Attached files
| file | filename |
|---|---|
| EX-32 - CERTIFICATION - NightCulture, Inc. | xxxaquisition_10q-ex32.htm |
| EX-31 - CERTIFICATION - NightCulture, Inc. | xxxaquisition_10q-ex31.htm |
| EXCEL - IDEA: XBRL DOCUMENT - NightCulture, Inc. | Financial_Report.xls |
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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, 2011
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______________ TO ______________
COMMISSION FILE NUMBER: 000-49648
XXX ACQUISITION CORP.
(Exact Name of Registrant as Specified in Its Charter)
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Nevada
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73-1554122
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(State or Other Jurisdiction of
Incorporation or Organization)
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(IRS Employer Identification No.)
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11 East 44th Street-19th Floor, New York, NY
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10017
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(Address of Principal Executive Offices)
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(Zip Code)
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(212) 687-1222.
(Registrant’s Telephone Number)
NA
(Former Name, Former Address, and Former Fiscal Year, if Changed Since Last Report)
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) been subject to such filing requirements for the past 90 days. Yes T No £
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 x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated file, non-accelerated filer, or a smaller reporting company.
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Large accelerated filer £
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Accelerated filed £
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Non-accelerated filer £
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Smaller reporting company T
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes T No £
As of August 5, 2011 the Registrant had 5,806,644 shares of common stock issued and outstanding.
TABLE OF CONTENTS
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PART I – FINANCIAL INFORMATION
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ITEM 1. FINANCIAL STATEMENT
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BALANCE SHEET AS OF JUNE 30, 2011 AND DECEMBER 31, 2010
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3
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STATEMENT OF OERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2011AND JUNE 30, 2010 (UNAUDITED)
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4
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STATEMENT OF CASH FLOWS FOR SIX MONTHS ENDED JUNE 30, 2011AND JUNE 30, 2010 (UNAUDITED)
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5
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NOTES TO FINANCIAL STATEMENTS
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6
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ITEM 2. MANAGMENT DISCUSSION AND ANALYSIS
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11
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ITEM 3. QUANATATIVE AND QUALATATVIE DISCLOSURES ABOUT MARKET RISKS
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12
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ITEM 4T. CONTROLS AND PROCEDURES
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12
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PART II – OTHER INFORMATION
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ITEM 1. LEGAL PROCEEDINGS
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13
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ITEM 1A. RISK FACTORS
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13 |
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
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13
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES
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13
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ITEM 4. REMOVE AND RESERVE
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13
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ITEM 5. OTHER INFORMATION
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13
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ITEM 6. EXHIBITS
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13
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SIGNATURES
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14
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2
PART I – FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS.
XXX ACQUISITION CORP.
BALANCE SHEET
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June 30,
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December 31,
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|||||||
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2011
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2010
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| (Unaudited) | (Audited) | |||||||
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ASSETS
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Current assets
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||||||||
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Cash
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$ | -- | $ | -- | ||||
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Other receivable
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-- | -- | ||||||
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Total Assets
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$ | -- | $ | -- | ||||
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LIABILITIES AND STOCKHOLDERS’ DEFICIT
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Current Liabilities
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||||||||
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Accounts payable and accrued expenses
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177,031 | 177,031 | ||||||
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Accrued interest
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375,505 | 340,789 | ||||||
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Notes payable
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694,349 | 694,349 | ||||||
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Total Current Liabilities
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1,246,885 | 1,212,169 | ||||||
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Stockholders’ Equity (Deficit)
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Common stock, $0.001 par value; authorized 100,000,000 shares, issued and outstanding, 806,644 and 806,644 shares, respectively
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806 | 806 | ||||||
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Preferred stock, $0.001 par value, authorized 10,000,000 shares; issued and outstanding; none
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-- | -- | ||||||
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Additional paid-in capital
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6,762,559 | 6,762,559 | ||||||
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Retained earnings (deficit)
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(8,010,250 | ) | (7,975,534 | ) | ||||
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Total Stockholders’ Deficit
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(1,246,885 | ) | (1,212,169 | ) | ||||
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Total liabilities and stockholders’ equity (deficit)
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$ | -- | $ | -- | ||||
The accompanying notes are an integral part of the unaudited financial statements
3
XXX ACQUISITION CORP.
