UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q/A
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarter ended September 30, 2009
Commission File Number: 333-141929
CYBERSPACE VITA, INC.
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(Exact name of registrant as specified in its charter)
Nevada 14-1982491
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(State of organization) (I.R.S. Employer
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
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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 were 247,550 shares of common stock outstanding as of October 26, 2009.
EXPLANATORY NOTE: This amended Form 10-Q addresses and corrects certain
matters raised in the SEC's Comment Letter to the Company dated December 15,
2009.
TABLE OF CONTENTS
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PAGE
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PART I - FINANCIAL INFORMATION
ITEM 1. INTERIM FINANCIAL STATEMENTS F-2
ITEM 2. MANAGEMENT'S DISCUSSION OF OPERATIONS AND FINANCIAL CONDITION 2
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 6
ITEM 4A(T). CONTROLS AND PROCEDURES 6
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 7
ITEM 1A RISK FACTORS 7
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES 7
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 7
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 7
ITEM 5. OTHER INFORMATION 7
ITEM 6. EXHIBITS 7
SIGNATURES 8
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,
2009 2008
(UNAUDITED) (AUDITED)
------------- ----------
ASSETS
CURRENT ASSETS
Cash $ - $ -
------------- ----------
TOTAL ASSETS $ - $ -
============= ==========
LIABILITIES & STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accrued interest $ 2,557 $ 297
Loans due to shareholders 78,176 34,517
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TOTAL CURRENT LIABILITIES 80,733 34,814
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TOTAL LIABILITIES 80,733 34,814
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; 247,550 shares outstanding as 248 248
of September 30, 2009 and December 31, 2008)
Additional paid-in capital 44,030 44,030
Deficit accumulated during development stage (125,011) (79,092)
------------- ----------
TOTAL STOCKHOLDERS' DEFICIT (80,733) (34,814)
------------- ----------
TOTAL LIABILITIES & STOCKHOLDERS' DEFICIT $ - $ -
============= ==========
See accompanying notes to financial statements
Note: All amounts shown in the financial statements have been adjusted
retroactively to show the impact of a one-for-twenty reverse stock split which
was declared effective on July 1, 2009.
F-2
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,
2009 2008 2009 2008 2009
------------ ------------ ------------ ------------ ------------
Revenues $ - $ - $ - $ - $ -
------------ ------------ ------------ ------------ ------------
Operating expenses
Professional fees 12,455 3,275 41,970 14,723 74,258
General and administrative 869 10,181 1,689 19,013 48,196
------------ ------------ ------------ ------------ ------------
Operating loss 13,324 13,456 43,659 33,736 122,454
------------ ------------ ------------ ------------ ------------
Other expenses
Interest expense 973 123 2,260 123 2,557
------------ ------------ ------------ ------------ ------------
Total other expenses 973 123 2,260 123 2,557
------------ ------------ ------------ ------------ ------------
Net loss $ (14,297) $ (13,579) $ (45,919) $ (33,859) $ (125,011)
============ ============ ============ ============ ============
Basic loss per share $ (0.06) $ (0.05) $ (0.19) $ (0.14)
============ ============ ============ ============
Weighted average number of
common shares outstanding -
basic 247,550 247,550 247,550 247,550
=========== ============ ============ ============
See accompanying notes to financial statements
Note: All amounts shown in the financial statements have been adjusted
retroactively to show the impact of a one-for-twenty reverse stock split which
was declared effective on July 1, 2009.
F-3
CYBERSPACE VITA, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
NOV. 7, 2006
NINE MONTHS NINE MONTHS (INCEPTION)
ENDED ENDED THROUGH
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2009 2008 2009
------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (45,919) $ (33,859) $ (125,011)
Changes in operating assets and liabilities:
Increase (decrease) in accounts payable - (5,504) -
Increase in accrued interest expense 2,260 123 2,557
NET CASH USED IN OPERATING ACTIVITIES $ (43,659) $ (39,240) $ (122,454)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from shareholder loans 43,659 19,611 78,176
Additional paid-in capital - 19,606 30,768
Proceeds from sale of common stock - - 13,510
------------ ------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 43,659 39,217 122,454
NET INCREASE (DECREASE) IN CASH - (23) -
CASH AT BEGINNING OF PERIOD - 23 -
------------ ------------ ------------
CASH AT END OF PERIOD $ - $ - $ -
============ ============ ============
Supplemental cash flow information:
Cash paid during period for interest $ - $ - $ -
============ ============ ============
Cash paid during period for income taxes $ - $ - $ -
============ ============ ============
See accompanying notes to financial statements
Note: All amounts shown in the financial statements have been adjusted
retroactively to show the impact of a one-for-twenty reverse stock split which
was declared effective on July 1, 2009.
