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EX-10.1 - BAETA CORPv193027_ex10-1.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 


FORM 10-Q

(Mark One)

x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2010
 
OR
 
o
TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ___________________________ to ___________________________

Commission file number: 333-154243

BAETA CORP.
(Exact Name of Registrant as Specified in Its Charter)

New Jersey
 
26-0722186
(State of Other Jurisdiction of Incorporation or
Organization)
 
(I.R.S. Employer Identification Number)
 
1 Bridge Plaza
Second Floor, Suite 275
Fort Lee, NJ
(201) 471-0988
 
07024
(Address of Principal Executive Offices)
 
(Zip Code)

(201) 471-0988
(Registrant’s Telephone Number, Including Area Code)

N/A 
(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)

Copies to:
The Sourlis Law Firm
Virginia K. Sourlis, Esq.
214 Broad Street
Red Bank, New Jersey 07701
(732) 530-9007
www.SourlisLaw.com

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 x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
 
Large accelerated filer o
 
Accelerated filer o
 
 
Non-accelerated filer o
 
Smaller reporting company x
 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No x

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

As of August 10, 2010, there were 22,852,926 shares of Common Stock outstanding, 100 shares of Series A Preferred Stock outstanding and 2 Shares of Series B Convertible Preferred Stock outstanding.


 
TABLE OF CONTENTS

     
Page
PART I – FINANCIAL INFORMATION
 
Item 1.
Financial Statements
 
3
Item 2.
Management’s Discussion and Analysis of Financial Condition and Plan of Operations
 
14
Item 3. 
Quantitative and Qualitative Disclosures About Market Risk 
 
19
Item 4T.
Controls and Procedures
 
19
 
 
   
PART II – OTHER INFORMATION
   
Item 1.
Legal Proceedings
 
21
Item 1A. 
Risk Factors
 
21
Item 2.
Unregistered Sale of Equity Securities and Use of Proceeds
 
21
Item 3.
Defaults Upon Senior Securities
 
24
Item 4.
Submission of Matters to a Vote of Security Holders
 
24
Item 5.
Other Information
 
24
Item 6.
Exhibits
 
25
       
SIGNATURES
   
26
 
2

 
PART I

Item 1. Financial Statements.
 
Baeta Corp.
( a Developmental Stage Company)
Balance Sheet

   
As of
June 30,
2010
   
As of
December 31,
2009
 
   
(Unaudited)
   
(Audited)
 
ASSETS
           
Current Assets
           
Cash
  $ 13,517     $ 3,189  
Inventory
    11,359       1,713  
                 
Total Current Assets
    24,876       4,901  
                 
Other Assets
               
Software Application
    250,607       203,357  
Plant Property & Equipment, net of accumulated depreciation of $794
    24,118       21,694  
Organization, net of accumulated amortization of $ 204
    146       181  
Deposit
    1,904       1,904  
                 
Total Other Assets
    276,776       227,136  
                 
      TOTAL ASSETS
  $ 301,651     $ 232,037  
                 
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
               
                 
Current Liabilities
               
     Accounts Payable
  $ 60,209     $ 69,805  
     Accounts Payable Related Party
    171,000       110,000  
     Line of Credit
    45,984       46,708  
     Other Current Liabilities
    56,825       56,492  
     Shareholder Advance - Short Term
    15,972       -  
     Shareholder Note - Short Term
    20,000       10,000  
Total Current Liabilities
    369,990       293,006  
                 
Long-Term Liabilities
               
Convertible Note
    105,694       -  
Interest Payable, Convertible Note
    1,667       -  
Shareholder Advance
    45,564       28,510  
Shareholder Note
    288,850       288,850  
                 
Total Long-Term Liabilities
    441,775       317,360  
                 
      TOTAL LIABILITIES
    811,765       610,366  
                 
Stockholders' Equity (Deficit)
               
                 
Preferred stock, 10,000,000 shares authorized with a par value of $ 0.0001. 100 shares of Series A issued or outstanding  (100 issued and outstanding as of 2008); 10 shares of Series B authorized with a par value of $0.0001 and issued and outstanding 2 shares at June 30, 2010
    -       -  
Common stock, 100,000,000 shares authorized with a par value of $ 0.0001, issued and outstanding 23,079,825 shares at March 31, 2010
    2,308       2,250  
Paid-in capital
    1,431,055       981,800  
Losses that have accumulated during the development stage
    (1,943,477 )     (1,362,378 )
                 
Total Stockholders' Equity (Deficit)
    (510,114 )     (378,328 )
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
  $ 301,651     $ 232,037  

See Notes Financial Statements
 
3

 
Baeta Corp.
( a Developmental Stage Company)
Statement of Operations

   
Three-Month Period Ended
June 30
2010
   
Three-Month Period Ended
June 30
2009
   
Six-Months
Period Ended
June 30
2010
   
Six-Months
Period Ended
June 30
2009
   
Cumulative during 
development stage August 14,
2007 to June 30, 2010
 
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
 
Revenues
                             
 Revenue
  $ -     $ -     $ -     $ 9,003     $ 9,074  
Total Revenue
    -       -       -       9,003       9,074  
                                         
Cost of Goods Sold
                                       
     Cost of Goods Sold
    -       -       -       2,595       2,612  
                                         
Total Cost of Goods Sold
    -       -       -       2,595       2,612  
                                         
Gross Profit
    -       -       -       6,408       6,462  
                                         
Operating Expenses
                                       
                                         
     Amortization
    150       17       301       122       998  
     Research & Development
    45,750               111,000               253,412  
     Sales & Marketing
    61,091       33,935       112,974       50,645       287,716  
     General & Administrative Personnel Expenses
    111,615       117,723       255,902       205,719       1,023,132  
     Professional Service Fees
    27,728       14,109       48,559       22,109       209,069  
     Other miscellaneous operating expenses
    14,235       25,472       30,024       29,650       131,130  
                                         
Total Operating Expenses
    260,569       191,256       558,759       308,244       1,905,457  
                                         
Loss From Operations
    (260,569 )     (191,256 )     (558,759 )     (301,836 )     (1,898,995 )
                                         
Other income (expense)
                                    -  
Charitable Donation
                                    (7,500 )
Interest expense
    (15,218 )     (1,080 )     (22,340 )     (2,242 )     (34,854 )
                                         
Net Loss Before Provision For Income Taxes
    (275,787 )     (192,336 )     (581,099 )     (304,078 )     (1,941,349 )
                                         
Provision For Income Taxes
    -       -       -       -       2,128  
                                         
Net Loss
  $ (275,787 )   $ (192,336 )   $ (581,099 )   $ (304,078 )   $ (1,943,477 )
                                         
Net loss per common share - basic and diluted
  $ (0.01 )   $ (0.01 )   $ (0.03 )   $ (0.01 )   $    
                                         
Weighted average number of common shares - basic and diluted
    22,870,918       21,605,434       22,729,832       21,531,573          

See Notes Financial Statements
 
4

 
Baeta Corp.
( a Developmental Stage Company)
Statement of Stockholders' Equity (Deficit)

 
                                       
Additional
   
Retained
       
   
Preferred Shares A
   
Preferred Shares B
   
Common Stock
   
Paid-in
   
Earnings
   
 
 
   
Shares
   
Amount
   
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
(Deficit)
   
Total
 
Balance, August 14, 2007
                            -       -       -       -       -  
                                                                 
Common stock issued, August 14, 2007
                            20,000,000       2,000       -       -       2,000  
Loss for the period beginning Aug 14, 2007 ( inception) to December 31, 2007
                                                    (11,529 )     (11,529 )
Balance,  December 31, 2007
                            20,000,000       2,000       -       (11,529 )     (9,529 )
                                                                 
Preferred  Stock - Series A
    100       -                                                      
Stock issued for service and consulting
                                536,280       54       146,016               146,070  
Private Placement Issuances, August 1, 2008
                                930,400       93       232,507               232,600  
Charitable donation, Nov 17, 2008
                                10,000       1       2,499               2,500  
Loss for the year ended Dec 31, 2008
                                                        (548,200 )     (548,200 )
Balance,  December 31, 2008
    100       -                   21,476,680       2,148       381,022       (559,729 )     (176,559 )
                                                                     
Stock issued for service and consulting
                                627,372       63       313,623               313,686  
Option Holder's Equity
                                                88,694               88,694  
Private Placement Issuances
                                387,000       39       193,461               193,500  
Charitable donation
                                10,000       1       4,999               5,000  
Loss for the year ended Dec 31, 2009
                                                        (802,649 )     (802,649 )
                                                                     
Balance,  December 31, 2009
    100       -                   22,501,052       2,250       981,800       (1,362,378 )     (378,328 )
                                                                     
                                                                     
Preferred  Stock - Series B
                    2       -                       100,000               100,000  
Stock issued for service and consulting
                                    238,150       24       119,051               119,075  
Option Holder's Equity
                                                    20,382               20,382  
Private Placement Issuances
                                    10,000       1       4,999               5,000  
Charitable donation
                                    -       -       -               -  
Loss for the quarter ended March 31, 2010
                                                            (305,312 )     (305,312 )
Balance,  March 31, 2010 - Unaudited
    100       -       2       -       22,749,202       2,275       1,226,232       (1,667,689 )     (439,183 )
                                                                         
