Attached files
U. S. SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C.
20549
Form 10-Q
(Mark One)
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þ
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QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the quarterly period ended September 30, 2009
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o
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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Commission
File Number
Quantum Assets,
Inc.
(Exact
name of registrant as specified in its charter)
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Nevada
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26-3452407
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(State
or other jurisdiction of
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(IRS
Employer Identification No.)
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incorporation
or organization)
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For
correspondence, please contact:
Jillian
Ivey Sidoti, Esq.
34721
Myrtle Court
Winchester,
CA 92596
(323)
799-1342 (phone)
(951)
602-6049 (fax)
19827 A,
Henderson Rd.
Cornelius,
NC 29730
(Address
of principal executive offices)
(704)
799-5500
(Registrant’s
telephone number, including area code)
Indicate
by check mark whether the
registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes þ No o
Indicate
by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of
“large accelerated
filer,” “accelerated
filer,” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
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Large
accelerated filer o
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Accelerated
filer o
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Non-accelerated
filer o
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Smaller
reporting company þ
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(Do
not check if a smaller reporting company)
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Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes o No x
At November 13, 2009, there were 1,000,000 shares outstanding of the
registrant’s common stock.
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INDEX
TO FORM 10-Q
FOR
THE QUARTER ENDED September 30, 2009
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Page
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Number
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PART
I. FINANCIAL INFORMATION
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Item 1.
Financial Statements
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Balance
Sheets at September 30, 2009 (unaudited) and December 31, 2008
(audited)
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F-1
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Statements
of Operations for the three and nine months ended September 30, 2009 and
for the period from December 17, 2008 (inception) to September 30, 2009
(unaudited)
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F-2
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Statement
of Shareholders’ Deficit as of September 30, 2009
(unaudited)
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F-3
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Statements
of Cash Flows for the nine months ended September 30, 2009 and for the
period from December 17, 2008 (inception) to September 30, 2009
(unaudited)
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F-4
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Notes
to Financial Statements
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F-5
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Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
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8
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Item 3.
Controls and Procedures
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13
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PART
II. OTHER INFORMATION
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Item 1.
Legal Proceedings
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15
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Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
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15
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Item
3. Defaults upon senior securities
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15
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Item
4. Submissions of matters to a vote of securities holders
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15
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Item
5. Other Information
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15
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Item 6. Exhibits
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16
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Exhibit
31.1
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Exhibit
32.1
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ii
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PART I — FINANCIAL
INFORMATION
QUANTUM
ASSETS, INC.
(A
DEVELOPMENT STAGE COMPANY)
BALANCE
SHEETS
As
of September 30, 2009 and December 31, 2008
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ASSETS
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September
30, 2009
(unaudited)
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December
31, 2008
(audited)
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Current
Assets
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Cash
and equivalents
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$ | 61 | $ | -0- | ||||
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TOTAL
ASSETS
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$ | 61 | $ | -0- | ||||
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LIABILITIES
AND STOCKHOLDER’S DEFICIT
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Current
Liabilities
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Accrued
expenses and interest
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$ | 1,982 | $ | 5,050 | ||||
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Notes
payable – related party
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11,005 | 4,000 | ||||||
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Total
current liabilities
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12,987 | 9,050 | ||||||
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Stockholder’s
Deficit
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Preferred
Stock, $.0001 par value, 10,000,000 shares authorized, -0- shares issued
and outstanding
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-0- | -0- | ||||||
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Common
Stock, $.0001 par value, 100,000,000 shares authorized, 1,000,000 shares
issued and outstanding
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100 | 100 | ||||||
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Stock
subscription receivable
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-0- | (100 | ) | |||||
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Deficit
accumulated during the development stage
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(13,026 | ) | (9,050 | ) | ||||
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Total
stockholder’s deficit
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(12,926 | ) | (9,050 | ) | ||||
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TOTAL
LIABILITIES AND STOCKHOLDER’S DEFICIT
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$ | 61 | $ | -0- | ||||
See
accompanying notes to financial statements.
