UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarter ended September 30, 2008
Commission File Number: 333-141929
CYBERSPACE VITA, INC.
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(Exact name of registrant as specified in its charter)
Nevada 14-1982491
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
122 Ocean Park Blvd.
Suite 307
Santa Monica, California 90405
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(Address of principal executive offices)
(310) 396-1691
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Registrant's telephone number, including area code
74090 El Paseo Ste 200, Palm Desert, CA 92260
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Former address if changed since last report
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months 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 Accelerated Non-Accelerated Filer Smaller Reporting
Filer [ ] Filer [ ] Filer [ ] 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 [ ]
Securities registered under Section 12(g) of the Exchange Act:
Common Stock $.001 par value
There are 4,951,000 shares of common stock outstanding as of November 1, 2008.
1
TABLE OF CONTENTS
_________________
PART I - FINANCIAL INFORMATION
ITEM 1. INTERIM FINANCIAL STATEMENTS............................ 3
ITEM 2. MANAGEMENT'S DISCUSSION OF OPERATIONS
AND FINANCIAL CONDITION..................................9
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK.......................................14
ITEM 4A(T). CONTROLS AND PROCEDURES...........................14
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.......................................15
ITEM 1A RISK FACTORS............................................15
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES.................15
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.........................15
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS........................................15
ITEM 5. OTHER INFORMATION.......................................15
ITEM 6. EXHIBITS................................................16
SIGNATURES
2
PART I - FINANCIAL INFORMATION
ITEM 1. INTERIM FINANCIAL STATEMENTS
CYBERSPACE VITA, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED BALANCE SHEETS
AS OF AS OF
SEPTEMBER 30 DECEMBER 31,
2008 2007
(UNAUDITED) (AUDITED)
------------ -----------
ASSETS
CURRENT ASSETS
Cash $ - $ 23
------------ -----------
TOTAL ASSETS $ - $ 23
============ ===========
LIABILITIES & STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 1,981 $ 7,495
Accrued interest 123 -
Convertible note payable-related party 19,611 -
------------ -----------
TOTAL CURRENT LIABILITIES 21,715 7,495
------------ -----------
TOTAL LIABILITIES 21,715 7,495
STOCKHOLDERS' DEFICIT
Preferred stock, ($.001 par value, 10,000,000
shares authorized; none issued and
outstanding) - -
Common stock, ($.001 par value, 100,000,000
shares authorized; 4,951,000 shares
outstanding 4,951 4,951
as of September 30, 2008 and December 31, 2007)
Additional paid-in capital 35,705 16,099
Deficit accumulated during development stage (62,371) (28,512)
------------ -----------
TOTAL STOCKHOLDERS' DEFICIT (21,715) (7,462)
------------ -----------
TOTAL LIABILITIES & STOCKHOLDERS' DEFICIT $ - $ 23
============ ===========
See accompanying notes to financials statements
3
CYBERSPACE VITA, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Nov. 7, 2006
Three Mos. Three Mos. Nine Mos. Nine Mos. (Inception)
Ended Ended Ended Ended through
September 30, September 30, September 30, September 30, September 30,
2008 2007 2008 2007 2008
------------ ------------ ------------ ------------ ------------
Revenues $ - $ - $ - $ - $ -
Operating expenses
Professional fees 3,275 5,546 14,723 17,334 40,110
General and administrative 10,181 236 19,013 391 22,138
------------ ------------ ------------ ------------ ------------
Operating Loss 13,456 5,782 33,736 17,725 62,248
------------ ------------ ------------ ------------ ------------
Other Expenses
Interest expense 123 - 123 - 123
------------ ------------ ------------ ------------ ------------
Total other expenses 123 - 123 - 123
Net loss $ (13,579) $ (5,782) $ (33,859) $ (17,725) $ (62,371)
============ ============ ============ ============ ============
Basic loss per share $ (0.00) $ (0.00) $ (0.01) $ (0.00)
============ ============ ============ ============
Weighted average number of
common shares outstanding -
basic 4,951,000 4,073,817 4,951,000 4,030,807
============ ============ ============ ============
See accompanying notes to financial statements
4
CYBERSPACE VITA, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS NINE MONTHS NOV. 7, 2006
ENDED ENDED (INCEPTION)
SEPTEMBER 30, SEPTEMBER 30, THROUGH
2008 2007 SEPTEMBER 30,
2008
------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (33,859) $ (17,725) $ (62,371)
Changes in operating assets and liabilities:
Increase (decrease) in accounts payable (5,504) 3,700 1,981
Increase in accrued interest expense 123 - 123
NET CASH USED IN OPERATING ACTIVITIES $ (39,240) $ (14,025) $ (60,267)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from convertible note payable - related party 19,611 - 19,611
Increase in due to shareholders - 6,540 7,540
Additional paid-in capital 19,606 - 19,606
Proceeds from sale of common stock - 9,510 13,510
NET CASH PROVIDED BY FINANCING ACTIVITIES 39,217 16,050 60,267
