Item 1 - Description of Business
General
Marketing Acquisition Corporation (the "Company") was originally incorporated on
July 26, 1990 in accordance with the laws of the State of Florida as Marketing
Educational Corp.
The Company was originally formed for the purpose of direct marketing of certain
educational materials and photography packages. The educational materials
marketed by the Company consisted of encyclopedias, learning books, educational
audio and video tapes which were designed to be used in various combinations to
accommodate the educational levels and needs of families with children of all
ages.
On June 13, 2006, the Company changed its state of incorporation from Florida to
Nevada by means of a merger with and into a Nevada corporation formed on June 8,
2006 solely for the purpose of effecting the reincorporation. The Articles of
Incorporation and Bylaws of the Nevada corporation are the Articles of
Incorporation and Bylaws of the surviving corporation. Such Articles of
Incorporation modified the Company's capital structure to allow for the issuance
of up to 100,000,000 shares of $0.001 par value common stock and up to
50,000,000 shares of $0.001 par value preferred stock.
During 1991, the Company completed a public offering of 150,000 units of common
stock, through a Registration Statement on Form S-18 (Registration
No.33-37039-A). Each unit consisted of one share of common Stock, one Class A
Common Stock Purchase Warrant and one Class B Common Stock Purchase Warrant.
Each Class A Common Stock Purchase Warrant entitled the holder thereof to
purchase two shares of Common Stock and each Class B Common Stock Purchase
Warrant entitled the holder to purchase one Share of Common Stock. It was
anticipated that the registration of the common stock underlying the Class A and
Class B Common Stock Purchase Warrants would generate working capital for the
Company. There was no exercise of any Class A or Class B Common Stock Purchase
Warrants. On August 5, 1992, pursuant to notice given to all Warrant holders (as
disclosed on a Current Report on Form 8-K filed August 12, 1992), the Company
gave a 30-day exercise period notice and notice to redeem all outstanding
warrants at a price of $0.0005 per Warrant. The Company realized no gross or net
proceeds as a result of this Registration Statement on Form S-18.
Effective at the close of business on September 30, 1992, as reported in a
Current Report on Form 8-K, filed October 7, 1992, the Company experienced a
change in management. As a result of this event, the Company effectively
liquidated all operations and assets and became a dormant entity at that point
in time. The Company suspended its reporting under the Securities Exchange Act
of 1934, as amended, due to a lack of operating capital.
Since September 30, 1992, the Company has had virtually no operations, assets or
liabilities.
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On April 16 and April 27, 2004, the Company, in two separate transactions, sold
a total of 20,000,000 shares of restricted, unregistered common stock to Glenn
A. Little, pursuant to two separate subscription agreements for 10,000,000
shares each, for gross proceeds of $20,000. The Company relied upon Section 4(2)
of The Securities Act of 1933, as amended, for an exemption from registration of
these shares and no underwriter was used in this transaction.
The Company stopped filing periodic reports in compliance with the Securities
Exchange Act of 1934, as amended, during 1992. Due to the absence of certain
accounting records, it was impossible to complete required filings from that
point through March 2005. On April 15, 2005, the Company filed a Form 10-SB in
order to disclose the Company's current status. The U. S. Securities and
Exchange Commission (SEC), while acknowledging the intent of the filing, took
the position that filing was improper and the filing was withdrawn. The Company
then voluntarily requested a revocation of the registration and, on February 15,
2006, the SEC entered an order pursuant to Section 12(j) of the Exchange Act
revoking the registration of the Company's securities which revocation cancelled
the Company's filling obligations from previous periods. The Company has had no
operations since 1992 and, accordingly, may now be deemed to be a "blank check"
or shell company, that is, either a development stage company that has no
specific business plan or purpose or a dormant or inactive company that has
indicated that its sole business plan is to engage in a merger or other
acquisition with an unidentified company or companies, or other entity or
person.
On June 21, 2006, the Company filed a Registration Statement on Form 10-SB to
re-register the Company's common stock under Section 12 of the Securities
Exchange Act of 1934, as amended.
