UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-QSB
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(Mark one)
[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 2007
[ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from ______________ to _____________
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Commission File Number: 0-52072
Marketing Acquisition Corporation
(Exact name of small business issuer as specified in its charter)
Nevada 62-1299374
(State of incorporation) (IRS Employer ID Number)
12890 Hilltop Road, Argyle, Texas 76226
(Address of principal executive offices)
(972) 233-0300
(Issuer's telephone number)
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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 (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES [X] NO [ ]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act): YES [X] NO [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: April 27, 2007: 84,033,600
Transitional Small Business Disclosure Format (check one): YES [ ] NO [X]
MARKETING ACQUISITION CORPORATION
Form 10-QSB for the Quarter ended March 31, 2007
Table of Contents
Page
----
PART I - FINANCIAL INFORMATION
Item 1 Financial Statements 3
Item 2 Management's Discussion and Analysis or Plan of Operation 12
Item 3 Controls and Procedures 15
PART II - OTHER INFORMATION
Item 1 Legal Proceedings 15
Item 2 Recent Sales of Unregistered Securities and Use of Proceeds 15
Item 3 Defaults Upon Senior Securities 16
Item 4 Submission of Matters to a Vote of Security Holders 16
Item 5 Other Information 16
Item 6 Exhibits 16
SIGNATURES 16
2
PART I
ITEM 1 - FINANCIAL STATEMENTS
MARKETING ACQUISITION CORPORATION
BALANCE SHEETS
March 31, 2007 and 2006
(UNAUDITED)
March 31, March 31,
2007 2006
--------- ---------
ASSETS
CURRENT ASSETS
Cash on hand and in bank $ 61,267 $ 11,889
--------- ---------
TOTAL CURRENT ASSETS 61,267 11,889
--------- ---------
TOTAL ASSETS $ 61,267 $ 11,889
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES
CURRENT LIABILITIES
Accounts payable - trade $ -- $ --
Accrued interest payable to stockholder 388 --
--------- ---------
TOTAL CURRENT LIABILITIES 388 --
--------- ---------
LONG-TERM LIABILITIES
Note payable to stockholder 10,000 --
--------- ---------
TOTAL LIABILITIES 10,388 --
--------- ---------
TOTAL CURRENT LIABILITIES -- --
--------- ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock - $0.001 par value
50,000,000 shares authorized
None issued and outstanding -- --
Common stock - $0.001 par value
100,000,000 shares authorized
84,033,600 and 24,033,600 shares
issued and outstanding, respectively 84,034 24,034
Additional paid-in capital 459,930 459,930
Accumulated deficit (493,085) (472,075)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 50,879 11,889
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 61,267 $ 11,889
========= =========
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.
3
MARKETING ACQUISITION CORPORATION
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
Three months ended March 31, 2007 and 2006
(UNAUDITED)
Three months Three months
ended ended
March 31, March 31,
2007 2006
------------ ------------
REVENUES $ -- $ --
------------ ------------
EXPENSES
General and administrative expenses 5,543 203
------------ ------------
INCOME (LOSS) FROM OPERATIONS (5,543) (203)
OTHER INCOME (EXPENSE)
Interest expense (148) --
Interest income 51 105
------------ ------------
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES (5,640) (98)
PROVISION FOR INCOME TAXES -- --
------------ ------------
NET LOSS (5,640) (98)
OTHER COMPREHENSIVE INCOME -- --
------------ ------------
COMPREHENSIVE LOSS $ (5,640) $ (98)
============ ============
Earnings per share of common stock
outstanding computed on net loss -
basic and fully diluted nil nil
============ ============
Weighted-average number of shares
outstanding - basic and fully diluted 32,033,600 24,033,600
============ ============
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.
4
MARKETING ACQUISITION CORPORATION
STATEMENTS OF CASH FLOWS
Three months ended March 31, 2007 and 2006
(UNAUDITED)
Three months Three months
ended ended
March 31, March 31,
2007 2006
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) for the period $ (5,640) $ (98)
Adjustments to reconcile net loss to net cash
provided by operating activities
Depreciation and amortization -- --
Increase in Accrued interest payable 148 --
-------- --------
NET CASH USED IN OPERATING ACTIVITIES (5,492) (98)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES -- --
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash received from sale of common stock 60,000 --
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 60,000 --
-------- --------
INCREASE (DECREASE) IN CASH 54,508 (98)
Cash at beginning of period 6,759 11,987
-------- --------
CASH AT END OF PERIOD $ 61,267 $ 11,889
======== ========
SUPPLEMENTAL DISCLOSURE OF INTEREST AND INCOME TAXES PAID
Interest paid for the year $ -- $ --
======== ========
Income taxes paid for the year $ -- $ --
======== ========
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.