STATEMENTS OF OPERATIONS
(Unaudited)
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Three Months Ended
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Six Months Ended
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September 16,
2002
(inception) to
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June 30
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June 30
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June 30,
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2011
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2010
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2011
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2010
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2010
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Revenue
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$ | -- | $ | -- | $ | -- | $ | -- | $ | 154,229 | ||||||||||
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Direct cost
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-- | -- | -- | -- | 402,081 | |||||||||||||||
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Selling expense
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-- | -- | -- | -- | 1,729,326 | |||||||||||||||
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Depreciation
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-- | -- | -- | -- | 203,734 | |||||||||||||||
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General, and Administrative expenses
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-- | -- | -- | -- | 4,902,791 | |||||||||||||||
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Operating loss
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-- | -- | -- | -- | (7,083,703 | ) | ||||||||||||||
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Other income (expense)
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Other income
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-- | -- | -- | -- | (134,345 | ) | ||||||||||||||
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Interest expense
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(17,359 | ) | (17,359 | ) | (34,717 | ) | (34,717 | ) | (592,788 | ) | ||||||||||
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Loss on derivative instruments
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-- | -- | -- | -- | (841,821 | ) | ||||||||||||||
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Other expense
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-- | -- | -- | -- | (954 | ) | ||||||||||||||
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Loss on other receivable
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-- | -- | -- | -- | (81,357 | ) | ||||||||||||||
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Total other income (expense)
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(17,359 | ) | (17,359 | ) | (34,717 | ) | (34,717 | ) | (1,651,265 | ) | ||||||||||
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Loss before discontinued operations
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(17,359 | ) | (17,359 | ) | (34,717 | ) | (34,717 | ) | (8,734,968 | ) | ||||||||||
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Gain from discontinued operations
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-- | -- | -- | -- | 728,718 | |||||||||||||||
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Provision for tax
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(4,000 | ) | ||||||||||||||||||
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Net income (loss)
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$ | (17,359 | ) | $ | (17,359 | ) | $ | (34,717 | ) | $ | (34,717 | ) | (8,010,250 | ) | ||||||
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Basic loss per common share
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$ | (0.02 | ) | $ | (0.02 | ) | $ | (0.04 | ) | $ | (0.04 | ) | ||||||||
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Weighted Average Number of Common Shares used to Compute net loss per Weighted Average Share
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806,644 | 806,644 | 806,644 | 806,644 | ||||||||||||||||
The accompanying notes are an integral part of the unaudited financial statements
4
XXX ACQUISITION CORP.