Preferred  Stock - Series B
                    0       -                       -               -  
Stock issued for service and consulting
                                    210,623       21       105,290               105,312  
Option Holder's Equity
                                                    19,545               19,545  
Private Placement Issuances
                                    120,000       12       29,988               30,000  
Beneficial Conversion feature on Convertible Note
                                                    50,000               50,000  
Charitable donation
                                    -       -       -               -  
Loss for the quarter ended June 30, 2010
                                                            (275,787 )     (275,787 )
Balance,  June 30, 2010 - Unaudited
    100       -       2       -       23,079,825       2,308       1,431,055       (1,943,476 )     (510,113 )
 
See Notes Financial Statements
 
5

 
Baeta Corp.
( a Developmental Stage Company)
Statement of Cash Flows

   
Six-Months Period Ended June 30, 2010
   
Six-Months Period Ended June 30, 2009
   
Cumulative during development stage August 14, 2007 to June 30, 2010
 
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
 
CASH FLOWS FROM OPERATING ACTIVITIES
                 
                   
Net income (loss)
  $ (581,099 )   $ (304,078 )   $ (1,943,476 )
                         
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
                       
      Depreciation
    266       87       794  
      Amortization
    35       35       204  
Stock Based Compensation
    264,314       170,302       812,763  
 Increase in current assets and liabilities;
                       
      Increase (decrease) in accounts payable
    (9,596 )     42,563       60,209  
      Increase (decrease) in accounts payable related party
    61,000       30,000       171,000  
      Increase (decrease) in Other Current Liabilities
    333       57,122       56,825  
      Decrease (Increase) in Inventory
    (9,646 )     2,595       (11,359 )
      Decrease (Increase) in Deposit
    0       (1,904 )     (1,904 )
                         
     Net cash provided by (used in) operating activities
    (274,393 )     (3,278 )     (854,943 )
                         
                         
CASH FLOWS FROM INVESTING ACTIVITIES
                       
                         
      PP&E
    (2,691 )     (20,911 )     (24,912 )
      Expenditure for organization expense
    -       -       (350 )
      Software Application
    (47,250 )     (90,000 )     (250,607 )
                         
     Net cash provided by (used in) investing activities
    (49,941 )     (110,911 )     (275,870 )
                         
CASH FLOWS FROM FINANCING ACTIVITIES
                       
                         
Convertible Note
    155,694               155,694  
Interest Payable, Convertible Note
    1,667               1,667  
Shareholder Advance
    33,026       106,250       61,536  
Shareholder Note
    10,000               308,850  
Line of Credit
    (725 )     1,663       45,984  
Additional Fianncing Fees
    0               0  
Change in Comon Stock Value
    0               0  
Common Stock Issued
    35,000       3,000       470,600  
Preferred Stock Issued
    100,000               535,600  
                         
     Net cash provided by (used in) financing activities
    334,662       110,913       1,579,931  
                         
    Net increase (decrease) in cash & cash equivalents
    10,329       (3,276 )     449,117  
                         
    Cash & Cash Equivalents at beginning of period
    3,189       14,475       -  
                         
    Cash & Cash Equivalents at end of period
  $ 13,517     $ 11,199     $ 13,517  
                         
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
                       
 
                       
Income taxes paid
    -       -       1,998  

6

 
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
June 30, 2010 


NOTE 1: Summary of Significant Accounting Policies, Nature of Operations and Use of Estimates:

Nature of Business and Basis of Presentation

BAETA Corp. (a development stage company) (“the Company”) was incorporated in the State of New Jersey on August 14, 2007 as a product-driven medical technology company that manufactures advanced products for the global vital signs monitoring industry. The Company has developed a patent-pending pain management and pain assessment product for the estimated 25 million chronic pain sufferers in the U.S. alone.

As of June 30, 2010, the Company had not yet commenced any substantive commercial operations. All activity through June 30, 2010 relates to the Company’s formation and initial research and development.

The Company is considered to be a development stage company and as such the financial statements presented herein are presented in accordance with FASB Accounting Standards Codification (“ASC”) 915 “Development Stage Entities.” The Company is subject to the risks associated with activities of development stage companies.

Basis of Presentation

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts in the financial statements, including the estimated useful lives of tangible and intangible assets. Management believes the estimates used in preparing the financial statements are reasonable and prudent. Actual results could differ from these estimates.

Revenue Recognition
 
Revenue is recognized in accordance with FASB ASC 605, “Revenue Recognition”. The Company recognizes revenue when the significant risks and rewards of ownership have been transferred to the customer pursuant to applicable laws and regulations, including factors such as when there has been evidence of a sales arrangement, delivery has occurred, or service have been rendered, the price to the buyer is fixed or determinable, and collectability is reasonably assured.
 
Evidence of a sales arrangement and a fixed or determinable price can be provided by a purchase order from the customer or from the customer paying for and accepting the product. Unless indicated differently in a contract between the customer and the Company, the Company assumes delivery to have occurred and title to have passed upon receipt of the product by the customer. Because the Company does not have a history with its customers yet, it assures collectability by recognizing revenue only after payment for product is received.
 
The Company has no significant post delivery obligations and its customers do not have any significant refund rights, acceptance terms, discounts, or other terms that serve to reduce the amount recorded relative to the sales price nor to delay the timing of recognition of revenue.
 
Use of Estimates
 
The preparation of financial statements, in conformity with accounting principals generally accepted in the United States of America requires management to make estimates and assumptions, which 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.
 
Cash and Cash Equivalents:
 
Cash and cash equivalents are considered to be all highly liquid investments purchased with an initial maturity of three (3) months or less.
 
7

 
Software Application Asset:
 
The Company complies with the provisions of FASB ACS 985-20 “Costs of Software to Be Sold, Leased, or Marketed”. The Software Application Asset is for software that will be used in the company’s products and began being capitalized after technological feasibility was established, which as required by FASB ACS 985-20 was after a working model was delivered to BAETA Corp and the working model software was tested for completeness, functionality, and consistency with expected product design. The testing was performed by the vendor that developed and delivered the product as well as by BAETA Corp and select potential customers. Capitalized software costs will begin being amortized when the software product is available for general release to customers. The asset is reviewed for impairment at an executive management meeting quarterly, during the review of the Company’s financial results. Impairment is reviewed on a product-by-product basis by comparing the unamortized capitalized costs to the asset’s net realizable value. The amount by which the unamortized capitalized costs exceed the net realizable value would be recognized as an impairment charge.
 
Inventories:
 
Inventories are stated at the lower of average costs incurred or estimated net realizable value. Major types of inventories include materials and supplies.
 
Property, Plant and Equipment:
 
Property, Plant and Equipment is capitalized at historical cost. Property, Plant and Equipment for the Company currently consists of Computer and Office Equipment and of Tooling. Computer and Office Equipment is depreciated over the time of its useful life. Tooling is depreciated in proportion to the units produced by the related tooling relative to the total number of units the tooling is expected to be able to produce. Each asset in Property, Plant and Equipment is reviewed for impairment at an executive management meeting quarterly, during the review of the Company’s financial results, and an impairment charge would be recognized if the carrying amount of the asset is not recoverable and exceeds its fair value. Expenditures incurred that enhance the productivity of the asset and/or extends the existing asset’s life are capitalized. Expenditures for typical normal wear and tear items are expensed when incurred.
 
Stock Compensation:
 
Stock issued for services rendered is valued at the time of service with the most relevant measurement at the time being either current stock price of the company stock in a recent private placement or equity offering or vendor invoice/contract that most closely reflects the value of services performed or product delivered.

Stock Options Issued for Services Rendered:
 
The Company complies with the provisions of FASB ACS 718 “Compensation - Stock Compensation”. The company uses the Black-Scholes-Merton closed-form model to value its stock options. Using that model, the Company includes as inputs to the model assumptions for the exercise price of each option, the expected term of each option, the current price of the underlying share, the expected volatility in the price of the underlying share for the expected term of each option, the expected dividends on the underlying share for the expected term of each option, and the risk free rate for the expected term of each option.
 
The exercise date of each option is included on the contractual agreements with each compensated provider. To estimate the expected term of options, the company used the “simplified” method as allowed in SEC Staff Accounting Bulletin: Codification of Staff Accounting Bulletins Topic 14: “Share-Based Payment”. The price of the underlying share is valued at the time of option grant with the most relevant measurement at the time being either current stock price of the company stock in a recent private placement or equity offering or vendor invoice/contract that most closely reflects the value of services performed or product delivered. Volatility is estimated by using the implied volatility a comparable company that is public, with publicly traded options, that is in a similar industry, with a similar product set, at a stage of life and size as close to the Company as possible for the set of similar companies with publicly traded options. The Company is using implied volatility, because historic volatility for the Company does not exist and is not practicable to obtain from comparable companies. There are no dividends expected to be paid on the underlying shares during the expected term of any options. And, the risk free rate is obtained from the yield on a similar term U.S. Treasury.
 