F-4
CYBERSPACE VITA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
(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, 2009 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2009. For further information, refer to the financial statements
and footnotes thereto included in the Form 10-K for the year ended December 31,
2008.
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
operation, 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, 2009,
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.
F-5
CYBERSPACE VITA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
(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.
G. NEW ACCOUNTING PRONOUNCEMENTS
In June 2009, the FASB issued Statement of Financial Accounting Standards No.
165, "Subsequent Events," ("SFAS No. 165"). SFAS 165 establishes general
standards of accounting for and disclosure of events that occur after the
balance sheet date but before financial statements are issued or are available
to be issued. SFAS 165 applies to both interim financial statements and annual
financial statements. SFAS 165 is effective for interim or annual financial
periods ending after June 15, 2009. SFAS 165 does not have a material impact on
our financial statements.
In June 2009, the FASB issued Statement of Financial Accounting Standards
No. 166, "Accounting for Transfers of Financial Assets, an amendment to SFAS
No. 140," ("SFAS 166"). SFAS 166 eliminates the concept of a "qualifying
special-purpose entity," changes the requirements for derecognizing financial
assets, and requires additional disclosures in order to enhance information
reported to users of financial statements by providing greater transparency
about transfers of financial assets, including securitization transactions, and
an entity's continuing involvement in and exposure to the risks related to
transferred financial assets. SFAS 166 is effective for fiscal years beginning
after November 15, 2009. The Company will adopt SFAS 166 in fiscal 2010. The
Company does not expect that the adoption of SFAS 166 will have a material
impact on the financial statements.
In June 2009, the FASB issued Statement of Financial Accounting Standards No.
167, "Amendments to FASB Interpretation No. 46(R)," ("SFAS 167"). The
amendments include: (1) the elimination of the exemption for qualifying special
purpose entities, (2) a new approach for determining who should consolidate a
variable-interest entity, and (3) changes to when it is necessary to reassess
who should consolidate a variable-interest entity. SFAS 167 is effective for
the first annual reporting period beginning after November 15, 2009 and for
interim periods within that first annual reporting
F-6
CYBERSPACE VITA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
(UNAUDITED)
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CON'T)
period. The Company will adopt SFAS 167 in fiscal 2010. The Company does not
expect that the adoption of SFAS 167 will have a material impact on the
financial statements.
In June 2009, the FASB issued Statement of Financial Accounting Standards
No. 168, "The FASB Accounting Standards Codification and the Hierarchy of
Generally Accepted Accounting Principles," ("SFAS 168"). SFAS 168 replaces FASB
Statement No. 162, "The Hierarchy of Generally Accepted Accounting Principles",
and establishes the FASB Accounting Standards Codification ("Codification") as
the source of authoritative accounting principles recognized by the FASB to be
applied by nongovernmental entities in the preparation of financial statements
in conformity with generally accepted accounting principles ("GAAP"). SFAS 168
is effective for interim and annual periods ending after September 15, 2009.
The Company will begin to use the new Codification when referring to GAAP in
its annual report on Form 10-K for the fiscal year ending January 3, 2010. This
will not have an impact on the results of the Company.
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
$125,011 during the period of November 7, 2006 (inception) to September 30,
2009. 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 relating to the
recoverability and classification of recorded assets, or the amounts of and
classification of liabilities that might be necessary in the event the company
cannot continue in existence. Accordingly, these factors raise substantial
doubt as to the Company's ability to continue as a going concern
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.
NOTE 4. RELATED PARTY TRANSACTIONS
As of September 30, 2007, we had borrowed $7,540 from a shareholder. This loan
was unsecured, carried no interest and was due on demand. In July 2007, this
loan was forgiven by the shareholder and contributed to the capital of the
Company.
At September 30, 2009, the Company had loans and notes outstanding from a
shareholder in the aggregate amount of $78,176, which represents amounts loaned
to the Company to pay the Company's operating expenses. 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. On December 31, 2008, the Company exchanged the convertible
promissory notes dated June 30, 2008 and September 30, 2008, together with an
additional shareholder payable in the amount of $14,906 for a promissory note
in the amount of $34,517 bearing simple interest at a rate of 6% per annum due
and payable on December 30, 2009. On March 31, 2009, the Payee under the Note
and the Company executed a First Amendment to the Note whereby they agreed that
additional shareholder advances in the amount of $16,915 would be considered as
additional principal payable under the terms of the Note. On June 30, 2009,
the Payee under the Note and the Company executed a Second Amendment to the
Note whereby they agreed that additional shareholder advances in the amount of
$13,420 would be considered as additional principal payable under the terms of
the Note. On September 30, 2009, the Payee under the Note and the Company
executed a Third Amendment to the Note whereby they agreed that additional
shareholder advances in the amount of $13,324 would be considered as additional
principal payable under the terms of the Note.