STATEMENTS OF CASH FLOWS
(Unaudited)
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Period from
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Six Months Ended
June 30,
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September 16, 2002
(inception) to
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2011
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2010
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June 30, 2011
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Operating Activities
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Net Income (Loss) Before Extraordinary Item
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$ | (34,717 | ) | $ | (34,717 | ) | $ | (8,010,251 | ) | |||
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Adjustments to reconcile net loss to net cash used in operating activities
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Depreciation
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-- | -- | 218,746 | |||||||||
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Stock for service
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-- | -- | 2,521,178 | |||||||||
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(Gain) loss on discontinued operations
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-- | -- | (728,718 | ) | ||||||||
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Loss on debt settlement
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-- | -- | 134,407 | |||||||||
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Write-off of prepaid expense
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-- | -- | 562,678 | |||||||||
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Write-off of notes payable
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-- | -- | (120,267 | ) | ||||||||
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Write-off of accounts payable
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-- | -- | 3,059 | |||||||||
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Change is operating assets and liabilities
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Security deposit
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-- | -- | (3,595 | ) | ||||||||
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Other receivable
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-- | -- | 81,357 | |||||||||
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Accounts payable
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-- | -- | 770,182 | |||||||||
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Accrued liabilities
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-- | -- | 177,150 | |||||||||
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Accrued interest- related party
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-- | -- | 93,057 | |||||||||
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Accrued Interest
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34,717 | 34,717 | 423,169 | |||||||||
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Management fee
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-- | -- | 479,537 | |||||||||
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Net Cash Used by Operating Activities
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0 | 0 | (3,398,311 | ) | ||||||||
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Investing Activities:
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Payment intangible assets
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-- | -- | (101,369 | ) | ||||||||
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Payment for software development
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-- | -- | (428,987 | ) | ||||||||
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Purchase of equipment
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-- | -- | (24,123 | ) | ||||||||
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Net Cash Required by Investing Activities
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0 | 0 | (554,479 | ) | ||||||||
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Financing Activities:
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Notes payable- related party
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-- | -- | 2,427,709 | |||||||||
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Payments on notes payable-related party
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-- | -- | (2,063 | ) | ||||||||
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Stock sold for cash
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-- | -- | 247,500 | |||||||||
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Borrowing on notes payable
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-- | -- | 1,206,313 | |||||||||
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Capital contribution on reversal of common stock
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-- | -- | 99,122 | |||||||||
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Payment on capital lease obligation
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-- | -- | (25,791 | ) | ||||||||
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Net Cash Provided by Financing Activities
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0 | 0 | 3,952,790 | |||||||||
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Increase (Decrease) in Cash and Cash Equivalents
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0 | 0 | 0 | |||||||||
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Cash and Cash Equivalents at Beginning Of Period
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0 | 0 | 0 | |||||||||
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Cash and Cash Equivalents at End of Period
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$ | 0 | 0 | 0 | ||||||||
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Supplemental schedules of cash flow information:
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Interest paid
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-- | -- | -- | |||||||||
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Income Taxes paid
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-- | -- | $ | 4,000 | ||||||||
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Supplemental disclosure of Nonmonetary Transactions
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Furniture and Equipment acquired with stock
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-- | -- | $ | 30,250 | ||||||||
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Development software acquired with stock
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-- | -- | $ | 16,500 | ||||||||
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Stock issued for payment of debt
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$ | -- | -- | $ | 2,539,893 | |||||||
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Common stock issued for accounts payable
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-- | -- | $ | 68,940 | ||||||||
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Cancellation of accounts payable
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-- | -- | $ | 12,698 | ||||||||
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Purchase of equipment through capital lease
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-- | -- | $ | 29,843 | ||||||||
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Common stock issued for consulting services
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-- | -- | $ | 82,000 | ||||||||
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Common stock issued upon exercise of warrants
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-- | -- | $ | 5,800 | ||||||||
The accompanying notes are an integral part of the unaudited financial statements
5
XXX ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1: ORGANIZATION
Texxon, Inc. was incorporated on October 6, 1998, under the laws of the state of Oklahoma. Since inception, the Company's primary focus was raising capital and paying for the exclusive licenses. Until April 2, 2008 pursuant to the Company’s Share Agreement with TelePlus, Inc., the Company's focus was centered on the development and marketing of its Multilingual Mobile Services for international travelers in their native languages in collaboration with major wireless providers. On April 2, 2008 the Company sold all the assets of its operating division to another company; subsequent to the sale the Company has not engaged in any business operations while looking for a new business.