Income Taxes:
 
The Company complies with the provisions of FASB ACS 740 “Income Taxes”. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts and are based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amount expected, by management in management’s quarterly financial review and based on available evidence, that is more likely than not to be realized.
 
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Income (Loss) Per Share:
 
In accordance with FASB ACS 260 “Earnings Per Share”, the basic net loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period presented. Diluted net loss per common share is computed similar to basic net loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. As at June 30, 2010, diluted net loss per share is equivalent to basic net loss per share as there were no dilutive securities outstanding.
 
Concentration of Credit Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist of cash and cash equivalents and accounts receivables. The Company places its cash with high quality financial institutions and at times may exceed the FDIC $250,000 insurance limit. The Company extends credit based on an evaluation of the customer’s financial condition, generally without collateral. Exposure to losses on receivables is principally dependent on each customer’s financial condition. The Company monitors its exposure for credit losses and maintains allowances for anticipated losses, as required. Accounts are “written-off” when deemed uncollectible.

As of June 30, 2010 the Company has cash balance of $ 13,517 and no accounts receivable.

Special – purpose entities

The Company does not have any off-balance sheet financing activities.

Fiscal Year
 
Company adopted December 31st for its accounting fiscal year

Control by Principal Stockholders

The directors, executive officers and their affiliates or related parties, own beneficially and in the aggregate, the majority of the voting power of the outstanding shares of the common stock of the Company. Accordingly, the directors, executive officers and their affiliates, if they voted their shares uniformly, would have the ability to control the approval of most corporate actions, including increasing the authorized capital stock of the Company and the dissolution, merger or sale of the Company’s assets or business.

NOTE 2: Revolving line of credit

As of June 30, 2010, the Company is obligated under unsecured line of credit of $50,000 from a bank and principal balance of such a loan is $45,984. The current interest rate on this line of credit is 9.24%, with no maturity date. The debt is also guaranteed by a personal liability of an officer and shareholder.

NOTE 3: Related Party Transactions

On August 19, 2009, the Company and Dr. Alexander Gak entered into an agreement to document the terms of the Shareholder Advance of $288,850 that had accrued to that point. The agreement converted the advance into a loan. The material terms are that the Company will owe an interest rate of 8% per year, beginning on August 19, 2009, for the outstanding loan amount. The company will begin payment of the principal and accrued interest only after the Company’s operating checking account exceeds $250,000 in net cash on hand, at which time the company will pay $5,000 per month. Any principal and accrued interest not already repaid is due on August 18, 2019. The Company is allowed to pre-pay the note without penalty, but the debt-holder does not have the right to demand pre-payment.

On December 29, 2009, Leonid Pushkantser lent the Company $10,000.00. The material terms are that the Company will pay an interest rate of 5% per year and that the principal plus interest is due six months from the date of the note. The Company is allowed to pre-pay the note without penalty, but the debt-holder does not have the right to demand pre-payment.

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On January 6, 2010, shareholder Daniel Lundin lent the Company $10,000.00. The material terms are that the Company will pay an interest rate of 5% per year and that the principal plus interest is due six months from the date of the note. The Company is allowed to pre-pay the note without penalty, but the debt-holder does not have the right to demand pre-payment.
 
Shareholder Advance increased to $61,536 as of June 30, 2010. The advance relates to accrued interest from the Shareholder Loans plus an additional $40,950 advance from Dr. Alexander Gak. The advance consists of $25,500 long term and $15,450 short term.

On September 16, 2008, Dr. Alexander Gak and Extranome, Inc., a New Jersey corporation entered into an Exclusive Software Agreement (the “Agreement”). Pursuant the Agreement, Extranome sold to Baeta Corp. all commercial rights to its software entitled MyHealthID Medical Records Systems for a period of twenty-five years, subject to renewal. Pursuant to the Agreement, the Company agreed to pay Extranome $0.00 upfront, and in perpetuity approximately forty-nine percent of all net revenues generated from advertising by MyHealthID. Our CEO and sole director, Dr. Alexander Gak, is the 100% owner of Extranome, Inc., a New Jersey corporation.
 
On November 1, 2008, BAETA Corp. entered into a Software Development Contract with Extranome, Inc. At the time of the transaction, BAETA and Extranome were controlled by Dr. Alexander Gak. Pursuant to the Software Development Agreement, Extranome has been providing ongoing software development and product support services for BAETA since November 01, 2008. The Software Development Agreement is a non-exclusive agreement and is not related to BAETA’s Exclusive Software Agreement regarding MyHealthID product. In accordance with the Software Development Agreement, BAETA is to pay Extranome for the contracted work in cash form; however BAETA currently does not have a sufficient amount of cash on hand. Therefore, BAETA is paying Extranome in shares of its common stock. Extranome has received 30,000 shares for each month since November as non-cash part of compensation for services rendered which represent approximately 50% of Extranome’s due monthly compensation. BAETA will continue to issue company shares to Extranome in the amount of 50% of the monthly compensation for services rendered until it is able to compensate Extranome fully in cash. Through June 30, 2010, BAETA had issued to Extranome 450,000 shares.

On June 1, 2009, the Company founder and CEO, Dr. Alexander Gak, moved to become Chairman of the Board and hired Mr. Leonid Pushkantser as CEO. The significant compensation for Mr. Pushkantser is as follows: Mr. Pushkantser is compensated with a base salary of $180,000 per year for the first six months and $250,000 per year after. In addition, Mr. Pushkantser has been granted options to acquire 400,000 shares, which options vest 25% of the amount for each of four years.

NOTE 4: Stockholders’ Equity:

Preferred stock

The Company is also authorized to issue 10,000,000 shares of Series A preferred stock with a par value of $ 0.0001. On June 23, 2008, the Board of Directors approved the designation of 100 shares of preferred stock as Series A Preferred Stock. As of June 30, 2010, Company has 100 preferred shares Series A issued or outstanding.

The Company is also authorized to issue 10 shares of Series B preferred stock with a par value of $ 0.0001. On February 8, 2010, the Board of Directors approved the designation of 2 shares of preferred stock as Series B Preferred Stock. As of June 30, 2010, Company has 2 preferred shares Series B issued or outstanding.

On February 8, 2010, our Board of Directors and majority shareholders approved the designation of 10 shares of our preferred stock as Series B Preferred Stock (the “Series B Preferred Shares”) and authorized our officers to file a Certificate of Designation for the Series B Preferred Shares, which occurred on February 9, 2010. The outstanding shares of Series B Preferred Stock have no voting rights. Each share of Series B Convertible Preferred Stock carries with it the immediate right by its owner to convert such share of Series B Convertible Preferred Stock into the amount of shares of BAETA Corp. Common Stock equivalent to one percent (1%) of the total amount of BAETA Corp. Common Stock then issued and outstanding at the time of the conversion election. All of the outstanding shares of Series B Preferred Stock (2 outstanding) are held by MBB Holdings, Inc., a non-affiliate.
 
On February 9, 2010, the Company issued its 2 shares of Series B Preferred Stock to MBB Holdings, Inc., a New York corporation. The shares are beneficially held by Mr. Shmyer Breuer, a qualified and sophisticated investor. The sale was made in accordance with the exemption from registration pursuant to Section 4(2) under the Securities Act, as it did not constitute a public offering of securities. The Company sold 2 shares of the Series B Preferred, par value $0.0001 per share, at a purchase price of $50,000 per share, to MBB Holdings, Inc. for an aggregate purchase price of $100,000.

Common stock

The Company is authorized to issue 100,000,000 shares of common stock with a par value of $ 0.0001. As of December 31, 2009, the Company had 22,501,052 shares issued and outstanding. As of June 30, 2009, Company has 23,079,825 shares issued and outstanding.
 
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On January 8, 2010, the Company conducted an offering of its common stock to an accredited investor and issued 10,000 shares to that investor. The investor purchased the shares at $0.50 per share.
 
On January 29, 2010, the Company issued 65,464 shares of its common stock for marketing and software services. The shares are accounted for at $0.50 per share, based the assumption that the market price was equal to that used in the private placement that closed on January 8, 2009, and because the bills paid for by the shares were for an amount equal to $0.50 per share compensation.

On February 28, 2010, the Company issued 100,185 shares of its common stock for software services. The shares are accounted for at $0.50 per share, based the assumption that the market price was equal to that used in the private placement that closed on January 8, 2009, and because the bills paid for by the shares were for an amount equal to $0.50 per share compensation.

On March 25, 2010, the Company issued 72,501 shares of its common stock for software services. The shares are accounted for at $0.50 per share, based the assumption that the market price was equal to that used in the private placement that closed on January 8, 2009, and because the bills paid for by the shares were for an amount equal to $0.50 per share compensation.

On April 29, 2010, the Company issued 67,501 shares of its common stock for marketing and software services. The shares are accounted for at $0.50 per share, because the bills paid for by the shares were for an amount equal to $0.50 per share compensation.
 