F-1
QUANTUM
ASSETS, INC.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENTS
OF OPERATIONS (unaudited)
For
the three months and nine months ended September 30, 2009
Period
from December 17, 2008 (inception) to September 30, 2009
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Three
months ended September 30, 2009
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Nine
months ended September 30, 2009
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Period
from December 17, 2008 (inception) to September 30, 2009
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Revenues:
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$ | -0- | $ | -0- | $ | -0- | ||||||
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Expenses:
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Bank
service charges
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39 | 39 | 39 | |||||||||
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Professional
fees
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1,735 | 3,505 | 12,505 | |||||||||
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Interest
expense
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197 | 432 | 482 | |||||||||
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Total
expenses
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1,971 | 3,976 | 13,026 | |||||||||
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Net
loss
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$ | (1,971 | ) | $ | (3,976 | ) | $ | (13,026 | ) | |||
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Net
loss per share:
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Basic
and diluted
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$ | (0.00 | ) | $ | (0.00 | ) | $ | (0.01 | ) | |||
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Weighted
average shares outstanding:
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Basic
and diluted
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1,000,000 | 1,000,000 | 1,000,000 | |||||||||
See
accompanying notes to financial statements.
F-2
QUANTUM
ASSETS, INC.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT
OF STOCKHOLDER’S DEFICIT (unaudited)
Period
from December 17, 2008 (Inception) to September 30, 2009
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Common
stock
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Stock subscription | Deficit accumulated during the | ||||||||||||||||||
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Shares
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Amount
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receivable
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development
stage
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Total
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Issuance
of common stock
@
$.0001
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1,000,000 | $ | 100 | $ | (100 | ) | $ | - | $ | - | ||||||||||
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Net
loss for the period
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- | - | - | (9,050 | ) | (9,050 | ) | |||||||||||||
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Balance,
December 31, 2008
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1,000,000 | 100 | (100 | ) | (9,050 | ) | (9,050 | ) | ||||||||||||
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Payment
received for stock
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- | - | 100 | - | 100 | |||||||||||||||
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Net
loss for the period
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- | - | - | (3,976 | ) | (3,976 | ) | |||||||||||||
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Balance,
September 30, 2009
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1,000,000 | $ | 100 | $ | -0- | $ | (13,026 | ) | $ | (12,926 | ) | |||||||||
See
accompanying notes to financial statements.
F-3
QUANTUM
ASSETS, INC.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENTS
OF CASH FLOWS (unaudited)
For
the nine months ended September 30, 2009
Period
from December 17, 2008 (Inception) to September 30, 2009
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Nine
months ended September 30, 2009
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Period
from December 17, 2008 (inception) to September 30, 2009
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CASH
FLOWS FROM OPERATING ACTIVITIES
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Net
loss for the period
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$ | (3,976 | ) | $ | (13,026 | ) | ||
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Change
in non-cash working capital items:
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Increase
(decrease) in accrued expenses and interest
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(3,068 | ) | 1,982 | |||||
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NET
CASH (USED IN) OPERATING ACTIVITIES
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(7,044 | ) | (11,044 | ) | ||||
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CASH
FLOWS FROM FINANCING ACTIVITIES
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Proceeds
from notes payable
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7,005 | 11,005 | ||||||
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Proceeds
from sales of common stock
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100 | 100 | ||||||
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NET
CASH PROVIDED BY FINANCING ACTIVITIES
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7,105 | 11,105 | ||||||
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NET
INCREASE IN CASH
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61 | 61 | ||||||
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CASH,
BEGINNING OF PERIOD
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-0- | -0- | ||||||
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CASH,
END OF PERIOD
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$ | 61 | $ | 61 | ||||
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SUPPLEMENTAL
CASH FLOW INFORMATION
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Interest
paid
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$ | -0- | $ | -0- | ||||
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Income
taxes paid
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$ | -0- | $ | -0- | ||||
See
accompanying notes to financial statements.
F-4
QUANTUM
ASSETS, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO THE FINANCIAL STATEMENTS
September
30, 2009
NOTE 1 –
SUMMARY OF ACCOUNTING POLICIES
Nature of
Business
Quantum
Assets, Inc. is a development stage company and was incorporated in Nevada on
December 17, 2008. The Company’s objective is to acquire or merge
with a target business or company in a business combination.
Development Stage
Company
The
Company is considered to be a development stage company. A
development-stage company is one in which planned principal operations have not
commenced or if its operations have commenced, there has been no significant
revenues there from.
Basis of
Presentation
The
accompanying unaudited interim financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America and the rules of the Securities and Exchange Commission (“SEC”), and
should be read in conjunction with the audited financial statements and notes
thereto contained in the Company’s Form 10 filed with the SEC as of and for the
period ended December 31, 2008. In the opinion of management, all
adjustments necessary in order for the financial statements to be not misleading
have been reflected herein. The results of operations for interim periods are
not necessarily indicative of the results to be expected for the full
year.
