The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
NOTES TO FINANCIAL STATEMENTS
September 30, 2007 and 2006
NOTE A - ORGANIZATION AND DESCRIPTION OF BUSINESS
Marketing Acquisition Corporation (Company) was originally incorporated on July
26, 1990 in accordance with the Laws of the State of Florida as Marketing
Educational Corporation. The Company changed it's corporate name to Marketing
Acquisition Corporation on February 28, 2006.
On June 13, 2006, the Company changed its state of incorporation from Florida to
Nevada by means of a merger with and into a Nevada corporation formed on June 8,
2006 solely for the purpose of effecting the reincorporation. The Articles of
Incorporation and Bylaws of the Nevada corporation are the Articles of
Incorporation and Bylaws of the surviving corporation. Such Articles of
Incorporation kept the Company's new name of Marketing Acquisition Corporation
and modified the Company's capital structure to allow for the issuance of up to
100,000,000 shares of $0.001 par value common stock and up to 50,000,000 shares
of $0.001 par value preferred stock.
The Company was originally formed for the purpose of direct marketing of certain
educational materials and photography packages. The educational materials
marketed by the Company consisted of encyclopedias, learning books, educational
audio and video tapes which were designed to be combined in various combinations
to accommodate the educational levels and needs of families with children of all
ages. During the year ended December 31, 1992, the Company sold or otherwise
disposed of all assets and operations in order to settle then-outstanding
indebtedness.
Since December 31, 1992, the Company has had no operations, significant assets
or liabilities.
The Company's current business plan is to locate and combine with an existing,
privately-held company which is profitable or, in management's view, has growth
potential, irrespective of the industry in which it is engaged. However, the
Company does not intend to combine with a private company which may be deemed to
be an investment company subject to the Investment Company Act of 1940. A
combination may be structured as a merger, consolidation, exchange of the
Company's common stock for stock or assets or any other form which will result
in the combined enterprise's becoming a publicly-held corporation.
NOTE B - PREPARATION OF FINANCIAL STATEMENTS
The Company follows the accrual basis of accounting in accordance with
accounting principles generally accepted in the United States of America and has
a year-end of December 31.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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.
Management further acknowledges that it is solely responsible for adopting sound
accounting practices, establishing and maintaining a system of internal
accounting control and preventing and detecting fraud. The Company's system of
internal accounting control is designed to assure, among other items, that 1)
recorded transactions are valid; 2) valid transactions are recorded; and 3)
transactions are recorded in the proper period in a timely manner to produce
financial statements which present fairly the financial condition, results of
operations and cash flows of the Company for the respective periods being
presented
6
MARKETING ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2007 and 2006
NOTE B - PREPARATION OF FINANCIAL STATEMENTS - CONTINUED
During interim periods, the Company follows the accounting policies set forth in
its annual audited financial statements filed with the U. S. Securities and
Exchange Commission on its Annual Report on Form 10-KSB for the year ended
December 31, 2006. The information presented within these interim financial
statements may not include all disclosures required by generally accepted
accounting principles and the users of financial information provided for
interim periods should refer to the annual financial information and footnotes
when reviewing the interim financial results presented herein.
In the opinion of management, the accompanying interim financial statements,
prepared in accordance with the U. S. Securities and Exchange Commission's
instructions for Form 10-QSB, are unaudited and contain all material
adjustments, consisting only of normal recurring adjustments necessary to
present fairly the financial condition, results of operations and cash flows of
the Company for the respective interim periods presented. The current period
results of operations are not necessarily indicative of results which ultimately
will be reported for the full fiscal year ending December 31, 2007.
NOTE C - GOING CONCERN UNCERTAINTY
The Company was originally formed for the purpose of direct marketing of certain
educational materials and photography packages. This venture was unsuccessful
and all business operations were abandoned by December 31, 1992. Since December
31, 1992, the Company has had no operations, assets or liabilities. The
Company's current principal business activity is to seek a suitable reverse
acquisition candidate through acquisition, merger or other suitable business
combination method.
The Company's continued existence is dependent upon its ability to generate
sufficient cash flows from operations to support its daily operations as well as
provide sufficient resources to retire existing liabilities and obligations on a
timely basis.
The Company anticipates future sales of equity securities to facilitate either
the consummation of a business combination transaction or to raise working
capital to support and preserve the integrity of the corporate entity. However,
there is no assurance that the Company will be able to obtain additional funding
through the sales of additional equity securities or, that such funding, if
available, will be obtained on terms favorable to or affordable by the Company.
