UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Form 10-Q
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x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 2011
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______to______.
Big Time Acquisition, Inc.
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(Exact Name of registrant as specified in its Charter)
Commission file number 000-54159
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Delaware 27-3291226
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(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
780 Reservoir Avenue, #123
Cranston,RI 02910
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(Address of Principal Executive Offices) (Zip Code)
Scot Scheer
780 Reservoir Avenue, #123
Cranston, RI 02910
Telephone: (401)641-0405
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(Registrant's telephone number, including area code)
(Former Name or Former Address if Changed Since Last Report)
Check whether the issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the
preceding 12 months (or for such shorter period that the issuer was
required to file such reports), and (2)has been subject to such
filing requirements for the past 90 days. Yes x No o
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 of 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 o No o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer or
a smaller reporting company filer. See definition of "accelerated
filer" and "large accelerated filer" in Rule 12b-2 of the Exchange
Act (Check one):
Large Accelerated Filer o Accelerated Filer o
Non-Accelerated Filer o Smaller Reporting Company x
Indicate by check mark whether the registrant is a shell company as
defined in Rule 12b-2 of the Exchange Act. Yes x No o
State the number of shares outstanding of each of the issuer's
classes of common equity, as of April 13, 2011: 100,000 shares of
common stock.
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Big Time Acquisition, Inc.
FORM 10-Q
February 28, 2011
INDEX
PART I-- FINANCIAL INFORMATION
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Control and Procedures
PART II-- OTHER INFORMATION
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. (Removed & Reserved)
Item 5. Other Information
Item 6. Exhibits
SIGNATURE
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Big Time Acquisition, Inc.
(A DEVELOPMENT STAGE COMPANY)
INDEX TO FINANCIAL STATEMENTS
AS OF February 28,2011
Big Time Acquisition, Inc.
(a development stage company)
Financial Statements Table of Contents
FINANCIAL STATEMENTS Page #
Balance Sheets at February 28, 2011(Unaudited) and August 31, 2010 F-1
Statement of Operations for the Three Months Ended F-2
February 28, 2011(Unaudited)
Statements of Operations for the Six Months Ended February 28, 2011 F-3
and for the period from August 17, 2010(inception) through
February 28, 2011(Unaudited)
Statement of Stockholders Equity (Deficit) for the period from F-4
August 17,2010(inception)through February 28,2011(Unaudited)
Statements of cash flows for the Six Months Ended February 28, 2011 F-5
and for the period from August 17, 2011(inception) through
February 28, 2011
Notes to the Financial Statements(Unaudited) F-6-F-9
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Big Time Acquisition, Inc.
(A Development Stage Company)
Balance Sheet
As of As of
February 28 August 31,
2011 2010
------------ ------------
(Unaudited)
ASSETS
Current Assets
Cash $ -- $ --
------------ ------------
Total Current Assets $ -- $ --
------------ ------------
TOTAL ASSETS $ -- $ --
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities $ -- $ --
------------ ------------
Total Current Liabilities -- --
------------ ------------
TOTAL LIABILITIES -- --
Stockholders' Equity (Deficit)
Preferred stock, ($.0001 par value, 10,000,000
shares authorized; none issued and outstanding.) -- --
Common stock ($.0001 par value, 100,000,000
shares authorized; 100,000 shares issued and
outstanding as of August 31, 2010) 10 10
Additional paid-in capital 3,498 3,098
------------ ------------
Retained Earnings during development stage (3,508) (3,108)
------------ ------------
Total Stockholders' Equity (Deficit) -- --
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY (DEFICIT)
------------ ------------
-- --
============ ============
See Notes to Financial Statements
F-1
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Big Time Acquisition, Inc.
(A Development Stage Company)
Statement of Operations
(Unaudited)
<Three months
Ended February
28,2011.>
---------------
Revenues
Revenues $ --
---------------
Total Revenues --
Operating and administrative expenses 400
---------------
Total Operating & Administrative Expenses 400
---------------
Income (loss) from operations (400)
---------------
Net Loss $ (400)
===============
Basic and diluted earnings per share $ (0.004)
===============
Weighted average number of
common shares outstanding 100,000
===============
See Notes to Financial Statements
F-2
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Big Time Acquisition, Inc.