Cash and Cash
Equivalents
The
Company considers all highly liquid investments with maturities of three months
or less to be cash equivalents. At September 30, 2009 and December
31, 2008, respectively, the Company had $61 and $-0- of cash.
Fair Value of Financial
Instruments
The
Company’s financial instruments consist of cash and cash equivalents, accrued
expenses, and notes payable to a related party. The carrying amount of these
financial instruments approximates fair value due either to length of maturity
or interest rates that approximate prevailing market rates unless otherwise
disclosed in these financial statements.
Income
Taxes
Income
taxes are computed using the asset and liability method. Under the
asset and liability method, deferred income tax assets and liabilities are
determined based on the differences between the financial reporting and tax
bases of assets and liabilities and are measured using the currently enacted tax
rates and laws. A valuation allowance is provided for the amount of
deferred tax assets that, based on available evidence, are not expected to be
realized.
F-5
QUANTUM
ASSETS, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO THE FINANCIAL STATEMENTS
September
30, 2009
NOTE 1 –
SUMMARY OF ACCOUNTING POLICIES (continued)
Use of
Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date the financial statements and the
reported amount of revenues and expenses during the reporting
period. Actual results could differ from those
estimates.
Basic loss per
share
Basic
loss per share has been calculated based on the weighted average number of
shares of common stock outstanding during the period.
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 flow.
NOTE
2 – ACCRUED EXPENSES AND INTEREST
Accrued
expenses and interest consisted of the following at September 30, 2009 and
December 31, 2008:
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September
30, 2009
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December
31, 2008
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Accrued
professional fees
Accrued
interest- related party
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$ | 1,500 482 | $ | 5,000 50 | ||||
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Total
accrued expenses and interest
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$ | 1,982 | $ | 5,050 | ||||
The
accrued interest – related party is owed to Zenith, LLC. See Note
3.
NOTE
3 – NOTES PAYABLE – RELATED PARTY
The
Company received $4,000, $5,000, $770, and $1,235 under notes payable from
Zenith Financial, LLC on November 4, 2008, April 21, 2009, June 30, 2009, and
September 30, 2009. The notes are unsecured, due on demand and bear
interest at the rate of 8%. Zenith Financial, LLC is the owner of
100% of the outstanding common stock of the Company.
NOTE
4 – INCOME TAXES
For the
periods ended September 30, 2009, the Company has incurred net losses and,
therefore, has no tax liability. The net deferred tax asset generated
by the loss carry-forward has been fully reserved. The cumulative net
operating loss carry-forward is approximately $13,000 at September 30, 2009, and
will expire beginning in the year 2028.
F-6
QUANTUM
ASSETS, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO THE FINANCIAL STATEMENTS
September
30, 2009
NOTE
4 – INCOME TAXES (continued)
The
cumulative tax effect at the expected rate of 34% of significant items
comprising our net deferred tax amount is as follows:
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2009
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Deferred
tax asset attributable to:
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Net
operating loss carryover
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$ | 4,420 | ||
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Valuation
allowance
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(4,420 | ) | ||
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Net
deferred tax asset
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$ | - | ||
NOTE
5 – LIQUIDITY AND GOING CONCERN
Quantum
Assets, Inc. has negative working capital, has incurred operating losses since
inception, and has not yet received revenues from sales of products or
services. These factors create substantial doubt about the Company’s
ability to continue as a going concern. The financial statements do
not include any adjustment that might be necessary if the Company is unable to
continue as a going concern.
The
ability of the Company to continue as a going concern is dependent on the
Company generating cash from the sale of its common stock and/or obtaining debt
financing and attaining future profitable operations. Management’s
plans include selling its equity securities and obtaining debt financing to fund
its capital requirement and ongoing operations; however, there can be no
assurance the Company will be successful in these efforts.
NOTE
6 – SUBSEQUENT EVENTS
The
Company has analyzed its operations subsequent to September 30, 2009 through
November 16, 2009 and has determined that it does not have any material
subsequent events to disclose in these financial statements.
F-7
Item 2. MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and
analysis should be read in conjunction with the consolidated financial
statements and related notes included in this report and those in our
Registration Statement filed on Form 10 with the Securities and Exchange
Commission on July 7, 2009. This discussion contains forward-looking statements
that involve risks and uncertainties. Our actual results may differ materially
from those anticipated in such forward-looking statements as a result of certain
factors, including but not limited to, those described under “Risk Factors”
included in Part II, Item IA of this report.