5
MARKETING ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
March 31, 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
March 31, 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
March 31, 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 March 31, 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 March 31, 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 March 31, 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
March 31, 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 March 31,
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 three month
periods ended March 31, 2007 and 2006, are as follows:
Three months Three months
ended ended
March 31, March 31,
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.
(Remainder of this page left blank intentionally)
9
MARKETING ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS - CONTINUED
March 31, 2007 and 2006
NOTE G - INCOME TAXES - CONTINUED
The Company's income tax expense (benefit) for each of the three month periods
ended March 31, 2007 and 2006, respectively, differed from the statutory federal
rate of 34 percent as follows:
Three months Three months
ended ended
March 31, March 31,
2007 2006
------- -------
Statutory rate applied to income before income taxes $(1,900) $ (30)
Increase (decrease) in income taxes resulting from:
State income taxes -- --
Other, including reserve for deferred tax asset
and application of net operating loss carryforward 1,900 30
------- -------
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 March 31, 2007 and 2006, respectively, after giving effect to the March
2007 change in control, the deferred tax asset is as follows:
March 31, March 31,
2007 2006
-------- --------
Deferred tax assets
Net operating loss carryforwards $ -- $ --
Less valuation allowance -- --
-------- --------
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.
10
MARKETING ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS - CONTINUED
March 31, 2007 and 2006
NOTE I - SUBSEQUENT EVENT
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. The
effect of the reverse split will reduce the number of issued and outstanding
shares from 84,033,600 to approximately 1,750,700 shares, thereby making the
Company be better positioned to effect our business strategy of entering into a
business combination with a private entity that has current business operations.
The reverse stock split, when implemented, will not change the par value of our
common stock nor change the number of authorized shares of our common stock.
Except for any changes as a result of the treatment of fractional shares,
following the reverse split, each stockholder who owns 48 or more shares will
hold the same percentage of common stock outstanding immediately following the
reverse stock split as such stockholder did immediately prior to the reverse
stock split.
(Remainder of this page left blank intentionally)
11
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
(1) CAUTION REGARDING FORWARD-LOOKING INFORMATION
Certain statements contained in this quarterly filing, including, without
limitation, statements containing the words "believes", "anticipates", "expects"
and words of similar import, constitute forward-looking statements. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the Company, or industry results, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements.
Such factors include, among others, the following: international, national and
local general economic and market conditions: demographic changes; the ability
of the Company to sustain, manage or forecast its growth; the ability of the
Company to successfully make and integrate acquisitions; raw material costs and
availability; new product development and introduction; existing government
regulations and changes in, or the failure to comply with, government
regulations; adverse publicity; competition; the loss of significant customers
or suppliers; fluctuations and difficulty in forecasting operating results;
changes in business strategy or development plans; business disruptions; the
ability to attract and retain qualified personnel; the ability to protect
technology; and other factors referenced in this and previous filings.
Given these uncertainties, readers of this Form 10-QSB and investors are
cautioned not to place undue reliance on such forward-looking statements. The
Company disclaims any obligation to update any such factors or to publicly
announce the result of any revisions to any of the forward-looking statements
contained herein to reflect future events or developments.
(2) GENERAL INFORMATION
The Company stopped filing periodic reports in compliance with the Securities
Exchange Act of 1934, as amended, during 1992. Due to the absence of certain
accounting records, it was impossible to complete required filings from that
point through the current date(s). On April 15, 2005, the Company filed a Form
10-SB in order to disclose the Issuer's current status. The U. S. Securities and
Exchange Commission (SEC), while acknowledging the intent of the filing, took
the position that filing was improper and the filing was withdrawn. The Company
then voluntarily requested a revocation of the registration and, on February 15,
2006, the SEC entered an order pursuant to Section 12(j) of the Exchange Act
revoking the registration of the Company's securities which revocation cancelled
the Company's filling obligations from previous periods. The Company has had no
operations since 1992 and, accordingly, may now be deemed to be a "BLANK CHECK"
or shell company, that is, either a development stage company that has no
specific business plan or purpose or a dormant or inactive company that has
indicated that its sole business plan is to engage in a merger or other
acquisition with an unidentified company or companies, or other entity or
person. On June 21, 2006, the Company filed a Registration Statement on Form
10-SB to re-register the eligible issued and outstanding shares of the Company's
common stock as issued by the Company. It is the current position of the SEC
that securities issued by a "SHELL" company cannot be sold under the exemption
from registration provided by Rule 144 promulgated under the Securities Act of
1933 (the "ACT"), but must be registered under the Act. Any other securities
issued to individuals in the capacity of management, affiliates, control persons
and promoters will also require registered with the SEC prior to resale and
shall be issued with appropriate restricted legend to reflect the registration
requirements.
