UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10/A
Amendment No. 2
GENERAL FORM FOR REGISTRATION OF SECURITIES Pursuant to
Section 12(b) or (g) of The Securities Exchange Act of 1934
MEDBOOK WORLD, INC.
(Exact name of registrant as specified in its charter)
Delaware 27-1397396
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2629 Regent Road
Carlsbad, California 92010
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (858) 775-2588
Copies to:
Daniel C. Masters, Esq.
P. O. Box 66
La Jolla, CA 92038
(858) 459-1133 - Tel
(858) 459-1103 - Fax
Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock - $0.0001 Par Value
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non accelerated filer, or a smaller reporting company.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
ITEM 1. DESCRIPTION OF BUSINESS
BACKGROUND OF THE ISSUER AND ITS PREDECESSOR
MedBook World, Inc. ("the Company" or "the Issuer" or "Journal") was
organized under the laws of the State of Nevada on November 17, 2009 as part of
the implementation of the Chapter 11 plan of reorganization of AP Corporate
Services, Inc. ("AP").
AP was incorporated in the State of Nevada in 1997 and was formed to
provide a variety of services to small, entrepreneurial businesses. These
services included business planning, market research, accounting advice,
incorporation and resident agent services. Between 1997 and 1999 AP's business
focus changed. In addition to providing business services, AP began to own and
develop businesses related to the medical professions. In 1999 AP organized
MedBook World, LLC with the intent of offering and selling medical books through
mail order catalogues and on line. Agreements were entered with various
publishers and wholesalers establishing MedBook as a book retailer, but
relatively few books were actually sold and all sales agreements terminated
prior to AP's bankruptcy filing in 2008. Progress in developing the business was
slow because most of AP's financial resources were directed at maintaining
another subsidiary, Radiology.com, Inc., a Virginia based MRI center.
Radiology.com had a significant patient flow and gross revenues but also large
loses. Ultimately these losses led to the bankruptcy of AP, to AP's inability to
fully develop the business of MedBook World, and to AP's loss of its interests
in Radiology.com in the bankruptcy.
AP filed for Chapter 11 Bankruptcy in September 2008 in the U.S. Bankruptcy
Court for the Central District of California. AP's plan of reorganization was
confirmed by the Court and became effective on January 4, 2009. This plan of
reorganization provided, among other things, for the incorporation of the Issuer
so that shares in it could be distributed to the bankruptcy creditors. The plan
also provided for the transfer to the Issuer of any interest which AP and/or
MedBook World LLC had in the development of a mail order and on line medical
bookseller. The plan of reorganization also required the Issuer to issue
1,085,000 shares of its common stock and distribute these to AP's general
unsecured creditors, to its administrative creditors, and to its shareholders.
The shares were distributed pursuant to section 1145 of the U.S. Bankruptcy
Code. As stated in the Plan of Reorganization ordered by the Court, these shares
were issued "to enhance the distribution to creditors," i.e. to enhance their
opportunity to recover the losses they sustained in the AP bankruptcy. To this
end, AP, by and through its President, agreed "to use its best efforts to have
the shares... publicly traded on the Over-The-Counter market in order to provide
an opportunity for liquidity to the creditors" (from the Court approved
"Disclosure Statement" describing the Plan of Reorganization). The present
filing is a result of this commitment. Subsequent to the effectiveness of the
plan of reorganization the Company issued 10,000,000 restricted shares to its
President, Kenneth Barton, at par value ($0.0001) for total consideration of
$1,000.
DESCRIPTION OF CURRENT BUSINESS
The Company's two officers and directors (there are no plans for additional
officers or directors) have determined that the Company lacks the resources to
properly develop the business of selling medical books and publications through
mail order catalogues and on line. Therefore, the Company's two officers and
directors have determined to seek a merger or an acquisition with a larger,
better capitalized entity which will accomplish the plan as ordered by the
Court: "to enhance the distribution to creditors" and bring greater value to our
shareholders. Therefore, as of the date hereof, the Company can be defined as a
"shell" company, an entity which is generally described as having no or nominal
operations and with no or nominal assets. As a shell company, our purpose at
this time, described more fully below, is to negotiate a business agreement or
combination with a larger entity which will bring greater value to our
shareholders. As of the date hereof, we have not identified any potential merger
or acquisition partner.
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The Company's two officers and directors (there are no plans for additional
officers or directors) believe that a potential merger or acquisition target
will be a business which seeks the benefits of our shareholder base or status as
a reporting issuer. The Company's two officers and directors will not restrict
its search to any specific industry or geographical location. The Company's two
officers and directors anticipate that the Company may be able to participate in
only one potential business venture because a business partner might require
exclusivity. This lack of diversification should be considered a substantial
risk to our shareholders because it will not permit us to offset potential
losses from one venture against gains from another.
We may seek a business opportunity with entities which have recently
commenced operations, or which wish to expand into new products or markets, to
develop a new product, or to utilize the public marketplace in order to raise
additional capital. This discussion of the proposed business is purposefully
general and is not meant to be restrictive of our discretion to search for and
enter into potential business opportunities.
We anticipate that the selection of a business opportunity in which to
participate will be complex and extremely risky due to general economic
conditions, rapid changes in the business environment, and shortages of
available capital. The Company's two officers and directors believe that there
are numerous firms seeking the benefits of an issuer who has complied with the
1934 Act, but this is by no means certain.
It is our present intent to continue to comply with all of the reporting
requirements under the 1934 Act. The Company's two officers and directors,
Kenneth Barton and Anthony Turnbull, have agreed to provide the necessary funds,
without interest, for the Company to comply with the 1934 Act reporting
requirements, provided that they are officers and directors of the Company when
the obligation is incurred. These officers have not, as of the date hereof, set
a maximum dollar amount that they are willing to provide to the Company.
It is anticipated that we will incur nominal expenses in the implementation
of the business plan described herein. Because we have no capital with which to
pay these anticipated expenses, the Company's two officers and directors will
pay these charges with their personal funds, as interest free loans to the
Company or as capital contributions. However, if loans, the only opportunity
which the two officers and directors have for repayment of these loans will be
from a prospective merger or acquisition candidate.
ACQUISITION OF OPPORTUNITIES
The two officers and directors of the Company (there are no plans for
additional officers or directors) will seek out business combination
opportunities through their personal business contacts. Our President regularly
attends meetings of the National Investment Banking Association, the Southern
California Investment Association, the Los Angeles Venture Association, and
similar groups where businesses seeking to expand and investors and related
professionals (e.g. consultants, accountants, and attorneys) meet in hopes of
working together. The two officers and directors of the Company will not be
limited in their search to these groups but believe that these groups will
provide a networking platform from which to seek business combination
opportunities.
In implementing a structure for a particular business venture, we may
become a party to a merger, consolidation, reorganization, joint venture, or
licensing agreement with another corporation or entity. We may also acquire
stock or assets of an existing business. On the consummation of an agreement, it
is probable that the present two officers and directors and the shareholders of
the Company will no longer be in control of the Company. In addition, and
especially if there is a business combination, our two directors may, as part of
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the terms of the acquisition or merger, resign and be replaced by new directors
without a vote of our shareholders or may sell their stock in the Company.
It is anticipated that any securities issued by our Company in any such
reorganization would be issued in reliance upon an exemption from registration
under applicable federal and state securities laws. It is anticipated that it
will also be a method of taking a private company public known as a "back door"
1934 Act registration procedure.
We will participate in a business opportunity only after the negotiation
and execution of appropriate written agreements. Although the terms of such
agreements cannot be predicted, generally such agreements will require some
specific representations and warranties by all of the parties thereto, will
specify certain events of default, will detail the terms of closing and the
conditions which must be satisfied by each of the parties prior to and after
such closing, will outline the manner of verifying revenue and bearing costs,
including costs associated with the Company's attorneys and accountants, will
set forth remedies on default and will include miscellaneous other terms.