Overview
QUANTUM
ASSETS, INC. (“we”, “us”, the “Company” or like terms) was incorporated in the
State of Nevada on December 17, 2008. We are a developmental stage
company and have not generated any revenues to date. Since inception,
we have not engaged in any business operations other than in connection with our
organization and the preparation and filing of a Form 10 registration statement
(the “Registration Statement”). We have no full-time employees and do
not own or lease any property.
We were
organized to serve as a vehicle for a business combination through a merger,
capital stock exchange, asset acquisition or other similar business combination
(a “Business Combination”) with an operating or development stage business (the
“Target Business”) which desires to utilize our status as a reporting company
under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). Our sole officer and director currently serves as an officer
of another development stage public company with the business purpose of
acquiring a Target Business but have never been affiliated with a public shell
company that has completed a Business Combination.
Given
that we have no assets, no current operations and our proposed business
contemplates entering into a Business Combination with an operating company, we
are a “shell company,” which is defined in Rule 405 under the Securities Act of
1933, as amended (the “Securities Act”), as a company which has (i) no or nominal operations; and (ii) either (x) no or nominal assets; (y) assets consisting solely
of cash and cash equivalents; or (z) assets consisting of
any amount of cash and cash equivalents and nominal other
assets.
We do not
have any specific Business Combination under consideration. We have
not identified or been provided with the identity of, or had any direct or
indirect contact with, potential targets. Additionally, we have not
engaged or retained any agent or other representative to identify or locate any
suitable target, although we may do so after the effective date of this
Registration Statement. Our efforts to identify a prospective Target
Business will not be limited to a particular industry or geographic
location.
Results
of Operations for the Quarter ending September 30, 2009
Assets
8
Currently,
we have no tangible assets and no intangible assets that are
quantifiable.
Operating
Expense
Total
operating expenses for the three months ended September 30, 2009, were $1,971
compared to expenses for the period ended September 30, 2009 of $13,026 since
inception. Total operating expenses for the
nine months ended September 30, 2009 were
$3,976. The decrease is attributed to the initial startup
costs in October 2008.
Net Loss
Net loss
for the three months ended September 30, 2009 was $(1,971) compared to the
period ended September 30, 2009 since inception of $(13,026). Net
loss for the nine months ended September 30, 2009 was $(3,976). The decrease in
net loss is due to the aforementioned change in activities.
Liquidity and Capital
Resources
At
September 30, 2009, we had $61 in cash.
Critical Accounting Policies
and Estimates
Our
critical accounting policies are disclosed in our Form 10 Registration
Statement. During the three months ended September 30, 2009 there have been no
significant changes in our critical accounting policies.
Recent Accounting
Pronouncements
Recent
accounting pronouncements are disclosed in our Form 10 Registration Statement,
filed with the Securities and Exchange Commission on July 7, 2009. During the
three months ended September 30, 2009 there have been no new accounting
pronouncements which are expected to significantly impact our consolidated
financial statements.
PLAN
OF OPERATION AND LIQUIDITY
We are
not presently engaged in, and we will not engage in, any substantive commercial
business for an indefinite period until we identify a Target Business and enter
into a Business Combination, if ever. A Business Combination may
involve the acquisition of, or merger with, a company which desires to have a
class of securities registered under the Exchange Act, while avoiding what it
may deem to be adverse consequences of undertaking a public offering
itself. These include time delays, significant expenses, possible
loss of voting control and compliance with various federal and state securities
laws. As more fully described below under the heading “Form of acquisition; Opportunity for
stockholder approval,” the proposed structure of any Business Combination
may not require that we seek stockholder approval for the transaction and
holders of our common stock may not have the opportunity to vote upon any such
Business Combination.
We
have not identified a target business or target industry.
To date,
we have not selected any Target Business or target industry on which to
concentrate our search for a Business Combination. Our officer and
director has not engaged in discussions on our behalf with representatives of
other companies regarding the possibility of a potential merger, capital stock
exchange, asset acquisition or other similar Business Combination with us, nor
have we been approached by any candidates (or representatives of any candidates)
with respect to a possible Business Combination with
us. Additionally, we have not, nor has
9
anyone on
our behalf, taken any measure, directly or indirectly, to identify or locate any
suitable Target Business, nor have we engaged or retained any agent or other
representative to identify or locate such a Target Business. We have
not conducted any research with respect to identifying the number and
characteristics of the potential Target Business candidates. As a
result, we cannot assure you that we will be able to locate a Target Business or
that we will be able to engage in a Business Combination with a Target Business
on favorable terms.