(A Development Stage Company)
Statement of Operations
(Unaudited)
<Six Months Cumulative
Ended February since inception
28,2011.> at February 28,2011
--------------- ---------------
Revenues
Revenues $ -- $ --
--------------- ---------------
Total Revenues -- --
Operating and administrative expenses 400 3,508
--------------- ---------------
Total Operating & Administrative Expenses 400 3,508
--------------- ---------------
Income (loss) from operations (400) (3,508)
--------------- ---------------
Net Loss $ (400) $ (3,508)
=============== ===============
Basic and diluted earnings per share $ (0.004) (0.035)
=============== ===============
Weighted average number of
common shares outstanding 100,000 100,000
=============== ===============
See Notes to Financial Statements
F-3
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Big Time Acquisition, Inc.
(A Development Stage Company)
Statement of Changes in Stockholders' Equity (Deficit)
From August 17, 2010 (inception) through February 28, 2011
(Unaudited)
Deficit
Accumulated
Common Common Additional During
Stock Stock Paid-in Development
Shares Amount Capital Stage Total
---------- ---------- ---------- ----------- ----------
Balance, August 17, 2010 -- -- -- -- --
(Inception)
Shares issued for services at $.0001
per share 100,000 10 3,098 -- 3,108
Net income (loss) -- -- (3,108) (3,108) (3,108)
------------------------------------ ---------- ---------- ---------- ----------- ----------
Balance, August 31, 2010 100,000 $ 10 $ (3,098) $ (3,108)
========== ========== ========= =========== ===========
Contribution to capital 400 400
Net income (loss) -- -- (400) (400) (400)
Balance, February 28, 2011 100,000 $ 10 $ (3,508) $ (3,508)
========== ========== ========= =========== ==========
See Notes to Financial Statements
F-4
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Big Time Acquisition, Inc.
(A Development Stage Company)
Statement of Cash flows
(Unaudited)
<Six Months Cumulative
ended February since inception at
28, 2011> February 28, 2011
--------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (400) $ (3,508)
Adjustments to reconcile net income to net -- --
cash provided (used) by operating activities:
Common stock issued to founder(s) for services rendered -- (3,108)
--------------- ---------------
Net cash provided by (used in) operating activities (400)
CASH FLOWS PROVIDED FROM INVESTING ACTIVITIES
Net cash provided by (used in) investing activities -- --
--------------- ---------------
CASH FLOWS USED BY FINANCING ACTIVITIES
Proceeds from shareholder loans -- --
Common stock issued for cash -- --
--------------- ---------------
Net cash provided by financing activities -- --
Net increase (decrease) in cash and cash equivalents -- --
Cash and cash equivalents, inception -- --
--------------- -----------------
Cash and cash equivalents, end of year $ -- $ --
=============== ===============
NONCASH INVESTING AND FINANCING ACTIVITIES:
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $ -- $ --
=============== ===============
Income taxes paid $ -- $ --
=============== ===============
See Notes to Financial Statements
F-5
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Big Time Acquisition, Inc.
(A DEVELOPMENT STAGE COMPANY)
February 28, 2011
(UNAUDITED)
NOTES TO THE FINANCIAL STATEMENTS
Note 1 - Nature of Operations
Big Time Acquisition Inc. (a development stage company) ("Big Time" or the
"Company") was incorporated in Delaware on August 17, 2010, with an
objective to acquire, or merge with, an operating business. As of February
28,2011, the Company had not yet commenced any operations.
The Company, based on proposed business activities, is a "blank check"
company. The Securities and Exchange Commission ("SEC") defines such a
company as "a development stage company" that has no specific business
plan or purpose, or has indicated that its business plan is to engage in a
merger or acquisition with an unidentified company or companies, or other
entity or person; and is issued 'penny stock,' as defined in Rule 3a51-1 under
the Securities Exchange Act of 1934. Many states have enacted statutes,
rules and regulations limiting the sale of securities of "blank check" companies
in their respective jurisdictions. Management does not intend to undertake any
efforts to cause a market to develop in its securities, either debt or equity,
until the Company concludes a business combination.