In May 2006, Texxon and the shareholders of TelePlus completed a Share Exchange Agreement whereas the Company acquired all of the outstanding capital stock of TelePlus from the TelePlus shareholders in exchange for 3,000,000 shares of voting convertible preferred stock convertible into 81,000,000 shares of Company common stock. This transaction constituted a change of control of the Company whereby the majority of the shares of Texxon are now owed by the shareholders of TelePlus. The accounting for this transaction is identical to that resulting from a reverse-acquisition, except that no goodwill or other intangible assets is recorded. As a result, the transaction was treated for accounting purposes as a recapitalization by the accounting acquirer TelePlus. The historical financial statements will be those of TelePlus. On November 22, 2006, Texxon, the Oklahoma Corporation, for the sole purpose of re-domestication in Nevada, filed Articles of Merger with the Secretaries of state of the states of Oklahoma and Nevada pursuant to which Texxon, the Oklahoma Corporation, was merged with and into Texxon, Inc., a Nevada corporation, with the Nevada Corporation remaining as the surviving entity. Immediately following the merger, the Nevada Company changed its name to Continan Communications, Inc. and its articles of incorporation were amended such that the number of common stock and preferred stock is increased from 45,000,000 to 100,000,000 and from 5,000,000 to 10,000,000, respectively. On December 1, 2006, the Company executed a 1 for 20 reverse stock split of all its issued and outstanding shares of common stock. Additionally, all convertible preferred stocks were converted into 20,250,000 shares of common stock. On March 6, 2009 the Company declared a 1 for 100 reverse stock split and on March 11, 2009 the Company changed its name to XXX Acquisition Corp. (the "Company")
NOTE 2: BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements of XXX Acquisition, Corp. (“XXX”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in XXX’s December 31, 2010 Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year end December 31, 2010 as reported on Form 10-K, have been omitted.
6
NOTE 3: GOING CONCERN CONSIDERATIONS
As shown in the accompanying interim financial statements, the Company has incurred a net loss of $34,717 for the six months ending June 30, 2011. As of June 30, 2011, the Company reported an accumulated deficit of $8,010,250. The Company has no sales or revenue. The Company’s ability to generate net income and positive cash flows is dependent on the ability to acquire or start an operating entity as well as the ability to raise additional capital. Management is following strategic plans to accomplish these objectives, but success is not guaranteed. As of June 30, 2011, these factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.
NOTE 4: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accounting and reporting policies of the Company conform to U.S. generally accepted accounting principles (US GAAP).
Going Concern
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. However, the Company has no established source of revenue. This matter raises substantial doubt about the Company's ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
The Company intends to pursue acquisitions of various business opportunities that, in the opinion of management, will provide a profit to the Company; however, the Company does not have the working capital to be successful in this effort or to service its debt. These factors raise substantial doubt about its ability to continue as a going concern.
Continuation of the Company as a going concern is dependent upon obtaining additional working capital and the management of the Company has developed a strategy that it believes will accomplish this objective through additional equity funding which will enable the Company to operate for the coming year. There is no guarantee that additional funding will be obtained or that the Company will be successful in it funding efforts or acquiring any profitable business opportunities.
Basic and Diluted Earnings (Loss) per Share
The Company reports earnings (loss) per share in accordance with ASC 260, "Earnings per Share." Basic earnings (loss) per share are computed by dividing income (loss) available to common stockholders by the weighted average number of common shares available. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per 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.
The Company has no potential dilutive instruments and accordingly, basic loss and diluted share loss per share are equal.
7
Estimates and Assumptions
Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing these financial statements.
Statement of Cash Flows
For the purposes of the statement of cash flows, the Company considers all highly liquid investments with a maturity of three months or less to be cash equivalents.
Revenue Recognition
The Company has not recognized any revenues from its operations.
NOTE 5: RECENT ACCOUNTING PRONOUNCEMENTS
In January 2009, the FASB issued Accounting Standards Update 2009-01, Equity (Topic 505): Accounting for Distributions to Shareholders with Components of Stock and Cash (A Consensus of the FASB Emerging Issues Task Force). This amendment to Topic 505 clarifies the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a limit on the amount of cash that will be distributed is not a stock dividend for purposes of applying Topics 505 and 260. This ASU is effective for interim and annual periods ending on or after December 15, 2009, and would be applied on a retrospective basis. The Company does not expect the provisions of ASU 2009-01 to have a material effect on the financial position, results of operations or cash flows of the Company.