We will
have virtually unrestricted flexibility in identifying and selecting a
prospective Target Business. We have not established any specific
attributes or criteria (financial or otherwise) for prospective Target
Businesses. To the extent we affect a Business Combination with a
financially unstable company or an entity in its early stage of development or
growth, including entities without established records of sales or earnings, we
may be affected by numerous risks inherent in the business and operations of
financially unstable and early stage or potential emerging growth
companies. Although our management will endeavor to evaluate the
risks inherent in a particular Target Business, we cannot assure you that we
will properly ascertain or assess all significant risk factors.
Sources
of target businesses.
Management
expects that Target Business candidates could be brought to our attention from
various unaffiliated sources, including members of the financial community, as
well as accountants and attorneys who represent potential Target Business
candidates. Target Business candidates may be brought to our
attention by these unaffiliated sources as a result of being solicited by us
through calls or mailings. These sources may also introduce us to
Target Businesses candidates they think we may be interested in on an
unsolicited basis. Our officer and director, as well as his
affiliates, may also bring to our attention Target Business candidates of which
they become aware through their business contacts, as a result of formal or
informal inquiries or discussions they may have, as well as attending trade
shows or conventions. In no event will our existing officer and
director or stockholders, or any entity with which any of them is affiliated, be
paid any finder’s fee, consulting fee or other compensation prior to, or for any
services they may render in order to effectuate, the consummation of a Business
Combination. After
the effective date of this Registration Statement, we may engage the services of
professional firms or other individuals that specialize in business
acquisitions, in which event we may pay a finder’s fee, consulting fee or other
compensation to be determined in an arm’s length negotiation. We have
not adopted any policies with respect to utilizing the services of consultants
or advisors to assist in the identification of a Target Business, the criteria
to be used in selecting such consultants or advisors, the services to be
provided, the term of service, or regarding the total amount of fees that may be
paid. However, because of our limited resources, it is likely that
any such fee we agree to pay would be paid in shares of our common
stock.
Selection
criteria of a Target Business.
Our
management will have virtually unrestricted flexibility in identifying and
selecting a prospective Target Business. We have not established any
specific attributes or criteria (financial or otherwise) for prospective Target
Businesses. In evaluating a prospective Target Business, our
management will consider, among other factors, the following:
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financial condition and results of operations;
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growth potential;
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experience and skill of management and availability of additional
personnel;
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capital requirements;
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competitive position;
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barriers to entry;
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stage of development of the products, processes or
services;
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degree of current or potential market acceptance of the products,
processes or services;
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proprietary features and degree of intellectual property or other
protection of the products,
processes or services;
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regulatory environment of the industry; and
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costs associated with affecting the Business
Combination.
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These
criteria are not intended to be exhaustive or to in any way limit the board of
director’s unrestricted discretion to enter into a Business Combination with any
Target Business. Any evaluation relating to the merits of a
particular Business Combination will be based, to the extent relevant, on the
above factors as well as other considerations deemed relevant by our
management. In evaluating a prospective Target Business, we will
conduct as extensive a due diligence review of potential targets as possible
given the lack of information which may be available regarding private
companies, our limited personnel and financial resources and the inexperience of
our management with respect to such activities. We expect that our
due diligence will encompass, among other things, meetings with the Target
Business’s incumbent management and inspection of its facilities, as well as a
review of financial and other information which is made available to
us. This due diligence review will be conducted either by our
management or by unaffiliated third parties we may engage. Our
limited funds and the lack of full-time management will likely make it
impracticable to conduct a complete and exhaustive investigation and analysis of
a Target Business candidate before we consummate a Business
Combination. Management decisions, therefore, will likely be made
without detailed feasibility studies, independent analysis, market surveys and
the like which, if we had more funds available to us, would be
desirable. We will be particularly dependent in making decisions upon
information provided by the promoters, owners, sponsors, or others associated
with the Target Business seeking our participation.
The time
and costs required to select and evaluate a Target Business and to structure and
complete the Business Combination cannot presently be ascertained with any
degree of certainty. Any costs incurred with respect to the
identification and evaluation of a prospective Target Business with which a
Business Combination is not ultimately completed will result in a loss to
us.
Lack
of diversification.