The Company was organized as a vehicle to investigate and, if such
investigation warrants, acquire a target company or business seeking the
perceived advantages of being a publicly held corporation and, to a lesser
extent that desires to employ the Company's funds in its business. The
Company's principal business objective for the next 12 months and beyond
such time will be to achieve long-term growth potential through a combination
with a business ("Business Combination") rather than immediate, short-term
earnings. The Company will not restrict its potential candidate target
companies to any specific business, industry or geographical location and,
thus, may acquire any type of business. The analysis of new business
opportunities will be undertaken by or under the supervision of the officers
and directors of the Company.
Note 2 - Significant Accounting Policies
Basis of presentation
The accompanying unaudited financial statements have been prepared in
accordance with accounting principles generally accepted in the
United States of America ("U.S. GAAP") for interim financial
information, and with the rules and regulations of the United States
Securities and Exchange Commission ("SEC") to Form 10-Q and Article 8
of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by U.S. GAAP for complete financial statements.
The unaudited interim financial statements furnished reflect all
adjustments (consisting of normal recurring accruals) which are, in the
opinion of management, necessary to a fair statement of the results for
the interim periods presented.
Interim results are not necessarily indicative of the results for the
full fiscal year. These financial statements should be read in
conjunction with the financial statements of the Company for the period
from August 17, 2010 (Inception) through November 29,2010 and notes
thereto contained in the Company's Registration Statement on Form 10 as
filed with the SEC on October 15, 2010.
Development stage company
The Company is a development stage company as defined by section
810-10-20 of the FASB Accounting Standards Codification. The
Company is still devoting substantially all of its efforts on establishing
the business and its planned principal operations have not commenced.
All losses accumulated since inception have been considered as part of
the Company's exploration stage activities.
F-6
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Use of estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States 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 as well as the reported amount of
revenues and expenses during the reporting period. Actual results could
differ from these estimates.
Due to the limited level of operations, the Company has not had to make
material assumptions or estimates other than the assumption that the
Company is a going concern.
Fiscal year end
The Company elected August 31 as its fiscal year ending date.
Cash equivalents
The Company considers all highly liquid investments with maturities of
three months or less at the time of purchase to be cash equivalents.
Fair value of financial instruments
The Company follows paragraph 825-10-50-10 of the FASB Accounting
Standards Codification for disclosures about fair value of its financial
instruments and paragraph 820-10-35-37 of the FASB Accounting
Standards Codification ("Paragraph 820-10-35-37") to measure the fair
value of its financial instruments. Paragraph 820-10-35-37 establishes
a framework for measuring fair value in accounting principles generally
accepted in the United States of America (U.S. GAAP), and expands
disclosures about fair value measurements. To increase consistency
and comparability in fair value measurements and related disclosures,
Paragraph 820-10-35-37 establishes a fair value hierarchy which
prioritizes the inputs to valuation techniques used to measure fair value
into three (3) broad levels. The fair value hierarchy gives the highest
priority to quoted prices (unadjusted) in active markets for identical
assets or liabilities and the lowest priority to unobservable inputs.
The three (3) levels of fair value hierarchy defined by Paragraph
820-10-35-37 are described below:
Level 1
Quoted market prices available in active markets for identical assets
or liabilities as of the reporting date.
Level 2
Pricing inputs other than quoted prices in active markets included in
Level 1, which are either directly or indirectly observable as of the
reporting date.
Level 3
Pricing inputs that are generally observable inputs and not corroborated
by market data.
The carrying amounts of the Company's financial assets and liabilities,
such as accrued expenses approximate its fair values because of the
short maturity of this instrument.
The Company does not have any assets or liabilities measured at fair
value on a recurring or a non-recurring basis, consequently, the
Company did not have any fair value adjustments for assets and
liabilities measured at fair value at February 28, 2011, nor gains or
losses are reported in the statement of operations that are attributable
to the change in unrealized gains or losses relating to those assets and
liabilities still held at the reporting date for the period from
August 17, 2010 (inception) through February 28, 2011.
Revenue recognition
The Company applies paragraph 605-10-S99-1 of the FASB Accounting
Standards Codification for revenue recognition. The Company will
recognize revenue when it is realized or realizable and earned. The
Company considers revenue realized or realizable and earned when all
of the following criteria are met: (i) persuasive evidence of an
arrangement exists, (ii) the product has been shipped or the services
have been rendered to the customer, (iii) the sales price is fixed or
determinable, and (iv) collectability is reasonably assured.