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH (23) 2,025 -
CASH AT BEGINNING OF PERIOD 23 732 -
------------ ------------ ------------
CASH AT END OF PERIOD $ - $ 2,757 $ -
============ ============ ============
Supplemental cash flow information:
Cash paid during period for interest $ - $ - $ -
------------ ------------ ------------
Cash paid during period for income taxes $ - $ - $ -
------------ ------------ ------------
See accompanying notes to financial statements
5
CYBERSPACE VITA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
(UNAUDITED)
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
The accompanying unaudited condensed financial statements have been prepared in
accordance with accounting principles generally accepted in the United States
of America for interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by accounting principles generally
accepted in the United States of America for annual financial statements. In
the opinion of management, all adjustments, consisting of normal recurring
accruals considered necessary for a fair presentation, have been included.
Operating results for the nine months ended September 30, 2008 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2008. For further information, refer to the financial statements
and footnotes thereto included in the Form 10-KSB for the year ended December
31, 2007.
BUSINESS DESCRIPTION
The Company was incorporated under the laws of the State of Nevada on November
7, 2006. The purpose for which the Corporation is organized is to engage in
any lawful act or activity for which a corporation may be organized under the
General Corporation Law of the State of Nevada including, without limitation,
to provide sales of vitamins and mineral supplements on the Internet.
The Company has been in the development stage since its formation on November
7, 2006. The Company has raised certain capital in an attempt to commence
operations, however it has not done so. The Company's current business plan is
to explore potential targets for a business combination with the Company
through a purchase of assets, share purchase or exchange, merger or similar
type of transaction. As we have not yet commenced principal operations we
consider ourselves a shell company and a Development Stage Company as defined
by Statement of Financial Accounting Standards No. 7 ("SFAS 7") "Accounting and
Reporting by Development Stage Enterprises."
As used in these Notes to the Condensed Financial Statements, the terms the
"Company", "we", "us", "our" and similar terms refer to Cyberspace Vita, Inc.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. BASIS OF ACCOUNTING
The financial statements have been prepared using the accrual basis
of accounting. Under the accrual basis of accounting, revenues are recorded as
earned and expenses are recorded at the time liabilities are incurred. The
Company has adopted a December 31 year-end.
B. CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents. At September 30, 2008,
the Company had no cash or cash equivalents.
C. USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
6
CYBERSPACE VITA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
(UNAUDITED)
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CON'T)
D. BASIC EARNINGS PER SHARE
In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share", which
specifies the computation, presentation and disclosure requirements for
earnings (loss) per share for entities with publicly held common stock.
SFAS No. 128 supersedes the provisions of APB No. 15, and requires the
presentation of basic earnings (loss) per share and diluted earnings (loss) per
share.
Basic net loss per share amounts is computed by dividing the net income by the
weighted average number of common shares outstanding. Diluted earnings per
share are the same as basic earnings per share due to the lack of dilutive
items in the Company. Common stock equivalents are excluded from the
computation if their effect is anti-dilutive. For all periods presented the
Company has sustained losses, which would make use of equivalent shares anti-
dilutive.
E. INCOME TAXES
Income taxes are provided in accordance with Statement of Financial Accounting
Standards No. 109 (SFAS 109), "Accounting for Income Taxes". A deferred tax
asset or liability is recorded for all temporary differences between financial
and tax reporting and net operating loss carryforwards. 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.
F. REVENUE RECOGNITION
The Company has not recognized any revenues from its operations.
NOTE 3. GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company generated net losses of
$62,371 during the period of November 7, 2006 (inception) to September 30,
2008. This condition raises substantial doubt about the Company's ability to
continue as a going concern. The Company's continuation as a going concern is
dependent on its ability to meet its obligations, to obtain additional
financing as may be required and ultimately to attain profitability. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
The Company is dependent on advances from its principal shareholders for
continued funding. There are no commitments or guarantees from any third party
to provide such funding nor is there any guarantee that the Company will be
able to access the funding it requires to continue its operations.
