UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-KSB
(Mark one)
[X] Annual Report Under Section 13 or 15(d) of The Securities Exchange Act of
1934
For the fiscal year ended December 31, 2007
[ ] Transition Report Under Section 13 or 15(d) of The Securities Exchange Act
of 1934
For the transition period from ______________ to _____________
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, TX 76226-4312
-----------------------------------------
(Address of principal executive offices)
(972) 233-0300
(Issuer's telephone number)
Securities registered under Section 12 (b) of the Exchange Act - None
Securities registered under Section 12(g) of the Exchange Act:
- Common Stock - $0.001 par value
Check whether the issuer has (1) filed all reports required to be files by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period the Company was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of Company's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act): Yes X No
The issuer's revenues for the fiscal year ended December 31, 2007 were $-0-.
The aggregate market value of voting common equity held by non-affiliates as of
February 5, 2008 was approximately $-0-, based on no trading activity and/or
posted quotations.
As of February 5, 2008, there were 1,853,207 shares of Common Stock issued and
outstanding.
Transitional Small Business Disclosure Format : Yes No X
----- -----
Marketing Acquisition Corporation
Index to Contents
Page Number
-----------
Part I
Item 1 Description of Business 3
Item 2 Description of Property 9
Item 3 Legal Proceedings 10
Item 4 Submission of Matters to a Vote of Security Holders 10
Part II
Item 5 Market for Company's Common Equity, Related Stockholders Matters
and Small Business Issuer Purchasers of Equity Securities 10
Item 6 Management's Discussion and Analysis or Plan of Operation 11
Item 7 Financial Statements F-1
Item 8 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 14
Item 8A Controls and Procedures 15
Part III
Item 9 Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act 15
Item 10 Executive Compensation 17
Item 11 Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters 18
Item 12 Certain Relationships and Related Transactions 18
Item 13 Exhibits 19
Item 14 Principal Accountant Fees and Services 19
Signatures F-12
2
Caution Regarding Forward-Looking Information
---------------------------------------------
Certain statements contained in this annual 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; existing government
regulations and changes in, or the failure to comply with, government
regulations; adverse publicity; competition; fluctuations and difficulty in
forecasting operating results; changes in business strategy or development
plans; business disruptions; the ability to attract and retain qualified
personnel; and other factors referenced in this and previous filings.
Given these uncertainties, readers of this Form 10-KSB 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.
PART I
Item 1 - Description of Business
General
-------
Marketing Acquisition Corporation (the "Company") was originally incorporated on
July 26, 1990 in accordance with the laws of the State of Florida as Marketing
Educational Corp.
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 used in various combinations to
accommodate the educational levels and needs of families with children of all
ages.
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 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.
During 1991, the Company completed a public offering of 150,000 units of common
stock, through a Registration Statement on Form S-18 (Registration
No.33-37039-A). Each unit consisted of one share of common Stock, one Class A
Common Stock Purchase Warrant and one Class B Common Stock Purchase Warrant.
Each Class A Common Stock Purchase Warrant entitled the holder thereof to
purchase two shares of Common Stock and each Class B Common Stock Purchase
Warrant entitled the holder to purchase one Share of Common Stock. It was
anticipated that the registration of the common stock underlying the Class A and
Class B Common Stock Purchase Warrants would generate working capital for the
Company. There was no exercise of any Class A or Class B Common Stock Purchase
Warrants. On August 5, 1992, pursuant to notice given to all Warrant holders (as
disclosed on a Current Report on Form 8-K filed August 12, 1992), the Company
gave a 30-day exercise period notice and notice to redeem all outstanding
warrants at a price of $0.0005 per Warrant. The Company realized no gross or net
proceeds as a result of this Registration Statement on Form S-18.
Effective at the close of business on September 30, 1992, as reported in a
Current Report on Form 8-K, filed October 7, 1992, the Company experienced a
change in management. As a result of this event, the Company effectively
liquidated all operations and assets and became a dormant entity at that point
in time. The Company suspended its reporting under the Securities Exchange Act
of 1934, as amended, due to a lack of operating capital.
Since September 30, 1992, the Company has had virtually no operations, assets or
liabilities.
3
On April 16 and April 27, 2004, the Company, in two separate transactions, sold
a total of 20,000,000 shares of restricted, unregistered common stock to Glenn
A. Little, pursuant to two separate subscription agreements for 10,000,000
shares each, for gross proceeds of $20,000. 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.
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 March 2005. On April 15, 2005, the Company filed a Form 10-SB in
order to disclose the Company'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 Company's common stock under Section 12 of the Securities
Exchange Act of 1934, as amended.
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 pre-reverse split shares
(1,250,000 post-reverse split shares) of its common stock at a purchase price of
$0.001 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.
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:
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 1,853,207 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.
Timothy P. Halter is an officer and member of Halter Financial Investments GP,
LLC, general partner of HFI. Mr. Halter currently serves as our president and
sole director.
Business Plan
-------------
Our current business plan is to seek and identify a privately-held operating
company desiring to become a publicly held company by combining with us through
a reverse merger or acquisition type transaction. Private companies wishing to
have their securities publicly traded may seek to merge or effect an exchange
transaction with a shell company with a significant stockholder base. As a
result of the merger or exchange transaction, the stockholders of the private
company will hold a majority of the issued and outstanding shares of the shell
company. Typically, the directors and officers of the private company become the
directors and officers of the shell company. Often the name of the private
company becomes the name of the shell company.
4
We have no capital and must depend on HFI to provide us with the necessary funds
to implement our business plan. We intend to seek opportunities demonstrating
the potential of long-term growth as opposed to short-term earnings. However, at
the present time, we have not identified any business opportunity that we plan
to pursue, nor have we reached any agreement or definitive understanding with
any person concerning an acquisition or merger.
Timothy P. Halter, our sole officer and director, will be primarily responsible
for investigating combination opportunities. However, we believe that business
opportunities may also come to our attention from various sources, including
HFI, professional advisors such as attorneys, and accountants, securities
broker-dealers, venture capitalists, members of the financial community, and
others who may present unsolicited proposals. We have no plan, understanding,
agreements, or commitments with any individual for such person to act as a
finder of opportunities for us.
No direct discussions regarding the possibility of a combination are currently
ongoing and we can give no assurances that we will be successful in finding or
acquiring a desirable business opportunity, given the limited funds that are
expected to be available to us for implementation of our business plan.
Furthermore, we can give no assurances that any acquisition, if it occurs, will
be on terms that are favorable to us or our current stockholders.
We do not propose to restrict our search for a candidate to any particular
geographical area or industry, and therefore, we are unable to predict the
nature of our future business operations. Our management's discretion in the
selection of business opportunities is unrestricted, subject to the availability
of such opportunities, economic conditions, and other factors.
Any entity which has an interest in being acquired by, or merging into us, is
expected to be an entity that desires to become a public company and establish a
public trading market for its securities. In connection with such a merger or
acquisition, it is anticipated that an amount of common stock constituting
control of us would be issued by us.
We do not foresee that we will enter into a merger or acquisition transaction
with any business with which HFI or Timothy P. Halter is currently affiliated.
Investigation and Selection of Business Opportunities
-----------------------------------------------------
Certain types of business acquisition transactions may be completed without
requiring us to first submit the transaction to our stockholders for their
approval. If the proposed transaction is structured in such a fashion our
stockholders (other than HFI our majority stockholder) will not be provided with
financial or other information relating to the candidate prior to the completion
of the transaction.