F-7
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Income taxes
The Company follows Section 740-10-30 of the FASB Accounting
Standards Codification, which requires recognition of deferred tax
assets and liabilities for the expected future tax consequences of
events that have been included in the financial statements or tax
returns. Under this method, deferred tax assets and liabilities are
based on the differences between the financial statement and tax
bases of assets and liabilities using enacted tax rates in effect for
the year in which the differences are expected to reverse.
Deferred tax assets are reduced by a valuation allowance to the
extent management concludes it is more likely than not that the
assets will not be realized. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in the
Statements of Operations in the period that includes the enactment date.
The Company adopted section 740-10-25 of the FASB Accounting
Standards Codification Section ("740-10-25"). Section 740-10-25
addresses the determination of whether tax benefits claimed or
expected to be claimed on a tax return should be recorded in the
financial statements. Under Section 740-10-25, the Company may
recognize the tax benefit from an uncertain tax position only if it is
more likely than not that the tax position will be sustained on
examination by the taxing authorities, based on the technical merits
of the position. The tax benefits recognized in the financial statements
from such a position should be measured based on the largest benefit
that has a greater than fifty percent (50%) likelihood of being realized
upon ultimate settlement. Section 740-10-25 also provides guidance
on de-recognition, classification, interest and penalties on income taxes,
accounting in interim periods and requires increased disclosures. The
Company had no material adjustments to its liabilities for unrecognized
income tax benefits according to the provisions of Section 740-10-25.
Net loss per common share
Net loss per common share is computed pursuant to section 260-10-45
of the FASB Accounting Standards Codification. Basic net loss per share
is computed by dividing net loss by the weighted average number of shares
of common stock outstanding during the period. Diluted net loss per share
is computed by dividing net loss by the weighted average number of shares
of common stock and potentially outstanding shares of common stock during
each period. There were no potentially dilutive shares outstanding as of
February 28, 2011.
Commitment and contingencies
The Company follows subtopic 450-20 of the FASB Accounting Standards
Codification to report accounting for contingencies. Liabilities for
loss contingencies arising from claims, assessments, litigation, fines
and penalties and other sources are recorded when it is probable that a
liability has been incurred and the amount of the assessment can be
reasonably estimated.
F-8
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Recently issued accounting standards
In January 2010, the FASB issued the FASB Accounting Standards
Update No. 2010-01 "Equity Topic 505 - Accounting for Distributions
to Shareholders with Components of Stock and Cash", which clarify
that the stock portion of a distribution to shareholders that allows them
to elect to receive cash or stock with a potential limitation on the total
amount of cash that all shareholders can elect to receive in the
aggregate is considered a share issuance that is reflected in EPS
prospectively and is not a stock dividend for purposes of
applying Topics 505 and 260 (Equity and Earnings Per Share ("EPS")).
Those distributions should be accounted for and included in EPS
calculations in accordance with paragraphs 480-10-25- 14 and
260-10-45-45 through 45-47 of the FASB Accounting Standards
codification. The amendments in this Update also provide a technical
correction to the Accounting Standards Codification. The correction
moves guidance that was previously included in the Overview and
Background Section to the definition of a stock dividend in the
Master Glossary. That guidance indicates that a stock dividend takes
nothing from the property of the corporation and adds nothing to the
interests of the stockholders. It also indicates that the proportional
interest of each shareholder remains the same, and is a key factor to
consider in determining whether a distribution is a stock dividend.
In January 2010, the FASB issued the FASB Accounting Standards
Update No. 2010-02 "Consolidation Topic 810 - Accounting and
Reporting for Decreases in Ownership of a Subsidiary - a Scope
Clarification", which provides amendments to Subtopic 810-10
and related guidance within U.S. GAAP to clarify that the scope of
the decrease in ownership provisions of the Subtopic and related
guidance applies to the following:
1. A subsidiary or group of assets that is a business or nonprofit
activity.
2. A subsidiary that is a business or nonprofit activity that is
transferred to an equity method investee or joint venture.