7
CYBERSPACE VITA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
(UNAUDITED)
NOTE 4. RELATED PARTY TRANSACTIONS
At September 30, 2008, the Company had unsecured notes outstanding from a
shareholder in the aggregate amount of $19,611, together with accrued interest
of $123, which represents amounts loaned to the Company to pay the Company's
expenses of operation. On June 30, 2008, a shareholder payable was exchanged
for a 6% convertible promissory note with a principal balance of $8,111 due and
payable on June 30, 2009. On September 30, 2008, an additional shareholder
payable was exchanged for a convertible 6% promissory note with a principal
balance of $11,500 due and payable on September 30, 2009. The principal
balance of the convertible promissory notes and all accrued interest thereunder
is convertible, in whole or in part, into shares of the Company's common stock
at the option of the payee or other holder thereof at any time prior to
maturity, upon ten days advance written notice to the Company. The number of
shares of the Company's common stock issuable upon such conversion shall be
determined by the Board of Directors of the Company based on what it determines
the fair market value of the Company is at the time of such conversion. Upon
conversion, the notes shall be cancelled and replacement notes in identical
terms shall be promptly issued by the maker to the holder thereof to evidence
the remaining outstanding principal amount thereof as of the date of the
conversion, if applicable. In the event of a stock split, combination, stock
dividend, recapitalization of the Company or similar event, the conversion
price and number of shares issuable upon conversion shall be equitably adjusted
to reflect the occurrence of such event.
Effective as of May 5, 2008, the Company entered into a Services Agreement with
Fountainhead Capital Management Limited ("FHM"), a shareholder who owns 80.79%
of the issued and outstanding shares of common stock of the Company. The term
of the Services Agreement is one year and the Company is obligated to pay FHM a
quarterly fee in the amount of $10,000, in cash or in kind, on the first day of
each calendar quarter commencing May 5, 2008. Pursuant to the terms of the
Services Agreement, FHM shall provide the following services to the Company:
(a) FHM will familiarize itself to the extent it deems appropriate with the
business, operations, financial condition and prospects of the Company;
(b) At the request of the Company's management, FHM will provide strategic
advisory services relative to the achievement of the Company's business plan;
(c) FHM will undertake to identify potential merger and acquisition targets for
the Company and assist in the analysis of proposed transactions;
(d) FHM will assist the Company in identifying potential investment bankers,
placement agents and broker-dealers who are qualified to act on behalf of the
Company to achieve its strategic goals.
(e) FHM will assist in the identification of potential investors which might
have an interest in evaluating participation in financing transactions with the
Company;
(f) FHM will assist the Company in the negotiation of merger, acquisition and
corporate finance transactions;
(g) At the request of the Company's management, FHM will provide advisory
services related to corporate governance and matters related to the maintenance
of the Company's status as a publicly-reporting company; and
(h) At the request of the Company's management, FHM will assist the Company in
satisfying various corporate compliance matters.
8
CYBERSPACE VITA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
(UNAUDITED)
NOTE 5. INCOME TAXES
The Company records its income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes". The Company incurred net operating losses
during all periods presented resulting in deferred tax assets. Realization of
deferred tax assets is dependent upon sufficient future taxable income during
the period that deductible temporary differences and carryforwards are expected
to be available to reduce taxable income. As the achievement of required
future taxable income is uncertain, the Company has recorded a valuation
allowance offsetting all deferred tax assets.
NOTE 6. ADDITIONAL PAID-IN CAPITAL
During the nine months ended September 30, 2008, Fountainhead Capital
Management Limited contributed $19,606 as additional paid-in capital for which
no new shares were issued.
NOTE 7 . STOCKHOLDERS' DEFICIT
The stockholders' deficit section of the Company contains the following
classes of capital stock as of September 30, 2008:
* Preferred stock, $0.001 par value: 10,000,000 shares authorized; -0-
shares issued and outstanding.
* Common stock, $0.001 par value: 100,000,000 shares authorized;
4,951,000 shares issued and outstanding.
There are no warrants or options outstanding to acquire any additional shares
of common or preferred stock.