It is our present intent that we will not submit a potential merger,
acquisition, or similar reorganization to our shareholders for approval. We are
incorporated under the laws of Delaware and Delaware's General Corporation Law,
Section 228, provides that "...any action required by this chapter to be taken
at any annual or special meeting of stockholders of a corporation, or any action
which may be taken at any annual or special meeting of such stockholders, may be
taken without a meeting, without prior notice and without a vote, if a consent
or consents in writing, setting forth the action so taken, shall be signed by
the holders of outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted..." Delaware's
General Corporation Law, Section 228, also provides that "Prompt notice of the
taking of the corporate action without a meeting... shall be given to those
stockholders or members who have not consented in writing..."
Our President, Kenneth Barton, owns 89.7% of our issued and outstanding
shares of stock; thus his written consent to a potential merger or acquisition
constitutes more than the minimum number of votes necessary to authorize such a
reorganization under Delaware law. Prompt notice of any such action will be
filed with the Securities and Exchange Commission on Form 8-K and also on Forms
PREM14C and DEFM14C and copies of these filings will be sent by first class
mail, postage pre-paid, to each of our shareholders.
Our present intent is that we will not enter into a business combination
agreement with an entity which cannot provide independent audited financial
statements at the time of closing of the proposed transaction and supply other
information that is normally disclosed in filings with the Securities and
Exchange Commission. We are subject to all of the reporting requirements
included in the 1934 Act. These rules are intended to protect investors by
deterring fraud and abuse in the securities markets through the use of shell
companies. Included in these requirements is the affirmative duty of the Company
to file independent audited financial statements as part of its Form 8-K to be
filed with the Securities and Exchange Commission upon consummation of a merger
or acquisition, as well as the Company's audited financial statements included
in its annual report on Form 10-K. In addition, in the filing of the Form 8-K
that we file to report an event that causes us to cease being a shell company,
we are required to include that information that is normally reported by a
company in its original Form 10.
We do not intend to hire an investment banker, a business broker, or a
similar professional specializing in business acquisitions. Once a potential
acquisition has been identified we do intend to hire an attorney experienced in
business acquisitions to prepare or review the merger or acquisition agreements
and documents. Because we have no capital with which to pay legal fees our
President, Kenneth Barton, has agreed to pay these fees with personal funds, as
an interest free loan to the Company or as a capital contribution. However, this
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is a voluntary agreement; Mr. Barton is not contractually obligated to pay this
expense.
ACCOUNTING IN THE EVENT OF A BUSINESS COMBINATION
Future business combinations will be recorded in accordance with the FASB
Accounting Standards Codification 805 (ASC 805).
We have been informed that most business combinations will be accounted for
as a reverse acquisition with us being the surviving registrant. As a result of
any business combination, if the acquired entity's shareholders will exercise
control over us, the transaction will be deemed to be a capital transaction
where we are treated as a non-business entity. Therefore, the accounting for the
business combination is identical to that resulting from a reverse merger,
except no goodwill or other intangible assets will be recorded. For accounting
purposes, the acquired entity will be treated as the accounting acquirer and,
accordingly, will be presented as the continuing entity.
REPORTING ISSUER STATUS
The Company chose to become a reporting company on a voluntary basis
because one attraction of the Company as a merger partner or acquisition vehicle
will be its status as a public company. In addition, we became a reporting
company to enhance investor protection and to provide information if a trading
market commences. Only those companies that report their current financial
information to the Securities and Exchange Commission, banking, or insurance
regulators are permitted to be quoted on the OTC Bulletin Board System.
Based upon our proposed future business activities, it is possible that we
may be deemed a "blank check" company (see "Risk Factors"). The Securities and
Exchange Commission definition of such a company is a development stage company
that has no specific business plan or purpose, or has indicated that its
business plan is to engage in a merger or acquisition with an unidentified
company or companies, or other entity or person, and is issuing "penny stock."
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
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A "penny stock" security is any equity security other than a security (i)
that is a reported security (ii) that is issued by an investment company (iii)
that is a put or call issued by the Option Clearing Corporation (iv) that has a
price of $5.00 or more (except for purposes of Rule 419 of the Securities Act of
1933, as amended) (v) that is registered on a national securities exchange (vi)
that is authorized for quotation on the NASDAQ Stock Market, unless other
provisions of the defining rule are not satisfied, or (vii) that is issued by an
issuer with (a) net tangible assets in excess of $2,000,000, if in continuous
operation for more than three years or $5,000,000 if in operation for less than
three years or (b) average revenue of at least $6,000,000 for the last three
years.
Our stock will likely be deemed a "penny stock."
ITEM 1A. RISK FACTORS
Our business is subject to numerous risk factors, including the following:
1. We have no operating history and no revenues or earnings from operations.
We have no assets. We will, in all likelihood, sustain operating expenses
without corresponding revenues, at least until the consummation of a business
combination. This may result in us incurring a net operating loss that will
increase continuously until we can consummate a business combination with a
profitable business entity. There is no assurance that we can identify such a
business entity and consummate such an agreement or combination.
2. We may not be able to continue to operate as a going concern.
Our auditor has expressed the opinion that we may not be able to continue
as a going concern. His opinion letter and the notation in the financial
statements indicate that we do not have revenues, cash reserves, or other
material assets and that we are relying on advances from stockholders, officers
and directors to meet our limited operating expenses. We may become insolvent if
we are unable to pay our debts in the ordinary course of business as they become
due.
3. Our proposed plan of operation is speculative.
The success of our proposed plan of operation will depend to a great extent
on the operations, financial condition and management of the business
opportunity which we identify, if any is identified. While our two officers and
directors intend to seek business agreement(s) or combination(s) with entities
having established operating histories, there can be no assurance that we will
be successful in locating candidates meeting such criteria. In the event we
complete a business agreement or combination, of which there can be no
assurance, the success of our operations may be dependent upon management of the
successor firm or venture partner firm and numerous other factors beyond our
control.
4. We face intense competition for business combination opportunities.
We are and will continue to be an insignificant participant in the business
of seeking mergers with, joint ventures with and acquisitions of small private
and public entities. A large number of established and well-financed entities,
including venture capital firms, are active in mergers and acquisitions of
companies that may be our desirable target candidates. Nearly all such entities
have significantly greater financial resources, technical expertise and
managerial capabilities than we have and, consequently, we will be at a
competitive disadvantage in identifying possible business opportunities and
successfully completing a business combination. Moreover, we will also compete
in seeking merger or acquisition candidates with numerous other small public
companies.
5. We have no agreements for a business combination or licensing transaction
and have established no standards for such transactions.
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We have no arrangement, agreement or understanding with respect to entering
into an agreement or engaging in a merger with, joint venture with or
acquisition of, a private or public entity. There can be no assurance that we
will be successful in identifying and evaluating suitable business opportunities
or in concluding a business transaction. Our two officers and directors have not
identified any particular business for our evaluation. There is no assurance
that we will be able to negotiate a business combination on terms favorable to
us. We have not established a specific length of operating history or a
specified level of earnings, assets, net worth or other criteria which we will
require a target business opportunity to have achieved, and without which we
would not consider a business transaction in any form with such business
opportunity. Accordingly, we may enter into a business agreement or a business
combination with a business having no significant operating history, losses,
limited potential or no potential for earnings, limited assets, negative net
worth or other negative characteristics.
6. Our success is dependent on our two officers and directors who have other
full time employment, have limited experience, and will only devote limited
time (part time) to working for the Company, all of which makes our future
even more uncertain.
Kenneth Barton is the President and Chief Executive Officer of the Issuer,
and Anthony Turnbull is the Secretary and Treasurer and Chief Financial Officer
of the Issuer. These are the only offices and directors of the Company. Both Mr.
Barton and Mr. Turnbull will serve without pay while maintaining other
employment. As of the date hereof, each is devoting no more than one hour per
week to the affairs of the Company, however, both expect to spend approximately
five hours per week on the affairs of the Company and the search for a suitable
merger or acquisition partner after the effectiveness of this registration
statement. Notwithstanding the limited availability of our two officers, loss of
the services of either officer would adversely affect development of our
business and its likelihood of continuing in operation.
7. Our two officers and directors have limited experience in mergers and
acquisitions, which makes our ability to complete a successful merger or
acquisition more uncertain.