On March 20, 2007, the Company entered into a Subscription Agreement (Agreement)
with Halter Financial Investments, L.P., a Texas limited partnership (HFI).
Other than in respect to this transaction, HFI had had no other material
relationship with the Company or any of the Company's then officers, directors
or affiliates or any associate of any such officer or director. Pursuant to the
Agreement, the Company sold to HFI 60,000,000 pre-reverse split shares
(1,250,000 post-reverse split shares) of its common stock at a purchase price of
$0.001 per share. The Company relied upon Section 4(2) of the Securities Act of
1933, as amended, for an exemption from registration of these shares and no
underwriter was used in this transaction.
On April 23, 2007, the Company's Board of Directors unanimously approved and
recommended that the stockholders approve, and the Company's Majority
Stockholder approved, an amendment to our Articles of Incorporation to effect a
reverse stock split of our issued and outstanding shares of common stock on a 1
for 48 share basis, with no stockholder being reversed to less than a round lot
of 100 shares with fractional shares rounded up to the nearest whole share:
Shares prior to Shares after
reverse split reverse split
------------- -------------
1 100
10 100
100 100
1,000 100
5,000 105
|
The effect of the reverse split reduced the total number of issued and
outstanding shares from 84,033,600 to 1,853,207 shares, after giving effect to
both the special provisions discussed above and the rounding for fractional
shares. The reverse stock split did not change the par value of our common stock
nor change the number of authorized shares of our common stock. The effect of
this action is reflected in the Company's financial statements as of the first
day of the first period presented.
Timothy P. Halter is an officer and member of Halter Financial Investments GP,
LLC, general partner of HFI. Mr. Halter currently serves as our president and
sole director.
Business Plan
Our current business plan is to seek and identify a privately-held operating
company desiring to become a publicly held company by combining with us through
a reverse merger or acquisition type transaction. Private companies wishing to
have their securities publicly traded may seek to merge or effect an exchange
transaction with a shell company with a significant stockholder base. As a
result of the merger or exchange transaction, the stockholders of the private
company will hold a majority of the issued and outstanding shares of the shell
company. Typically, the directors and officers of the private company become the
directors and officers of the shell company. Often the name of the private
company becomes the name of the shell company.
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We have no capital and must depend on HFI to provide us with the necessary funds
to implement our business plan. We intend to seek opportunities demonstrating
the potential of long-term growth as opposed to short-term earnings. However, at
the present time, we have not identified any business opportunity that we plan
to pursue, nor have we reached any agreement or definitive understanding with
any person concerning an acquisition or merger.
Timothy P. Halter, our sole officer and director, will be primarily responsible
for investigating combination opportunities. However, we believe that business
opportunities may also come to our attention from various sources, including
HFI, professional advisors such as attorneys, and accountants, securities
broker-dealers, venture capitalists, members of the financial community, and
others who may present unsolicited proposals. We have no plan, understanding,
agreements, or commitments with any individual for such person to act as a
finder of opportunities for us.
No direct discussions regarding the possibility of a combination are currently
ongoing and we can give no assurances that we will be successful in finding or
acquiring a desirable business opportunity, given the limited funds that are
expected to be available to us for implementation of our business plan.
Furthermore, we can give no assurances that any acquisition, if it occurs, will
be on terms that are favorable to us or our current stockholders.
We do not propose to restrict our search for a candidate to any particular
geographical area or industry, and therefore, we are unable to predict the
nature of our future business operations. Our management's discretion in the
selection of business opportunities is unrestricted, subject to the availability
of such opportunities, economic conditions, and other factors.
Any entity which has an interest in being acquired by, or merging into us, is
expected to be an entity that desires to become a public company and establish a
public trading market for its securities. In connection with such a merger or
acquisition, it is anticipated that an amount of common stock constituting
control of us would be issued by us.
We do not foresee that we will enter into a merger or acquisition transaction
with any business with which HFI or Timothy P. Halter is currently affiliated.