On May 17, 2010, the Company conducted an offering of its common stock to an accredited investor and issued 100,000 shares to that investor. The investor purchased the shares at $0.25 per share.
 
On May 29, 2010, the Company issued 71,561 shares of its common stock for marketing and software services. The shares are accounted for at $0.50 per share, because the bills paid for by the shares were for an amount equal to $0.50 per share compensation.
 
On June 22, 2010, the Company conducted an offering of its common stock to an accredited investor and issued 20,000 shares to that investor. The investor purchased the shares at $0.25 per share.
 
On June 29, 2010, the Company issued 71,561 shares of its common stock for marketing and software services. The shares are accounted for at $0.50 per share, because the bills paid for by the shares were for an amount equal to $0.50 per share compensation.

Stock Options

As of December 31, 2009, the Company had granted options to purchase 1,631,125 shares. As of June 30, 2010, the Company had granted options to purchase 1,649,350 shares, of which options to purchase 499,350 shares had vested. During the period, the Company awarded option grants to purchase a total of 18,225 shares, which had an average contract life of 10 years until they expire, and options to purchase 368,225 shares vested. For those grants during the period, the company used the valuation method described in the Significant Accounting Policies (Footnote 1 “Stock Options Issued for Services Rendered” section) and used the options with the closest expiration date available for the similar entity, with the closest strike price to the current share price because all of the Company’s option grants are issued at a strike price equal to the current share price at the time, which resulted in an implied volatility, from the average of the bid and ask implied volatilities, of 57.45, a risk free rate of 3.19%, and a resulting total value of $4,310 for those option grants. $39,927 of options were expensed as compensation costs during the period and $0 was on the balance sheet.

During the six-month period, the following aggregate option grants were made:

Shares Available for the Grant(s)
 
Vesting Period (same as Service Period)
 
Maximum Contractual Life
18,225
 
Immediate
 
10 years

Below is information about the options outstanding:
 
   
Number of Shares
   
Weighted Average Exercise Price
   
Average Remaining Contractual Life (years)
   
Value
 
Outstanding December 31, 2009
    1,631,125     $ 0.50       8.9     $ 340,825  
Granted
    18,225     $ 0.50       10     $ 4,310  
Exercised
    0                          
Forfeited
    0                          
Expired
    0                          
Outstanding June 30, 2010
    1,649,350     $ 0.50       7.62     $ 345,135  
Vested during the Period
    368,225     $ 0.50       7.55     $ 76,768  
Total vested at June 30, 2010
    499,350     $ 0.50       7.88     $ 105,983  
 

* All vested options are currently exercisable
 
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Total nonvested awards that are not yet recognized as compensation cost have a value of $216,514 and are expected to be recognized over a weighted-average period of 3.2 years.

NOTE 5: Income Tax

The Company accounts for income taxes under FASB ACS 740, “Income Taxes” (“ACS 740”). ACS 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and the tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and tax credit carryforwards. ACS 740 additionally requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. Realization of deferred tax assets, including those related to the U.S. net operating loss carryforwards, are dependent upon future earnings, if any, of which the timing and amount are uncertain. Accordingly, the net deferred tax asset related to the net operating loss carryforward has been fully offset by a valuation allowance.

The Company has a net operating loss carry forward for tax purposes totaling approximately $ 1,693,833 at June 30, 2010. The net operating loss carries forward for income taxes, which may be available to reduce future years’ taxable income. These carry forwards will expire, if not utilized, through 2028 and are subject to the Internal Revenue Code Section 382, which places a limitation on the amount of taxable income that can be offset by net operating losses after a change in ownership. Management believes that the realization of the benefits from these losses appears uncertain due to the Company’s continuing losses for United States income tax purposes. Accordingly, the Company has provided a 100% valuation allowance on the deferred tax asset benefit to reduce the asset to zero. Management will review this valuation allowance periodically and make adjustments as warranted.
 
   
June 30
2010
   
December 31
2009
 
Tax benefit of net operating loss carryforward
  $ 592,841     $ 389,457  
Valuation allowance
    (592,841 )     (389,457 )
Net deferred tax asset recorded
  $ -     $ -  

NOTE 6: Going Concern
 
The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business.

The Company’s accumulated operating loss since inception was $1,941,477, working capital deficit of $345,114 and stockholders’ equity deficit of $510,114 as of June 30, 2010.

The Company will actively pursue its business activities, offer noncash consideration, secure additional or refinance the debt and/or raise equity as a means of financing its operations and meet the credit obligations. If the Company is unable to return to its profitability or obtain necessary financing, it may substantially curtail or terminate its operations or seek other business opportunities through strategic alliances, acquisitions or other arrangements that may dilute the interests of existing stockholders. The company’s management is currently seeking additional capital to support operations, but has not received any firm or other commitments from any parties and may, or may not, be successful in obtaining capital sufficient to perpetuate the operations of the Company.

 NOTE 7: Commitment and contingencies

On July 1, 2009, the Company began a one-year lease for office space for its headquarters operation from Regus at a minimum monthly rent of $952 which expires on June 30, 2010. The minimum rental commitment to June 30, 2010 is $11,424.

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On March 12, 2010 the Company extended its office space lease for its headquarters operation from Regus for an additional year, through June 30, 2011, at a minimum monthly rent of $1,000, starting July 1, 2010. The minimum full year rental commitment from July 1, 2010 to June 30, 2011 is $12,000.

Exclusive Software Agreement
 
On September 16, 2008, Dr. Alexander Gak, our Chief Executive Officer and President, and Extranome, Inc., a New Jersey corporation entered into an exclusive Software Agreement (the “Agreement”). Pursuant the Agreement, Extranome sold to Baeta Corp. all commercial rights to its software entitled MyHealthID Medical Records Systems. Pursuant to the Agreement, the Company agreed to pay Extranome $0.00 upfront, and in perpetuity approximately forty-nine percent of all net revenues generated from advertising by MyHealthID. Our sole officer and director, Dr. Alexander Gak, is the 100% owner of Extranome, Inc., a New Jersey corporation.

NOTE 8: Convertible Notes

On April 8, 2010, the Company issued a convertible note of $100,000 to an accredited investor. The material terms are that the note will accrue an interest rate of 10% per year and that the principal plus interest is due two years from the date of the note. At any time during the term of the note, the holder may convert principal plus accrued interest into common stock in the Company at a value equal to 50% of the average of the lowest three trading prices for the prior five days, but not less than $0.25 per share. The Company is allowed to pre-pay the note without penalty, but the debt-holder does not have the right to demand pre-payment.

On May 19, 2010, the Company issued a convertible note of $50,000 to an accredited investor. The material terms are that the note will accrue an interest rate of 10% per year and that the principal plus interest is due two years from the date of the note. At any time during the term of the note, the holder may convert principal plus accrued interest into common stock in the Company at a value equal $0.50 per share. The Company is allowed to pre-pay the note without penalty, but the debt-holder does not have the right to demand pre-payment.

NOTE 9: Interest Expense

Interest Expense on the Income Statement is for interest paid on the Line of Credit, the Shareholder Notes, and the Convertible Notes.

NOTE 10: Material Subsequent Events (unaudited)

On July 19, 2010, the Company purchased 304,000 shares from Mr. Douglas Rogers for $25,000.

On July 20, 2010, the Company purchased 1,000 shares of Company stock on the open market for $1 per share.
 
On August 10, 2010, Leonid Pushkantser, the Company’s Chief Executive Officer and Director, loaned the Company $100,000.00. The material terms are that the Company will pay an interest rate of 5% per year. The Company will pay $5,000 in principal, plus accrued interest, on the first of each month after the date of the loan. The Company is allowed to pre-pay the note without penalty, but the debt-holder does not have the right to demand pre-payment.
 
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion together with our consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements, which involve risks and uncertainties. Our actual results may differ materially from those we currently anticipate as a result of many factors.

Forward Looking Statements

Some of the information in this section contains forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by forward-looking words such as “may,” “will,” “expect,” “anticipate,” “believe,” “estimate” and “continue,” or similar words. You should read statements that contain these words carefully because they:

 
·
discuss our future expectations;
     
 
·
contain projections of our future results of operations or of our financial condition; and
     
 
·
state other “forward-looking” information.

We believe it is important to communicate our expectations. However, there may be events in the future that we are not able to accurately predict or over which we have no control. Our actual results and the timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of certain factors.

Unless stated otherwise, the words “we,” “us,” “our,” “the Company” or “BAETA Corp” in this Quarterly Report on Form 10-Q collectively refers to the Company, BAETA Corp.

Organizational History

BAETA Corp. (a development stage company) (“the Company”) was incorporated in the State of New Jersey on August 14, 2007 as a product-driven medical technology company that manufactures advanced products for the global vital signs monitoring industry. The Company has developed a patent-pending pain management and pain assessment product for the estimated 25 million chronic pain sufferers in the U.S. alone.

All activity through June 30, 2010 relates to the Company’s formation and initial research and development.