Although our President, Kenneth Barton, has experience in business
reorganizations, and our Secretary/Treasurer, Anthony Turnbull, has experience
in financial and accounting integration of acquisitions, neither has direct
experience in negotiating mergers and acquisitions. This lack of direct
experience makes our ability to complete a successful merger or acquisition more
uncertain.
8. Our two officers and directors may have a conflict of interest in selecting
a merger or acquisition target because of loans they may make to our
Company.
As noted above, the Company's two officers and directors have agreed that
they will pay the Company's anticipated operating expenses with their personal
funds, making interest free loans to the Company or capital contributions. If
they make interest free loans to the Company, the only opportunity they will
have for repayment of these loans will be from a prospective merger or
acquisition candidate. This may result in a conflict of interest in selecting a
merger candidate as the officers may prefer a candidate which will repay their
loans over one which will not.
9. The reporting requirements under federal securities law may delay or
prevent us from making certain acquisitions.
Sections 13 and 15(d) of the Securities Exchange Act of 1934, as amended,
(the "1934 Act"), require companies subject thereto to provide certain
information about significant acquisitions, including certified financial
statements for the company acquired, covering one, two, or three years,
depending on the relative size of the acquisition. The time and additional costs
that may be incurred by some target entities to prepare such statements may
significantly delay or essentially preclude consummation of an otherwise
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desirable acquisition by the Company. Acquisition prospects that do not have or
are unable to obtain the required audited statements may not be appropriate for
acquisition so long as the reporting requirements of the 1934 Act are
applicable.
In addition to the audited financial statements, in the filing of the Form
8-K that we file to report an event that causes us to cease being a shell
company, we will be required to include that information that is normally
reported by a company in a Form 10. The time and additional costs that may be
incurred by some target entities to prepare and disclose such information may
significantly delay or essentially preclude consummation of an otherwise
desirable acquisition by the Company.
10. An acquisition could create a situation wherein we would be required to
register under The Investment Company Act of 1940 and thus be required to
incur substantial additional costs and expenses.
Although we will be subject to regulation under the 1934 Act, our two
officers and directors believe the Company will not be subject to regulation
under the Investment Company Act of 1940, insofar as we will not be engaged in
the business of investing or trading in securities. In the event we engage in a
business combination that results in us holding passive investment interests in
a number of entities, we could be subject to regulation under the Investment
Company Act of 1940. In such event, we would be required to register as an
investment company and could be expected to incur significant registration and
compliance costs. We have obtained no formal determination from the Securities
and Exchange Commission as to the status of our Company under the Investment
Company Act of 1940 and, consequently, any violation of such Act would subject
us to material adverse consequences.
11. A merger, acquisition, or similar agreement would most likely be exclusive,
resulting in a lack of diversification.
Our two officers and directors anticipate that the Company may be able to
participate in only one potential business venture because a business partner
might require exclusivity. This lack of diversification should be considered a
substantial risk to our shareholders because it will not permit us to offset
potential losses from one venture against gains from another.
12. Our two officers/directors most likely will not remain after we complete a
business combination or will have little power to influence the direction
of business development.
A business combination will, in all likelihood, result in management of the
acquired business determining the timing and funding of our development. Our two
officers and directors will have little to do except monitor business activity,
if they remain in management at all. A business combination involving the
issuance of our Common Stock will, in all likelihood, result in shareholders of
a private company obtaining a controlling interest in us. Any such business
combination may require our two officers and directors to sell or transfer all
or a portion of the Company's Common Stock held by them, and/or resign as
members of the Board of Directors. The resulting change in our control could
result in removal of one or both present officers and directors and a
corresponding reduction in or elimination of their participation in our future
affairs.
13. If we do any business combination, each shareholder will most likely hold a
substantially lesser percentage ownership in the Company.
If we enter a business combination with a private concern, that, in all
likelihood, would result in the Company issuing securities to shareholders of
any such private company. The issuance of our previously authorized and unissued
stock would result in reduction in percentage of shares owned by our present and
prospective shareholders and may result in a change in our control or in our
management.
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14. As a shell company, we face substantial additional adverse business and
legal consequences if we enter a business combination.
We may enter into a business combination with an entity that desires to
establish a public trading market for its shares. A business opportunity may
attempt to avoid what it deems to be adverse consequences of undertaking its own
public offering by seeking a business combination with us. Such consequences may
include, but are not limited to, time delays of the registration process,
significant expenses to be incurred in such an offering, conditions and
restrictions imposed by underwriters, and the costs to comply with various state
("Blue Sky") securities laws.
On June 29, 2005, the Securities and Exchange Commission adopted final
rules amending the Form S-8 and the Form 8-K for shell companies like us. The
amendments expand the definition of a shell company to be broader than a company
with no or nominal operations/assets or assets consisting of cash and cash
equivalents. The amendments prohibit the use of a Form S-8 (a form used by a
corporation to register securities issued to an employee, director, officer,
consultant or advisor), under certain circumstances, and revise the Form 8-K to
require a shell company to include current Form 10 information, including
audited financial statements, in the filing on Form 8-K that the shell company
files to report the acquisition of the business opportunity. This initial filing
must be made within four days of the acquisition and the Form 8-K filing may be
reviewed by the Securities and Exchange Commission. The prospects of certain
disclosures, or the lack of the ability to issue securities using a Form S-8, or
the requirement of audited financial statements, or the unwillingness to assume
the significant costs of compliance, may make an otherwise appropriate
acquisition target unwilling to enter a business combination with us.
15. The requirement of audited financial statements may disqualify some
business opportunities seeking a business combination with us.
Our two officers and directors believe that any potential business
combination opportunity must provide audited financial statements for review,
for the protection of all parties to the business combination. One or more
attractive business opportunities may choose to forego the possibility of a
business combination with us, rather than incur the expenses associated with
preparing audited financial statements.
16. One of our officers is also our principal shareholder and he will be able
to approve all corporate actions without shareholder consent and will
control our Company.
Our principal shareholder, Kenneth Barton, currently owns approximately
89.7% of our Common Stock. Because of this, he will have the controlling vote in
all matters requiring approval by our shareholders, but not requiring the
approval of the minority shareholders. In addition, he is now the Company's
President and one of its two officers and directors. Because he is the majority
shareholder, he will be able to elect all of the members of our board of
directors, allowing him to exercise significant control of our affairs and
management. In addition, he may transact corporate business requiring
shareholder approval, including approval of the acquisition of, or merger with,
an operating company, by written consent, without soliciting the votes of other
shareholders.
17. Our Common Stock may never be publicly traded and holders may have no
ability to sell their shares.
There is no established public trading market for our shares of Common
Stock, and there is no assurance that our Common Stock will be accepted for
listing on the OTC Bulletin Board or in any other trading system in the future.
There can be no assurance that a market for our Common Stock will be
established or that, if established, a market will be sustained. Therefore, if
you purchase our Common Stock you may be unable to sell the shares. Accordingly,
you should be able to bear the financial risk of losing your entire investment.
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Only market makers can apply to quote securities. A market maker who
desires to initiate quotations in the OTC Bulletin Board system must complete an
application (Form 211) (unless an exemption is applicable) and by doing so, will
have to represent that it has satisfied all applicable requirements of the
Securities and Exchange Commission Rule 15c2-11 and the filing and information
requirements promulgated under the Financial Industry Regulatory Authority
("Finra") Bylaws. The OTC Bulletin Board will not charge us a fee for being
quoted on the service. Finra rules prohibit market makers from accepting any
remuneration in return for quoting issuers' securities on the OTC Bulletin Board
or any similar medium. Finra will review the market maker's application (unless
an exemption is applicable). If cleared, it cannot be assumed by any investor
that any federal, state or self-regulatory requirements other than certain Finra
rules and Rule 15c2-11 have been considered by Finra. Furthermore, the clearance
should not be construed by any investor as indicating that Finra, the Securities
and Exchange Commission, or any state securities commission has passed upon the
accuracy or adequacy of the documents contained in the submission.
