity for a business combination that would provide a basis
of possible operations.
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, Essential 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 as folllows:
On July 30, 2012 the Company issued the following shares of
its common stock:
Name Number of Shares Consideration
Tiber Creek Corporation 10,000,000 $1,000
(9,750,000 redeemed on March 25, 2013)
MB Americus LLC 10,000,000 $1,000
(9,750,000 redeemed on March 25, 2013)
On March 26, 2013 the Company issued 1,000,000 shares of its
common stock to Louis A. White.
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.
ESSENTIAL TELECOMMUNICATIONS, INC.
By: /s/ David F. Martin
President, Chief Financial Officer
Dated: May 15, 2013