We expect
that we will be able to consummate a Business Combination with only one
candidate given that, among other considerations, we will not have the resources
to diversify our operations and the dilution of interest for present and
prospective stockholders, which is likely to occur as a result of our
management's plan to offer a controlling interest to a Target Business in order
to achieve a tax free reorganization, as described below, will render more than
one Business Combination unlikely. Therefore, at least initially, the
prospects for our success may be entirely dependent upon the future performance
of a single business and we will not be benefit from the possible spreading of
risks or offsetting of losses. By consummating a Business Combination
with a single entity, our lack of diversification may:
|
·
|
subject
us to numerous economic, competitive and regulatory developments, any or
all of which may have a substantial adverse impact upon the particular
industry in which we may operate subsequent to a Business Combination,
and
|
|
·
|
result
in our dependency upon the development or market acceptance of a single or
limited number of products, processes or
services.
|
11
Limited
ability to evaluate the Target Business.
To a
significant degree, our security holders will rely on management’s evaluation of
a Target Business in making the decision to enter into a Business
Combination. Management’s assessment of a Target Business will
be based upon discussions with management of the Target Business and a review of
due diligence material relating to the Target Business available to it during
the evaluation period. Any such assessment may not be
accurate.
Although
we intend to scrutinize the management of a prospective Target Business when
evaluating the desirability of effecting a Business Combination, we cannot
assure you that our assessment of the Target Business’s management will prove
accurate. In addition, we cannot assure you that future management
will have the necessary skills, qualifications or abilities to manage a public
company. Furthermore, the future role of our officer and director, if
any, in the Target Business following a Business Combination cannot presently be
stated with any certainty.
Given our
current resources, we will likely seek a Business Combination with a
privately-held company. Generally, very little public information
exists about these companies and we will be required to rely on the ability of
our management to obtain adequate information to evaluate the potential returns
from entering into a Business Combination with such a company. If we
do not uncover all material information about a Target Business prior to a
Business Combination, we may not make a fully informed investment decision and
we may lose money on our investment.
Form
of acquisition; Opportunity for stockholder approval.
The
manner in which we participate in a Business Combination will depend upon, among
other things, the nature of the opportunity and the respective requirements and
desires of management of our Company and of the Target Business. In
addition, the structure of any Business Combination will be dispositive as to
whether stockholder approval of the Business Combination is
required.
It is
likely that we will acquire our participation in a business opportunity by the
acquisition of Target Company through the issuance of our common stock or other
securities to the principals of the Target Business in exchange for all of the
outstanding stock of the Target Company. Upon the consummation of
such a transaction, the Target Company would be a wholly owned subsidiary of our
Company. In the case of an acquisition, the transaction may be
accomplished in the sole determination of management without any vote or
approval by stockholders.
Although
the terms of an acquisition of a Target Business cannot be predicted, it is
likely that we will seek to structure a Business Combination to qualify as a tax
free transaction under the Internal Revenue Code of 1986, as amended (the
"Code"). One such form of “tax free” transaction, if structured
properly, entails the exchange of capital stock of the Target Business for our
capital stock. Under Section 368(a)(1) of the Code, in order for a
stock exchange transaction to qualify as a "tax free" reorganization, the
holders of the stock of the target must receive a number of shares of our
capital stock equal to 80% or more of the voting stock of our
Company. If a transaction were structured to take advantage of these
provisions rather than other "tax free" provisions provided under the Code, our
existing stockholders would in such circumstances retain 20% or less of the
total issued and outstanding shares of the surviving
entity. Depending upon the relative negotiating strength of the
parties, stockholders at the time of the Business Combination may retain
substantially less than 20% of the total issued and outstanding shares of our
Company. This could result in substantial additional dilution to the
equity of those persons who were stockholders of our Company prior to such
Business Combination.
12
In the
case of a statutory merger or consolidation directly involving the Company, it
might be necessary to call a stockholders' meeting and obtain the approval of
the holders of a majority of the outstanding shares of common
stock. The necessity to obtain stockholder approval may result in
delay and additional expense in the consummation of any proposed transaction,
which we may not be able to fund, and will also give rise to certain appraisal
rights to dissenting stockholders. Accordingly, management will seek
to structure any Business Combination so as not to require stockholder
approval.
In the
case of either an acquisition or merger, our stockholders prior to the
consummation of a Business Combination likely will not have control of a
majority of the voting shares of the Company following a Business
Combination. As part of such a transaction, all or a majority of the
Company's then director(s) may resign and new directors may be appointed without
any vote by stockholders.
It is
anticipated that the investigation of specific business opportunities and the
negotiation, drafting and execution of relevant agreements, disclosure documents
and other instruments will require substantial management time and attention and
substantial cost for accountants, attorneys and others. If a decision
is made not to participate in a specific business opportunity, the costs
incurred in the related investigation would not be
recoverable. Furthermore, even if an agreement is reached for a
Business Combination, the failure to consummate that transaction may result in
the loss to the Company of the related costs incurred.