In April 2009, the FASB issued Accounting Standard Update No. 2009-13 “Stock Compensation” (Topic 718). ASU No.2009-13 provides amendments to Topic 718 to clarify that an employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity's equity securities trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2009. The amendments in this Update should be applied by recording a cumulative-effect adjustment to the opening balance of retained earnings. The cumulative-effect adjustment should be calculated for all awards outstanding as of the beginning of the fiscal year in which the amendments are initially applied, as if the amendments had been applied consistently since the inception of the award. The cumulative-effect adjustment should be presented separately. Earlier application is permitted. The adoption of this guidance has not had and is not expected to have a material impact on the Company’s consolidated financial statements.
8
In February 2009, FASB issued ASU No. 2009-09, “Subsequent Events” (Topic 855) Amendments to Certain Recognition and Disclosure Requirements (“ASU 2009-09”). ASU 2009-09 amends disclosure requirements within Subtopic 855-10. An entity that is an SEC filer is not required to disclose the date through which subsequent events have been evaluated. This change alleviates potential conflicts between Subtopic 855-10 and the SEC’s requirements. ASU 2009-09 is effective for interim and annual periods ending after June 15, 2009. The Company does not expect the adoption of ASU 2009-09 to have a material impact on its unaudited interim results of operations or financial position.
In January 2009, the FASB issued ASU No. 2009-06, “Improving Disclosures about Fair Value Measurements” (ASU 2009-06) (codified within ASC 820 Fair Value Measurements and Disclosures). ASU 2009-06 improves disclosures originally required under SFAS No. 157. ASU 2009-06 is effective for interim and annual periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2009, and for interim periods within those years. The adoption of the guidance did not have a material effect on the Company's unaudited interim financial position, results of operations, cash flows or related disclosures.
NOTE 6: NOTE PAYABLE
The Company issued a promissory note to First Bridge Capital Inc., on January 20, 2007 with interest accruing at 10%. The principal along with the accrued interest was due on or before December 31, 2007 or on the date the Company receives proceeds from the public offering of its shares, whichever is earlier. During the period ending March, 2009 the Company agreed to convert $258,378 of debt to 56,786,461 shares of common stock. As neither has occurred the note is in default with the outstanding balance of the note payable as of June 30, 2011with a principal balance of $ 649,349 plus accrued interest of $ 375,505 for a total amount of $1,069,854. (See Note: 8 – Equity)
NOTE 7: EQUITY
In March, 2009 the Company agreed to convert $258,378 of debt to 56,786,461 shares of common stock. Subsequently during the same period the Company declared a reverse split in which each shareholder of 100 old shares received in exchange one new share of the Company. In addition the Company retired 194,062 shares of common stock. As a result of the reverse split and its rounding of shares and the retirement of shares, the total outstanding shares of common stock, as of June 30, 2010, are 806,644. (See Note 6: - Note Payable)
NOTE 8: STOCK OPTIONS AND WARRANTS
(a) In October 2006, the Company granted an option to purchase 10,000 (200,000 pre reverse split) restricted shares of common stock, exercisable at $0.01 per share, to a non-employee; this option will expire on October 15, 2011. This option was granted in exchange for consulting services, valued at $11,814 using the Black-Scholes model. Because the Company did not have enough shares authorized to issue if this option was exercised, this amount was recorded as a derivative and are classified on the balance sheet as a liability for derivative instruments. The factors used for the Black-Scholes model were a market price of $0.06 per share; volatility of 178%; risk free interest rate of 4.39%; exercise price of $0.01 per share; and an estimated life of 5 years.
9
As a result of recapitalization in November 2006, the Company had more shares authorized to be issued. Therefore, the derivative liability in the amount of $11,814 due to a lack of authorized shares had to be eliminated and accounted for as equity. In addition, due to changes in market value for the common stock, the value for the derivative liability had to be recalculated using the Black-Scholes model as of December 1, 2006 (the date of reverse split). The recalculated value for the derivative liability was $6,976, which became an addition to APIC. The remaining difference of $4,838 after elimination of derivative liability was recognized as a gain on derivative. The factors used for the Black-Scholes model were a market price of $0.70 per share; volatility of 178%; risk free interest rate of 4.39%; exercise price of $0.01 per share; and an estimated life of 4.75 years.