Investigation and Selection of Business Opportunities
Certain types of business acquisition transactions may be completed without
requiring us to first submit the transaction to our stockholders for their
approval. If the proposed transaction is structured in such a fashion our
stockholders (other than HFI our majority stockholder) will not be provided with
financial or other information relating to the candidate prior to the completion
of the transaction.
If a proposed business combination or business acquisition transaction is
structured that requires our stockholder approval, and we are a reporting
company, we will be required to provide our stockholders with information as
applicable under Regulations 14A and 14C under the Exchange Act.
The analysis of business opportunities will be undertaken by or under the
supervision of Timothy P. Halter, our president and sole director. In analyzing
potential merger candidates, our management will consider, among other things,
the following factors:
* Potential for future earnings and appreciation of value of securities;
* Perception of how any particular business opportunity will be received
by the investment community and by our stockholders;
* Eligibility of a candidate, following the business combination, to
qualify its securities for listing on a national exchange or on a
national automated securities quotation system, such as NASDAQ.
* Historical results of operation;
* Liquidity and availability of capital resources;
* Competitive position as compared to other companies of similar size
and experience within the industry segment as well as within the
industry as a whole;
* Strength and diversity of existing management or management prospects
that are scheduled for recruitment;
* Amount of debt and contingent liabilities; and
* The products and/or services and marketing concepts of the target
company.
There is no single factor that will be controlling in the selection of a
business opportunity. Our management will attempt to analyze all factors
appropriate to each opportunity and make a determination based upon reasonable
investigative measures and available data. Potentially available business
opportunities may occur in many different industries and at various stages of
development, all of which will make the task of comparative investigation and
analysis of such business opportunities extremely difficult and complex. Because
of our limited capital available for investigation and our dependence on one
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person, Timothy P. Halter, we may not discover or adequately evaluate adverse
facts about the business opportunity to be acquired.
We are unable to predict when we may participate in a business opportunity. We
expect, however, that the analysis of specific proposals and the selection of a
business opportunity may take several months.
Prior to making a decision to participate in a business transaction, we will
generally request that we be provided with written materials regarding the
business opportunity containing as much relevant information as possible,
including, but not limited to, a description of products, services and company
history; management resumes; financial information; available projections, with
related assumptions upon which they are based; an explanation of proprietary
products and services; evidence of existing patents, trademarks, or service
marks, or rights thereto; present and proposed forms of compensation to
management; a description of transactions between such company and its
affiliates during the relevant periods; a description of present and required
facilities; an analysis of risks and competitive conditions; a financial plan of
operation and estimated capital requirements; audited financial statements, or
if audited financial statements are not available, unaudited financial
statements, together with reasonable assurance that audited financial statements
would be able to be produced to comply with the requirements of a Current Report
on Form 8-K to be filed with the Securities and Exchange Commission, or
Commission, upon consummation of the business combination.
We believe that various types of potential candidates might find a business
combination with us to be attractive. These include candidates desiring to
create a public market for their securities in order to enhance liquidity for
current stockholders, candidates which have long-term plans for raising capital
through public sale of securities and believe that the prior existence of a
public market for their securities would be beneficial, and candidates which
plan to acquire additional assets through issuance of securities rather than for
cash, and believe that the development of a public market for their securities
will be of assistance in that process. Companies, which have a need for an
immediate cash infusion, are not likely to find a potential business combination
with us to be a prudent business transaction alternative.
Employees
The Company currently has no employees. Management of the Company expects to use
consultants, attorneys and accountants as necessary, and does not anticipate a
need to engage any full-time employees so long as it is seeking and evaluating
business opportunities. The need for employees and their availability will be
addressed in connection with the decision whether or not to acquire or
participate in specific business opportunities.
Risk Factors
The Company's business and plan of operation is subject to numerous risk
factors, including, but not limited to, the following:
Limited Operating History Makes Potential Difficult to Assess
The Company has limited financial resources and no operating activities.