The Company's current principal business activity is to seek a suitable reverse
acquisition candidate through acquisition, merger or other suitable business
combination method. As a "REPORTING COMPANY," the Company may be more attractive
to a private acquisition target because its common stock may thereby be quoted
on the OTC Bulletin Board. As a result of filing the June 21, 2006 Registration
Statement on Form 10-SB, the Company is obligated to file with the SEC certain
interim and periodic reports including an annual report containing audited
financial statements. The Company anticipates that it will continue to file such
reports as required under the Exchange Act. Shell corporations have zero or
nominal assets and typically no stated or contingent liabilities. Private
companies wishing to become publicly trading may wish to merge with a shell
corporation through a reverse merger or reverse acquisition transaction whereby
the stockholders of the private company become the majority of the stockholders
of the combined company. The private company may purchase for cash all or a
portion of the common shares of the shell corporation from its major
stockholders. Typically, the Board and officers of the private company become
the new Board and officers of the combined Company and often the name of the
private company becomes the name of the combined entity.
12
(3) RESULTS OF OPERATIONS
The Company had no revenue for either of the nine or three month periods ended
March 31, 2007 and 2006, respectively.
General and administrative expenses for each of the respective three month
periods ended March 31, 2007 and 2006 were nominal and were directly related to
the maintenance of the corporate entity and the preparation and filing of the
June 21, 2006 Form 10-SB and subsequent periodic reports pursuant to the
Securities Exchange Act of 1934. It is anticipated that future expenditure
levels will increase as the Company intends to fully comply with it's periodic
reporting requirements. Earnings per share for the respective three month
periods ended March 31, 2007 and 2006 were $0.00 and $0.00 based on the
weighted-average shares issued and outstanding at the end of each respective
period.
The Company does not expect to generate any meaningful revenue or incur
operating expenses for purposes other than fulfilling the obligations of a
reporting company under the Securities Exchange Act of 1934 unless and until
such time that the Company's operating subsidiary begins meaningful operations.
PLAN OF BUSINESS
GENERAL
The Company intends 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.
Pending negotiation and consummation of a combination, the Company anticipates
that it will have, aside from carrying on its search for a combination partner,
no business activities, and, thus, will have no source of revenue. Should the
Company incur any significant liabilities prior to a combination with a private
company, it may not be able to satisfy such liabilities as are incurred.
If the Company's management pursues one or more combination opportunities beyond
the preliminary negotiations stage and those negotiations are subsequently
terminated, it is foreseeable that such efforts will exhaust the Company's
ability to continue to seek such combination opportunities before any successful
combination can be consummated. In that event, the Company's common stock will
become worthless and holders of the Company's common stock will receive a
nominal distribution, if any, upon the Company's liquidation and dissolution.
COMBINATION SUITABILITY STANDARDS
In its pursuit for a combination partner, the Company's management intends to
consider only combination candidates which are profitable or, in management's
view, have growth potential. The Company's management does not intend to pursue
any combination proposal beyond the preliminary negotiation stage with any
combination candidate which does not furnish the Company with audited financial
statements for at least its most recent fiscal year and unaudited financial
statements for interim periods subsequent to the date of such audited financial
statements, or is in a position to provide such financial statements in a timely
manner. The Company will, if necessary funds are available, engage attorneys
and/or accountants in its efforts to investigate a combination candidate and to
consummate a business combination. The Company may require payment of fees by
such combination candidate to fund the investigation of such candidate. In the
event such a combination candidate is engaged in a high technology business, the
Company may also obtain reports from independent organizations of recognized
standing covering the technology being developed and/or used by the candidate.
The Company's limited financial resources may make the acquisition of such
reports difficult or even impossible to obtain and, thus, there can be no
assurance that the Company will have sufficient funds to obtain such reports
when considering combination proposals or candidates. To the extent the Company
is unable to obtain the advice or reports from experts, the risks of any
combined enterprise's being unsuccessful will be enhanced. Furthermore, to the
knowledge of the Company's officers and directors, neither the candidate nor any
of its directors, executive officers, principal stockholders or general
partners:
13
(1) will not have been convicted of securities fraud, mail fraud, tax
fraud, embezzlement, bribery, or a similar criminal offense involving
misappropriation or theft of funds, or be the subject of a pending
investigation or indictment involving any of those offenses;
(2) will not have been subject to a temporary or permanent injunction or
restraining order arising from unlawful transactions in securities,
whether as issuer, underwriter, broker, dealer, or investment advisor,
may be the subject of any pending investigation or a defendant in a
pending lawsuit arising from or based upon allegations of unlawful
transactions in securities; or
(3) will not have been a defendant in a civil action which resulted in a
final judgement against it or him awarding damages or rescission based
upon unlawful practices or sales of securities.