3. An exchange of a group of assets that constitutes a business
or nonprofit activity for a non-controlling interest in an entity
(including an equity method investee or joint venture).
The amendments in this Update also clarify that the decrease
in ownership guidance in Subtopic 810-10 does not apply to
the following transactions even if they involve businesses:
1. Sales of in substance real estate. Entities should apply the
sale of real estate guidance in Subtopics 360-20 (Property,
Plant, and Equipment) and 976-605 (Retail/Land) to such
transactions.
2. Conveyances of oil and gas mineral rights. Entities should
apply the mineral property conveyance and related transactions
guidance in Subtopic 932-360 (Oil and Gas-Property, Plant,
and Equipment) to such transactions.
If a decrease in ownership occurs in a subsidiary that is not a
business or nonprofit activity, an entity first needs to consider
whether the substance of the transaction causing the decrease
in ownership is addressed in other U.S. GAAP, such as
transfers of financial assets, revenue recognition, exchanges
of non-monetary assets, sales of in substance real estate, or
conveyances of oil and gas mineral rights, and apply that
guidance as applicable. If no other guidance exists, an entity
should apply the guidance in Subtopic 810-10.
Management does not believe that any other recently issued,
but not yet effective accounting pronouncements, if adopted,
would have a material effect on the accompanying financial
statements.
Note 3 - Going Concern
The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern.
As reflected in the accompanying financial statements, the
Company had a deficit accumulated during the development stage
of $3,508 at February 28, 2011 and had a net loss of $400.00 and
cash used in operations of $400.00 for the interim period ended
February 28,2011,respectiveley with no revenues earned sicne
inception.
While the Company is attempting to commence operations
and generate revenues, the Company's cash position may
not be sufficient enough to support the Company's daily
operations without the financial support of our shareholders.
Management intends to raise additional funds by way of a
public or private offering. Management believes that the
actions presently being taken to further implement its
business plan and generate revenues provide the opportunity
for the Company to continue as a going concern. While the
Company believes in the viability of its strategy to generate
revenues and in its ability to raise additional funds, there can
be no assurances to that effect. The ability of the Company
to continue as a going concern is dependent upon the
Company's ability to further implement its business plan and
generate revenues.
The financial statements do not include any adjustments that
might be necessary if the Company is unable to continue as
a going concern.
Note 4 - Stockholder' Equity (Deficit)
The Company was incorporated on August 17, 2010 at which
time 100,000 shares of common stock were issued to the
Company's founders at $0.0001 per share or $10.00 for services
performed and for paid-in-capital in the amount of $3098.
During the six months ended February 28, 2011, the shareholders
contributed $400 for business expenses.
Note 5 - Related Party Transaction
The Company has been provided office space by its Chief
Executive Officer at no cost. The management determined
that such cost is nominal and did not recognize the rent
expense in its financial statements.
Note 6 - Subsequent Events
The Company has evaluated all events that occured after the
balance sheet date of February 28, 2011 through April 13,
2011, the date when the financial statements were issued to
determine if they must be reported. The Management of the
Company determined that there are no reportable subsequent
events to be disclosed.
F-9
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The following plan of operation provides information which
management believes is relevant to an assessment and
understanding of our results of operations and financial condition.
The discussion should be read along with our financial statements
and notes thereto. The following discussion and analysis contains
forward-looking statements, which involve risks and uncertainties.
Our actual results may differ significantly from the results,
expectations and plans discussed in these forward-looking statements.
Plan of Operation
We were organized as a vehicle to investigate and, if such investigation
warrants, acquire a target company or business seeking the perceived
advantages of being a publicly held corporation. Our principal business
objective for the next 12 months and beyond such time will be to achieve
long-term growth potential through a combination with a business rather than
immediate, short-term earnings. We will not restrict our potential candidate
target companies to any specific business, industry or geographical location
and, thus, may acquire any type of business.
We do not currently engage in any business activities that provide cash flow.
As of this date of this registration statement, the cash balance in our
treasury is zero dollars,($0).The costs of investigating and analyzing
business combinations for the next 12 months and beyond such time will be paid
with money in our treasury or with additional amounts, as necessary, to be
loaned to or invested in us by our stockholders, management or other investors.