(b) In December 2006, the Company granted an option to purchase 70,000 restricted shares of common stock, exercisable at $0.01 per share, to a non-employee; this option will expire on December 31, 2011. This option was granted in exchange for consulting services, valued at $48,846 using the Black-Scholes model. The Company recorded consulting expense and additional paid-in-capital in this amount. The factors used for Black-Scholes model were a market price of $0.70 per share; volatility of 178%; risk free interest rate of 4.39%; exercise price of $0.01; and an estimated lift of 5.00 years.
(c) In December 2006, the Company granted options to purchase 414,900 restricted shares of common stock, exercisable at $0.01 per shares, for consultants (one of which is James Gibson, the Company's vice president business development); these options will expire on December 31, 2011. These options were valued at $215,748 using the Black-Scholes model. The Company recorded consulting expense and additional paid-in-capital in this amount. The factors used for Black-Scholes model were a market price of $0.52 per share; volatility of 178%; risk free interest rate of 4.39%; exercise price of $0.01; and an estimated life of 5.00 years.
(d) In December 2006, the Company granted options to purchase 179,300 restricted shares of common stock, exercisable at $0.01 per share, to various employees (one of which is Ross Nordin, the Company's former chief financial officer, remaining as an advisor to the Company); these options will expire on December 31, 2011. These options were valued at $93,236 using Black-Scholes model. The company recorded consulting expense and additional paid-in-capital in this amount. The factors used for Black-Scholes model were a market price of $0.52 per share; volatility of 178%; risk free interest rate of 4.39%; exercise price of $0.01; and an estimated life of 5.00 years.
NOTE 9: SUBSEQUENT EVENT
On July 31, 2011 the Company entered into a share exchange agreement with Night Culture, Inc. a Texas corporation. Under terms of the agreement the Company issued 5,000,000 shares to the shareholders of Night Culture in exchange for all the outstanding shares of Night Culture which was 100,000,000 shares.
Under this agreement Night Culture became a wholly owned subsidiary of the Company, In addition, the officer of the Company resigned and was replaced by the officer of Night Culture. One of the directors of Night Culture was appointed to the board of directors of the Company. The transition will create a change in control of the Company.
10
ITEM 2: MANAGEMENTS DISCUSSION AND ANALYSIS
This report contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. XXX’s actual results could differ materially from those set forth on the forward looking statements as a result of the risks set forth in XXX Acquisition Corp.’s filings with the Securities and Exchange Commission, general economic conditions, and changes in the assumptions used in making such forward looking statements.
OVERVIEW
The Company historically experienced operating losses and negative cash flow. The Company expects that these operating losses and negative cash flows may continue through additional periods. The Company has had a limited record of revenue-producing operations but with the modified and highly realistic product deployment strategy, the Company now believes it has a predictable, scalable revenue and business model that will be able to achieve its business plans.
RESULTS OF OPERATIONS
During the three and six month periods ending June 30, 2011 and 2010 the Company had no revenues. General and Administrative expense was zero for the three months and the six months ending June 30, 2011 and for the same periods in 2010. Interest expense was $17,359 for the three months periods and $34,717 for the six months ending June 30, 2011 and for the same period in 2010. Net loss of the three month period was $17,359 and for the six month period was $34,717 for June 30, 2011 and for the same periods in 2010. The loss was a result of no revenue during both 2011 and 2010 along with interest cost during that time period.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2011, the Company had no assets and current liabilities of $1,246,885, resulting in working capital deficit of $1,246,885. Shareholders' deficit as of June 30, 2011 was $8,010,250. There exist no agreements or understandings with regard to loan agreements by or with the Officers, Directors, principals, affiliates or shareholders of the Company.
