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 March 31, 2010
Commission File Number: 333-141929
CYBERSPACE VITA, INC.
______________________________________________________
(Exact name of registrant as specified in its charter)
Nevada 14-1982491
_______________________ ___________________
(State of organization) (I.R.S. Employer
Identification No.)
122 Ocean Park Blvd.
Suite 307
Santa Monica, California 90405
________________________________________
(Address of principal executive offices)
(310) 396-1691
_______________________________________________
Registrant's telephone number, including area code
______________________________________________
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 has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 and Regulation S-T
({section}232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such
files).
Yes [ ] 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 May 1, 2010.
TABLE OF CONTENTS
_________________
PART I - FINANCIAL INFORMATION
ITEM 1. INTERIM FINANCIAL STATEMENTS.................................. F-1
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
MARCH 31, 2010 DECEMBER 31, 2009
(UNAUDITED) (UNAUDITED)
-------------- -----------------
ASSETS
CURRENT ASSETS
Cash - $ -
----------- -----------
TOTAL ASSETS - $ -
=========== ===========
LIABILITIES & STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accrued interest 5,078 $ 3,740
Loans due to shareholders 109,089 90,451
TOTAL CURRENT LIABILITIES 114,167 94,191
----------- -----------
TOTAL LIABILITIES 114,167 94,191
STOCKHOLDERS' DEFICIT
Preferred stock, ($0.001 par value, 10,000,000 shares authorized; none issued and - -
outstanding)
Common stock, ($0.001 par value, 100,000,000 shares authorized; 247,550 shares outstanding as 248 248
of March 31, 2010 and December 31, 2009)
Additional paid-in capital 44,030 44,030
Deficit accumulated during development stage (158,445) (138,469)
----------- -----------
TOTAL STOCKHOLDERS' DEFICIT (114,167) (94,191)
----------- -----------
TOTAL LIABILITIES & STOCKHOLDERS' DEFICIT $ - $ -
=========== ===========
See accompanying notes to financial statements
F-1
CYBERSPACE VITA, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
NOV. 7, 2006
THREE MOS. THREE MOS. (INCEPTION)
ENDED ENDED THROUGH
MARCH 31, 2010 MARCH 31, 2009 MARCH 31, 2010
-------------- -------------- --------------
REVENUES $ - $ - $ -
-------------- -------------- --------------
OPERATING EXPENSES
General and administrative 150 415 33,873
Professional fees 18,488 17,015 119,495
-------------- -------------- --------------
OPERATING LOSS 18,638 17,430 153,368
-------------- -------------- --------------
OTHER EXPENSES
INTEREST EXPENSE 1,338 517 5,077
-------------- -------------- --------------
TOTAL OTHER EXPENSES 1,338 517 5,077
-------------- -------------- --------------
NET LOSS $ (19,976) $ (17,947) $ (158,445)
============== ============== ==============
BASIC LOSS PER SHARE $ (0.08) $ (0.07)
============== ==============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC 247,550 247,550
============== ==============
See accompanying notes to financial statements
F-2
CYBERSPACE VITA, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
NOV. 7, 2006
THREE MONTHS THREE MONTHS (INCEPTION)
ENDED ENDED THROUGH
MARCH 31, 2010 MARCH 31, 2009 MARCH 31, 2010
--------------- -------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (19,976) $ (17,947) $ (158,445)
Changes in operating assets and liabilities:
Increase in accounts payable - 515 -
Increase in accrued interest expense 1,338 517 5,077
NET CASH USED IN OPERATING ACTIVITIES $ (18,638) $ (16,915) $ (153,368)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from shareholder loans 18,638 16,915 109,089
Additional paid-in capital - - 30,769
Proceeds from sale of common stock - - 13,510
NET CASH PROVIDED BY FINANCING ACTIVITIES 18,638 16,915 153,368
--------------- -------------- --------------
NET INCREASE (DECREASE) IN CASH - - -
CASH AT BEGINNING OF PERIOD - - -
--------------- -------------- --------------
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
F-3
CYBERSPACE VITA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2010
(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 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 three months ended March 31, 2010 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2010. For further
information, refer to the financial statements and footnotes thereto included
in the Form 10-K for the year ended December 31, 2009.
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 ASC 915 "Development Stage Entities."