If no additional operating capital is received during the next twelve months,
the Company will be forced to rely on existing cash in the bank and upon
additional funds loaned by management and/or significant stockholders to
preserve the integrity of the corporate entity at this time. In the event, the
Company is unable to acquire advances from management and/or significant
stockholders, the Company's ongoing operations would be negatively impacted.
It is the intent of management and significant stockholders to provide
sufficient working capital necessary to support and preserve the integrity of
the corporate entity. However, no formal commitments or arrangements to advance
or loan funds to the Company or repay any such advances or loans exist. There is
no legal obligation for either management or significant stockholders to provide
additional future funding.
While the Company is of the opinion that good faith estimates of the Company's
ability to secure additional capital in the future to reach our goals have been
made, there is no guarantee that the Company will receive sufficient funding to
sustain operations or implement any future business plan steps.
7
MARKETING ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2007 and 2006
NOTE D - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Cash and cash equivalents
For Statement of Cash Flows purposes, the Company considers all cash on
hand and in banks, certificates of deposit and other highly-liquid
investments with maturities of three months or less, when purchased, to be
cash and cash equivalents.
2. Income Taxes
The Company uses the asset and liability method of accounting for income
taxes. At September 30, 2007 and 2006, respectively, the deferred tax asset
and deferred tax liability accounts, as recorded when material to the
financial statements, are entirely the result of temporary differences.
Temporary differences represent differences in the recognition of assets
and liabilities for tax and financial reporting purposes, primarily
accumulated depreciation and amortization, allowance for doubtful accounts
and vacation accruals.
As of September 30, 2007 and 2006, the deferred tax asset related to the
Company's net operating loss carryforward is fully reserved. Due to the
provisions of Internal Revenue Code Section 338, the Company may have no
net operating loss carryforwards available to offset financial statement or
tax return taxable income in future periods as a result of a change in
control involving 50 percentage points or more of the issued and
outstanding securities of the Company.
3. Earnings (loss) per share
Basic earnings (loss) per share is computed by dividing the net income
(loss) available to common stockholders by the weighted-average number of
common shares outstanding during the respective period presented in our
accompanying financial statements.
Fully diluted earnings (loss) per share is computed similar to basic income
(loss) per share except that the denominator is increased to include the
number of common stock equivalents (primarily outstanding options and
warrants).
Common stock equivalents represent the dilutive effect of the assumed
exercise of the outstanding stock options and warrants, using the treasury
stock method, at either the beginning of the respective period presented or
the date of issuance, whichever is later, and only if the common stock
equivalents are considered dilutive based upon the Company's net income
(loss) position at the calculation date.
At September 30, 2007 and 2006, and subsequent thereto, the Company had no
outstanding common stock equivalents.
4. Recent Accounting Pronouncements
The Company does not expect the adoption of recently issued accounting
pronouncements to have a significant impact on the Company's results of
operations, financial position or cash flows.
NOTE E - FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of cash, accounts receivable, accounts payable and notes
payable, as applicable, approximates fair value due to the short term nature of
these items and/or the current interest rates payable in relation to current
market conditions.
8
MARKETING ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2007 and 2006
NOTE E - FAIR VALUE OF FINANCIAL INSTRUMENTS - CONTINUED
Interest rate risk is the risk that the Company's earnings are subject to
fluctuations in interest rates on either investments or on debt and is fully
dependent upon the volatility of these rates. The Company does not use
derivative instruments to moderate its exposure to interest rate risk, if any.
Financial risk is the risk that the Company's earnings are subject to
fluctuations in interest rates or foreign exchange rates and are fully dependent
upon the volatility of these rates. The company does not use derivative
instruments to moderate its exposure to financial risk, if any.
NOTE F - NOTE PAYABLE TO STOCKHOLDER
During Calendar 2006, the Company executed a $20,000 Line of Credit Note Payable
with Glenn A. Little, the Company's former controlling stockholder to provide
funds necessary to support the corporate entity and comply with the periodic
reporting requirements of the Securities Exchange Act of 1934, as amended. This
note bears interest at 6.0% and matures in September 2008. Through September 30,
2007, Mr. Little has advanced $10,000 to the Company.