If a proposed business combination or business acquisition transaction is
structured that requires our stockholder approval, and we are a reporting
company, we will be required to provide our stockholders with information as
applicable under Regulations 14A and 14C under the Exchange Act.
The analysis of business opportunities will be undertaken by or under the
supervision of Timothy P. Halter, our president and sole director. In analyzing
potential merger candidates, our management will consider, among other things,
the following factors:
* Potential for future earnings and appreciation of value of securities;
* Perception of how any particular business opportunity will be received
by the investment community and by our stockholders;
* Eligibility of a candidate, following the business combination, to
qualify its securities for listing on a national exchange or on a
national automated securities quotation system, such as NASDAQ.
* Historical results of operation;
* Liquidity and availability of capital resources;
* Competitive position as compared to other companies of similar size
and experience within the industry segment as well as within the
industry as a whole;
* Strength and diversity of existing management or management prospects
that are scheduled for recruitment;
* Amount of debt and contingent liabilities; and
* The products and/or services and marketing concepts of the target
company.
There is no single factor that will be controlling in the selection of a
business opportunity. Our management will attempt to analyze all factors
appropriate to each opportunity and make a determination based upon reasonable
investigative measures and available data. Potentially available business
opportunities 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. Because
of our limited capital available for investigation and our dependence on one
5
person, Timothy P. Halter, we may not discover or adequately evaluate adverse
facts about the business opportunity to be acquired.
We are unable to predict when we may participate in a business opportunity. We
expect, however, that the analysis of specific proposals and the selection of a
business opportunity may take several months.
Prior to making a decision to participate in a business transaction, we will
generally request that we be provided with written materials regarding the
business opportunity containing as much relevant information as possible,
including, but not limited to, a description of products, services and company
history; management resumes; financial information; available projections, with
related assumptions upon which they are based; an explanation of proprietary
products and services; evidence of existing patents, trademarks, or service
marks, or rights thereto; present and proposed forms of compensation to
management; a description of transactions between such company and its
affiliates during the relevant periods; a description of present and required
facilities; an analysis of risks and competitive conditions; a financial plan of
operation and estimated capital requirements; audited financial statements, or
if audited financial statements are not available, unaudited financial
statements, together with reasonable assurance that audited financial statements
would be able to be produced to comply with the requirements of a Current Report
on Form 8-K to be filed with the Securities and Exchange Commission, or
Commission, upon consummation of the business combination.
We believe that various types of potential candidates might find a business
combination with us to be attractive. These include candidates desiring to
create a public market for their securities in order to enhance liquidity for
current stockholders, candidates which have long-term plans for raising capital
through public sale of securities and believe that the prior existence of a
public market for their securities would be beneficial, and candidates which
plan to acquire additional assets through issuance of securities rather than for
cash, and believe that the development of a public market for their securities
will be of assistance in that process. Companies, which have a need for an
immediate cash infusion, are not likely to find a potential business combination
with us to be a prudent business transaction alternative.
Employees
---------
The Company currently has no employees. Management of the Company expects to use
consultants, attorneys and accountants as necessary, and does not anticipate a
need to engage any full-time employees so long as it is seeking and evaluating
business opportunities. The need for employees and their availability will be
addressed in connection with the decision whether or not to acquire or
participate in specific business opportunities.
Risk Factors
------------
The Company's business and plan of operation is subject to numerous risk
factors, including, but not limited to, the following:
Limited Operating History Makes Potential Difficult to Assess
-------------------------------------------------------------
The Company has limited financial resources and no operating activities.
The Company will, in all likelihood, continue to sustain operating expenses
without corresponding revenues, at least until the consummation of a
business combination. This will most likely result in the Company incurring
a net operating loss which will increase continuously until the Company can
consummate a business combination with a target company. There is no
assurance that the Company can identify such a target company and
consummate such a business combination.
There Is No Agreement for a Business Combination and No Minimum Requirements for
a Business Combination
----------------------
The Company has no current arrangement, agreement or understanding with
respect to engaging in a business combination with a specific entity. There
can be no assurance that the Company will be successful in identifying and
evaluating suitable business opportunities or in concluding a business
combination. No particular industry or specific business within an industry
has been selected for a target company. The Company has not established a
specific length of operating history or a specified level of earnings,
assets, net worth or other criteria which it will require a target company
to have achieved, or without which the Company would not consider a
business combination with such business entity. Accordingly, the Company
may enter into a business combination with a business entity having no
significant operating history, losses, limited or no potential for
immediate earnings, limited assets, negative net worth or other negative
characteristics. There is no assurance that the Company will be able to
negotiate a business combination on terms favorable to the Company.
No Assurance of Success or Profitability
----------------------------------------
6
There is no assurance that the Company will acquire a favorable business
opportunity. Even if the Company should become involved in a business
opportunity, there is no assurance that it will generate revenues or
profits, or that the market price of the Company's outstanding shares will
be increased thereby.
Type of Business Acquired
-------------------------
The business to be acquired may wish to avoid effecting its own public
offering and the accompanying expense, delays, and uncertainties. Because
of the Company's limited capital, it is more likely than not that any
acquisition by the Company will involve other parties whose primary
interest is the acquisition of control of a publicly traded Company.
Moreover, any business opportunity acquired may be currently unprofitable
or present other negative factors.
Lack of Diversification
-----------------------
Because of the limited financial resources that the Company has, it is
unlikely that the Company will be able to diversify its acquisitions or
operations. The Company's probable inability to diversify its activities
into more than one area will subject the Company to economic fluctuations
within a particular business or industry and therefore increase the risks
associated with the Company's operations.
Dependence upon Management; Limited Participation of Management
---------------------------------------------------------------
Because management consists of only one person, while seeking a business
combination, Timothy P. Halter, the President of the Company, will be the
only person responsible in conducting the day-to-day operations of the
Company. The Company does not benefit from multiple judgments that a
greater number of directors or officers would provide, and the Company will
rely completely on the judgment of its one officer and director when
selecting a target company. Mr. Halter anticipates devoting only a limited
amount of time per month to the business of the Company. Mr. Halter has not
entered into a written employment agreement with the Company and he is not
expected to do so. The Company does not anticipate obtaining key man life
insurance on Mr. Halter. The loss of the services of Mr. Halter would
adversely affect development of the Company's business and its likelihood
of continuing operations.
Conflicts of Interest
---------------------
The Company's sole officer and director has other business interests to
which he currently devotes attention, and is expected to continue to do so.
As a result, conflicts of interest may arise that can be resolved only
through their exercise of judgment in a manner which is consistent with his
fiduciary duties to the Company.
It is anticipated that the Company's principal stockholder may actively
negotiate or otherwise consent to the purchase of a portion of their common
stock as a condition to, or in connection with, a proposed merger or
acquisition transaction. In this process, the Company's principal
stockholder may consider his own personal pecuniary benefit rather than the
best interest of other Company stockholders. Depending upon the nature of a
proposed transaction, Company stockholders other than the principal
stockholder may not be afforded the opportunity to approve or consent to a
particular transaction.
Possible Need for Additional Financing
--------------------------------------
The Company has very limited funds, and such funds, may not be adequate to
take advantage of any available business opportunities. Even if the
Company's currently available funds prove to be sufficient to pay for its
operations until it is able to acquire an interest in, or complete a
transaction with, a business opportunity, such funds will clearly not be
sufficient to enable it to exploit the opportunity. Thus, the ultimate
success of the Company will depend, in part, upon its availability to raise
additional capital. In the event that the Company requires modest amounts
of additional capital to fund its operations until it is able to complete a
business acquisition or transaction, such funds, are expected to be
provided by the principal stockholder. The Company has not investigated the
availability, source, or terms that might govern the acquisition of the
additional capital which is expected to be required in order to exploit a
business opportunity, and will not do so until it has determined the level
of need for such additional financing. There is no assurance that
additional capital will be available from any source or, if available, that
it can be obtained on terms acceptable to the Company. If not available,
the Company's operations will be limited to those that can be financed with
its modest capital.