Competition.
Our
ability to consummate a Business Combination will be constrained by our lack of
financial resources to provide to the Target Business. We expect that
in the course of identifying, evaluating and selecting a Target Business, we may
encounter intense competition from other entities having a business objective
similar to ours. These include blank check companies that may have
raised significant sums through sales of securities registered under federal
securities laws that are seeking to carry out a business plan similar to ours
and possess a significant competitive advantage over us both from a financial
and personnel perspective. Additionally, we may be subject to
competition from entities other than blank check companies having a business
objective similar to ours, including venture capital firms, leverage buyout
firms and operating businesses looking to expand their operations through
acquisitions. Many of these entities are well established and have
extensive experience identifying and affecting business combinations directly or
through affiliates. Moreover, nearly all of these competitors possess
greater technical, human and other resources than us. In addition, we
will experience competition from other modestly capitalized shell companies that
are seeking to enter into business combinations with targets similar to those we
expect to pursue. Our management currently serve as management of a
shell company that registered its class of common stock under the Exchange Act
prior to the effective date of our Exchange Act registration
statement. Our management’s affiliation with two shell companies
raises the possibility of conflicts of interest, in that both companies may seek
to take advantage of the same business opportunity. Neither our
Company nor the other shell company with which our management is affiliated has
adopted any policy with respect to resolving any potential conflict of interest
and it is possible that any conflict or interest that arises between the two
companies may not be decided in our favor.
While we
believe there may be numerous potential target candidates with which we could
affect a Business Combination, our ability to compete in affecting a Business
Combination with prime candidates will be limited by our lack of financial
resources. This inherent competitive limitation gives others an
advantage in pursuing the acquisition of a Target Business.
If we
succeed in effecting a Business Combination, there will be, in all likelihood,
intense competition from competitors of the Target Business. We cannot assure
you that, subsequent to a Business Combination, we will have the resources or
ability to compete effectively.
Employees.
We have
one executive officer and he has other business interests and is not obligated
to devote any specific number of hours to our matters and intends to devote only
as much time as he deems necessary to our affairs. The amount of time
he will devote to our operations in any time period will vary based on whether a
Target Business
13
has been
selected for the Business Combination and the stage of the Business Combination
process the Company is in. Accordingly, once management locates a
suitable Target Business, management will spend more time investigating such
Target Business and negotiating and processing the Business Combination (and
consequently spend more time to our affairs) than he would prior to locating a
suitable Target Business. We do not intend to have any full time
employees prior to the consummation of a Business Combination.
Our sole
officer and director may engage in other business activities similar and
dissimilar to those we are engaged in without any limitations or restrictions
applicable to such activities. Currently, our sole officer and
director serves as an officer of another shell company that has a business
purpose identical to ours and that has a class of common stock registered under
the Exchange Act. Our sole officer and director will allocate his
time to both companies. To the extent that our management engages in
such other activities, he will have possible conflicts of interest in diverting
opportunities which would be appropriate for our Company to other companies,
entities or persons with which he is or may be associated or have an interest,
rather than diverting such opportunities to us. Since we have not
established any policy for the resolution of such a conflict, we could be
adversely affected should our sole officer and director choose to place his
other business interests before ours. We cannot assure you that such
potential conflicts of interest will not result in the loss of potential
opportunities or that any conflict will be resolved in our favor.
Periodic Reporting and
Audited Financial Statements; Disclosure of Business
Combination.
Upon the
effective date of this Registration Statement, our class of common stock will be
registered under the Exchange Act and we will have reporting obligations,
including the requirement that we file annual, quarterly and current reports
with the SEC. In accordance with the requirements of the Exchange
Act, our annual reports will contain financial statements audited and reported
on by our independent registered public accountants.
We will
not acquire a Target Business if audited financial statements based on United
States generally accepted accounting principles cannot be obtained for the
Target Business. We cannot assure you that any particular Target
Business identified by us as a potential acquisition candidate will have
financial statements prepared in accordance with United States generally
accepted accounting principles or that the potential Target Business will be
able to prepare its financial statements in accordance with United States
generally accepted accounting principles. To the extent that this
requirement cannot be met, we may not be able to acquire the proposed Target
Business. While this may limit the pool of potential acquisition
candidates, we do not believe that this limitation will be
material.