NOTE 8. CHANGE OF CONTROL
The Company and Henry C. Casden (the "Seller"), who was a record holder of
4,000,000 shares of the Company's common stock, (the "Shares") (comprising
approximately 80.8% of the Company's issued and outstanding common stock)
entered into a Stock Purchase Agreement dated as of April 15, 2008 and
effective as of May 5, 2008, with Fountainhead Capital Management Limited (the
"Purchaser"), pursuant to which the Seller agreed to sell to the Purchaser the
Shares for a purchase price in the aggregate amount of $400,000, less the
amount of capital contributed to the Company by the Purchaser as detailed in
Note 6, above. The sale represented a change of control of the Company.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION
The following discussion should be read in conjunction with our unaudited
financial statements and the notes thereto.
FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements and information
relating to us that are based on the beliefs of our management as well as
assumptions made by, and information currently available to, our management.
When used in this report, the words "believe," "anticipate," "expect,"
"estimate," "intend", "plan" and similar expressions, as they relate to us or
our management, are intended to identify forward-looking statements. These
statements reflect management's current view of us concerning future events and
are subject to certain risks, uncertainties and assumptions, including among
many others: a general economic downturn; a downturn in the securities markets;
federal or state laws or regulations having an adverse effect on proposed
transactions that we desire to effect; Securities and Exchange Commission
regulations which affect trading in the securities of "penny stocks,"; and
other risks and uncertainties. Should any of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those described in this report as anticipated,
estimated or expected. The accompanying information contained in this
registration statement, including, without limitation, the information set
forth under the heading "Management's Discussion and Analysis and Plan of
Operation -- Risk Factors" identifies important additional factors that could
materially adversely affect actual results and performance. You are urged to
carefully consider these factors. All forward-looking statements attributable
to us are expressly qualified in their entirety by the foregoing cautionary
statement.
9
OVERVIEW
We are presently a shell company (as defined in Rule 12b-2 of the Exchange Act)
whose plan of operation over the next twelve months is to seek and, if
possible, acquire an operating business or valuable assets by entering into a
business combination. We will not be restricted in our search for business
combination candidates to any particular geographical area, industry or
industry segment, and may enter into a combination with a private business
engaged in any line of business, including service, finance, mining,
manufacturing, real estate, oil and gas, distribution, transportation, medical,
communications, high technology, biotechnology or any other. Management's
discretion is, as a practical matter, unlimited in the selection of a
combination candidate. Management will seek combination candidates in the
United States and other countries, as available time and resources permit,
through existing associations and by word of mouth. This plan of operation has
been adopted in order to attempt to create value for our shareholders. For
further information on our plan of operation and business, see PART I, Item 1
of our Annual Report on Form 10-KSB for the fiscal year ending 2007.
PLAN OF OPERATION
We do not intend to do any product research or development. We do not expect to
buy or sell any real estate, plant or equipment except as such a purchase might
occur by way of a business combination that is structured as an asset purchase,
and no such asset purchase currently is anticipated. Similarly, we do not
expect to add additional employees or any full-time employees except as a
result of completing a business combination, and any such employees likely will
be persons already then employed by the company acquired.
From inception, the Company's business plan was to construct an e-commerce
website by which we intended to engage in the sale of vitamins on the Internet.
The Company has now discontinued its prior business and changed its business
plan. The Company's business plan now consists of exploring potential targets
for a business combination through the purchase of assets, share purchase or
exchange, merger or similar type of transaction. We anticipate no operations
unless and until we complete a business combination as described above.
CRITICAL ACCOUNTING POLICIES
The methods, estimates and judgments we use in applying our accounting policies
have a significant impact on the results we report in our financial statements,
which we discuss under the heading "Results of Operations" following this
section of our Plan of Operation. Some of our accounting policies require us to
make difficult and subjective judgments, often as a result of the need to make
estimates of matters that are inherently uncertain. Due to the life cycle stage
of our Company every balance sheet account has inherent estimates.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2008 COMPARED TO
SEPTEMBER 30, 2007.
As of September 30, 2008, we have not generated any revenues.
SEPTEMBER 30, 2008 SEPTEMBER 30, 2007 $ Change % Change
------------------ ------------------ -------- --------
Revenue $ - $ - $ - 0 %
Professional fees 3,275 5,546 (2,271) (40.9)%
General and administrative expenses 10,181 236 9,945 4,214.0%
Operating loss $ (13,456) $ (5,782) $ 7,674 132.72%
The increase in general and administrative expenses primarily comprised a
management services fee paid to Fountainhead Capital Management Limited, an
affiliate of the Company. The Company also incurred interest expense of $123
for the three months ended September 30, 2008.