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 March 31, 2010, 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-4
CYBERSPACE VITA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2010
(UNAUDITED)
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CON'T)
D. BASIC EARNINGS PER SHARE
The FASB issued SFAS No. 128, (ASC Topic 260) "Earnings Per Share", which
specifies the computation, presentation and disclosure requirements for
earnings (loss) per share for entities with publicly held common stock. ASC
260 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 ASC 740 " 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 February 2010, the FASB issued amended guidance on subsequent events to
alleviate potential conflicts between FASB guidance and SEC requirements. Under
this amended guidance, SEC filers are no longer required to disclose the date
through which subsequent events have been evaluated in originally issued and
revised financial statements. This guidance was effective immediately and we
adopted these new requirements for the period ended March 31, 2010. The
adoption of this guidance did not have a material impact on our financial
statements.
In February 2010, the FASB (Financial Accounting Standards Board) issued
Accounting Standards Update 2010-08 (ASU 2010-08), Technical Corrections to
Various Topics. This amendment eliminated inconsistencies and outdated
provisions and provided the needed clarifications to various topics within
Topic 815. The amendments are effective for the first reporting period
(including interim periods) beginning after issuance (February 2, 2010), except
for certain amendments. The amendments to the guidance on accounting for
income taxes in a reorganization (Subtopic 852-740) should be applied to
reorganizations for which the date of the reorganization is on or after the
beginning of the first annual reporting period beginning on or after December
15, 2008. For those reorganizations reflected in interim financial statements
issued before the amendments in this Update are effective, retrospective
application is required. The clarifications of the guidance on the embedded
derivates and hedging (Subtopic 815-15) are effective for fiscal years
beginning after December 15, 2009, and should be applied to existing contracts
(hybrid instruments) containing embedded derivative features at the date of
adoption. The Company does not expect the provisions of ASU 2010-08 to have a
material effect on the financial position, results of operations or cash flows
of the Company.
In January 2010, the FASB (Financial Accounting Standards Board) issued
Accounting Standards Update 2010-07 (ASU 2010-07), Not-for-Profit Entities
(Topic 958): Not-for-Profit Entities: Mergers and Acquisitions. This amendment
to Topic 958 has occurred as a result of the issuance of FAS 164. The Company
does not expect the provisions of ASU 2010-07 to have a material effect on the
financial position, results of operations or cash flows of the Company.
F-5
CYBERSPACE VITA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2010
(UNAUDITED)
G. NEW ACCOUNTING PRONOUNCEMENTS (CON'T)
In January 2010, the FASB (Financial Accounting Standards Board) issued
Accounting Standards Update 2010-06 (ASU 2010-06), Fair Value Measurements and
Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements.
This amendment to Topic 820 has improved disclosures about fair value
measurements on the basis of input received from the users of financial
statements. This is effective for interim and annual reporting periods
beginning after December 15, 2009, except for the disclosures about purchases,
sales, issuances, and settlements in the roll forward of activity in Level 3
fair value measurements. Those disclosures are effective for fiscal years
beginning after December 15, 2010, and for interim periods within those fiscal
years. Early adoption is permitted. The Company does not expect the
provisions of ASU 2010-06 to have a material effect on the financial position,
results of operations or cash flows of the Company.
In January 2010, the FASB (Financial Accounting Standards Board) issued
Accounting Standards Update 2010-05 (ASU 2010-05), Compensation - Stock
Compensation (Topic 718). This standard codifies EITF Topic D-110 Escrowed
Share Arrangements and the Presumption of Compensation.
In January 2010, the FASB (Financial Accounting Standards Board) issued
Accounting Standards Update 2010-04 (ASU 2010-04), Accounting for Various
Topics-Technical Corrections to SEC Paragraphs.
In January 2010, the FASB (Financial Accounting Standards Board) issued
Accounting Standards Update 2010-03 (ASU 2010-03), Extractive Activities-Oil
and Gas (Topic 932): Oil and Gas Reserve Estimation and Disclosures. This
amendment to Topic 932 has improved the reserve estimation and disclosure
requirements by (1) updating the reserve estimation requirements for changes in
practice and technology that have occurred over the last several decades and
(2) expanding the disclosure requirements for equity method investments. This
is effective for annual reporting periods ending on or after December 31, 2009.
However, an entity that becomes subject to the disclosures because of the
change to the definition oil- and gas- producing activities may elect to
provide those disclosures in annual periods beginning after December 31, 2009.
Early adoption is not permitted. The Company does not expect the provisions of
ASU 2010-03 to have a material effect on the financial position, results of
operations or cash flows of the Company.