The Company is considered to be a development stage company and as such the financial statements presented herein are presented in accordance with FASB Accounting Standards Codification (“ASC”) 915 “Development Stage Entities.” The Company is subject to the risks associated with activities of development stage companies.

Forward Stock Split

On May 16, 2008, BAETA filed an amendment to the Company’s Certificate of Incorporation with the Secretary of State of the State of New Jersey thereby effectuating a forward stock split of 20,000-to-1, effective 12:01 a.m. on May 16, 2008. The Company did not amend the par value of the Company’s common stock.

Prior to the Forward Split, there were 1,000 shares of the Company’s common stock, par value $0.0001 per share, issued and outstanding, all held by Dr. Alexander Gak, our President and Director. Upon the effectiveness of the Forward Split as of May 16, 2008, there became 20,000,000 shares of the Company’s Common Stock issued and outstanding, all held by Dr. Gak. Currently, there are 22,852,926 shares of the Company’s common stock issued and outstanding to approximately 88 shareholders of record as of the date of this filing.

Effectiveness of S-1 Registration Statement

On May 14, 2010, the Securities and Exchange Commission declared the Company’s Registration Statement on Form S-1 (File No.: 333-154243) effective. The Registration Statement registered 915,400 shares of Common Stock, par value $0.0001 per share of the Company on behalf of the selling stockholders named in the Registration Statement. The Company will not receive any proceeds from the sale of those shares.

Plan of Operations

We anticipate that the Company will require approximately $500,000 to $1,000,000 in additional capital to execute its current 12-month plan of operations; including but not necessarily limited to expenses related to the patents pending for its developing products and technology, expansion of infrastructure and physical office space, hiring of key employees and sales and administrative and executive personnel as well as for the registration of its shares and compliance with securities regulations. We do not currently have sufficient capital to meet our needs for the next 12 months, and we are extremely reliant upon future financings to fund our operations. We intend procure this additional capital by way of private offerings of our common stock, exempt from the registration requirements of the Federal and state securities laws. We may retain the services of one or more placement agents to obtain this financing. To date, we have been in discussions with potential placement agents regarding the commencement of such private offerings, however, no such private offerings have yet commenced.

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During the next 12 months, we intend to continue to outsource our product research and development to Ionidea Ukraine of Crimea, Ukraine for technical development and prototyping and M.B. Turnkey Design, LLC of Manville, New Jersey for physical product prototyping and production. We anticipate that we will incur costs of approximately $10,000 to $20,000 per month for ongoing technology development. We have started the MyPainAway™ device manufacturing process with M.B. Turnkey Design, LLC of Manville, New Jersey.

We have also obtained MyPainAway™ device manufacturing quotes from Ultraflex, Ronkonkoma, New York, and OCM Manufacturing, Ontario, Canada. We expect that the cost of production will be significantly lower than the average sale price of the product and that terms will be predicated on actual product ordered at any given time. We anticipate that we will use additional capital to hire sales personnel and administrative and executive personnel at a level consistent with available capital, but aggressively to support initial product sales and market penetration. We do not believe that we can sustain or execute our plan of operations, nor bring our proposed products to market without additional capital of approximately $500,000 to $1,000,000.
 
Exclusive Software Agreement
 
On September 16, 2008, Dr. Alexander Gak, our President and Chairman, and Extranome, Inc., a New Jersey corporation entered into an Exclusive Software Agreement (the “Agreement”). Pursuant the Agreement, Extranome sold to Baeta Corp. all commercial rights to its software entitled MyHealthID Medical Records Systems for a twenty five year term. Pursuant to the Agreement, the Company agreed to pay Extranome $0.00 upfront, and in perpetuity approximately forty-nine percent of all net revenues generated from advertising by MyHealthID. Our President and sole director, Dr. Alexander Gak, is the 100% owner of Extranome, Inc., a New Jersey corporation.

Software Development Agreement with Extranome, Inc.

On November 1, 2008, BAETA Corp. entered into a Software Development Contract with Extranome, Inc. At the time of the transaction, BAETA and Extranome were controlled by Dr. Alexander Gak, our President and Chairman.

Pursuant to the Software Development Agreement, Extranome has been providing ongoing software development and product support services for BAETA since November 01, 2008. The Software Development Agreement is a non-exclusive agreement and is not related to BAETA’s Exclusive Software Agreement regarding MyHealthID product. In accordance with Section 2 of the Software Development Agreement, BAETA is to pay Extranome for the contracted work in cash form; however BAETA currently does not have a sufficient amount of cash on hand. Therefore, BAETA is paying Extranome 50% in shares of its common stock, and 50% in cash. Extranome has received 30,000 for each month since November 2008 as non-cash part of compensation for services rendered which represent approximately 50% of Extranome’s due monthly compensation, and to date has received 600,000 shares of BAETA Corp. BAETA will continue to issue company shares to Extranome in the amount of 50% of the monthly compensation for services rendered until it is able to compensate Extranome fully in cash.

Going Concern

The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business.

The Company’s accumulated operating loss since inception is $1,943,477. As of June 30, 2010, the Company has total liabilities of $811,765 compared to total assets of $301,651, limited cash on hand in the amount of $13,517, and stockholders’ deficit of ($510,114).

The Company will actively pursue its business activities, offer noncash consideration, secure additional or refinance the debt and/or raise equity as a means of financing its operations and meet the credit obligations. If the Company is unable to return to its profitability or obtain necessary financing, it may substantially curtail or terminate its operations or seek other business opportunities through strategic alliances, acquisitions or other arrangements that may dilute the interests of existing stockholders. The company’s management is currently seeking additional capital to support operations, but has not received any firm or other commitments from any parties and may or may not, be successful in obtaining capital sufficient to perpetuate the operations of the Company.

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Evolving Industry Standards; Rapid Technological Changes

The Company’s success in its business will depend in part upon its continued ability to enhance its existing products and services, to introduce new products and services quickly and cost effectively to meet evolving customer needs, to achieve market acceptance for new product and service offerings and to respond to emerging industry standards and other technological changes. There can be no assurance that the Company will be able to respond effectively to technological changes or new industry standards. Moreover, there can be no assurance that competitors of the Company will not develop competitive products, or that any such competitive products will not have an adverse effect upon the Company’s operating results.

Moreover, management intends to continue to implement “best practices” and other established process improvements in its operations going forward. There can be no assurance that the Company will be successful in refining, enhancing and developing its operating strategies and systems going forward, that the costs associated with refining, enhancing and developing such strategies and systems will not increase significantly in future periods or that the Company’s existing software and technology will not become obsolete as a result of ongoing technological developments in the marketplace.
 
Sufficiency of Cash Flows

Because current cash balances and projected cash generation from operations are not sufficient to meet the Company’s cash needs for working capital and capital expenditures, management intends to seek additional equity or obtain additional credit facilities. The sale of additional equity could result in additional and substantial dilution to the Company’s shareholders. A portion of the Company’s cash may be used to acquire or invest in complementary businesses or products or to obtain the right to use complementary technologies. From time to time, in the ordinary course of business, the Company evaluates potential acquisitions of such businesses, products or technologies.

Results of Operations at June 30, 2010 compared to December 31, 2009

Assets.   Our total assets were $301,651 at June 30, 2010 compared to $232,037 as of December 31, 2009 primarily as a result of the acquisition of property, the development of our Software Asset, addition of some inventory, and a small increase in cash.

Liabilities. Our total liabilities were $811,765 at June 30, 2010 compared to $610,366 at December 31, 2009. This increase was primarily due to an increase in Accounts Payable to Extranome (Related Party), a small decrease in Accounts Payable, an increase in Shareholder Notes and Advances, and the addition of two Convertible Notes.

Total Stockholders’ Deficit. Our stockholders’ deficit was ($510,114) at June 30, 2010 compared to ($387,328) at December 31, 2009. This increase in deficit was primarily due to continuing losses offset some by additional paid in capital, but primarily funded by Liabilities.

Results of Operations for the three months ended June 30, 2010 compared to the three months ended June 30, 2009

Revenues.  Our revenues were $0 for the three months ended June 30, 2010, compared with $0 for the three months ended June 30, 2009.

Research & Development expenses.  Research & Development costs were $45,750 for the three months ended June 30, 2010, compared to $0 for the three months ended June 30, 2009. The increase in research & development costs for this time period is attributed to research into two new products, which are extensions of the My Pain Away product line.

Sales & Marketing expenses.  Sales & Marketing costs were $61,091 for the three months ended June 30, 2010, compared to $33,935 for the three months ended June 30, 2009. The increase in sales & marketing costs for this time period is attributed to increasing marketing efforts related to company products.

General & Administrative Personnel expenses.  General & Administrative Personnel Expenses were $111,615 for the three months ended June 30, 2010, compared to $117,723 for the three months ended June 30, 2009. The decrease in General & Administrative Personnel Expenses for this time period is attributed to decreased reliance on contractors, offset somewhat by increased employee costs associated with the hiring of a full time CEO.

Professional Service Fees expenses.  Professional Services Fees were $27,728 for the three months ended June 30, 2010, compared to $14,109 for the three months ended June 30, 2009. The increase in Professional Service Fees for this time period is attributed to increased legal costs, offset by slightly decreased accounting fees.