During the next 12 months we anticipate incurring costs related to:
(i)
filing of Exchange Act reports,(legal,accounting and auditing fees)
in the amount of approximately Five Thousand Dollars, ($5,000.00) and
(ii)
consummating an acquisition in the amount of approximately Ten Thousand
Dollars, ($10,000.00) to pay for legal fees and audit fees.
The Company believes it will be able to meet the costs of filing Exchange Act
reports during the next 12 months through use of funds to be loaned to or
invested in us by our existing shareholders or other investors. If we enter
into a business combination with a target entity, we will require the target
company to pay the acquistion related fees and expenses as a condition
precedent to such an agreement. To date, we have had no discussions with our
shareholders or other investors regarding funding and we have no funding
commitment or written agreement for future expenses has been obtained. If our
existing shareholders do not loan to or invest sufficient funds in us, then
we will not be able to meet our SEC reporting obligations and will not be
able to attract a private company with which to combine. In the event that
our shareholders fail to provide us with ongoing financial support and
additional funding for our business operations, we may have to cease
operations.
We are in the development stage and have negative working capital, negative
stockholders' equity and have not earned any revenues from operations to
date. These conditions raise substantial doubt about our ability to continue
as a going concern. We are currently devoting its efforts to locating merger
candidates. Our ability to continue as a going concern is dependent upon our
ability to develop additional sources of capital, locate and complete a
merger with another company, and ultimately, achieve profitable operations.
We may consider a business which has recently commenced operations, is a
developing company in need of additional funds for expansion into new
products or markets, is seeking to develop a new product or service, or is an
established business which may be experiencing financial or operating
difficulties, may be in bankruptcy and is in need of additional capital. In the
alternative,a business combination may involve the acquisition of, or merger
with, a company which does not need substantial additional capital, but which
desires to establish a public trading market for its shares, while avoiding,
among other things, the time delays, significant expense, and loss of voting
control which may occur in a public offering.
Our sole officer and director Mr. Scot Scheer has not had any preliminary
contact or discussions with any representative of any other entity regarding
a business combination with us. Any target business that is selected may be a
financially unstable company, presently in or out of bankruptcy, or an entity
in its early stages of development or growth, including entities without
established records of sales or earnings. In that event, we will be subject
to numerous risks inherent in the business and operations of financially
unstable and early stage or potential emerging growth companies. In addition,
we may effect a business combination with an entity in an industry
characterized by a high level of risk, and, although our management(consisting
solely of Mr. Scheer at the present) will endeavor to evaluate the risks
inherent in a particular target business, there can be no assurance that we
will properly ascertain or assess all significant risks.
Our management anticipates that it will likely be able to effect only one
business combination, due primarily to our limited financing and the dilution
of interest for present and prospective stockholders, which is likely to occur
as a result of our management's plan to offer a controlling interest to a
target business in order to achieve a tax-free reorganization. This lack of
diversification should be considered a substantial risk in investing in us,
because it will not permit us to offset potential losses from one venture
against gains from another.
We anticipate that the selection of a business combination will be complex
and extremely risky. Because of general economic conditions, rapid
technological advances being made in some industries and shortages of
available capital, our management believes that there are numerous firms
seeking even the limited additional capital which we will have and/or the
perceived benefits of becoming a publicly traded corporation. Such perceived
benefits of becoming a publicly traded corporation include, among other
things, facilitating or improving the terms on which additional equity
financing may be obtained, providing liquidity for the principals of and
investors in a business, creating a means for providing incentive stock
options or similar benefits to key employees, and offering greater
flexibility in structuring acquisitions, joint ventures and the like through
the issuance of stock. Potentially available business combinations may occur
in many different industries and at various stages of development, all of
which will make the task of comparative investigation and analysis of such
business opportunities extremely difficult and complex.
1
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Results of Operation
We have not had any operating income since inception.For the
period ended February 28, 2011 we incurred a net loss of $400
and since inception we have incurred a net loss of $3,508.
Expenses from inception were comprised of costs mainly associated
with legal,franchise tax, accounting and office expense.
Liquidity and Capital Resources
At February 28, 2011, we had no capital resources and will rely upon
the issuance of common stock and additional capital contributions
from shareholders to fund administrative expenses pending acquisition
of an operating company. However, our shareholders are under no
obligation to provide such funding.