The OTC Bulletin Board is a market maker or dealer-driven system offering
quotation and trading reporting capabilities - a regulated quotation service -
that displays real-time quotes, last-sale prices, and volume information in OTC
equity securities. The OTC Bulletin Board securities are not listed and traded
on the floor of an organized national or regional stock exchange. Instead, OTC
Bulletin Board securities transactions are conducted through a telephone and
computer network connecting market makers or dealers in stocks.
18. If our Common Stock does not meet blue sky resale requirements, certain
shareholders may be unable to resell our Common Stock.
The resale of Common Stock must meet the blue sky resale requirements in
the states in which the proposed purchasers reside. If we are unable to qualify
the Common Stock and there is no exemption from qualification in certain states,
the holders of the Common Stock or the purchasers of the Common Stock may be
unable to sell them.
19. Our shareholders may face significant restrictions on the resale of our
Common Stock due to state "blue sky" laws or if we are determined to be a
"blank check" company.
There are state regulations that may adversely affect the transferability
of our Common Stock. We have not registered our Common Stock for resale under
the securities or "blue sky" laws of any state. We may seek qualification or
advise our shareholders of the availability of an exemption. We are under no
obligation to register or qualify our Common Stock in any state or to advise the
shareholders of any exemptions.
Current shareholders, and persons who desire to purchase the Common Stock
in any trading market that may develop in the future, should be aware that there
might be significant state restrictions upon the ability of new investors to
purchase the Common Stock.
Blue sky laws, regulations, orders, or interpretations place limitations on
offerings or sales of securities by "blank check" companies or in "blind-pool"
offerings, or if such securities represent "cheap stock" previously issued to
promoters or others. Our majority shareholder, because he received stock at a
price of $.0001 for each share, may be deemed to hold "cheap stock." These
limitations typically provide, in the form of one or more of the following
limitations, that such securities are:
(a) Not eligible for sale under exemption provisions permitting sales
without registration to accredited investors or qualified purchasers;
(b) Not eligible for the transaction exemption from registration for
non-issuer transactions by a registered broker-dealer;
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(c) Not eligible for registration under the simplified small corporate
offering registration (SCOR) form available in many states;
(d) Not eligible for the "solicitations of interest" exception to
securities registration requirements available in many states;
(e) Not permitted to be registered or exempted from registration, and thus
not permitted to be sold in the state under any circumstances.
Virtually all 50 states have adopted one or more of these limitations, or
other limitations or restrictions affecting the sale or resale of stock of blank
check companies or securities sold in "blind pool" offerings or "cheap stock"
issued to promoters or others. Specific limitations on such offerings have been
adopted in:
Alaska Nevada Tennessee
Arkansas New Mexico Texas
California Ohio Utah
Delaware Oklahoma Vermont
Florida Oregon Washington
Georgia Pennsylvania
Idaho Rhode Island
Indiana South Carolina
Nebraska South Dakota
Any secondary trading market which may develop, may only be conducted in
those jurisdictions where an applicable exemption is available or where the
shares have been registered.
We do not have any legal opinions as it relates to whether we are a blind
pool or blank-check company. The Securities and Exchange Commission have adopted
a rule (Rule 419) which defines a blank-check company as (i) a development stage
company, that is (ii) offering penny stock, as defined by Rule 3a51-1, and (iii)
that has no specific business plan or purpose or has indicated that its business
plan is to engage in a merger or acquisition with an unidentified company or
companies. Certain jurisdictions may have definitions that are more restrictive
than Rule 419. We have been informed that the Securities and Exchange Commission
has cautioned that "it will scrutinize registered offerings for attempts to
create the appearance that the registrant... has a specific business plan, in an
effort to avoid the application of Rule 419." Provisions of Rule 419 apply to
every registration statement filed under the Securities Act of 1933, as amended,
relating to an offering by a blank-check company. We have never filed a
registration statement under the Securities Act of 1933, as amended.
If we are later determined to be a so-called "blank check" company, it
would be necessary for the Company to file a registration statement under the
Securities Act of 1933, as amended, prior to the resale of the Common Stock,
unless there exists a transactional or security exemption for such sale under
the Securities Act of 1933, as amended or under Title 11 of the U.S. Code.
Current shareholders and persons who desire to purchase the Common Stock in any
trading market that may develop in the future, should be aware that we are under
no obligation to register the shares on behalf of our shareholders under the
Securities Act of 1933, as amended.
The Company's officers, directors and majority shareholder have expressed
their intentions not to engage in any transactions with respect to the Company's
Common Stock except in connection with or following a business combination
resulting in us no longer being defined as a blank check issuer. Any
transactions in our Common Stock by said shareholders will require compliance
with the registration requirements under the Securities Act of 1933, as amended.
20. Our Common Stock will be subject to significant restriction on resale due
to federal penny stock restrictions.
11
The Securities and Exchange Commission has adopted rules that regulate
broker or dealer practices in connection with transactions in penny stocks.
Penny stocks generally are equity securities with a price of less than $5.00
(other than securities registered on certain national securities exchanges or
quoted on the Nasdaq system, provided that current price and volume information
with respect to transactions in such securities is provided by the exchange
system). The penny stock rules require a broker or dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document prepared by the Securities and Exchange
Commission that provides information about penny stocks and the nature and level
of risks in the penny stock market. The broker or dealer also must provide the
customer with bid and offer quotations for the penny stock, the compensation of
the broker or dealer, and its salesperson in the transaction, and monthly
account statements showing the market value of each penny stock held in the
customer's account. The penny stock rules also require that prior to a
transaction in a penny stock not otherwise exempt from such rules, the broker or
dealer must make a special written determination that a penny stock is a
suitable investment for the purchaser and receive the purchaser's written
agreement to the transaction.
These disclosure requirements will have the effect of reducing the level of
trading activity in any secondary market for our stock, and accordingly,
shareholders of our Common Stock will find it difficult to sell their
securities, if at all.
ITEM 2. FINANCIAL INFORMATION
SELECTED FINANCIAL DATA
The Company was organized on November 17, 2009 and therefore no significant
historical financial information exists. The Company's statement of operations
for the period from November 17, 2009 (inception) through November 30, 2009
reflects the following:
2009
-------
Revenues $ 0
Expenses 1,015
-------
Profit (Loss) $(1,015)
=======
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
1) Liquidity: The Company had no cash and no liquid instruments at November
30, 2009. It is anticipated that we will incur nominal expenses in the
implementation of the business plan described herein. Because we have no cash
with which to pay these anticipated expenses, the two officers and directors of
the Company have agreed to pay these charges with their personal funds, as
interest free loans to the Company or as capital contributions. However, this is
a voluntary agreement; our two officers and directors are not contractually
obligated to pay these expenses. No loans have been made as of the date hereof.
2) Capital Resources: As noted above, the Company has no capital resources
but will rely upon interest free loans or capital contributions from our two
officers and directors to meet its needs.
3) Results of Operations: As noted above, the Company was recently
organized and has conducted no operations other than organizational efforts and
the preparation of this Form 10 and the audit of its financial statements.
4) Off-Balance Sheet Arrangements: The Company has no off balance sheet
arrangements.
INFORMATION ABOUT MARKET RISK
The Company is not subject to fluctuations in interest rates, currency
exchange rates, or other financial market risks. Our two officers and directors
have agreed to extend loans to the Company as needed to meet obligations,
12
however these will be interest free. The Company has not made any sales,
purchases, or commitments with foreign entities which would expose it to
currency risks.
ITEM 3. DESCRIPTION OF PROPERTY
We presently utilize minimal office space at 2629 Regent Road, Carlsbad,
California. This space is provided to the Company by our president on a rent
free basis, and it is anticipated that this arrangement will remain until such
time as the Company successfully consummates a merger, acquisition or other
business combination. Management believes that this arrangement will meet the
Company's needs for the foreseeable future.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners.
The following table sets forth the security and beneficial ownership for
each class of our equity securities for any person who is known to be the
beneficial owner of more than five (5%) percent of the Company.