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Other miscellaneous operating expenses.  Other miscellaneous operating expenses were $14,235 for the three months ended June 30, 2010, compared to $25,472 for the three months ended June 30, 2009. The decrease in Other miscellaneous operating expenses for this time period is attributed to a decrease in trademark and patent fees from $22,195 to $0, offset by a new Directors & Officers Insurance policy as well as a slight increase in most other general business expenses.

Net Loss. We had a net loss of ($275,787) for the three months ended June 30, 2010, compared to a net loss of ($192,.336) for the three months ended June 30, 2009. This increase in net loss is due primarily to an increase in Research & Development and Sales & Marketing Expenses

Results of Operations for the six months ended June 30, 2010 compared to the six months ended June 30, 2009

Revenues.  Our revenues were $0 for the six months ended June 30, 2010, compared with $9,003 for the six months ended June 30, 2009.  The decrease is attributable to no customer purchases placed nor delivered during the six months ended June 30, 2010.

Research & Development expenses.  Research & Development costs were $111,000 for the six months ended June 30, 2010, compared to $0 for the six months ended June 30, 2009. The increase in research & development costs for this time period is attributed to research into two new products, which are extensions of the My Pain Away product line.

Sales & Marketing expenses.  Sales & Marketing costs were $112,974 for the six months ended June 30, 2010, compared to $50,645 for the six months ended June 30, 2009. The increase in sales & marketing costs for this time period is attributed to increasing marketing efforts related to company products.

General & Administrative Personnel expenses.  General & Administrative Personnel Expenses were $255,902 for the six months ended June 30, 2010, compared to $205,719 for the six months ended June 30, 2009. The decrease in General & Administrative Personnel Expenses for this time period is attributed to decreased reliance on contractors, offset somewhat by increased employee costs associated with the hiring of a full time CEO.

Professional Service Fees expenses.  Professional Services Fees were $48,559 for the six months ended June 30, 2010, compared to $22,109 for the six months ended June 30, 2009. The increase in Professional Service Fees for this time period is attributed to increased legal costs, offset by decreased accounting fees.

Other miscellaneous operating expenses.  Other miscellaneous operating expenses were $30,024 for the six months ended June 30, 2010, compared to $29,650 for the six months ended June 30, 2009. The decrease in Other miscellaneous operating expenses for this time period is attributed to a decrease in trademark and patent fees from $22,195 to $2,464, offset by a new Directors & Officers Insurance policy, filing fees associated with delivering stock certificates, as well as a slight increase in most other general business expenses.

Net Loss. We had a net loss of ($581,099) for the six months ended June 30, 2010, compared to a net loss of ($304,078) for the six months ended June 30, 2009. This increase in net loss is due primarily to an increase in Research & Development, Sales & Marketing Expenses, General & Administrative Personnel Expenses, and Professional Service Fees.

Liquidity and Capital Resources; Going Concern

Cash Balance. At June 30, 2010, we had $13,517 cash on-hand and our stockholder’s deficit was ($510,114), and there is substantial doubt as our ability to continue as a going concern. We anticipate incurring losses in the near future. We do not have an established source of revenue sufficient to cover our operating costs in the next 12 months. Our ability to continue as a going concern is dependent upon our ability to successfully compete, operate profitably and/or raise additional capital through other means. If we are unable to reverse our losses, we will have to discontinue operations.

Off –Balance Sheet Operations

The Company does not have any off-balance sheet operations.

CRITICAL ACCOUNTING POLICIES

The Company’s financial statements included herein were prepared in accordance with United States generally accepted accounting principles. Significant accounting policies are as follows:

 
a.
Use of Estimates

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, which 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.
 
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b.
Cash and Cash Equivalents

Cash and cash equivalents are considered to be all highly liquid investments purchased with an initial maturity of three (3) months or less.

 
c.
Income Taxes

The Company complies with the provisions of FASB ACS 740 “Income Taxes”. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts and are based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amount expected, by management in management’s quarterly financial review and based on available evidence, that is more likely than not to be realized.

 
d.
Fair Value of Financial Instruments

The carrying value of cash equivalents, software development costs, and accrued expenses approximates fair value.

 
e.
Revenue Recognition
 
Revenue is recognized in accordance with FASB ASC 605, “Revenue Recognition”.  The Company recognizes revenue when the significant risks and rewards of ownership have been transferred to the customer pursuant to applicable laws and regulations, including factors such as when there has been evidence of a sales arrangement, delivery has occurred, or service have been rendered, the price to the buyer is fixed or determinable, and collectability is reasonably assured.
 
Evidence of a sales arrangement and a fixed or determinable price can be provided by a purchase order from the customer or from the customer paying for and accepting the product.  Unless indicated differently in a contract between the customer and the Company, the Company assumes delivery to have occurred and title to have passed upon receipt of the product by the customer.  Because the Company does not have a history with its customers yet, it assures collectability by recognizing revenue only after payment for product is received.
 
The Company has no significant post delivery obligations and its customers do not have any significant refund rights, acceptance terms, discounts, or other terms that serve to reduce the amount recorded relative to the sales price nor to delay the timing of recognition of revenue.

 
f.
Software Development Costs

The Company complies with the provisions of FASB ACS 985-20 “Costs of Software to Be Sold, Leased, or Marketed”.  The Software Application Asset is for software that will be used in the company’s products and began being capitalized after technological feasibility was established, which as required by FASB ACS 985-20 was after a working model was delivered to BAETA Corp and the working model software was tested for completeness, functionality, and consistency with expected product design.  The testing was performed by the vendor that developed and delivered the product as well as by BAETA Corp and select potential customers.  Capitalized software costs will begin being amortized when the software product is available for general release to customers.  The asset is reviewed for impairment at an executive management meeting quarterly, during the review of the Company’s financial results.  Impairment is reviewed on a product-by-product basis by comparing the unamortized capitalized costs to the asset’s net realizable value.  The amount by which the unamortized capitalized costs exceed the net realizable value would be recognized as an impairment charge.

 
g.
Stock Options

The Company complies with the provisions of FASB ACS 718 “Compensation - Stock Compensation”.  The company uses the Black-Scholes-Merton closed-form model to value its stock options.  Using that model, the Company includes as inputs to the model assumptions for the exercise price of each option, the expected term of each option, the current price of the underlying share, the expected volatility in the price of the underlying share for the expected term of each option, the expected dividends on the underlying share for the expected term of each option, and the risk free rate for the expected term of each option.
 
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The exercise date of each option is included on the contractual agreements with each compensated provider.  To estimate the expected term of options, the company used the “simplified” method as allowed in SEC Staff Accounting Bulletin: Codification of Staff Accounting Bulletins Topic 14:  “Share-Based Payment”.  The price of the underlying share is valued at the time of option grant with the most relevant measurement at the time being either current stock price of the company stock in a recent private placement or equity offering or vendor invoice/contract that most closely reflects the value of services performed or product delivered.  Volatility is estimated by using the implied volatility a comparable company that is public, with publicly traded options, that is in a similar industry, with a similar product set, at a stage of life and size as close to the Company as possible for the set of similar companies with publicly traded options.  The Company is using implied volatility, because historic volatility for the Company does not exist and is not practicable to obtain from comparable companies.  There are no dividends expected to be paid on the underlying shares during the expected term of any options.  And, the risk free rate is obtained from the yield on a similar term U.S. Treasury.

 
h.
Stock Compensation

Stock issued for services rendered is valued at the time of service with the most relevant measurement at the time being either current stock price of the company stock in a recent private placement or equity offering or vendor invoice/contract that most closely reflects the value of services performed or product delivered.

 
i.
Inventories

Inventories are stated at the lower of average costs incurred or estimated net realizable value.  Major types of inventories include materials and supplies.

 
j.
Property, Plant and Equipment

Property, Plant and Equipment is capitalized at historical cost.  Property, Plant and Equipment for the Company currently consists of Computer and Office Equipment and of Tooling.  Computer and Office Equipment is depreciated over the time of its useful life.  Tooling is depreciated in proportion to the units produced by the related tooling relative to the total number of units the tooling is expected to be able to produce.  Each asset in Property, Plant and Equipment is reviewed for impairment at an executive management meeting quarterly, during the review of the Company’s financial results, and an impairment charge would be recognized if the carrying amount of the asset is not recoverable and exceeds its fair value.  Expenditures incurred that enhance the productivity of the asset and/or extends the existing asset’s life are capitalized.  Expenditures for typical normal wear and tear items are expensed when incurred.


N/A.

Item 4T. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) (the Company’s principal financial and accounting officers), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report.

Based on their evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2010, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were not effective to ensure that the information required to be disclosed by us in this Report was recorded, processed, summarized and reported accurately, completely, and within the time periods specified in the SEC’s rules and instructions for Form 10-Q.