10
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008 COMPARED TO
SEPTEMBER 30, 2007.
As of September 30, 2008, we have not generated any revenues.
SEPTEMBER 30, 2008 SEPTEMBER 30, 2007 $ Change % Change
------------------ ------------------ -------- --------
Revenue $ - $ - $ - 0 %
Professional fees 14,723 17,334 (2,611) (15.06)%
General and administrative 19,013 391 18,622 4,762.7%
expenses
Operating loss $ (33,736) $ (17,725) $ 16,011 90.33 %
The increase in general and administrative expenses primarily comprised a
management services fee paid to Fountainhead Capital Management Limited, an
affiliate of the Company. The Company also incurred interest expense of $123
for the nine months ended September 30, 2008.
LIQUIDITY AND CAPITAL RESOURCES
We have financed our operations during the quarter through proceeds from a
convertible note payable entered into with a related party in the amount of
$11,500 and an increase in accounts payable of $1,956.
No stock was issued in the third quarter of 2008.
We had $0 cash on hand as of September 30, 2008 compared to $23 as of December
31, 2007. We will continue to need additional cash during the following twelve
months and these needs will coincide with the cash demands resulting from
implementing our business plan and remaining current with our Securities and
Exchange Commission filings. There is no assurance that we will be able to
obtain additional capital as required, or obtain the capital on acceptable
terms and conditions.
GOING CONCERN
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of the
Company as a going concern. The Company has not begun generating revenue, is
considered a development stage company, has experienced recurring net operating
losses, had a net loss of $(13,579) for the three months ended September 30,
2008, and a working capital deficiency of $21,715 at September 30, 2008. These
factors raise substantial doubt about the Company's ability to continue as a
going concern. These financial statements do not include any adjustments
relating to the recoverability and classification of recorded asset amounts, or
amounts and classification of liabilities that might result from this
uncertainty. We will need to raise funds or implement our business plan to
continue operations.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes
in financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to investors.
RISK FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS
You should carefully consider the risks described below before making an
investment decision. The risks and uncertainties described below are not the
only ones facing our Company. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial may also impair our business
operations. If any of the following risks actually occur, our business,
financial condition, or results of operations could be materially adversely
affected. In such case, the trading price of our common stock could decline and
you could lose all or part of your investment. You should also refer to the
other information about us contained in this Form 10-Q, including our financial
statements and related notes.
11
WE CURRENTLY HAVE NO OPERATING REVENUES OR EARNINGS FROM OPERATIONS.
We currently have had no operating revenues or earnings from operations. We
have no significant assets or financial resources. We have operated at a loss
to date and will, in all likelihood, continue to sustain operating expenses
without corresponding revenues, at least until the consummation of a business
combination.
OUR MANAGEMENT DOES NOT DEVOTE ITS FULL TIME TO OUR BUSINESS AND OPERATIONS.
Our management only devotes minimal time to our business. Management does not
have any written employment agreement with us, and is not expected to enter
into one. Our management serves only on a part*time basis and has had limited
experience in the business activities contemplated by us, yet our Company will
be solely dependent on him. We lack the funds or other incentive to hire
full*time experienced management. Management has other employment or business
interests to which he devotes his primary attention and will continue to do so,
devoting time to the Company only on an as*needed basis.
WE MAY HAVE CONFLICTS OF INTEREST WITH OUR MANAGEMENT TEAM.
Our officers and directors may in the future be affiliated with other blank
check companies having a similar business plan to that of our Company
("Affiliated Companies") which may compete directly or indirectly with us.
Certain specific conflicts of interest may include those discussed below.
- - The interests of any Affiliated Companies from time to time may be
inconsistent in some respects with the interests of the Company. The
nature of these conflicts of interest may vary. There may be
circumstances in which an Affiliated Company may take advantage of an
opportunity that might be suitable for the Company. Although there can
be no assurance that conflicts of interest will not arise or that
resolutions of any such conflicts will be made in a manner most
favorable to the Company and its shareholders, the officers and
directors of the Company have a fiduciary responsibility to the
Company and its shareholders and, therefore, must adhere to a standard
of good faith and integrity in their dealings with and for The Company
and its shareholders.