Dependence Upon Outside Advisors
--------------------------------
To supplement the business experience of its officer and director, the
Company may be required to employ accountants, technical experts,
appraisers, attorneys, or other consultants or advisors. The selection of
7
any such advisors will be made by the Company's officer, without any input
by stockholders. Furthermore, it is anticipated that such persons may be
engaged on an as needed basis without a continuing fiduciary or other
obligation to the Company. In the event the officer of the Company
considers it necessary to hire outside advisors, he may elect to hire
persons who are affiliates, if those affiliates are able to provide the
required services.
Regulation of Penny Stocks
--------------------------
The U. S. Securities and Exchange Commission (SEC) has adopted a number of
rules to regulate "penny stocks." Such rules include Rule 3a51-1 and Rules
15g-1 through 15g-9 under the Securities Exchange Act of 1934, as amended.
Because the securities of the Company may constitute "penny stocks" within
the meaning of the rules (as any equity security that has a market price of
less than $5.00 per share or with an exercise price of less than $5.00 per
share, largely traded in the National Association of Securities Dealers'
(NASD) OTC Bulletin Board or the "Pink Sheets", the rules would apply to
the Company and to its securities. The Commission has adopted Rule 15g-9
which established sales practice requirements for certain low price
securities. Unless the transaction is exempt, it shall be unlawful for a
broker or dealer to sell a penny stock to, or to effect the purchase of a
penny stock by, any person unless prior to the transaction: (I) the broker
or dealer has approved the person's account for transactions in penny stock
pursuant to this rule and (ii) the broker or dealer has received from the
person a written agreement to the transaction setting forth the identity
and quantity of the penny stock to be purchased. In order to approve a
person's account for transactions in penny stock, the broker or dealer
must: (a) obtain from the person information concerning the person's
financial situation, investment experience, and investment objectives; (b)
reasonably determine that transactions in penny stock are suitable for that
person, and that the person has sufficient knowledge and experience in
financial matters that the person reasonably may be expected to be capable
of evaluating the risks of transactions in penny stock; (c) deliver to the
person a written statement setting forth the basis on which the broker or
dealer made the determination (I) stating in a highlighted format that it
is unlawful for the broker or dealer to affect a transaction in penny stock
unless the broker or dealer has received, prior to the transaction, a
written agreement to the transaction from the person; and (ii) stating in a
highlighted format immediately preceding the customer signature line that
(iii) the broker or dealer is required to provide the person with the
written statement; and (iv) the person should not sign and return the
written statement to the broker or dealer if it does not accurately reflect
the person's financial situation, investment experience, and investment
objectives; and (d) receive from the person a manually signed and dated
copy of the written statement. It is also required that disclosure be made
as to the risks of investing in penny stock and the commissions payable to
the broker-dealer, as well as current price quotations and the remedies and
rights available in cases of fraud in penny stock transactions. Statements,
on a monthly basis, must be sent to the investor listing recent prices for
the Penny Stock and information on the limited market. Stockholders should
be aware that, according to Securities and Exchange Commission Release No.
34-29093, the market for penny stocks has suffered in recent years from
patterns of fraud and abuse. Such patterns include (I) control of the
market for the security by one or a few broker-dealers that are often
related to the promoter or issuer; (ii) manipulation of prices through
prearranged matching of purchases and sales and false and misleading press
releases; (iii) "boiler room" practices involving high-pressure sales
tactics and unrealistic price projections by inexperienced sales persons;
(iv) excessive and undisclosed bid-ask differential and markups by selling
broker-dealers; and (v) the wholesale dumping of the same securities by
promoters and broker dealers after prices have been manipulated to a
desired level, along with the resulting inevitable collapse of those prices
and with consequent investor losses. The Company's management is aware of
the abuses that have occurred historically in the penny stock market.
Although the Company does not expect to be in a position to dictate the
behavior of the market or of broker-dealers who participate in the market,
management will strive within the confines of practical limitations to
prevent the described patterns from being established with respect to the
Company's securities.
There May Be a Scarcity of and/or Significant Competition for Business
Opportunities and Combinations
------------------------------
The Company is and will continue to be an insignificant participant in the
business of seeking mergers with and acquisitions of business entities. A
large number of established and well-financed entities, including venture
capital firms, are active in mergers and acquisitions of companies which
may be merger or acquisition target candidates for the Company. Nearly all
such entities have significantly greater financial resources, technical
expertise and managerial capabilities than the Company and, consequently,
the Company will be at a competitive disadvantage in identifying possible
business opportunities and successfully completing a business combination.
Moreover, the Company will also compete in seeking merger or acquisition
candidates with other public shell companies, some of which may also have
funds available for use by an acquisition candidate.
Reporting Requirements May Delay or Preclude Acquisition
--------------------------------------------------------
Pursuant to the requirements of Section 13 of the Exchange Act, the Company
is required to provide certain information about significant acquisitions
including audited financial statements of the acquired company. Obtaining
audited financial statements are the economic responsibility of the target
company. The additional time and costs that may be incurred by some
potential target companies to prepare such financial statements may
8
significantly delay or essentially preclude consummation of an otherwise
desirable acquisition by the Company. Acquisition prospects that do not
have or are unable to obtain the required audited statements may not be
appropriate for acquisition so long as the reporting requirements of the
Exchange Act are applicable. Notwithstanding a target company's agreement
to obtain audited financial statements within the required time frame, such
audited financials may not be available to the Company at the time of
effecting a business combination. In cases where audited financials are
unavailable, the Company will have to rely upon unaudited information that
has not been verified by outside auditors in making its decision to engage
in a transaction with the business entity. This risk increases the prospect
that a business combination with such a business entity might prove to be
an unfavorable one for the Company.
Lack of Market Research or Marketing Organization
-------------------------------------------------
The Company has neither conducted, nor have others made available to it,
market research indicating that demand exists for the transactions
contemplated by the Company. In the event demand exists for a transaction
of the type contemplated by the Company, there is no assurance the Company
will be successful in completing any such business combination.
Probable Change in Control of the Company and/or Management
-----------------------------------------------------------
In conjunction with completion of a business acquisition, it is anticipated
that the Company will issue an amount of the Company's authorized but
unissued common stock that represents the greater majority of the voting
power and equity of the Company, which will, in all likelihood, result in
stockholders of a target company obtaining a controlling interest in the
Company. The resulting change in control of the Company will likely result
in removal of the present officer and director of the Company and a
corresponding reduction in or elimination of his participation in the
future affairs of the Company.
Possible Dilution of Value of Shares upon Business Combination
--------------------------------------------------------------
A business combination normally will involve the issuance of a significant
number of additional shares. Depending upon the value of the assets
acquired in such business combination, the per share value of the Company's
common stock may increase or decrease, perhaps significantly.
Additional Risks--Doing Business in a Foreign Country
-----------------------------------------------------
The Company may effectuate a business combination with a merger target
whose business operations or even headquarters, place of formation or
primary place of business are located outside the United States of America.
In such event, the Company may face the significant additional risks
associated with doing business in that country. In addition to the language
barriers, different presentations of financial information, different
business practices, and other cultural differences and barriers that may
make it difficult to evaluate such a merger target, ongoing business risks
result from the international political situation, uncertain legal systems
and applications of law, prejudice against foreigners, corrupt practices,
uncertain economic policies and potential political and economic
instability that may be exacerbated in various foreign countries.