Our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures had the following material weaknesses:

 
·
We were unable to maintain any segregation of duties within our financial operations due to our reliance on limited personnel in the finance function. While this control deficiency did not result in any audit adjustments to our 2007 through 2010 interim or annual financial statements, it could have resulted in a material misstatement that might have been prevented or detected by a segregation of duties.
 
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·
The Company’s current accounting staff is relatively small and the Company’s resources are limited given its size;

 
·
The Company lacks sufficient resources to perform the internal audit function and does not have an Audit Committee;

 
·
We do not have an independent Board of Directors, nor do we have a board member designated as an independent financial expert for the Company. The Board of Directors is comprised of two members of management. As a result, there may be lack of independent oversight of the management team, lack of independent review of our operating and financial results, and lack of independent review of disclosures made by the Company; and

 
·
Documentation of all proper accounting procedures is not yet complete.

To the extent reasonably possible given our limited resources, we intend to take measures to cure the aforementioned material weaknesses, including, but not limited to, the following:

 
·
Considering the engagement of consultants to assist in ensuring that accounting policies and procedures are consistent across the organization and that we have adequate control over financial statement disclosures;

 
·
Hiring additional qualified financial personnel on a full-time basis;

 
·
Expanding our current board of directors to include additional individuals willing to perform directorial functions; and

 
·
Increasing our workforce in preparation for exiting the exploration stage and commencing revenue producing operations.

Since the recited remedial actions will require that we hire or engage additional personnel, these material weaknesses may not be overcome in the near term due to our limited financial resources. Until such remedial actions can be realized, we will continue to rely on the advice of outside professionals and consultants.

We anticipate that these initiatives will be at least partially, if not fully, implemented by December 31, 2010.

Changes in Internal Controls

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the three months ended June 30, 2010 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II
OTHER INFORMATION

Item 1. Legal Proceedings.

The Company is currently not a party to any pending legal proceedings and no such action by or to the best of its knowledge, against the Company has been threatened.

Item 1A. Risk Factors.

N/A.

Item 2. Unregistered Sale of Equity Securities and Use of Proceeds.

On April 29, 2010, the Company issued 7,500 shares of its common stock to Leroy and Lisbet Smith. The Company issued the stock in consideration for marketing consultation services rendered by Mr. Smith as the Company’s Chief Marketing Officer and upon reliance on the exemption from registration requirements of the Securities Act of 1933, as amended, provided under Section 4(2) promulgated thereunder as the issuance of the stock did not involve a public offering of securities.

On April 29, 2010, the Company issued 30,000 shares of Common Stock due to Extranome pursuant to the Software Development Contract between BAETA Corp. and Extranome, Inc. As noted above, our President and Chairman, Dr. Alexander Gak, is the 100% owner of Extranome. Therefore he is deemed to beneficially own these 30,000 shares as he maintains voting and dispositive control over Extranome.

On April 29, 2010, the Company issued 8,334 shares of Common Stock to Boris Mordkovich MD. The Company issued the stock in consideration for product development services, in accordance with the August 2009 consulting agreement between BAETA Corp. and Boris Mordkovich MD, and issued upon reliance on the exemption from registration requirements of the Securities Act of 1933, as amended, provided under Section 4(2) promulgated thereunder as the issuance of the stock did not involve a public offering of securities.

On April 29, 2010, the Company issued 5,000 shares of its common stock to Eugene Gribov. The Company issued the stock in consideration for technology services rendered as the Company’s Chief Tech Officer and upon reliance on the exemption from registration requirements of the Securities Act of 1933, as amended, provided under Section 4(2) promulgated thereunder as the issuance of the stock did not involve a public offering of securities.

On April 29, 2010, the Company issued 11,667 shares of its common stock to Leonid Pushkantser. The Company issued the stock in consideration for executive services rendered as the Company’s Chief Executive Officer and upon reliance on the exemption from registration requirements of the Securities Act of 1933, as amended, provided under Section 4(2) promulgated thereunder as the issuance of the stock did not involve a public offering of securities.

On April 29, 2010, the Company issued 5,000 shares of its common stock to Joseph Cusack. The Company issued the stock in consideration for consulting services rendered as the Company’s Product Sales Services consultant pursuant to an Agreement executed between BAETA Corp. and Mr. Cusack on January 1, 2010, and upon reliance on the exemption from registration requirements of the Securities Act of 1933, as amended, provided under Section 4(2) promulgated thereunder as the issuance of the stock did not involve a public offering of securities.

On May 17, 2010, the Company issued 100,000 shares of its Common Stock to Dr. Anroy Ottley, a qualified and sophisticated investor. The sale was made in accordance with the exemption from registration pursuant to Section 4(2) under the Securities Act, as it did not constitute a public offering of securities. The Company sold 100,000 shares of Common Stock, par value $0.0001 per share, at a purchase price of $0.25 per share, to Dr. Ottley for an aggregate purchase price of $25,000.

On May 29, 2010, the Company issued 11,560 shares of its common stock to Leroy and Lisbet Smith. The Company issued the stock in consideration for marketing consultation services rendered by Mr. Smith as the Company’s Chief Marketing Officer and upon reliance on the exemption from registration requirements of the Securities Act of 1933, as amended, provided under Section 4(2) promulgated thereunder as the issuance of the stock did not involve a public offering of securities.

On May 29, 2010, the Company issued 30,000 shares of Common Stock due to Extranome pursuant to the Software Development Contract between BAETA Corp. and Extranome, Inc. As noted above, our President and Chairman, Dr. Alexander Gak, is the 100% owner of Extranome. Therefore he is deemed to beneficially own these 30,000 shares as he maintains voting and dispositive control over Extranome.

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On May 29, 2010, the Company issued 8,334 shares of Common Stock to Boris Mordkovich MD. The Company issued the stock in consideration for product development services, in accordance with the August 2009 consulting agreement between BAETA Corp. and Boris Mordkovich MD, and issued upon reliance on the exemption from registration requirements of the Securities Act of 1933, as amended, provided under Section 4(2) promulgated thereunder as the issuance of the stock did not involve a public offering of securities.

On May 29, 2010, the Company issued 5,000 shares of its common stock to Eugene Gribov. The Company issued the stock in consideration for technology services rendered as the Company’s Chief Tech Officer and upon reliance on the exemption from registration requirements of the Securities Act of 1933, as amended, provided under Section 4(2) promulgated thereunder as the issuance of the stock did not involve a public offering of securities.

On May 29, 2010, the Company issued 11,667 shares of its common stock to Leonid Pushkantser. The Company issued the stock in consideration for executive services rendered as the Company’s Chief Executive Officer and upon reliance on the exemption from registration requirements of the Securities Act of 1933, as amended, provided under Section 4(2) promulgated thereunder as the issuance of the stock did not involve a public offering of securities.

On May 29, 2010, the Company issued 5,000 shares of its common stock to Joseph Cusack. The Company issued the stock in consideration for consulting services rendered as the Company’s Product Sales Services consultant pursuant to an Agreement executed between BAETA Corp. and Mr. Cusack on January 1, 2010, and upon reliance on the exemption from registration requirements of the Securities Act of 1933, as amended, provided under Section 4(2) promulgated thereunder as the issuance of the stock did not involve a public offering of securities.

On June 22, 2010, the Company issued its common stock to Ignatius Scalia, a qualified and sophisticated investor. The sale was made in accordance with the exemption from registration pursuant to Section 4(2) under the Securities Act, as it did not constitute a public offering of securities. The Company sold 20,000 shares of its Common Stock, par value $0.0001 per share, at a purchase price of $0.50 per share, to Mr. Scalia for an aggregate of $10,000.

On June 29, 2010, the Company issued 11,560 shares of its common stock to Leroy and Lisbet Smith. The Company issued the stock in consideration for marketing consultation services rendered by Mr. Smith as the Company’s Chief Marketing Officer and upon reliance on the exemption from registration requirements of the Securities Act of 1933, as amended, provided under Section 4(2) promulgated thereunder as the issuance of the stock did not involve a public offering of securities.

On June 29, 2010, the Company issued 30,000 shares of Common Stock due to Extranome pursuant to the Software Development Contract between BAETA Corp. and Extranome, Inc. As noted above, our President and Chairman, Dr. Alexander Gak, is the 100% owner of Extranome. Therefore he is deemed to beneficially own these 30,000 shares as he maintains voting and dispositive control over Extranome.

On June 29, 2010, the Company issued 8,334 shares of Common Stock to Boris Mordkovich MD. The Company issued the stock in consideration for product development services, in accordance with the August 2009 consulting agreement between BAETA Corp. and Boris Mordkovich MD, and issued upon reliance on the exemption from registration requirements of the Securities Act of 1933, as amended, provided under Section 4(2) promulgated thereunder as the issuance of the stock did not involve a public offering of securities.

On June 29, 2010, the Company issued 5,000 shares of its common stock to Eugene Gribov. The Company issued the stock in consideration for technology services rendered as the Company’s Chief Tech Officer and upon reliance on the exemption from registration requirements of the Securities Act of 1933, as amended, provided under Section 4(2) promulgated thereunder as the issuance of the stock did not involve a public offering of securities.