Management anticipates seeking out a target company through
solicitation. Such solicitation may include newspaper or magazine
advertisements, mailings and other distributions to law firms,
accounting firms, investment bankers, financial advisors and similar
persons, the use of one or more World Wide Web sites and similar
methods. No estimate can be made as to the number of persons who will
be contacted or solicited. Management may engage in such solicitation
directly or may employ one or more other entities to conduct or assist
in such solicitation. Management and its affiliates will pay referral
fees to consultants and others who refer target businesses for mergers
into public companies in which management and its affiliates have an
interest. Payments are made if a business combination occurs, and may
consist of cash or a portion of the stock in the Company retained by
management and its affiliates, or both.
As reflected in the accompanying financial statements, the Company is in
the development stage with no operations has a net loss of $3,508 from
inception, and used $400 cash in operations for the period from August 17,
2010(inception) through February 28, 2011. This raises substantial doubt
about its ability to continue as a going concern. The ability of the
Company to continue as a going concern is dependent on the Company's
ability to raise additional capital and implement its business plan.
The financial statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going concern.
Management believes that actions presently being taken to obtain
additional funding and implement its strategic plans provide the
opportunity for the Company to continue as a going concern
Scot Scheer will supervise the search for target companies as potential
candidates for a business combination. Scot Scheer and Lisa DeNunzio will
pay, at their own expense, any costs that incurs in supervising the search
for a target company. Scot Scheer may enter into agreements with other
consultants to assist in locating a target company and may share stock
received by it or cash resulting from the sale of its securities with such
other consultants. Scot Scheer, Lisa DeNunzio, and LMIC, Inc. controls us
and therefore have the authority to enter into any agreement binding us.
Scot Scheer as our sole officer, director and only shareholder can authorize
any such agreement binding us.
Critical Accounting Policies
We have identified the policies outlined below as critical to our business
operations and an understanding of our results of operations. The list is
not intended to be a comprehensive list of all of our accounting policies.
In many cases, the accounting treatment of a particular transaction is
specifically dictated by accounting principles generally accepted in the
United States, with no need for management's judgment in their application.
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Income Taxes
The Company follows Section 740-10-30 of the FASB Accounting Standards
Codification, which requires recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have
been included in the financial statements or tax returns. Under this method,
deferred tax assets and liabilities are based on the differences between the
financial statement and tax bases of assets and liabilities using enacted tax
rates in effect for the year in which the differences are expected to reverse.
Deferred tax assets are reduced by a valuation allowance to the extent
management concludes it is more likely than not that the assets will not be
realized. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in
the Statements of Operations in the period that includes the enactment date.
The Company adopted section 740-10-25 of the FASB Accounting Standards
Codification ("Section 740-10-25"). Section 740-10-25.addresses the
determination of whether tax benefits claimed or expected to be claimed on a
tax return should be recorded in the financial statements. Under Section
740-10-25, the Company may recognize the tax benefit from an uncertain tax
position only if it is more likely than not that the tax position will be
sustained on examination by the taxing authorities, based on the technical
merits of the position. The tax benefits recognized in the financial
statements from such a position should be measured based on the largest
benefit that has a greater than fifty percent (50%) likelihood of being
realized upon ultimate settlement. Section 740-10-25 also provides guidance
on de-recognition, classification, interest and penalties on income taxes,
and accounting in interim periods, and requires increased disclosures.
The Company had no material adjustments to its liabilities for unrecognized
income tax benefits according to the provisions of Section 740-10-25.
Recent Pronouncements
In January 2010, the FASB issued the FASB Accounting Standards
Update No. 2010-01 "Equity Topic 505 - Accounting for Distributions
to Shareholders with Components of Stock and Cash", which clarify
that the stock portion of a distribution to shareholders that allows them
to elect to receive cash or stock with a potential limitation on the total
amount of cash that all shareholders can elect to receive in the
aggregate is considered a share issuance that is reflected in EPS
prospectively and is not a stock dividend for purposes of
applying Topics 505 and 260 (Equity and Earnings Per Share ("EPS")).