Net cash used in operations for the period ending June 30, 2011 and 2010 was zero. Net cash used in investing activities for the period ending June 30, 2011 was zero as well as for the same period in 2010. Net cash provided by financing activities during the period ended June 30, 2011 was zero and zero for the same period in 2010.
Our existing capital may not be sufficient to meet the Company’s cash needs, including the costs of compliance with the continuing reporting requirements of the Securities Exchange Act of 1934, as amended. This condition raises substantial doubt as to the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if XXX is unable to continue as a going concern.
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EMPLOYEES
As of June 30, 2011 the Company had no employees
CAPITAL EXPENDITURES
There were no capital expenditures during the quarter ended June 30, 2011.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSUREES ABOUT MARKET RISK
As a “smaller reporting company” as defined by Item 10 of Regulation S-K XXX is not required to provide information required under this Item.
ITEM 4: CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Based on their evaluation of our disclosure controls and procedures(as defined in Rule 13a-15e under the Securities Exchange Act of 1934 the "Exchange Act"), our principal executive officer and acting principal financial officer have concluded that as of the end of the period covered by this quarterly report on Form 10-Q such disclosure controls and procedures were not effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms because of the identification of a material weakness in our internal control over financial reporting which we view as an integral part of our disclosure controls and procedures. The material weakness relates to the lack of segregation of duties in financial reporting, as our financial reporting and all accounting functions are performed by an external consultant with no oversight by a professional with accounting expertise. Our CEO/Acting CFO does not possess accounting expertise and our company does not have an audit committee. This weakness is due to the company’s lack of working capital to hire additional staff. To remedy this material weakness, we intend to engage another accountant to assist with financial reporting as soon as our finances will allow.
Changes in Internal Control over Financial Reporting
Except as noted above, there have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our first quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting
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PART II – OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
None
ITEM 1A: RISK FACTORS
There have been no material changes to XXX’s risk factors as previously disclosed in our most recent 10-K filing for the year ending December 31, 2010.
ITEM 2: CHANGES IN SECURITIES
In March, 2009 the Company agreed to convert $258,378 of debt to 56,786,461 shares of common stock. Subsequently during the same period the Company declared a reverse split in which each shareholder of 100 old shares received in exchange one new share of the Company. In addition the Company retired 194,062 shares of common stock. As a result of the reverse split and its rounding of shares and the retirement of shares, the total outstanding shares of common stock, as of June 30, 2010, are 806,644.
ITEM 3: DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4: [REMOVE AND RESERVE]
None
ITEM 5: OTHER INFORMATION
None
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
|
(a)
|
Exhibits:
|
|
|
Exhibit 31 - Certification of President, Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
|
Exhibit 32 - Certification of President, Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
||
| Exhibit 101.INS - XBRL Instance Document | ||
| Exhibit 101.SCH - XBRL Schema Document | ||
| Exhibit 101.CAL - XBRL Calculation Linkbase Document | ||
| Exhibit 101.LAB - XBRL Label Linkbase Document | ||
| Exhibit 101.PRE - XBRL Presentation Linkbase Document | ||
| Exhibit 101.DEF - XBRL Definition Linkbase Document |
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SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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XXX ACQUISITION CORP.
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|||
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Dated: August 8, 2011
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By:
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/s/ Michael Long | |
|
Michael Long
|
|||
|
Chief Executive Officer
(Acting Principal Financial and Accounting Officer
And Duly Authorized Officer)
|
|||
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EXHIBIT INDEX
|
Number
|
Description
|
|
31
|
Rule 13a-14(a)/15d-14(a) Certification of Michael Long; (filed herewith).
|
|
32
|
Section 1350 Certification of Michael Long; (filed herewith).
|
|
101.INS
|
XBRL Instance Document
|
|
101.SCH
|
XBRL Schema Document
|
|
101.CAL
|
XBRL Calculation Linkbase Document
|
|
101.LAB
|
XBRL Label Linkbase Document
|
|
101.PRE
|
XBRL Presentation Linkbase Document
|
|
101.DEF
|
XBRL Definition Linkbase Document
|
15