F-7
CYBERSPACE VITA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
(UNAUDITED)
NOTE 4. RELATED PARTY TRANSACTIONS (CON'T)
Effective as of May 5, 2008, the Company entered into a Services Agreement with
Fountainhead Capital Management Limited ("FHM"), a shareholder who holds
approximately 80.8% of the Company's issued and outstanding common stock. 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. Total fees paid to FHM for
the quarter ended September 30, 2009 were $10,000.
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 quarter ended June 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, 2009:
* 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;
247,550 shares issued and outstanding.
All amounts shown in the financial statements have been adjusted retroactively
to show the impact of a one-for-twenty reverse stock split which was declared
effective on July 1, 2009.
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.
F-8
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.
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-K for the fiscal year ending 2008.
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.
2
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2009 COMPARED TO
SEPTEMBER 30, 2008.
As of September 30, 2009, we have not generated any revenues.
SEPTEMBER 30, SEPTEMBER 30, $ CHANGE % CHANGE
2009 2008
Revenue $ - $ - $ - -%
Professional fees 12,455 3,275 9,180 280%
G & A 869 10,181 9,312 (91.5%)
Operating loss $ (13,324) $ (13,456) $ (132) (1.3%)
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 $973
for the three months ended September 30, 2009.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 COMPARED TO
SEPTEMBER 30, 2008.
As of September 30, 2009, we have not generated any revenues.
SEPTEMBER 30, SEPTEMBER 30, $ CHANGE % CHANGE
2009 2008
Revenue $ - $ - $ - -%
Professional fees 41,970 14,723 27,247 185%
G & A 1,689 19,013 17,324 (91.1%)
Operating loss $ (43,659) $ (33,736) $ 9,923 29.4%
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 $2,260
for the nine months ended September 30, 2009.
LIQUIDITY AND CAPITAL RESOURCES
We have financed our operations during the quarter through proceeds from a loan
from a shareholder in the amount of $13,324.
No stock was issued in the third quarter of 2009.
We had $0 cash on hand as of September 30, 2009 compared to $0 as of December
31, 2008. 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 $(14,297) for the three months ended September 30,
2009, and a working capital deficiency of $80,733 at September 30, 2009. 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.
3
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.
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.
4
- 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.
- 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 Articles 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 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.
5
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.
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
Our management, with the participation of our Chief Executive Officer and Chief
Financial Officer, evaluated the effectiveness of our disclosure controls and
procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of
1934), as of the end of the period covered by this Quarterly Report on Form 10-
Q. Based on that evaluation, our Chief Executive Officer and Chief Financial
Officer concluded that our disclosure controls and procedures were not
effective to ensure that information we are required to disclose in reports
that we file or submit under the Securities Exchange Act of 1934 (i) is
recorded, processed, summarized and reported within the times periods specified
in the Securities and Exchange Commission rules and forms and (ii) is
accumulated and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer, as appropriate to allow timely decisions
regarding required disclosure. It was determined that such controls and
procedures were not effective because the Company failed to provide an
evaluation of its disclosure controls and procedures in its originally filed
Form 10-Q for the period ended September 30, 2009 in accordance with Item 307
of Regulation S-K. While the omission was an oversight, the Company recognizes
that the failure to make the required disclosure could be indicative of an
overall ineffectiveness in the Company's disclosure controls and procedures in
general. As a result, the mere fact that the disclosure required by Item 307
was not made requires that the Company conclude that for the period reported
such controls were not effective.
Remediation Measures. The Company has now re-examined its disclosure controls
and procedures to ensure that such examination is carried out on a going
forward basis in the manner required by Rule 13a-15 and thereafter reported in
accordance with Item 307.
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 first quarter of fiscal 2009 that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.
6
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
Effective July 1, 2009, the Company effectuated a one-for-twenty reverse stock
split which reduced the then issued and outstanding shares of common stock from
4,951,000 to 247,550. All amounts shown in the financial statements have been
adjusted retroactively to show the impact of a one-for-twenty reverse stock
split which was declared effective on July 1, 2009.
ITEM 6. EXHIBITS
Exhibit No.Description
31.1 Certification of Principal Executive Officer filed pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Principal Financial Officer filed pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
32.1 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.
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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: January 26, 2010 By: /s/ Geoffrey Alison
-------------------------------
Geoffrey Alison
Director, CEO, President and Treasurer
EXHIBIT INDEX
Exhibit No.Description
31.1 Certification of Principal Executive Officer filed pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Principal Financial Officer filed pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
32.1 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.
8