Taxation
--------
Federal and state tax consequences will, in all likelihood, be major
considerations in any business combination that the Company may undertake.
Currently, such transactions may be structured so as to result in tax-free
treatment to both companies, pursuant to various federal and state tax
provisions. The Company intends to structure any business combination so as
to minimize the federal and state tax consequences to both the Company and
the target entity; however, there can be no assurance that such business
combination will meet the statutory requirements of a tax-free
reorganization or that the parties will obtain the intended tax-free
treatment upon a transfer of stock or assets. A non-qualifying
reorganization could result in the imposition of both federal and state
taxes, which may have an adverse effect on both parties to the transaction.
Item 2 - Description of Property
The Company currently maintains a mailing address at 12890 Hilltop Road, Argyle,
Texas 76226. The Company's telephone number there is (972) 233-0300. Other than
this mailing address, the Company does not currently maintain any other office
facilities, and does not anticipate the need for maintaining office facilities
at any time in the foreseeable future. The Company pays no rent or other fees
for the use of the mailing address as these offices are used virtually full-
time by other businesses of the Company's sole officer and director.
9
It is likely that the Company will not establish an office until it has
completed a business acquisition transaction, but it is not possible to predict
what arrangements will actually be made with respect to future office
facilities.
Item 3 - Legal Proceedings
The Company is not a party to any pending legal proceedings, and no such
proceedings are known to be contemplated.
Item 4 - Submission of Matters to a Vote of Security Holders
The Company has not conducted any meetings of stockholders during the preceding
quarter or periods subsequent thereto.
PART II
Item 5 - Market for Company's Common Equity, Related Stockholder Matters and
Small Business Issuer Purchases of Equity Securities
Common Stock
The authorized capital stock of the Company consists of 100,000,000 shares of
common stock, par value $0.001 per share, of which there are 1,853,207 shares
issued and outstanding.
The following summarizes the important provisions of the Company's capital
stock: Holders of shares of common stock are entitled to one vote for each share
on all matters to be voted on by the stockholders; have no preemptive rights;
have no conversion or redemption rights or sinking fund; do not have cumulative
voting rights; and share ratably in dividends, if any, as may be declared from
time to time by the Board of Directors in its discretion from funds legally
available therefore. In the event of a liquidation, dissolution or winding up of
the company, the holders of common stock are entitled to share pro rata all
assets remaining after payment in full of all liabilities. All of the
outstanding shares of common stock are fully paid and non-assessable.
For more information about the Company's capital stock, please see the copy of
our Articles of Incorporation and By-Laws, which were filed, as exhibits to our
Registration Statement on Form 10-SB in June 2006.
Preferred Stock
The Company is also authorized to issue up to 50,000,000 shares of $0.001 par
value Preferred Stock and no shares are issued and outstanding as of the date of
this Report.
Market for Trading
The Company's securities are eligible for trading on the OTC Bulletin Board
under SEC Rule 15c2-11, Subsection (a)(5). The Company's trading symbol is MKAQ.
As of the date of this report, there have been no known trades of the Company's
securities.
Dividends
Dividends, if any, will be contingent upon the Company's revenues and earnings,
if any, and capital requirements and financial conditions. The payment of
dividends, if any, will be within the discretion of the Company's Board of
Directors. The Company presently intends to retain all earnings, if any, and
accordingly the Board of Directors does not anticipate declaring any dividends
prior to a business combination.
Transfer Agent
Our independent stock transfer agent is Securities Transfer Corporation, located
in Frisco, Texas. The mailing address and telephone number are: 2591 Dallas
Parkway, Suite 102, Frisco, Texas 75034; (469) 633-0101.
Reports to Stockholders
The Company plans to furnish its stockholders with an annual report for each
fiscal year ending December 31 containing financial statements audited by its
registered independent public accounting firm. In the event the Company enters
10
into a business combination with another Company, it is the present intention of
management to continue furnishing annual reports to stockholders. Additionally,
the Company may, in its sole discretion, issue unaudited quarterly or other
interim reports to its stockholders when it deems appropriate. The Company
intends to maintain compliance with the periodic reporting requirements of the
Securities Exchange Act of 1934.
Item 6 - Management's Discussion and Analysis or Plan of Operation
(1) Caution Regarding Forward-Looking Information
Certain statements contained in this annual 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; existing government
regulations and changes in, or the failure to comply with, government
regulations; adverse publicity; competition; fluctuations and difficulty in
forecasting operating results; changes in business strategy or development
plans; business disruptions; the ability to attract and retain qualified
personnel; and other factors referenced in this and previous filings.
Given these uncertainties, readers of this Form 10-KSB 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
Marketing Educational Corp. (Company) was originally incorporated on July 26,
1990 in accordance with the Laws of the State of Florida.
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 used in various combinations to
accommodate the educational levels and needs of families with children of all
ages.
Effective at the close of business on September 30, 1992, as reported on a Form
8-K, filed October 7, 1992, the Company experienced a change in management. As a
result of this event, the Company effectively liquidated all operations and
assets and became a dormant entity at that point. The Company suspended its
reporting under the Securities Exchange Act of 1934, as amended, due to a lack
of operating capital.
Since September 30, 1992, the Company has had virtually no operations, assets or
liabilities.
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 Company's common stock under Section 12 of the Securities
Exchange Act of 1934, as amended.
The Company's current principal business activity is to seek a suitable reverse
acquisition candidate through acquisition, merger or other suitable business
combination method.
11
(3) Results of Operations
The Company had no revenue for either of the years ended December 31, 2007 or
2006, respectively.
General and administrative expenses for each of the years ended December 31,
2007 and 2006 were approximately $13,700 and 15,600, respectively. These
expenses 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 years ended December 31, 2007 and 2006 were $(0.01) and
$(0.03), based on the adjusted post-reverse split weighted-average number of
shares issued and outstanding at the end of each respective period.
It is anticipated that expenditure levels until such time a business combination
transaction is consummated will approximate Calendar 2007 and 2006 levels. Upon
completion of a business combination transaction, it is anticipated that the
Company's expenses will increase significantly.
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.
(4) Plan of Business
General
The Company's current purpose is to seek, investigate and, if such
investigation warrants, merge or acquire an interest in business
opportunities presented to it by persons or companies who or which desire
to seek the perceived advantages of a Securities Exchange Act of 1934
registered corporation. As of the date of this registration statement, the
Company has no particular acquisitions in mind and has not entered into any
negotiations regarding such an acquisition, and neither the Company's
officer and director nor any promoter and affiliate has engaged in any
negotiations with any representatives of the owners of any business or
company regarding the possibility of a merger or acquisition between the
Company and such other company.
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.
Management
The Company is a blank check or shell corporation, and currently has no
full-time employees. Timothy P. Halter is the Company's sole officer,
director, and controlling shareholder. All references herein to management
of the Company are to Mr. Halter. Mr. Halter, as president of the Company,
has agreed to allocate a limited portion of his time to the activities of
the Company after the effective date of this Registration Statement without
compensation. Potential conflicts may arise with respect to the limited
time commitment by Mr. Halter and the potential demands of the Company's
activities.
The amount of time spent by Mr. Halter on the activities of the Company is
not predictable. Such time may vary widely from an extensive amount when
reviewing a target company to an essentially quiet time when activities of
management focus elsewhere, or some amount in between. It is impossible to
predict with any precision the exact amount of time Mr. Halter will
actually be required to spend to locate a suitable target company. Mr.