Name and Amount and
Address of Nature of
Beneficial Beneficial Percent
Title of Class Owner Owner of Class
-------------- ----- ----- --------
Common Kenneth Barton 10,000,000 89.69%
2629 Regent Road
Carlsbad, CA 92010
The remaining 1,150,000 shares of the Company's outstanding common stock are
held by 96 persons, no one of which is known to be the beneficial owner of five
percent (5%) or more of the Company's common shares. There are, as of the date
hereof, a total of 11,150,000 common shares issued and outstanding and no
preferred shares issued or outstanding.
(b) Security Ownership of Management.
The following table sets forth the ownership for each class of equity
securities of the Company owned beneficially and of record by all of our
directors and officers.
Name and Amount and
Address of Nature of
Beneficial Beneficial Percent
Title of Class Owner Owner of Class
-------------- ----- ----- --------
Common Kenneth Barton 10,000,000 89.69%
2629 Regent Road
Carlsbad, CA 92010
Common Anthony Turnbull 7,500 0.07%
1640 10th Avenue, #306
San Diego, CA 92101
Common All Officers and 10,007,500 89.76%
Directors as a Group
(two [2] individuals)
13
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
Our directors and officers (and promoters, affiliates and control persons)
are as follows:
Name Age Position
---- --- --------
Kenneth Barton 45 President/Director
Anthony Turnbull 65 Secretary/Treasurer/Director
The above listed officers and directors will serve until the next annual
meeting of the shareholders or until their death, resignation, retirement,
removal, or disqualification, or until their successors have been duly elected
and qualified. Vacancies in the existing Board of Directors are filled by
majority vote of the remaining Directors. Officers of the Company serve at the
will of the Board of Directors. There are no agreements or understandings for
any officer or director to resign at the request of another person and no
officer or director is acting on behalf of or will act at the direction of any
other person.
RESUMES
Kenneth Barton, age 45, has been the President and CEO of the Issuer since
its incorporation. He is a Mechanical Engineer and since the beginning of 2009
he has acted as an independent consultant performing technical analysis and due
diligence assessments of emerging technologies for investors. In 2008 he
assisted with the corporate restructuring of a project management company in
Bangalore, India, recruiting department heads for HVAC and civil, structural,
and electrical engineering. In 2006 and 2007 he served as Senior Systems
Engineer at Novo Engineering in Carlsbad, California. From 2001 to 2006 he was
an engineer with Systems Machines Automation Corporation, and from 1999 to 2001
he was employed as a manufacturing engineer at Woodside Biomedical, Inc. Prior
engineering employers include Callaway Golf, General Atomics, and General
Dynamics Space Systems. He received his BSME degree from the University of
California at San Diego.
Anthony Turnbull, age 65, has been the Secretary, Treasurer and CFO of the
Issuer since its incorporation. He holds an MBA and is a CPA with experience in
financial management, manufacturing accounting, management reporting, payroll,
and taxation. Since 2007 he has been CFO of KOJO Worldwide a $52,000,000
upholstery and bedding manufacturing company selling to major hotels in the US
and Mexico. In 2006 - 2007 he was CFO of Countryside Hospice Care, a hospice
company with branches in Georgia and Alabama, and in 2004 - 2005 he was CFO of
Prolong Super Lubricants, an $8,000,000 manufacturing company. From 2001 to 2004
he was Vice President Finance of Molecular Imaging Corporation, a $21,000,000
molecular imaging service company serving more than 75 hospitals throughout the
US. Prior to 2001 he served as CFO to Casa de las Campanas, McCain Traffic
Supply, Inc., Ride Manufacturing, Inc. and Kuma Sport, Inc. He has also held
accounting positions with Stauffer Chemicals, General Foods, Kraft Foods,
Commonwealth Bank in Sydney, Australia and Midland Bank Limited in London,
England.
OTHER OFFERINGS
Neither of the directors and officers named above are currently directors
or officers of any other publicly traded companies or SEC registrants and none
have been involved with any other blank check or shell companies in the past.
CONFLICTS OF INTEREST
As noted above, the Company's two officers and directors have agreed that
they will pay the Company's anticipated operating expenses with their personal
funds, making interest free loans to the Company or capital contributions. Our
14
two officers believe that because they are shareholders their primary interest
is in finding an acquisition candidate that will bring greater value to their
shares and to all shareholders. However, to the extent they have made loans to
the Company, the only opportunity which they have for repayment of these loans
will be from a prospective merger or acquisition candidate. This may result in a
conflict of interest as the officers may prefer a merger candidate which will
repay their loans over one which will not.
Also as noted above, the Company's two officers and directors have other
employment. These other businesses are not seeking mergers or acquisitions and
have entirely different business plans from that of this Issuer. Consequently,
there are no known potential conflicts of interest in these businesses, however
there is a potential conflict of interest in the time which the officers and
directors devote to this Company and to their other employment. We do not
currently have an agreement as to the amount of time that will be devoted to the
Company's affairs, however our two officers and directors have stated that they
will devote such time as they believe necessary to seeking out potential
business combination targets for the Company, and they currently expect to
devote approximately five hours per week to this search after this registration
statement becomes effective.
The officers and directors are, so long as they are officers or directors
of the Company, subject to the restriction that all opportunities contemplated
by the Company's plan of operation which come to their attention, either in the
performance of their duties or in any other manner, will be considered
opportunities of, and be made available to the Company. A breach of this
requirement will be a breach of the fiduciary duties of the officer or director.
However, all directors may still individually take advantage of opportunities if
the Company should decline to do so.
ITEM 6. EXECUTIVE COMPENSATION
Neither of our two officers and directors has received any compensation for
services rendered to the Company since its inception, nor are there any
agreements in place or contemplated to provide compensation to any officer or
director.
Neither of our two directors or officers will receive any finders fee,
either directly or indirectly, as a result of their respective efforts to
implement the Company's business plan outlined herein and/or identify or
negotiate a merger or acquisition for the Company.
We have no retirement, pension, profit sharing, stock option or insurance
programs or other similar programs for the benefit of our two officers and
directors, and we have no employees.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There have been no related party transactions, or any other transactions or
relationships required to be disclosed. There are no promoters except to the
extent the President may be considered a promoter because of his involvement in
the Company's incorporation and his investment of $1,000 in exchange for
10,000,000 shares of stock.
The two officers and directors of the Company have agreed to provide the
necessary funds, without interest, for the Company to comply with the 1934 Act
provided that the lender is an officer and director of the Company when the
obligation is incurred. All advances are interest-free and there is no
contractual obligation requiring the two officers and directors to provide these
funds.
ITEM 8. LEGAL PROCEEDINGS
There is no litigation pending or threatened by or against the Company.
15
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
(a) Market Price.
There is no trading market for our Common Stock at present and there has
been no trading market to date. We do not have a trading symbol. There is no
assurance that a trading market will ever develop or, if such a market does
develop, that it will continue. The Company intends to request a broker-dealer
to make application to Finra to have the Company's securities traded on the OTC
Bulletin Board System or published, in print and electronic media, or either, in
the Pink Sheets, LLC ("Pink Sheets"), however there is no assurance that a
broker-dealer will agree to make such application or, if one does, that Finra
will provide us with a symbol.
The Securities and Exchange Commission adopted Rule 15g-9, which
established the definition of a "penny stock," for purposes relevant to the
Company, as any equity security that has a market price of less than $5.00 per
share or with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require: (i) that a broker or dealer approve a person's account for
transactions in penny stocks; and (ii) the broker or dealer receive from the
investor a written agreement to the transaction, setting forth the identity and
quantity of the penny stock to be purchased. In order to approve a person's
account for transactions in penny stocks, the broker or dealer must (i) obtain
financial information and investment experience and objectives of the person;
and (ii) make a reasonable determination that the transactions in penny stocks
are suitable for that person and that person has sufficient knowledge and
experience in financial matters to be capable of evaluating the risks of
transactions in penny stocks. The broker or dealer must also deliver, prior to
any transaction in a penny stock, a disclosure schedule prepared by the
Commission relating to the penny stock market, which, in highlight form, (i)
sets forth the basis on which the broker or dealer made the suitability
determination; and (ii) that the broker or dealer received a signed, written
agreement from the investor prior to the transaction. Disclosure also has to be
made about the risks of investing in penny stock in both public offering and in
secondary trading, and about commissions payable to both the broker-dealer and
the registered representative, current quotations for the securities and the
rights and remedies available to an investor in cases of fraud in penny stock
transactions. Finally, monthly statements have to be sent disclosing recent
price information for the penny stock held in the account and information on the
limited market in penny stocks.