NOTE G - INCOME TAXES
The components of income tax (benefit) expense for each of the nine month
periods ended September 30, 2007 and 2006, are as follows:
Nine months Nine months
ended ended
September 30, September 30,
2007 2006
------- -------
Federal:
Current $ -- $ --
Deferred -- --
------- -------
-- --
------- -------
State:
Current -- --
Deferred -- --
------- -------
-- --
------- -------
Total $ -- $ --
======= =======
|
Concurrent with April 2004 and March 2007 changes in control, the Company has a
nominal net operating loss carryforward for income tax purposes. The amount and
availability of any future net operating loss carryforwards may be subject to
limitations set forth by the Internal Revenue Code. Factors such as the number
of shares ultimately issued within a three year look-back period; whether there
is a deemed more than 50 percent change in control; the applicable long-term tax
exempt bond rate; continuity of historical business; and subsequent income of
the Company all enter into the annual computation of allowable annual
utilization of the carryforwards.
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9
MARKETING ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2007 and 2006
NOTE G - INCOME TAXES - CONTINUED
The Company's income tax expense (benefit) for each of the six month periods
ended September 30, 2007 and 2006, respectively, differed from the statutory
federal rate of 34 percent as follows:
Nine months Nine months
ended ended
September 30, September 30,
2007 2006
------- -------
Statutory rate applied to income before income taxes $(4,400) $(4,700)
Increase (decrease) in income taxes resulting from:
State income taxes -- --
Other, including reserve for deferred tax asset
and application of net operating loss carryforward 4,400 4,700
------- -------
Income tax expense $ -- $ --
======= =======
|
Temporary differences, which consist principally of net operating loss
carryforwards, statutory deferrals of expenses for organizational costs and
statutory differences in the depreciable lives for property and equipment,
between the financial statement carrying amounts and tax bases of assets and
liabilities give rise to deferred tax assets and/or liabilities, as appropriate.
As of September 30, 2007 and 2006, respectively, after giving effect to the
March 2007 change in control, the deferred tax asset is as follows:
September 30, September 30,
2007 2006
------- -------
Deferred tax assets
Net operating loss carryforwards $ 2,500 $ --
Less valuation allowance (2,500) --
------- -------
Net Deferred Tax Asset $ -- $ --
======= =======
|
NOTE H - COMMON STOCK TRANSACTIONS
On June 13, 2006, the Company changed its state of incorporation from Florida to
Nevada by means of a merger with and into a Nevada corporation formed on June 8,
2006 solely for the purpose of effecting the reincorporation. The Articles of
Incorporation and Bylaws of the Nevada corporation are the Articles of
Incorporation and Bylaws of the surviving corporation. Such Articles of
Incorporation kept the Company's new name of Marketing Acquisition Corporation
and modified the Company's capital structure to allow for the issuance of up to
100,000,000 shares of $0.001 par value common stock and up to 50,000,000 shares
of $0.001 par value preferred stock.
On March 20, 2007, the Company entered into a Subscription Agreement (Agreement)
with Halter Financial Investments, L.P., a Texas limited partnership (HFI).
Other than in respect to this transaction, HFI had had no other material
relationship with the Company or any of the Company's then officers, directors
or affiliates or any associate of any such officer or director. Pursuant to the
Agreement, the Company sold to HFI 60,000,000 shares of its common stock at a
purchase price of $.001 per share. The Company relied upon Section 4(2) of the
Securities Act of 1933, as amended, for an exemption from registration of these
shares and no underwriter was used in this transaction. As a result of the
closing of this stock purchase transaction, HFI owns 71.4% of the total
outstanding shares of the Company's capital stock and 71.4% total voting power
of all outstanding voting securities.
On April 23, 2007, the Company's Board of Directors unanimously approved and
recommended that the stockholders approve, and the Company's Majority
Stockholder approved, an amendment to our Articles of Incorporation to effect a
reverse stock split of our issued and outstanding shares of common stock on a 1
for 48 share basis, with no stockholder being reversed to less than a round lot
of 100 shares with fractional shares rounded up to the nearest whole share:
10
MARKETING ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2007 and 2006
NOTE H - COMMON STOCK TRANSACTIONS - CONTINUED
Shares prior to Shares after
reverse split reverse split
------------- -------------
1 100
10 100
100 100
1,000 100
5,000 105
|
The effect of the reverse split reduced the total number of issued and
outstanding shares from 84,033,600 to 1,849,285 shares, after giving effect to
both the special provisions discussed above and the rounding for fractional
shares. The reverse stock split did not change the par value of our common stock
nor change the number of authorized shares of our common stock. The effect of
this action is reflected in the Company's financial statements as of the first
day of the first period presented.
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11
PART I - ITEM 2