Halter estimates that the business plan of the Company can be implemented
by devoting less than 5 hours per month but such figure cannot be stated
with precision.
Search for Business Opportunities
12
The Company's search will be directed toward small and medium-sized
enterprises, which have a desire to become reporting corporations and which
are able to provide audited financial statements. The Company does not
propose to restrict its search for investment opportunities to any
particular geographical area or industry, and may, therefore, engage in
essentially any business, to the extent of its limited resources. The
Company's discretion in the selection of business opportunities is
unrestricted, subject to the availability of such opportunities, economic
conditions, and other factors. No assurance can be given that the Company
will be successful in finding or acquiring a desirable business
opportunity, and no assurance can be given that any acquisition, which does
occur, will be on terms that are favorable to the Company or its current
stockholders.
The Company may merge with a company that has retained one or more
consultants or outside advisors. In that situation, the Company expects
that the business opportunity will compensate the consultant or outside
advisor. As of the date of this filing, there have been no discussions,
agreements or understandings with any party regarding the possibility of a
merger or acquisition between the Company and such other company.
Consequently, the Company is unable to predict how the amount of such
compensation would be calculated at this time. It is anticipated that any
finder that the target company retains would be a registered broker-dealer.
The Company will not restrict its search to any specific kind of firm, but
may acquire a venture, which is in its preliminary or development stage,
one which is already in operation, or in a more mature stage of its
corporate existence. The acquired business may need to seek additional
capital, may desire to have its shares publicly traded, or may seek other
perceived advantages which the Company may offer. The Company does not
intend to obtain funds to finance the operation of any acquired business
opportunity until such time as the Company has successfully consummated the
merger or acquisition transaction. There are no loan arrangements or
arrangements for any financing whatsoever relating to any business
opportunities.
Evaluation of Business Opportunities
The analysis of business opportunities will be under the supervision of the
Company's sole officer and director, who is not a professional business
analyst. In analyzing prospective business opportunities, management will
consider such matters as available technical, financial and managerial
resources; working capital and other financial requirements; history of
operations, if any; prospects for the future; nature of present and
expected competition; the quality and experience of management services
which may be available and the depth of that management; the potential for
further research, development, or exploration; specific risk factors not
now foreseeable, but which then may be anticipated to impact the proposed
activities of the Company; the potential for growth or expansion; the
potential for profit; the perceived public recognition or acceptance of
products, services, or trades; name identification; and other relevant
factors. In many instances, it is anticipated that the historical
operations of a specific business opportunity may not necessarily be
indicative of the potential for the future because of a variety of factors,
including, but not limited to, the possible need to expand substantially,
shift marketing approaches, change product emphasis, change or
substantially augment management, raise capital and the like. Management
intends to meet personally with management and key personnel of the target
business entity as part of its investigation. To the extent possible, the
Company intends to utilize written reports and personal investigation to
evaluate the above factors. Prior to making a decision to participate in a
business opportunity, the Company will generally request that it be
provided with written materials regarding the business opportunity
containing as much relevant information as possible. Including, but not
limited to, such items as a description of products, services and company
history; management resumes; financial information; available projections,
with related assumptions upon which they are based; an explanation of
proprietary products and services; evidence of existing patents,
trademarks, or service marks, or rights thereto; present and proposed forms
of compensation to management; a description of transactions between such
company and its affiliates during the relevant periods; a description of
present and required facilities;, an analysis of risks and competitive
conditions; a financial plan of operation and estimated capital
requirements; audited financial statements, or if they are not available at
that time, unaudited financial statements, together with reasonable
assurance that audited financial statements would be able to be produced
within a required period of time; and the like.
The Company is currently subject to the reporting requirements of the
Exchange Act since the effective date of the Company's September 2006
filing of the Registration Statement on Form 10-SB. Under the Exchange Act,
any merger or acquisition candidate will become subject to the same
reporting requirements of the Exchange Act as the Company following
consummation of any merger or acquisition. Thus, in the event the Company
successfully completes the acquisition of or merger with an operating
business entity, that business entity must provide audited financial
statements for at least two most recent fiscal years or, in the event the
business entity has been in business for less than two years, audited
financial statements will be required from the period of inception.
Acquisition candidates that do not have or are unable to obtain the
required audited statements will not be considered appropriate for
acquisition.
Management believes that various types of potential merger or acquisition
candidates might find a business combination with the Company to be
attractive. These include acquisition candidates desiring to create a
13
public market for their shares in order to enhance liquidity for current
stockholders, acquisition candidates which have long-term plans for raising
capital through public sale of securities and believe that the possible
prior existence of a public market for their securities would be
beneficial, and acquisition candidates which plan to acquire additional
assets through issuance of securities rather than for cash, and believe
that the possibility of development of a public market for their securities
will be of assistance in that process. Acquisition candidates, who have a
need for an immediate cash infusion, are not likely to find a potential
business combination with the Company to be an attractive alternative.
Nevertheless, the Company has not conducted market research and is not
aware of statistical data which would support the perceived benefits of a
merger or acquisition transaction for the owners of a business opportunity.
The Company is unable to predict when it may participate in a business
opportunity. It expects, however, that the analysis of specific proposals
and the selection of a business opportunity may take several months or
more. There can also be no assurances that we are able to successfully
pursue a business opportunity. In that event, there is a substantial risk
to the Company that failure to complete a business combination will
significantly restrict its business operation and force management to cease
operations and liquidate the Company.
(5) Liquidity and Capital Resources
At December 31, 2007 and 2006, respectively, the Company had working capital of
$42,300 and $6,500, respectively.
The Company and its then-controlling stockholder, Glenn A. Little, have
acknowledged that outside funds may become necessary to support the corporate
entity and comply with the periodic reporting requirements of the Securities
Exchange Act of 1934, as amended. To this end, Mr. Little has agreed to lend the
Company up to $20,000 with a maturity period not to exceed two (2) years from
the initial funding date at an interest rate of 6.0% per annum. Through December
31, 2007, Mr. Little advanced an aggregate of $10,000 to the Company with a
maturity date of September 2008.
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 pre-reverse split shares
(1,250,000 post-reverse split shares) of its common stock at a purchase price of
$0.001 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.
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, 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.
Item 7 - Index to Financial Statements
The required financial statements begin on page F-1 of this document.
Item 8 - Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
14
Item 8A - Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management,
including our principal executive officer and principal financial officer,
we conducted an evaluation of our disclosure controls and procedures, as
such term is defined under Rule 13a-15(e) promulgated under the Securities
Exchange Act of 1934, as amended (Exchange Act), as of December 31, 2007.
Based on this evaluation, our principal executive officer and principal
financial officer concluded that our disclosure controls and procedures are
effective in alerting them on a timely basis to material information
relating to our Company required to be included in our reports filed or
submitted under the Exchange Act.
(b) Changes in Internal Controls
There were no significant changes (including corrective actions with regard
to significant deficiencies or material weaknesses) in our internal
controls over financial reporting that occurred during the quarter ended
December 31, 2007 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
PART III
Item 9 - Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act
The directors and executive officers serving the Company are as follows:
Name Age Position Held and Tenure
---- --- ------------------------
Timothy P. Halter 41 President, Chief Executive Officer
Chief Financial Officer and Director
The director named above will serve until the next annual meeting of the
Company's stockholders or until any successors are duly elected and have
qualified. Directors will be elected for one-year terms at the annual
stockholders meeting. Officers will hold their positions at the pleasure of the
board of directors, absent any employment agreement, of which none currently
exists or is contemplated. There is no arrangement or understanding between any
of the directors or officers of the Company and any other person pursuant to
which any director or officer was or is to be selected as a director or officer,
and there is no arrangement, plan or understanding as to whether non-management
stockholders will exercise their voting rights to continue to elect the current
directors to the Company's board. There are also no arrangements, agreements or
understandings between non-management stockholders that may directly or
indirectly participate in or influence the management of the Company's affairs.