For the initial listing in the NASDAQ SmallCap market, a company must have
net tangible assets of $4 million or market capitalization of $50 million or a
net income (in the latest fiscal year or two of the last fiscal years) of
$750,000, a public float of 1,000,000 shares with a market value of $5 million.
The minimum bid price must be $4.00 and there must be 3 market makers. In
addition, there must be 300 shareholders holding 100 shares or more, and the
company must have an operating history of at least one year or a market
capitalization of $50 million.
For continued listing in the NASDAQ SmallCap market, a company must have
net tangible assets of $2 million or market capitalization of $35 million or a
net income (in the latest fiscal year or two of the last fiscal years) of
$500,000, a public float of 500,000 shares with a market value of $1 million.
The minimum bid price must be $1.00 and there must be 2 market makers. In
addition, there must be 300 shareholders each holding 100 shares or more.
Our two officers and directors intend to strongly consider undertaking a
transaction with a merger or acquisition candidate that will allow the Company's
securities to be traded on NASDAQ or some other national market. However, there
can be no assurance that, upon a successful merger or acquisition, the Company
will qualify its securities for listing on NASDAQ or some other national
exchange, or, if it does, that it will be able to maintain the maintenance
criteria necessary to insure continued listing. The failure of the Company to
qualify its securities or to meet the relevant maintenance criteria after such
16
qualification in the future may result in the inability of the Company's
securities to trade on a national exchange. In such events, trading, if any, in
the Company's securities may then continue in the non-NASDAQ over-the-counter
market. As a result, a shareholder may find it more difficult to dispose of, or
to obtain accurate quotations as to the market value of, the Company's
securities.
(b) Holders.
There are ninety-six (96) shareholders of record of the Company's Common
Stock. Ninety-three (93) of these shareholders received their shares as a result
of the bankruptcy of AP Corporate Services, Inc. In that case the Bankruptcy
Court for the Central District of California ordered certain shares of the
Company's stock to be distributed to the creditors of AP Corporate Services,
Inc. The shares were distributed under an exemption from registration provided
by Section 1145 of Title 11 of the U.S. Code (the Bankruptcy Code).
(c) Dividends.
The Company has not paid any cash dividends to date, and has no plans to do
so in the immediate future.
(d) Securities authorized for issuance under equity compensation plans.
The Company has not authorized the issuance of any securities under any
compensation plan.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
(a) Securities issued in bankruptcy.
1,085,000 shares of our common stock were distributed to 93 shareholders by
order of the U.S. Bankruptcy Court for the Central District of California as
part of the confirmed Plan of Reorganization of AP Corporate Services, Inc. (the
"Debtor"). Plans for a business selling professional books and publications to
the medical community were developed by the Debtor through an LLC subsidiary
prior to the bankruptcy. The Court ordered the incorporation of the Issuer, the
assignment to it of the plans to establish a publication retailer, and ordered
the Issuer's securities to be distributed to creditors of the Debtor in partial
satisfaction of their claims against the Debtor and in order to enhance the
creditors' opportunity for recovery.
5,000,000 warrants to purchase shares of our common stock were also
distributed to creditors of the Debtor as part of the confirmed Plan of
Reorganization. The warrants consist of 1,000,000 "A Warrants" each convertible
into one share of common stock at an exercise price of $1.00; 1,000,000 "B
Warrants" each convertible into one share of common stock at an exercise price
of $2.00; 1,000,000 "C Warrants" each convertible into one share of common stock
at an exercise price of $3.00; 1,000,000 "D Warrants" each convertible into one
share of common stock at an exercise price of $4.00; and 1,000,000 "E Warrants"
each convertible into one share of common stock at an exercise price of $5.00.
All warrants are currently exercisable and may be exercised at any time prior to
January 4, 2014.
The issuance of the 1,085,000 shares of common stock and the 5,000,000
warrants to purchase a total of 5,000,000 shares of common stock were issued in
exchange for claims against the estate of AP Corporate Services, Inc. and were
exempt from registration under the Securities Act of 1933, as amended, because
they were issued under section 1145 of the Bankruptcy Code (Title 11 of the U.S.
Code). In addition, we may have also relied upon section 3(a)(7) of the
Securities Act of 1933 as a transaction ordered by a court as part of a
bankruptcy reorganization.
17
(b) Securities issued in a private placement.
On November 17, 2009 the Company issued 10,065,000 restricted shares of its
common stock to its two officers and its attorney (10,000,000 shares to its
President, Kenneth Barton, 10,000 shares to its Secretary, Anthony Turnbull, and
55,000 shares to its attorney, Daniel Masters, all at par value (0.0001 per
share) for total consideration of $1,007. We relied upon Section 4(2) of the
Securities Act of 1933, as amended for the above issuance. We believed that
Section 4(2) was available because:
- The issuance involved no underwriter, underwriting discounts or
commissions;
- We placed restrictive legends on all certificates issued;
- No sales were made by general solicitation or advertising;
- Sales were made only to accredited investors.
In connection with the above transactions, we provided the following to the
investor:
- Access to all our books and records.
- Access to all material contracts and documents relating to our
operations.
- The opportunity to obtain any additional information, to the extent we
possessed such information, necessary to verify the accuracy of the
information to which the investors were given access.
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
The Company's authorized capital stock consists of 100,000,000 Common
Shares, par value $0.0001 per share, and 20,000,000 Preferred Shares, par value
$0.0001 per share. We have no other class of equity securities authorized, and
we have no debt securities presently authorized. We have 11,150,000 Common
Shares issued and outstanding as of the date of this filing and no Preferred
Shares issued and outstanding as of the date of this filing. We also have
warrants outstanding which are convertible into an additional 5,000,000 Common
Shares. The warrants are currently exercisable and may be exercised at any time
prior to January 4, 2014.
All shares of our Common Stock have equal voting rights and, when validly
issued and outstanding, are entitled to one vote per share in all matters to be
voted upon by shareholders. The shares of Common Stock have no preemptive,
subscription, conversion or redemption rights and may be issued only as
fully-paid and non-assessable shares. Cumulative voting in the election of
directors is not permitted, which means that the holders of a majority of the
issued and outstanding shares of Common Stock represented at any meeting at
which a quorum is present will be able to elect the entire Board of Directors if
they so choose and, in such event, the holders of the remaining shares of Common
Stock will not be able to elect any directors. In the event of liquidation of
the Company, each shareholder is entitled to receive a proportionate share of
the Company's assets available for distribution to shareholders after the
payment of liabilities and after distribution in full of preferential amounts,
if any. All shares of the Company's Common Stock issued and outstanding are
fully-paid and non-assessable. Holders of the Common Stock are entitled to share
pro rata in dividends and distributions with respect to the Common Stock, as may
be declared by the Board of Directors out of funds legally available therefor.
Our Board of Directors is authorized to issue our Preferred Stock in series and
to fix the designation, powers, preferences, and rights of the shares of each
such series and the qualifications, limitations, or restrictions thereof.
In addition to the 11,150,000 Common Shares which we currently have
outstanding there are 5,000,000 warrants outstanding, each of which is
convertible into one share of our Common Stock. These consist of 1,000,000 "A
Warrants" each convertible in to one share of common stock at an exercise price
of $1.00; 1,000,000 "B Warrants" each convertible in to one share of common
stock at an exercise price of $2.00; 1,000,000 "C Warrants" each convertible in
to one share of common stock at an exercise price of $3.00; 1,000,000 "D
Warrants" each convertible in to one share of common stock at an exercise price
18
of $4.00; and 1,000,000 "E Warrants" each convertible in to one share of common
stock at an exercise price of $5.00. All of the warrants are currently
exercisable; they will expire if unexercised on January 4, 2014 unless extended
by vote of the Board of Directors. All of these warrants were issued to
creditors of AP Corporate Services, Inc. by order of the Bankruptcy Court as
part of the Chapter 11 Plan of Reorganization of AP Corporate Services. The
warrants were distributed under an exemption from registration provided by
Section 1145 of Title 11 of the U.S. Code (the Bankruptcy Code).