Those distributions should be accounted for and included in EPS
calculations in accordance with paragraphs 480-10-25- 14 and
260-10-45-45 through 45-47 of the FASB Accounting Standards
codification. The amendments in this Update also provide a technical
correction to the Accounting Standards Codification. The correction
moves guidance that was previously included in the Overview and
Background Section to the definition of a stock dividend in the
Master Glossary. That guidance indicates that a stock dividend takes
nothing from the property of the corporation and adds nothing to the
interests of the stockholders. It also indicates that the proportional
interest of each shareholder remains the same, and is a key factor to
consider in determining whether a distribution is a stock dividend.
In January 2010, the FASB issued the FASB Accounting Standards
Update No. 2010-02 "Consolidation Topic 810 - Accounting and
Reporting for Decreases in Ownership of a Subsidiary - a Scope
Clarification", which provides amendments to Subtopic 810-10
and related guidance within U.S. GAAP to clarify that the scope of
the decrease in ownership provisions of the Subtopic and related
guidance applies to the following:
1. A subsidiary or group of assets that is a business or nonprofit
activity.
2. A subsidiary that is a business or nonprofit activity that is
transferred to an equity method investee or joint venture.
3. An exchange of a group of assets that constitutes a business
or nonprofit activity for a non-controlling interest in an entity
(including an equity method investee or joint venture).
The amendments in this Update also clarify that the decrease
in ownership guidance in Subtopic 810-10 does not apply to
the following transactions even if they involve businesses:
1. Sales of in substance real estate. Entities should apply the
sale of real estate guidance in Subtopics 360-20 (Property,
Plant, and Equipment) and 976-605 (Retail/Land) to such
transactions.
2. Conveyances of oil and gas mineral rights. Entities should
apply the mineral property conveyance and related transactions
guidance in Subtopic 932-360 (Oil and Gas-Property, Plant,
and Equipment) to such transactions.
If a decrease in ownership occurs in a subsidiary that is not a
business or nonprofit activity, an entity first needs to consider
whether the substance of the transaction causing the decrease
in ownership is addressed in other U.S. GAAP, such as
transfers of financial assets, revenue recognition, exchanges
of non-monetary assets, sales of in substance real estate, or
conveyances of oil and gas mineral rights, and apply that
guidance as applicable. If no other guidance exists, an entity
should apply the guidance in Subtopic 810-10.
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Management does not believe that any other recently issued,
but not yet effective accounting pronouncements, if adopted,
would have a material effect on the accompanying financial
statements.
Off Balance Sheet Transactions
None.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company, we are not required to provide the
information required by this item.
Item 4. Controls and Procedures
As of the end of the period covered by this report, we carried out
an evaluation, under the supervision and with the participation of
our sole executive officer, who is our principal executive officer
and principal financial and accounting officer, of the effectiveness
of the design and operation of our disclosure controls and procedures,
as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Based upon
that evaluation, our sole executive officer concluded that our
disclosure controls and procedures were effective as of the end of the
applicable period to ensure that the information required to be
disclosed by the Company in reports that it files or submits under the
Exchange Act (i) is recorded, processed, summarized, and reported
within the time periods specified in Securities and Exchange
Commission rules and forms and (ii) is accumulated and communicated
to our management, including our principal executive officer and
principal financial and accounting officer, as appropriate to allow
timely decisions regarding required disclosures.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting
during our most recent fiscal quarter that has materially affected, or
is reasonably likely to materially affect, our internal control over
financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
There have been no material developments during the quarter ended June 30,
2010 in any material pending legal proceedings to which the Company is a
party or of which any of our property is the subject.
Item 1A. Risk Factors
As a smaller reporting company, we are not required to provide the
information required by this Item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities.
None
Item 4. (Removed & Reserved).
Item 5. Other Information.
None
Item 6. Exhibits
(a) Exhibits filed herewith
31.1 Section 302 Certification by the Corporation's Principal Executive
Officer
31.2 Section 302 Certification by the Corporation's Principal Financial
and Accounting Officer
32.1 Section 906 Certification by the Corporation's Principal Executive
Officer and Principal Financial and Accounting Officer
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the registrant caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Signature Title Date
/s/ Scot A. Scheer
------------------ CEO and CFO April 13,2011