- - The officers and directors of The Company may serve as officers and
directors of other Affiliated Companies in the future. The Company's
officers and directors are required to devote only so much of their
time to The Company's affairs as they deem appropriate, in their sole
discretion. As a result, The Company's officers and directors may
have conflicts of interest in allocating their management time,
services, and functions among The Company and any current and future
Affiliated Companies which they may serve, as well as any other
business ventures in which they are now or may later become involved.
- - The Affiliated Companies may compete directly or indirectly with The
Company for the acquisition of available, desirable combination
candidates. There may be factors unique to The Company or an Affiliated
Company which respectively makes it more or less desirable to a
potential combination candidate, such as age of the company, name,
capitalization, state of incorporation, contents of the articles of
incorporation, etc. However, any such direct conflicts are not expected
to be resolved through arm's-length negotiation, but rather in the
discretion of management. While any such resolution will be made with
due regard to the fiduciary duty owed to the Company and its
shareholders, there can be no assurance that all potential conflicts
can be resolved in a manner most favorable to the Company as if no
conflicts existed. Members of the Company's management who also are or
will be members of management of another Affiliated Company will also
owe the same fiduciary duty to the shareholders of each other
Affiliated Company. Should a potential acquisition be equally available
to and desirable for both the Company and the Affiliated Companies, no
guideline exists for determining which company would make the
acquisition. This poses a risk to the Company's shareholders that a
desirable acquisition available to the Company may be made by an
Affiliated Company, whose shareholders would instead reap the rewards
of the acquisition. An Affiliated Company's shareholders of course face
exactly the same risk. Any persons who are officers and directors of
both The Company and an Affiliated Company do not have the sole power
(nor the power through stock ownership) to determine which company
would acquire a particular acquisition. No time limit exists in which
an acquisition may or must be made by the Company, and there is no
assurance when * or if * an acquisition ever will be completed.
12
- - Certain conflicts of interest exist and will continue to exist between
the Company and its officers and directors due to the fact that each
has other employment or business interests to which he devotes his
primary attention. Each officer and director is expected to continue to
do so in order to make a living, notwithstanding the fact that
management time should be devoted to the Company's affairs. The Company
has not established policies or procedures for the resolution of
current or potential conflicts of interest between the Company and its
management. As a practical matter, such potential conflicts could be
alleviated only if the Affiliated Companies either are not seeking a
combination candidate at the same time as the Company, have already
identified a combination candidate, are seeking a combination candidate
in a specifically identified business area, or are seeking a
combination candidate that would not otherwise meet the Company's
selection criteria. It is likely, however, that the combination
criteria of the Company and any Affiliated Companies will be
substantially identical. Ultimately, the Company's shareholders
ultimately must rely on the fiduciary responsibility owed to them by
the Company's officers and directors. There can be no assurance that
members of management will resolve all conflicts of interest in the
Company's favor. The officers and directors are accountable to the
Company and its shareholders as fiduciaries, which means that they are
legally obligated to exercise good faith and integrity in handling the
Company's affairs and in their dealings with the Company. Failure by
them to conduct the Company's business in its best interests may result
in liability to them. The area of fiduciary responsibility is a
rapidly developing area of law, and persons who have questions
concerning the duties of the officers and directors to the Company
should consult their counsel.
Our Certificate of Incorporation excludes personal liability on the part of its
directors to the Company for monetary damages based upon any violation of their
fiduciary duties as directors, except as to liability for any acts or omissions
which involve intentional misconduct, fraud or a knowing violation of law or
for improper payment of dividends. This exclusion of liability does not limit
any right which a director may have to be indemnified and does not affect any
director's liability under federal or applicable state securities laws.
Therefore, our assets could be used or attached to satisfy any liabilities
subject to this indemnification.
OUR PROPOSED OPERATIONS ARE PURELY SPECULATIVE.
The success of our proposed plan of operation will depend to a great extent on
the operations, financial condition and management of the identified target
company. While business combinations with entities having established operating
histories are preferred, there can be no assurance that we will be successful
in locating candidates meeting these criteria. If we complete a business
combination, the success of our operations will be dependent upon management of
the target company and numerous other factors beyond our control. No
combination candidate has been identified for acquisition by management, nor
has any determination been made as to any business for the Company to enter,
and shareholders will have no meaningful voice in any such determinations.
There is no assurance that the Company will be successful in completing a
combination or originating a business, nor that the Company will be successful
or that its shares will have any value even if a combination is completed or a
business originated.
WE ARE SUBJECT TO THE PENNY STOCK RULES.