On June 29, 2010, the Company issued 11,667 shares of its common stock to Leonid Pushkantser. The Company issued the stock in consideration for executive services rendered as the Company’s Chief Executive Officer and upon reliance on the exemption from registration requirements of the Securities Act of 1933, as amended, provided under Section 4(2) promulgated thereunder as the issuance of the stock did not involve a public offering of securities.

On June 29, 2010, the Company issued 5,000 shares of its common stock to Joseph Cusack. The Company issued the stock in consideration for consulting services rendered as the Company’s Product Sales Services consultant pursuant to an Agreement executed between BAETA Corp. and Mr. Cusack on January 1, 2010, and upon reliance on the exemption from registration requirements of the Securities Act of 1933, as amended, provided under Section 4(2) promulgated thereunder as the issuance of the stock did not involve a public offering of securities.

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On July 19, 2010, the Company repurchased 304,000 shares of its common stock held by Douglas A. Rogers for an aggregate purchase price of $25,000, or $0.0822 per share. The repurchase was made upon reliance on the exemption from registration requirements of the Securities Act of 1933, as amended. The entirety of the 304,000 shares were surrendered to the Company’s treasury and thereafter retired and accounted for in the Company’s authorized but unissued common stock reserves.

On July 29, 2010, the Company issued 14,100 shares of its common stock to Leroy and Lisbet Smith. The Company issued the stock in consideration for marketing consultation services rendered by Mr. Smith as the Company’s Chief Marketing Officer and upon reliance on the exemption from registration requirements of the Securities Act of 1933, as amended, provided under Section 4(2) promulgated thereunder as the issuance of the stock did not involve a public offering of securities.

On July 29, 2010, the Company issued 30,000 shares of Common Stock due to Extranome pursuant to the Software Development Contract between BAETA Corp. and Extranome, Inc. As noted above, our President and Chairman, Dr. Alexander Gak, is the 100% owner of Extranome. Therefore he is deemed to beneficially own these 30,000 shares as he maintains voting and dispositive control over Extranome.

On July 29, 2010, the Company issued 8,334 shares of Common Stock to Boris Mordkovich MD. The Company issued the stock in consideration for product development services, in accordance with the August 2009 consulting agreement between BAETA Corp. and Boris Mordkovich MD, and issued upon reliance on the exemption from registration requirements of the Securities Act of 1933, as amended, provided under Section 4(2) promulgated thereunder as the issuance of the stock did not involve a public offering of securities.

On July 29, 2010, the Company issued 5,000 shares of its common stock to Eugene Gribov. The Company issued the stock in consideration for technology services rendered as the Company’s Chief Tech Officer and upon reliance on the exemption from registration requirements of the Securities Act of 1933, as amended, provided under Section 4(2) promulgated thereunder as the issuance of the stock did not involve a public offering of securities.

On July 29, 2010, the Company issued 11,667 shares of its common stock to Leonid Pushkantser. The Company issued the stock in consideration for executive services rendered as the Company’s Chief Executive Officer and upon reliance on the exemption from registration requirements of the Securities Act of 1933, as amended, provided under Section 4(2) promulgated thereunder as the issuance of the stock did not involve a public offering of securities.

On July 29, 2010, the Company issued 5,000 shares of its common stock to Joseph Cusack. The Company issued the stock in consideration for consulting services rendered as the Company’s Product Sales Services consultant pursuant to an Agreement executed between BAETA Corp. and Mr. Cusack on January 1, 2010, and upon reliance on the exemption from registration requirements of the Securities Act of 1933, as amended, provided under Section 4(2) promulgated thereunder as the issuance of the stock did not involve a public offering of securities.

On July 29, 2010, the Company issued 3,000 shares of its common stock to Vesta Caldwell. The Company issued the stock in consideration for consulting services rendered as the Company’s Sales consultant pursuant to an Agreement executed between BAETA Corp. and Ms. Caldwell on April 12, 2010, and upon reliance on the exemption from registration requirements of the Securities Act of 1933, as amended, provided under Section 4(2) promulgated thereunder as the issuance of the stock did not involve a public offering of securities.

Issuance of Promissory Note and Warrant

On April 8, 2010, The Company issued a $100,000 Promissory Note and a 5-year Warrant with a cashless exercise option to purchase up to 400,000 shares of common stock at an exercise price of $0.25 per share, to one accredited investor for an aggregate purchase price of $100,000.00. In accordance with the terms of the promissory note, and in consideration for the receipt of $100,000 in proceeds from the investment, the Company promises to pay to the Note holder the principal sum of One Hundred Thousand Dollars and Zero Cents ($100,000.00), together with interest on the unpaid principal of the note at the rate of ten percent (10%) per year (computed on the basis of a 365-day year and the actual days elapsed) from the date of the Note until paid. All principal and accrued interest shall be due and payable two (2) calendar years from the date of the Note’s execution (April 8, 2010), in cash; provided, however, in the event that the Company receives any financing from any other source all proceeds received in connection with any such financing shall be paid to the Note holder until such time that all outstanding principal and accrued interest has been paid to the Note holder. All payment amounts shall be first applied to interest, if any, and then to the balance to principal.

At any time on or prior to the Note’s maturity, in the sole discretion of the Note holder, any amount of the unpaid principal may be converted into free-trading and unrestricted shares of Common Stock of the Company equal to the result of (i) the Conversion Amount, divided by (ii) the Variable Conversion Price (as defined below):

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The “Variable Conversion Price” shall mean the Applicable Percentage (as defined herein) multiplied by the Market Price (as defined herein); provided, however, the Variable Conversion Price shall not be less than $0.25 cents per share. “Market Price” means the average of the lowest three (3) Trading Prices (as defined below) for the Common Stock during the five (5) Trading Day period ending one Trading Day prior to the date the Conversion Notice is sent by the Holder to the Company via facsimile (the “Conversion Date”). “Trading Price” means, for any security as of any date, the intraday trading price on the Pink Sheets or, if the Pink Sheets is not the principal trading market for such security, the intraday trading price of such security on the principal securities exchange or trading market where such security is listed or traded or, if no intraday trading price of such security is available in any of the foregoing manners, the average of the intraday trading prices of any market makers for such security that are listed in the Pink Sheets by the National Quotation Bureau, Inc. “Applicable Percentage” shall mean 50%.

The issuance of the promissory note and warrant was part of a private offering up to $1,000,000 by the Company that was made without registration under the Securities Act of 1933, as amended,  made only to “accredited investors,” (as such term is defined in as defined in the rules to the Securities Act of 1933, as amended) pursuant to Regulation D, Rule 504 and Sections 7309(b)(8) of the Delaware Securities Act, and Section 510(a)(1) of Part E under the Rules and Regulations Pursuant to the Delaware Securities Act. The Company filed a Form D with the SEC on April 13, 2010 thereby filing Notice with Commission.

Item 3. Defaults Upon Senior Securities.

N/A.

Item 4. Submission of Matters to a Vote of Security Holders.

N/A.

Item 5. Other Information.

Subsequent Events:

On May 14, 2010, the Securities and Exchange Commission declared the Company’s Registration Statement on Form S-1 (File No.: 333-154243) effective. The Registration Statement registered 915,400 shares of Common Stock, par value $0.0001 per share of the Company on behalf of the selling stockholders named in the Registration Statement. The Company will not receive any proceeds from the sale of those shares.

On July 19, 2010, the Company purchased 304,000 shares from Mr. Douglas Rogers for $25,000.

On July 20, 2010, the Company purchased 1,000 shares of Company stock on the open market for $1 per share.
 
Officer Loan:

On August 10, 2010, Leonid Pushkantser, the Company’s Chief Executive Officer and Director, loaned the Company $100,000.00. The material terms are that the Company will pay an interest rate of 5% per year. The Company will pay $5,000 in principal, plus accrued interest, on the first of each month after the date of the loan. The Company is allowed to pre-pay the note without penalty, but the debt-holder does not have the right to demand pre-payment.
 
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Item 6. Exhibits.

Exhibit No.
 
Description
10.1
 
Promissory Note executed by Leonid Pushkantser and BAETA Corp. dated August 9, 2010.
     
31.1
 
Certification by Leonid Pushkantser, the Principal Executive Officer of BAETA Corp., pursuant to SEC Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
31.2
 
Certification by Jeff Burkland, the Principal Financial Officer and Principal Accounting Officer of BAETA Corp., pursuant to SEC Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
32.1
 
Certification by Leonid Pushkantser, the Principal Executive Officer of BAETA Corp., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
32.2
 
Certification by Jeff Burkland, the Principal Financial Officer and Principal Accounting Officer of BAETA Corp., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, there unto duly authorized.
 
    BAETA Corp.  
       
Dated: August 10, 2010
/s/ LEONID PUSHKANTSER  
    Leonid Pushkantser  
    Chief Executive Officer and Director  
    (Principal Executive Officer)  
 
 
/s/ JEFF BURKLAND  
    Jeff Burkland  
    Chief Financial Officer  
   
(Principal Financial Officer and
Principal Accounting Officer)
 
 
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