The sole director and officer will devote his time to the Company's affairs on
an as needed basis, which, depending on the circumstances, could amount to as
little as two hours per month, or more than forty hours per month, but more than
likely encompass less than four (4) hours per month. There are no agreements or
understandings for the officer or director to resign at the request of another
person, and he is not acting on behalf of, and will not act at the direction of,
any other person.
Biographical Information
Timothy P. Halter
-----------------
Since 1995, Mr. Halter has been the president and the sole stockholder of Halter
Financial Group, Inc., a Dallas, Texas based consulting firm specializing in the
area of mergers, acquisitions and corporate finance. In September 2005, Mr.
Halter and other minority partners formed HFI. HFI conducts no business
operations.
Mr. Halter currently serves as a director of DXP Enterprises, Inc., a public
corporation (NASDAQ: DXPE), and is an officer and director of Nevstar
Corporation, a Nevada corporation; BTHC VIII, Inc., BTHC X, Inc., BTHC XIV,
Inc., and BTHC XV, Inc., each a Delaware corporation. Each of the
afore-referenced companies is current in the filing of their periodic reports
with the SEC. Except for DXP Enterprises, each of the afore-referenced companies
for which Mr. Halter acts as an officer and director may be deemed shell
corporations. Mr. Halter will devote as much of his time to our business affairs
as may be necessary to implement our business plan.
15
Indemnification of Officers and Directors.
We have the authority under the Nevada General Corporation Law to indemnify our
directors and officers to the extent provided for in such statute. Set forth
below is a discussion of Nevada law regarding indemnification which we believe
discloses the material aspects of such law on this subject. The Nevada law
provides, in part, that a corporation may indemnify a director or officer or
other person who was, is or is threatened to be made a named defendant or
respondent in a proceeding because such person is or was a director, officer,
employee or agent of the corporation, if it is determined that such person:
* conducted himself in good faith;
* reasonably believed, in the case of conduct in his official capacity
as a director or officer of the corporation, that his conduct was in
the corporation's best interest and, in all other cases, that his
conduct was at least not opposed to the corporation's best interests;
and
* in the case of any criminal proceeding, had no reasonable cause to
believe that his conduct was unlawful.
A corporation may indemnify a person under the Nevada law against judgments,
penalties, including excise and similar taxes, fines, settlement, unreasonable
expenses actually incurred by the person in connection with the proceeding. If
the person is found liable to the corporation or is found liable on the basis
that personal benefit was improperly received by the person, the indemnification
is limited to reasonable expenses actually incurred by the person in connection
with the proceeding, and shall not be made in respect of any proceeding in which
the person shall have been found liable for willful or intentional misconduct in
the performance of his duty to the corporation. The corporation may also pay or
reimburse expenses incurred by a person in connection with his appearance as
witness or other participation in a proceeding at a time when he is not a named
defendant or respondent in the proceeding.
Our Articles of Incorporation provides that none of our directors shall be
personally liable to us or our stockholders for monetary damages for an act or
omission in such directors' capacity as a director; provided, however, that the
liability of such director is not limited to the extent that such director is
found liable for (a) a breach of the directors' duty of loyalty to us or our
stockholders, (b) an act or omission not in good faith that constitutes a breach
of duty of the director to us or an act or omission that involves intentional
misconduct or a knowing violation of the law, (c) a transaction from which the
director received an improper benefit, whether or not the benefit resulted from
an action taken within the scope of the director's office, or (d) an act or
omission for which the liability of the director is expressly provided under
Nevada law. Limitations on liability provided for in our Articles of
Incorporation do not restrict the availability of non-monetary remedies and do
not affect a director's responsibility under any other law, such as the federal
securities laws or state or federal environmental laws.
We believe that these provisions will assist us in attracting and retaining
qualified individuals to serve as executive officers and directors. The
inclusion of these provisions in our Articles of Incorporation may have the
effect of reducing a likelihood of derivative litigation against our directors
and may discourage or deter stockholders or management from bringing a lawsuit
against directors for breach of their duty of case, even though such an action,
if successful, might otherwise have benefitted us or our stockholders.
Our Bylaws provide that we will indemnify our directors to the fullest extent
provided by Nevada General Corporation Law and we may, if and to the extent
authorized by our board of directors, so indemnify our officers and other
persons whom we have the power to indemnify against liability, reasonable
expense or other matters.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities is
asserted by such director, officer, or controlling person in connection with the
securities being registered, we will (unless in the opinion of our counsel the
matter has been settled by controlling precedent) submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
Compliance With Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act requires our executive officers and
directors and person who own more than 10% of our common stock to file reports
regarding ownership of and transactions in our securities with the Securities
and Exchange Commissioner and to provide us with copies of those filings. Based
solely on our review of the copies received by or a written representation from
certain reporting persons we believe that during fiscal year ended December 31,
2007, we believe that all eligible persons are in compliance with the
requirements of Section 16(a).
16
Conflicts of Interest
The sole officer of the Company will not devote more than a small portion of his
time to the affairs of the Company. There will be occasions when the time
requirements of the Company's business conflict with the demands of the
officer's other business and investment activities. Such conflicts may require
that the Company attempt to employ additional personnel. There is no assurance
that the services of such persons will be available or that they can be obtained
upon terms favorable to the Company.
The officer, director and principal stockholder of the Company may actively
negotiate for the purchase of a portion of their common stock as a condition to,
or in connection with, a proposed merger or acquisition transaction. It is
anticipated that a substantial premium may be paid by the purchaser in
conjunction with any sale of shares by the Company's officer, director and
principal stockholder made as a condition to, or in connection with, a proposed
merger or acquisition transaction. The fact that a substantial premium may be
paid to the Company's sole officer and director to acquire his shares creates a
conflict of interest for him and may compromise his state law fiduciary duties
to the Company's other stockholders. In making any such sale, the Company's sole
officer and director may consider his own personal pecuniary benefit rather than
the best interests of the Company and the Company's other stockholders, and the
other stockholders are not expected to be afforded the opportunity to approve or
consent to any particular buy-out transaction involving shares held by Company
management.
The Company has adopted a policy under which any consulting or finders fee that
may be paid to a third party for consulting services to assist management in
evaluating a prospective business opportunity would be paid in stock rather than
in cash. Any such issuance of stock would be made on an ad hoc basis.
Accordingly, the Company is unable to predict whether, or in what amount, such
stock issuance might be made.
It is not currently anticipated that any salary, consulting fee, or finders fee
shall be paid to any of the Company's directors or executive officers, or to any
other affiliate of the Company except as described under Executive Compensation
above.
Although management has no current plans to cause the Company to do so, it is
possible that the Company may enter into an agreement with an acquisition
candidate requiring the sale of all or a portion of the Common Stock held by the
Company's current stockholders to the acquisition candidate or principals
thereof, or to other individuals or business entities, or requiring some other
form of payment to the Company's current stockholders, or requiring the future
employment of specified officers and payment of salaries to them. It is more
likely than not that any sale of securities by the Company's current
stockholders to an acquisition candidate would be at a price substantially
higher than that originally paid by such stockholders. Any payment to current
stockholders in the context of an acquisition involving the Company would be
determined entirely by the largely unforeseeable terms of a future agreement
with an unidentified business entity.