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Except for acts or omissions which involve intentional misconduct, fraud or
known violation of law, there shall be no personal liability of a director or
officer to the Company, or to its stockholders for damages for breach of
fiduciary duty as a director or officer. The Company may indemnify any person
for expenses incurred, including attorneys fees, in connection with their good
faith acts if they reasonably believe such acts are in and not opposed to the
best interests of the Company and for acts for which the person had no reason to
believe his or her conduct was unlawful. The Company may indemnify the officers
and directors for expenses incurred in defending a civil or criminal action,
suit or proceeding as they are incurred in advance of the final disposition of
the action, suit or proceeding, upon receipt of an undertaking by or on behalf
of the director or officer to repay the amount of such expenses if it is
ultimately determined by a court of competent jurisdiction in which the action
or suit is brought that such person is not fairly and reasonably entitled to
indemnification for such expenses.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to officers, directors or persons
controlling the Company pursuant to the foregoing, we have been informed that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933, as amended,
and is therefore unenforceable.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's audited financial statements are attached hereto.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There are no disagreements with the findings of our accountant.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
The Company's audited financial statements as of November 30, 2009 are
filed herewith.
Exhibit:
3.1 Articles of Incorporation Filed herewith
3.2 Bylaws Filed herewith
4.1 Form of "A" Warrant Agreement Filed herewith
4.2 Form of "B" Warrant Agreement Filed herewith
4.3 Form of "C" Warrant Agreement Filed herewith
4.4 Form of "D" Warrant Agreement Filed herewith
4.5 Form of "E" Warrant Agreement Filed herewith
23.1 Consent of Stan J. H. Lee, CPA Filed herewith
19
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.
Date: February 1, 2010 MEDBOOK WORLD, INC.
By: /s/ Kenneth Barton
---------------------------------
Kenneth Barton
President, CEO and Director
By: /s/ Anthony Turnbull
---------------------------------
Anthony Turnbull
CFO, Secretary, and Director
20
MEDBOOK WORLD, INC.
FINANCIAL REPORT
November 30, 2009
CONTENTS
Independent Auditors' Report
Balance Sheet - Assets and Liabilities and Stockholders' Equity
Statement of Operations
Statement of Changes in Stockholders' Equity
Statement of Cash Flows
Notes to Financial Statements
F-1
Stan J.H. Lee, CPA
2160 North Central Rd. Suite 203 * Fort Lee * NJ 07024
P.O. Box 436402 * San Ysidro * CA
92143-9402
619-623-7799 Fax 619-564-3408 E-mail) stan2u@gmail.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
MEDBOOK WORLD, INC.
(A Development Stage Company)
We have audited the accompanying balance sheet of MedBook World, Inc. (the
"Company") as of November 30, 2009 and the related statements of operations,
changes in shareholders' equity, and cash flows for the period from November 17,
2009 (inception) through November 30, 2009. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our 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. 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 MedBook World, Inc. as of
November 30, 2009, and the result of its operations and its cash flows for the
period from November 17, 2009 (inception) through November 30, 2009 in
conformity with U.S. generally accepted accounting principles.
The financial statements have been prepared assuming that the Company will
continue as a going concern. As discussed in Note 3 to the financial statements,
the Company has not established any source of revenue to cover its operating
costs and losses from operations raise substantial doubt about its ability to
continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Stan J.H. Lee, CPA
- ----------------------------------
Stan J.H. Lee, CPA
February 1, 2010
Fort Lee, NJ
Registered with the Public Company Accounting Oversight Board
F-2
MEDBOOK WORLD, INC.
(A Development Stage Company)
BALANCE SHEET
November 30, 2009
As of
Nov. 30, 2009
-------------
ASSETS
Assets
Cash $ --
--------
TOTAL ASSETS $ --
========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
TOTAL LIABILITIES $ --
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $0.0001 par value:
100,000,000 shares authorized,
11,150,000 shares issued and outstanding
as of November 30, 2009 1,115
Preferred stock, $0.0001 par value:
20,000,000 shares authorized,
no shares issued and outstanding
as of November 30, 2009 --
Deficit accumulated during the development sate (1,115)
--------
TOTAL SHAREHOLDERS' EQUITY (DEFICIT) --
--------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ --
========
See Notes to Financial Statements
F-3
MEDBOOK WORLD, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
November 30, 2009
Period From
Nov. 17, 2009
(Inception) to
Nov. 30, 2009
-------------
REVENUE $ --
------------
Total Revenue --
EXPENSES
Professional Exps 1,115
General & Admin Exps
------------
Operating Expense 1,115
------------
OPERATING INCOME (LOSS) (1,115)
OTHER INCOME (EXPENSE)
Current Income Tax --
Income Tax Benefit --
------------
NET INCOME (LOSS) (1,115)
============
Basic & Diluted (Loss) per Share (0.00)
------------
Weighted average number of common shares
outstanding 11,150,000
See Notes to Financial Statements
F-4
MEDBOOK WORLD, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
From inception Nov. 17, 2009 to Nov. 30, 2009
Accumulated
Additional During the Total
Common Stock Paid-in Development Stockholders
Shares Amount Capital Stage Equity
------ ------ ------- ----- ------
Common Stock Issued Per Court
Order Nov 17, 2009 1,085,000 $ 108 $ 0 $ 0 $ 108
Common Stock Issued To
Officers Nov 17, 2009 10,065,000 1,007 0 1,007
Net loss for period
Ended Nov. 30, 2009 (1,015) (1,015)
---------- ------- ------- -------- --------
Balance, Nov 30, 2009 11,150,000 $ 1,015 0 (1,015) $ --
========== ======= ======= ======== ========
See Notes to Financial Statements
F-5
MEDBOOK WORLD, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
November 30, 2009
Period From
Nov 17, 2009
(inception) thru
Nov 30, 2009
------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $(1,015)
-------
Adjustments to reconcile net income (loss)
to net cash (used in) operations --
Changes in operating assets and liabilities --
-------
NET CASH PROVIDED BY (USED IN) OPERATIONS (1,015)
-------
CASH FLOWS FROM INVESTING ACTIVITIES
NET CASH PROVIDED BY INVESTING ACTIVITIES --
-------
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issuance 1,015
-------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,015
-------
NET INCREASE (DECREASE) (1,015)
-------
CASH BEGINNING OF PERIOD --
-------
CASH END OF PERIOD $ --
=======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid $ --
-------
Income taxes paid $ --
-------
See Notes to Financial Statements
F-6
MEDBOOK WORLD, INC.
(A Development Stage Company)
Notes to Financial Statements
November 30, 2009
NOTE 1. NATURE AND BACKGROUND OF BUSINESS
MedBook World, Inc. ("the Company" or "the Issuer") was organized under the laws
of the State of Delaware on November 17, 2009. The Company was established as
part of the Chapter 11 reorganization of AP Corporate Services, Inc. ("AP").
Under AP's Plan of Reorganization, as confirmed by the U.S. Bankruptcy Court for
the Central District of California, the Company was incorporated to: (1) receive
and own any interest which AP had in the development of a mail order and on line
medical bookseller; and (2) issue shares of its common stock to AP's general
unsecured creditors, to its administrative creditors, and to its shareholders.
Management believes the Company lacks the resources to effectively develop such
a bookseller on its own at this time and is therefore engaged in a search for a
strategic business partner or a merger or acquisition partner with the resources
to take the Company in a new direction and bring greater value to its
shareholders. The Company has been in the development stage since its formation
and has not yet realized any revenues from its planned operations.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. BASIS OF ACCOUNTING
The Company's financial statements are prepared using the accrual method of
accounting. The Company has elected a September 30 year-end.
b. BASIC EARNINGS PER SHARE
The Company computes net income (loss) per share in accordance with the FASB
Accounting Standards Codification ("ASC"). The ASC specifies the computation,
presentation and disclosure requirements for earnings (loss) per share for
entities with publicly held common stock.