In January 2010, the FASB issued Accounting Standards Update 2010-02,
Consolidation (Topic 810): Accounting and Reporting for Decreases in Ownership
of a Subsidiary. This amendment to Topic 810 clarifies, but does not change,
the scope of current US GAAP. It clarifies the decrease in ownership
provisions of Subtopic 810-10 and removes the potential conflict between
guidance in that Subtopic and asset derecognition and gain or loss recognition
guidance that may exist in other US GAAP. An entity will be required to follow
the amended guidance beginning in the period that it first adopts FAS 160 (now
included in Subtopic 810-10). For those entities that have already adopted FAS
160, the amendments are effective at the beginning of the first interim or
annual reporting period ending on or after December 15, 2009. The amendments
should be applied retrospectively to the first period that an entity adopted
FAS 160. The Company does not expect the provisions of ASU 2010-02 to have a
material effect on the financial position, results of operations or cash flows
of the Company.
In January 2010, the FASB issued Accounting Standards Update 2010-01, Equity
(Topic 505): Accounting for Distributions to Shareholders with Components of
Stock and Cash (A Consensus of the FASB Emerging Issues Task Force). This
amendment to Topic 505 clarifies the stock portion of a distribution to
shareholders that allows them to elect to receive cash or stock with a limit on
the amount of cash that will be distributed is not a stock dividend for
purposes of applying Topics 505 and 260. Effective for interim and annual
periods ending on or after December 15, 2009, and would be applied on a
retrospective basis. The Company does not expect the provisions of ASU 2010-01
to have a material effect on the financial position, results of operations or
cash flows of the Company.
NOTE 3. WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional shares
of common or preferred stock.
F-6
CYBERSPACE VITA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2010
(UNAUDITED)
NOTE 4. 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
$158,445 from Inception (November 7, 2006) to March 31, 2010. 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 5. 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 March 31, 2010, the Company had loans and notes outstanding from a
shareholder in the aggregate amount of $109,089, 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. On
December 31, 2009, the Payee under the Note and the Company executed a
Fourth Amendment to the Note whereby they agreed that additional shareholder
advances in the amount of $12,275 would be considered as additional principal
payable under the terms of the Note and further agreed to extend the maturity
date of the Note to December 31, 2010. On March 31, 2010, the Payee under the
Note and the Company executed a Fifth Amendment to the Note whereby they agreed
that additional shareholder advances in the amount of $18,638 would be
considered as additional principal payable under the terms of the Note.
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
original term of the Services Agreement was one year (and it has been extended
to the end of fiscal year 2010) 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 March 31, 2010 were $10,000.
NOTE 6. INCOME TAXES
The Company records its income taxes in accordance with ASC 740 "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.
F-7
CYBERSPACE VITA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2010
(UNAUDITED)
NOTE 7. STOCKHOLDERS' DEFICIT
The stockholders' deficit section of the Company contains the following classes
of capital stock as of March 31, 2010:
* 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) a 10:1 stock split which was declared effective in
October 2007 and (b) a one-for-twenty reverse stock split which was declared
effective in July 2009.
There are no warrants or options outstanding to acquire any additional shares
of common or preferred stock.
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 MARCH 31, 2010 COMPARED TO
MARCH 31, 2009.
As of March 31, 2010, we have not generated any revenues.
MARCH 31, MARCH 31,
2010 2009 $ CHANGE % CHANGE
-------- -------- -------- --------
Revenue $ - $ - $ - -%
Professional fees 18,488 17,015 1,473 9%
G & A 150 415 (265) (64%)
Operating loss $(19,976) $(17,430) $2,546 14.6%
The Company's operations for the quarter ended March 31, 2010 showed only
nominal changes from its operations in the comparable quarter of 2009.
Professional fees incurred in both the quarters ended March 31, 2010 and 2009
include $2,500 in management services fees paid to Fountainhead Capital
Management Limited and fees paid to the Company's outside auditors and legal
counsel. The Company also incurred interest expense of $1,338 for the three
months ended March 31, 2010.
LIQUIDITY AND CAPITAL RESOURCES
We have financed our operations during the quarter through proceeds from a loan
from a shareholder in the amount of $18,638.
No stock was issued in the first quarter of 2010.
We had $0 cash on hand as of March 31, 2010 compared to $0 as of December 31,
2009. 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 $(19,976) for the three months ended March 31, 2010,
and a working capital deficiency of $114,167 at March 31, 2010. 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.
3
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.
4
* 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.
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.
5
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 March 31,
2010. 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 first quarter of fiscal 2010 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.
7
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: May 10, 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