The Company's officers and directors will make these determinations by asking
pertinent questions of the management of prospective combination candidates.
Such persons will also ask pertinent questions of others who may be involved in
the combination proceedings. However, the officers and directors of the Company
will not generally take other steps to verify independently information obtained
in this manner which is favorable. Unless something comes to their attention
which puts them on notice of a possible disqualification which is being
concealed from them, such persons will rely on information received from the
management of the prospective combination candidate and from others who may be
involved in the combination proceedings.
(4) LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2007, the Company had working capital of approximately $60,900.
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 March 31,
2007, Mr. Little has advanced $10,000 to the Company.
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.
It is the belief of management and significant stockholders that sufficient
working capital necessary to support and preserve the integrity of the corporate
entity will be present. However, there is no legal obligation for either
management or significant stockholders to provide additional future funding.
Should this pledge fail to provide financing, the Company has not identified any
alternative sources. Consequently, there is substantial doubt about the
Company's ability to continue as a going concern.
The Company's need for working capital may change dramatically as a result of
any business acquisition or combination transaction. There can be no assurance
that the Company will identify any such business, product, technology or company
suitable for acquisition in the future. Further, there can be no assurance that
the Company would be successful in consummating any acquisition on favorable
terms or that it will be able to profitably manage the business, product,
technology or company it acquires.
The Company has no current plans, proposals, arrangements or understandings with
respect to the sale or issuance of additional securities prior to the location
of a merger or acquisition candidate. Accordingly, there can be no assurance
that sufficient funds will be available to the Company to allow it to cover the
expenses related to such activities.
Regardless of whether the Company's cash assets prove to be inadequate to meet
the Company's operational needs, the Company might seek to compensate providers
of services by issuances of stock in lieu of cash.
14
ITEM 3 - CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures that are designed
to ensure that information required to be disclosed in its Exchange Act
reports is recorded, processed, summarized and reported within the time
periods specified in the Security and Exchange Commission's rules and
forms, and that such information is accumulated and communicated to the
Company's management, including the Company's Chief Executive Officer and
Chief Accounting Officer, as appropriate, to allow timely decisions
regarding required disclosure. Management necessarily applied its judgment
in assessing the costs and benefits of such controls and procedures, which,
by their nature, can provide only reasonable assurance regarding
management's control objectives.
The Company carried out an evaluation, under the supervision and with the
participation of its management, including its Chief Executive Officer and
Chief Accounting Officer, on the effectiveness of the design and operation
of its disclosure controls and procedures pursuant to Exchange Act Rules
13a-15 and 15d-15 as of the end of the period covered by this report. Based
upon that evaluation, the Company's Chief Executive Officer and Chief
Accounting Officer concluded that the Company's disclosure controls and
procedures are effective in timely alerting them to information relating to
the Company required to be included in the Company's Exchange Act reports.
While the Company believes that its existing disclosure controls and
procedures have been effective to accomplish their objectives, the Company
intends to continue to examine, refine and document its disclosure controls
and procedures and to monitor ongoing developments in this area.
(b) Changes in Internal Controls
During the quarter ended March 31, 2007, there were no changes (including
corrective actions with regard to significant deficiencies or material
weaknesses) in the Company's internal control over financial reporting that
have materially affected, or are reasonably likely to materially affect,
the Company's internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
None
ITEM 2 - RECENT SALES OF UNREGISTERED SECURITIES AND USE OF PROCEEDS
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.
15
ITEM 3 - DEFAULTS ON SENIOR SECURITIES
None
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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. The
effect of the reverse split will reduce the number of issued and outstanding
shares from 84,033,600 to approximately 1,750,700 shares, thereby making the
Company be better positioned to effect our business strategy of entering into a
business combination with a private entity that has current business operations.
The reverse stock split, when implemented, will not change the par value of our
common stock nor change the number of authorized shares of our common stock.
Except for any changes as a result of the treatment of fractional shares,
following the reverse split, each stockholder who owns 48 or more shares will
hold the same percentage of common stock outstanding immediately following the
reverse stock split as such stockholder did immediately prior to the reverse
stock split.
ITEM 5 - OTHER INFORMATION
None
ITEM 6 - EXHIBITS
31.1 Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002
32.1 Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002
--------------------------------------------------------------------------------
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
MARKETING ACQUISITION CORPORATION
Dated: April 27, 2007 By: /s/ Timothy P. Halter
-------------- --------------------------------------
Timothy P. Halter
Chairman, Chief Executive Officer,
Chief Financial Officer and Director
16