Basic net earnings (loss) per share amounts are computed by dividing the net
earnings (loss) by the weighted average number of common shares outstanding.
Diluted earnings (loss) per share are the same as basic earnings (loss) per
share due to the lack of dilutive items in the Company.
c. 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 of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
d. CASH and CASH EQUIVALENT
For the Balance Sheet and Statements of Cash Flows, all highly liquid
investments with maturity of three months or less are considered to be cash
equivalents.
F-7
MEDBOOK WORLD, INC.
(A Development Stage Company)
Notes to Financial Statements
November 30, 2009
e. REVENUE RECOGNITION
The Company recognizes revenues and the related costs when persuasive evidence
of an arrangement exists, delivery and acceptance has occurred or service has
been rendered, the price is fixed or determinable, and collection of the
resulting receivable is reasonably assured. Amounts invoiced or collected in
advance of product delivery or providing services are recorded as deferred
revenue. The Company accrues for warranty costs, sales returns, bad debts, and
other allowances based on its historical experience.
f. STOCK-BASED COMPENSATION
The Company records stock-based compensation in accordance with the FASB
Accounting Standards Classification using the fair value method. All
transactions in which goods or services are the consideration received for the
issuance of equity instruments are accounted for based on the fair value of the
consideration received or the fair value of the equity instrument issued,
whichever is more reliably measurable. Equity instruments issued to employees
and the cost of the services received as consideration are measured and
recognized based on the fair value of the equity instruments issued.
g. INCOME TAXES
Income taxes are provided in accordance with the FASB Accounting Standards
Classification. A deferred tax asset or liability is recorded for all temporary
differences between financial and tax reporting and net operating loss carry
forwards. Deferred tax expense (benefit) results from the net change during the
year of deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the deferred
tax assets will not be realized. Deferred tax assets and liabilities are
adjusted for the effects of changes in tax laws and rates on the date of
enactment.
h. IMPACT OF NEW ACCOUNTING STANDARDS
The Company 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 3. GOING CONCERN
The Company's financial statements are prepared in accordance with generally
accepted accounting principles applicable to a going concern. This contemplates
the realization of assets and the liquidation of liabilities in the normal
course of business. Currently, the Company does not have significant cash or
other material assets, nor does it have operations or a source of revenue
sufficient to cover its operation costs and allow it to continue as a going
concern. The officers and directors have committed to advancing certain
operating costs of the Company.
F-8
MEDBOOK WORLD, INC.
(A Development Stage Company)
Notes to Financial Statements
November 30, 2009
Management plans to seek a strategic partner to assist in the development of the
book sales business, or a merger or acquisition partner with the resources to
take the Company in a new direction and bring greater value to its shareholders.
Management has yet to identify any of these and there is no guarantee that the
Company will be able to identify such opportunities in the future.
NOTE 4. STOCKHOLDERS' EQUITY COMMON STOCK
The authorized share capital of the Company consists of 100,000,000 shares of
common stock with $0.0001 par value, and 20,000,000 shares of preferred stock
also with $0.0001 par value. No other classes of stock are authorized.
COMMON STOCK: As of November 30, 2009, there were a total of 11,150,000 common
shares issued and outstanding.
The Company's first issuance of common stock, totaling 1,085,000 shares, took
place on November 17, 2009 pursuant to the Chapter 11 Plan of Reorganization
confirmed by the U.S. Bankruptcy Court in the matter of AP Corporate Services,
Inc. ("AP"). The Court ordered the distribution of shares in MedBook World, Inc.
to all general unsecured creditors of AP, with these creditors to receive their
PRO RATA share (according to amount of debt held) of a pool of 80,000 shares in
the Company. The Court also ordered the distribution of shares in the Company to
all shareholders of AP, with these shareholders to receive their PRO RATA share
(according to number of shares held) of a pool of 5,000 shares in the Company.
The Court also ordered the distribution of shares in the Company to all
administrative creditors of AP, with these creditors to receive one share of
common stock in the Company for each $0.10 of AP's administrative debt which
they held.
The Court also ordered the distribution of warrants in the Company to all
administrative creditors of AP, with these creditors to receive five warrants in
the Company for each $0.10 of AP's administrative debt which they held. These
creditors received an aggregate of 5,000,000 warrants consisting of 1,000,000 "A
Warrants" each convertible into one share of common stock at an exercise price
of $1.00; 1,000,000 "B Warrants" each convertible into one share of common stock
at an exercise price of $2.00; 1,000,000 "C Warrants" each convertible into one
share of common stock at an exercise price of $3.00; 1,000,000 "D Warrants" each
convertible into one share of common stock at an exercise price of $4.00; and
1,000,000 "E Warrants" each convertible into one share of common stock at an
exercise price of $5.00. All warrants are exercisable at any time prior to
January 4, 2014. This warrant distribution also took place on November 17, 2009.
Also on November 17, 2009 the Officers of the Company and the Company's counsel
acquired a total of 10,065,000 common shares from the Issuer in a private
placement. The shares were purchased at par value, which is $0.0001 per share.
As a result of these issuances there were a total 11,150,000 common shares
issued and outstanding, and a total of 5,000,000 warrants to acquire common
shares issued and outstanding, at November 30, 2009.
PREFERRED STOCK: The authorized share capital of the Company includes 20,000,000
shares of preferred stock with $0.0001 par value. As of November 30, 2009 no
shares of preferred stock had been issued and no shares of preferred stock were
outstanding.
F-9
MEDBOOK WORLD, INC.
(A Development Stage Company)
Notes to Financial Statements
November 30, 2009
NOTE 5. INCOME TAXES
The Company has had no business activity and made no U.S. federal income tax
provision since its inception on November 17, 2009.
NOTE 6. RELATED PARTY TRANSACTIONS
The Company neither owns nor leases any real or personal property. An officer of
the corporation provides office services without charge. Such costs are
immaterial to the financial statements and accordingly, have not been reflected
therein. The officers and directors for the Company are involved in other
business activities and may, in the future, become involved in other business
opportunities. If a specific business opportunity becomes available, such
persons may face a conflict in selecting between the Company and their other
business interests. The Company has not formulated a policy for the resolution
of such conflicts.
NOTE 7. WARRANTS AND OPTIONS
On November 17, 2009 (inception), the Company issued 5,000,000 warrants
exercisable into 5,000,000 shares of the Company's common stock. These warrants
were issued per order of the U.S. Bankruptcy Court in the matter of AP Corporate
Services, Inc. ("AP") to the administrative creditors of AP. These creditors
received an aggregate of 5,000,000 warrants consisting of 1,000,000 "A Warrants"
each convertible into one share of common stock at an exercise price of $1.00;
1,000,000 "B Warrants" each convertible into one share of common stock at an
exercise price of $2.00; 1,000,000 "C Warrants" each convertible into one share
of common stock at an exercise price of $3.00; 1,000,000 "D Warrants" each
convertible into one share of common stock at an exercise price of $4.00; and
1,000,000 "E Warrants" each convertible into one share of common stock at an
exercise price of $5.00. All warrants are exercisable at any time prior to
January 4, 2014. As of the date of this report, no warrants have been exercised.
The fair value of these warrants was estimated at the date of the Company's
inception, November 17, 2009, which was also the date of the grant, using the
Black-Scholes Option Pricing Model with current value of the stock at $0.0001
(par value) since there is no market for the stock at the time; dividend yield
of 0%; risk-free interest rate of 2.16% (5 year Treasury Note rate at the issue
date); and expiration date of 4.13 years. Since the stock does not trade, and
since its par value is $0.0001, the fair value of the warrants came out to be
zero.
NOTE 8. COMMITMENT AND CONTIGENTCY
There is no commitment or contingency to disclose during the period ended
November 30, 2009.
NOTE 9. SUBSEQUENT EVENTS
There are no events subsequent to November 30, 2009 to report.
F-10