Upon the
consummation of a Business Combination, the Company will file with the
Securities and Exchange Commission a current report on Form 8-K to disclose the
Business Combination, the terms of the transaction and a description of the
business and management of the Target Business, among other things, and will
include audited consolidated financial statements of the Company giving effect
to the Business Combination. Holders of the Company’s securities will
be able to access the Form 8-K and other filings made by the Company on the
EDGAR Company Search page of the Securities and Exchange Commission’s Web site,
the address for which is “www.sec.gov.”
Item 3.
CONTROLS AND PROCEDURES
Evaluation of Disclosure
Controls and Procedures
The
Company carried out an evaluation of the effectiveness of the design and
operation of its disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) as of September 30, 2009. This
evaluation was accomplished under the supervision and with the participation of
our chief executive officer / principal executive officer, and chief financial
officer / principal financial officer who concluded that our disclosure controls
and procedures are currently effective to ensure that all material information
required to be filed in the quarterly report on Form 10-Q has been made known to
them.
14
For
purposes of this section, the term disclosure controls and procedures means
controls and other procedures of an issuer that are designed to ensure that
information required to be disclosed by the issuer in the reports that it files
or submits under the Act (15 U.S.C. 78a et seg.) is recorded, processed,
summarized and reported, within the time periods specified in the Commission’s
rules and forms. Disclosure, controls and procedures include, without
limitation, controls and procedures designed to ensure that information required
to be disclosed by in our reports filed under the Securities Exchange Act of
1934, as amended (the "Act") is accumulated and communicated to the issuer's
management, including its principal executive and principal financial officers,
or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure.
Based
upon an evaluation conducted for the period ended September 30, 2009, our Chief
Executive Officer and Chief Financial Officer as of September 30, 2009, and as
of the date of this Report, have concluded that as of the end of the periods
covered by this report, they have identified no material weakness of Company
internal controls.
Corporate
expenses incurred are processed and paid by the officers of the
Company. The current number of transactions is not sufficient to
justify the retaining of additional accounting personnel.
Management’s Report on
Internal Control over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in
Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control
system was designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes, in accordance with generally accepted accounting principles in the
United States of America. Our internal control over financial
reporting includes those policies and procedures that (i) pertain to the
maintenance records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the Company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America, and that receipts and
expenditures of the Company are being made only in accordance with
authorizations of management of the Company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of the Company’s assets that could have a material effect on
the financial statements.
Because
of inherent limitations, a system of internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate due to change in conditions, or that the degree of compliance with
the policies or procedures may deteriorate.
Our
management conducted an evaluation of the effectiveness of our internal control
over financial reporting using the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in Internal
Control—Integrated Framework. Based on its evaluation, our management
concluded that, as of September 30, 2009, our internal control over financial
reporting was effective.
This
quarterly report does not include an attestation report of the Company’s
registered public accounting firm regarding internal control over financial
reporting. Management’s report was not subject to the attestation by the
Company’s registered public accounting firm pursuant to temporary rules of the
SEC that permit the Company to provide only management’s report in this
quarterly report.
Changes in Internal Controls
over Financial Reporting
We have
not yet made any changes in our internal controls over financial reporting that
occurred during the period covered by this report that has materially
affected, or is reasonably likely to materially affect, our internal
control over financial reporting.
15
PART II. OTHER
INFORMATION
Item 1. LEGAL
PROCEEDINGS
In the
ordinary conduct of our business, we are periodically subject to lawsuits,
investigations and claims including, but not limited to, claims involving
students or graduates and routine employment matters. Although we cannot predict
with certainty the ultimate resolution of lawsuits, investigations and claims
asserted against us, we do not believe that any currently pending legal
proceeding to which we are a party will have a material adverse effect on our
business, results of operations, cash flows or financial condition.
None
None
None
None
Item 6.
EXHIBITS
(a) Exhibits:
|
Number
|
Description
|
|
|
31.1
|
Certification
of Chief Executive and Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002. (Filed herewith.)
|
|
|
32.1
|
Certification
of Chief Executive and Financial Officer pursuant to 18 U.S.C. §1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(Filed herewith.)
|
|
16
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
| Quantum Assets, INC. | |||
|
By:
|
/s/Steve Curling | ||
| Name : Steve Curling | |||
| Title :
President, Chief Financial Officer and Director
(Principal
Executive Officer, Principal Financial Officer and Principal Accounting
Officer)
|
|||
|
Date: November 16, 2009
|
By:
|
/s/Steve
Curling
Director
|
|
| Name : Steve Curling | |||
| Title : Director | |||
17