Our securities may be classified as penny stock. The Securities and Exchange
Commission has adopted Rule 15g-9 which establishes the definition of a "penny
stock," for purposes relevant to us, 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 whose securities are admitted to quotation but do not trade on the
Nasdaq SmallCap Market or on a national securities exchange. For any
transaction involving a penny stock, unless exempt, the rules require delivery
of a document to investors stating the risks, special suitability inquiry,
regular reporting and other requirements. Prices for penny stocks are often not
available and investors are often unable to sell this stock. Thus, an investor
may lose his investment in a penny stock and consequently should be cautious of
any purchase of penny stocks.
WE MAY HAVE SIGNIFICANT DIFFICULTY IN LOCATING A VIABLE BUSINESS COMBINATION
CANDIDATE.
We are and will continue to be an insignificant participant in the business of
seeking mergers with and acquisitions of business entities. A large number of
established and well-financed entities, including venture capital firms, are
active in mergers and acquisitions of companies which may be merger or
acquisition target candidates for us. Nearly all of these competitors have
significantly greater financial resources, technical expertise and managerial
capabilities than we do 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 with numerous
other small public companies in seeking merger or acquisition candidates.
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IT IS POSSIBLE THAT THE PER SHARE VALUE OF YOUR STOCK WILL DECREASE UPON THE
CONSUMMATION OF A BUSINESS COMBINATION.
A business combination normally will involve the issuance of a significant
number of additional shares. Depending upon the value of the assets acquired in
a business combination, the current shareholders of the Company may experience
severe dilution of their ownership due to the issuance of shares in the
combination. Any combination effected by the Company almost certainly will
require its existing management and board members to resign, thus shareholders
have no way of knowing what persons ultimately will direct the Company and may
not have an effective voice in their selection.
ANY BUSINESS COMBINATION THAT WE ENGAGE IN MAY HAVE TAX EFFECTS ON US.
Federal and state tax consequences will, in all likelihood, be major
considerations in any business combination that we may undertake. Currently, a
business combination may be structured so as to result in tax-free treatment to
both companies pursuant to various federal and state tax provisions. We intend
to structure any business combination so as to minimize the federal and state
tax consequences to both us and the target company; however, there can be no
assurance that a business combination will meet the statutory requirements of a
tax-free reorganization or that the parties will obtain the intended tax-free
treatment upon a transfer of stock or assets. A non-qualifying reorganization
could result in the imposition of both federal and state taxes which may have
an adverse effect on both parties to the transaction.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the
Company is not required to provide information required by this Item.
ITEM 4A(T). CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including
our principal executive officer and principal financial officer, we conducted
an evaluation of our disclosure controls and procedures, as such term is
defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the
Securities Exchange Act of 1934, as amended (Exchange Act), as of September 30,
2008. Based on this evaluation, our principal executive officer and principal
financial officer have concluded that our disclosure controls and procedures
are effective to ensure that information required to be disclosed by us in the
reports we file or submit under the Exchange Act is recorded, processed,
summarized, and reported within the time periods specified in the Securities
and Exchange Commission's rules and forms and that our disclosure and controls
are designed to ensure that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act is accumulated and
communicated to our management, including our principal executive officer and
principal financial officer, or persons performing similar functions, as
appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There were no changes (including corrective actions with regard to significant
deficiencies or material weaknesses) in our internal controls over financial
reporting that occurred during the third quarter of fiscal 2008 that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no legal proceedings which are pending or have been threatened
against us or any of our officers, directors or control persons of which
management is aware.
ITEM 1A.RISK FACTORS.
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the
Company is not required to provide information required by this Item
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES
Except as may have previously been disclosed on a current report on Form 8-K or
a quarterly report on Form 10-Q, we have not sold any of our securities in a
private placement transaction or otherwise during the past three years.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS
Exhibit No. Description
31 Certification of Principal Executive Officer and Principal
Financial Officer filed pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002.
32 Certification of Principal Executive Officer and Principal
Financial Officer furnished pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
SIGNATURES
In accordance with the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
CYBERSPACE VITA, INC.
Date: November 11, 2008 By: /s/ Geoffrey Alison
------------------------
Geoffrey Alison
Director, CEO, President and Treasurer
15
EXHIBIT INDEX
Exhibit No. Description
31 Certification of Principal Executive Officer and Principal
Financial Officer filed pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002.
32 Certification of Principal Executive Officer and Principal
Financial Officer furnished pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
16