Involvement on Certain Material Legal Proceedings During the Past Five (5) Years
(1) No director, officer, significant employee or consultant has been
convicted in a criminal proceeding, exclusive of traffic violations or
is subject to any pending criminal proceeding.
(2) No bankruptcy petitions have been filed by or against any business or
property of any director, officer, significant employee or consultant
of the Company nor has any bankruptcy petition been filed against a
partnership or business association where these persons were general
partners or executive officers.
(3) No director, officer, significant employee or consultant has been
permanently or temporarily enjoined, barred, suspended or otherwise
limited from involvement in any type of business, securities or
banking activities.
(4) No director, officer or significant employee has been convicted of
violating a federal or state securities or commodities law.
Item 10 - Executive Compensation
The current management and oversight of the Company requires less than four (4)
hours per month. As the Company's sole officer and director is engaged in other
full-time income producing activities, the Company's sole officer or director
has received any compensation from the Company. In future periods, subsequent to
the consummation of a business combination transaction, the Company anticipates
that it will pay compensation to its officer(s) and/or director(s).
17
SUMMARY COMPENSATION TABLE
Change in
Pension
Value and
Nonqualified
Non-Equity Deferred
Name and Stock Option Incentive Plan Compensation All Other
Principal Awards Awards Compensation Earnings Compensation Total
Position Year Salary($) Bonus($) ($) ($) ($) ($) ($) ($)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Timothy P. 2007 $-0- $-0- $-0- $-0- $-0- $-0- $-0- $-0-
Halter, 2006 $-0- $-0- $-0- $-0- $-0- $-0- $-0- $-0-
Principal 2005 $-0- $-0- $-0- $-0- $-0- $-0- $-0- $-0-
Executive
Officer
Glenn A. 2007 $-0- $-0- $-0- $-0- $-0- $-0- $-0- $-0-
Little, Former 2006 $-0- $-0- $-0- $-0- $-0- $-0- $-0- $-0-
Principal 2005 $-0- $-0- $-0- $-0- $-0- $-0- $-0- $-0-
Executive
Officer
The Company has no other Executive Compensation issues which would require the
inclusion of other mandated table disclosures.
Item 11 - Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of the date of this Annual Report, the number
of shares of Common Stock owned of record and beneficially by executive
officers, directors and persons who hold 5% or more of the outstanding Common
Stock of the Company. Also included are the shares held by all executive
officers and directors as a group.
% of Class
Name and address Number of Shares Beneficially Owned
---------------- ---------------- ------------------
Halter Financial Investments, L. P. 1,250,000 67.45%
12890 Hilltop Road
Argyle, TX 76226-4312
Glenn A. Little 416,668 22.48%
211 West Wall
Midland, Texas 79701
All Directors and 1,250,000 67.45%
Executive Officers (1 person)
Timothy P. Halter is an officer and member of Halter Financial Investments GP,
LLC, general partner of HFI. Mr. Halter currently serves as our president and
sole director.
Item 12 - Certain Relationships and Related Transactions
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 pre-reverse split shares
(1,250,000 post-reverse split shares) of its common stock at a purchase price of
$0.001 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 67.59% of the total outstanding shares of
the Company's capital stock and 67,59% total voting power of all outstanding
voting securities.
18
The Company currently maintains a mailing address at 12890 Hilltop Road, Argyle,
Texas 76226. The Company's telephone number there is (972) 233-0300. Other than
this mailing address, the Company does not currently maintain any other office
facilities, and does not anticipate the need for maintaining office facilities
at any time in the foreseeable future. The Company pays no rent or other fees
for the use of the mailing address as these offices are used virtually full-
time by other businesses of the Company's sole officer and director.
Item 13 - Exhibits
Exhibit
Number
3i.1 Articles of Incorporation (*)
3i.2 Articles of Merger (*)
3.2 By-Laws (*)
4.1 Specimen of Certificate of Common Stock (**)
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.
(*) - Incorporated by reference to the Company's Registration Statement on Form
10-SB (File No. 0-52072) on June 21, 2006.
(**) - Incorporated by reference to the Company's Registration Statement on Form
S-18 (File No. 0-19276) on March 26, 1991
Item 14 - Principal Accountant Fees and Services
The Company paid or accrued the following fees in each of the prior two fiscal
years to it's principal accountant, S. W. Hatfield, CPA of Dallas, Texas.
Year ended Year ended
December 31, December 31,
2007 2006
------- -------
1. Audit fees $5,975 $4,144
2. Audit-related fees -- --
3. Tax fees -- --
4. All other fees -- --
------- -------
Totals $5,975 $4,144
======= =======
We have considered whether the provision of any non-audit services, currently or
in the future, is compatible with S. W. Hatfield, CPA maintaining its
independence and have determined that these services do not compromise their
independence.
Financial Information System Design and Implementation: S. W. Hatfield, CPA did
not charge the Company any fees for financial information system design and
implementation fees.
The Company has no formal audit committee. However, the entire Board of
Directors (Board) is the Company's defacto audit committee. In discharging its
oversight responsibility as to the audit process, the Board obtained from the
independent auditors a formal written statement describing all relationships
between the auditors and the Company that might bear on the auditors'
independence as required by Independence Standards Board Standard No. 1,
"Independence Discussions with Audit Committees." The Board discussed with the
auditors any relationships that may impact their objectivity and independence,
including fees for non-audit services, and satisfied itself as to the auditors'
independence. The Board also discussed with management, the internal auditors
and the independent auditors the quality and adequacy of the Company's internal
controls.
The Company's principal accountant, S. W. Hatfield, CPA, did not engage any
other persons or firms other than the principal accountant's full-time,
permanent employees.
Financial Statements follow on Page F-1
19
Marketing Acquisition Corporation
Contents
Page
----
Report of Registered Independent Certified Public Accounting Firm F-2
Financial Statements
Balance Sheets
as of December 31, 2007 and 2006 F-3
Statements of Operations and Comprehensive Loss
for the years ended December 31, 2007 and 2006 F-4
Statement of Changes in Shareholders' Equity
for the years ended December 31, 2007 and 2006 F-5
Statements of Cash Flows
for the years ended December 31, 2007 and 2006 F-6
Notes to Financial Statements F-7
F-1
Letterhead of S. W. Hatfield, CPA
---------------------------------
Report of Registered Independent Certified Public Accounting Firm
-----------------------------------------------------------------
Board of Directors and Stockholders
Marketing Acquisition Corporation
We have audited the accompanying balance sheets of Marketing Acquisition
Corporation (a Nevada corporation) as of December 31, 2007 and 2006 and the
related statements of operations and comprehensive loss, changes in
shareholders' equity (deficit) and cash flows for the each of the two years
ended December 31, 2007 and 2006, respectively. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Marketing Acquisition
Corporation as of December 31, 2007 and 2006 and the results of its operations
and its cash flows for the each of the two years ended December 31, 2007 and
2006, respectively, in conformity with generally accepted accounting principles
generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note C to the
financial statements, the Company has no viable operations or significant assets
and is dependent upon significant shareholders to provide sufficient working
capital to maintain the integrity of the corporate entity. These circumstances
create substantial doubt about the Company's ability to continue as a going
concern and are discussed in Note C. The financial statements do not contain any
adjustments that might result from the outcome of these uncertainties.
/s/ S. W. Hatfield, CPA
--------------------------
S. W. HATFIELD, CPA
Dallas, Texas
February 5, 2008
F-2
Marketing Acquisition Corporation
Balance Sheets
December 31, 2007 and 2006
December 31, December 31,
2007 2006
--------- ---------
ASSETS
Current Assets
Cash on hand and in bank $ 53,127 $ 6,759
--------- ---------
Total Current Assets 53,127 6,759
--------- ---------
Total Assets $ 53,127 $ 6,759
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Liabilities
Current Liabilities
Accounts payable - trade $ -- $ --
Note payable to stockholder 10,000 --
Accrued interest payable to stockholder 840 240
--------- ---------
Total Current Liabilities 10,840 240
--------- ---------
Long-Term Liabilities
Note payable to stockholder -- 10,000
--------- ---------
Total Liabilities 10,840 10,240
--------- ---------
Commitments and Contingencies
Shareholders' 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.
1,853,207 and 603,207 shares
issued and outstanding, respectively 1,853 603
Additional paid-in capital 542,111 483,361
Accumulated deficit (501,677) (487,445)
--------- ---------
Total Shareholders' Equity (Deficit) 42,287 (3,481)
--------- ---------
Total Liabilities and Shareholders' Equity $ 53,127 $ 6,759
========= =========
The accompanying notes are an integral part of these financial statements.
F-3
Marketing Acquisition Corporation
Statements of Operations and Comprehensive Loss
Years ended December 31, 2007 and 2006
Year ended Year ended
December 31, December 31,
2007 2006
----------- -----------
Revenues $ -- $ --
----------- -----------
Expenses
General and administrative expenses 13,683 15,562
----------- -----------
Income (Loss) from operations (13,683) (15,562)
Other Income (Expense)
Interest expense (600) (240)
Interest income 51 334
----------- -----------
Income (Loss) before provision for income taxes (14,232) (15,468)
Provision for income taxes -- --
----------- -----------
Net Loss (14,232) (15,468)
Other Comprehensive Income -- --
----------- -----------
Comprehensive Loss $ (14,232) $ (15,468)
=========== ===========
Earnings per share of common stock
outstanding computed on net loss -
basic and fully diluted $ (0.01) $ (0.03)
=========== ===========
Weighted-average number of shares
outstanding - basic and fully diluted 1,586,084 603,207
=========== ===========
The accompanying notes are an integral part of these financial statements.
F-4
Marketing Acquisition Corporation
Statement of Changes in Shareholders' Equity
Years ended December 31, 2007 and 2006
Common Stock Additional
------------ paid-in Accumulated
Shares Amount capital deficit Total
----------- ----------- ----------- ----------- -----------
Balances at
January 1, 2006 24,033,600 $ 24,034 $ 459,930 $ (471,977) $ 11,987
Effect of April 23, 2007
reverse stock split (23,430,393) (23,431) 23,431 -- --
----------- ----------- ----------- ----------- -----------
Balances at
January 1, 2006,
as adjusted 603,207 603 483,361 (471,977) 11,987
Net loss for the year -- -- -- (15,468) (15,468)
----------- ----------- ----------- ----------- -----------
Balances at
December 31, 2006 603,207 603 483,361 (487,445) (3,481)
Sale of common stock 1,250,000 1,250 58,750 -- 60,000
Net loss for the year -- -- -- (14,232) (14,232)
----------- ----------- ----------- ----------- -----------
Balances at
December 31, 2007 1,853,207 $ 1,853 $ 542,111 $ (501,677) $ 42,287
=========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements.
F-5
Marketing Acquisition Corporation
Statements of Cash Flows
Years ended December 31, 2007 and 2006
Year ended Year ended
December 31, December 31,
2007 2006
-------- --------
Cash Flows from Operating Activities
Net income (loss) for the period $(14,232) $(15,468)
Adjustments to reconcile net loss
to net cash provided by operating activities
Depreciation and amortization -- --
Increase in Accrued interest payable 600 240
-------- --------
Net cash used in operating activities (13,632) (15,228)
-------- --------
Cash Flows from Investing Activities -- --
-------- --------
Cash Flows from Financing Activities
Proceeds from sale of common stock 60,000 --
Proceeds from loan from officer -- 10,000
-------- --------
Net cash provided by financing activities 60,000 10,000
-------- --------
Increase (Decrease) in Cash 46,368 (5,228)
Cash at beginning of period 6,759 11,987
-------- --------
Cash at end of period $ 53,127 $ 6,759
======== ========
Supplemental Disclosure of Interest and Income Taxes Paid
Interest paid for the year $ -- $ --
======== ========
Income taxes paid for the year $ -- $ --
======== ========
The accompanying notes are an integral part of these financial statements.
F-6
Marketing Acquisition Corporation
Notes to Financial Statements
December 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 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 used 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. 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
F-7
Marketing Acquisition Corporation
Notes to Financial Statements - Continued
December 31, 2007 and 2006
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.
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 December 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 December 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.
F-8
Marketing Acquisition Corporation
Notes to Financial Statements - Continued
December 31, 2007 and 2006
Note D - Summary of Significant Accounting Policies - Continued
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 December 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.
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 advanced an aggregate $10,000 to the Company.
F-9
Marketing Acquisition Corporation
Notes to Financial Statements - Continued
December 31, 2007 and 2006
Note G - Income Taxes
The components of income tax (benefit) expense for each of the years ended
December 31, 2007 and 2006, are as follows:
Year ended Year ended
December 31, December 31,
2007 2006
---- ----
Federal:
Current $ -- $ --
Deferred -- --
------- ------
-- --
------- ------
State:
Current -- --
Deferred -- --
------- ------
-- --
------- ------
Total $ -- $ --
======= ======
Concurrent with April 2004 and March 2007 changes in control, the Company has a
net operating loss carryforward of approximately $8,600 for Federal 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.
The Company's income tax expense (benefit) for each of the years ended December
31, 2007 and 2006, respectively, differed from the statutory federal rate of 34
percent as follows:
Year ended Year ended
December 31, December 31,
2007 2006
------- -------
Statutory rate applied to income before income taxes $(4,800) $(4,400)
Increase (decrease) in income taxes resulting from:
State income taxes -- --
Other, including reserve for deferred tax asset
and application of net operating loss carryforward 4,800 4,400
------- -------
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 December 31, 2007 and 2006, respectively, after giving effect to the March
2007 change in control, the deferred tax asset is as follows:
December 31, December 31,
2007 2006
------- -------
Deferred tax assets
Net operating loss carryforwards $ 2,900 $ --
Less valuation allowance (2,900) --
------- -------
Net Deferred Tax Asset $ -- $ --
======= =======
F-10
Marketing Acquisition Corporation
Notes to Financial Statements - Continued
December 31, 2007 and 2006
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. 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 pre-reverse split shares
(1,250,000 post-reverse split shares) of its common stock at a purchase price of
$0.001 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.
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:
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 1,853,207 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.
(Remainder of this page left blank intentionally)
(Signatures follow on next page)
F-11
SIGNATURES
In accord with Section 13 or 15(d) of the Securities Act of 1933, as amended,
the Company caused this report to be signed on its behalf by the undersigned,
thereto duly authorized.
Marketing Acquisition Corporation
Dated: February 8, 2008 /s/ Timothy P. Halter
---------------- -------------------------------------
Timothy P. Halter
President, Chief Executive Officer
Chief Financial Officer and Director
In accordance with the Securities Exchange Act of 1934, as amended, this report
has been signed below by the following persons on behalf of the Company and in
the capacities and on the date as indicated.
Dated: February 8, 2008 /s/ Timothy P. Halter
---------------- -------------------------------------
Timothy P. Halter
President, Chief Executive Officer
Chief Financial Officer and Director