The Company will, in all likelihood, continue to sustain operating expenses
without corresponding revenues, at least until the consummation of a
business combination. This will most likely result in the Company incurring
a net operating loss which will increase continuously until the Company can
consummate a business combination with a target company. There is no
assurance that the Company can identify such a target company and
consummate such a business combination.
There Is No Agreement for a Business Combination and No Minimum Requirements for
a Business Combination
The Company has no current arrangement, agreement or understanding with
respect to engaging in a business combination with a specific entity. There
can be no assurance that the Company will be successful in identifying and
evaluating suitable business opportunities or in concluding a business
combination. No particular industry or specific business within an industry
has been selected for a target company. The Company has not established a
specific length of operating history or a specified level of earnings,
assets, net worth or other criteria which it will require a target company
to have achieved, or without which the Company would not consider a
business combination with such business entity. Accordingly, the Company
may enter into a business combination with a business entity having no
significant operating history, losses, limited or no potential for
immediate earnings, limited assets, negative net worth or other negative
characteristics. There is no assurance that the Company will be able to
negotiate a business combination on terms favorable to the Company.
No Assurance of Success or Profitability
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There is no assurance that the Company will acquire a favorable business
opportunity. Even if the Company should become involved in a business
opportunity, there is no assurance that it will generate revenues or
profits, or that the market price of the Company's outstanding shares will
be increased thereby.
Type of Business Acquired
The business to be acquired may wish to avoid effecting its own public
offering and the accompanying expense, delays, and uncertainties. Because
of the Company's limited capital, it is more likely than not that any
acquisition by the Company will involve other parties whose primary
interest is the acquisition of control of a publicly traded Company.
Moreover, any business opportunity acquired may be currently unprofitable
or present other negative factors.
Lack of Diversification
Because of the limited financial resources that the Company has, it is
unlikely that the Company will be able to diversify its acquisitions or
operations. The Company's probable inability to diversify its activities
into more than one area will subject the Company to economic fluctuations
within a particular business or industry and therefore increase the risks
associated with the Company's operations.
Dependence upon Management; Limited Participation of Management
Because management consists of only one person, while seeking a business
combination, Timothy P. Halter, the President of the Company, will be the
only person responsible in conducting the day-to-day operations of the
Company. The Company does not benefit from multiple judgments that a
greater number of directors or officers would provide, and the Company will
rely completely on the judgment of its one officer and director when
selecting a target company. Mr. Halter anticipates devoting only a limited
amount of time per month to the business of the Company. Mr. Halter has not
entered into a written employment agreement with the Company and he is not
expected to do so. The Company does not anticipate obtaining key man life
insurance on Mr. Halter. The loss of the services of Mr. Halter would
adversely affect development of the Company's business and its likelihood
of continuing operations.
Conflicts of Interest
The Company's sole officer and director has other business interests to
which he currently devotes attention, and is expected to continue to do so.
As a result, conflicts of interest may arise that can be resolved only
through their exercise of judgment in a manner which is consistent with his
fiduciary duties to the Company.
It is anticipated that the Company's principal stockholder may actively
negotiate or otherwise consent to the purchase of a portion of their common
stock as a condition to, or in connection with, a proposed merger or
acquisition transaction. In this process, the Company's principal
stockholder may consider his own personal pecuniary benefit rather than the
best interest of other Company stockholders. Depending upon the nature of a
proposed transaction, Company stockholders other than the principal
stockholder may not be afforded the opportunity to approve or consent to a
particular transaction.
Possible Need for Additional Financing
The Company has very limited funds, and such funds, may not be adequate to
take advantage of any available business opportunities. Even if the
Company's currently available funds prove to be sufficient to pay for its
operations until it is able to acquire an interest in, or complete a
transaction with, a business opportunity, such funds will clearly not be
sufficient to enable it to exploit the opportunity. Thus, the ultimate
success of the Company will depend, in part, upon its availability to raise
additional capital. In the event that the Company requires modest amounts
of additional capital to fund its operations until it is able to complete a
business acquisition or transaction, such funds, are expected to be
provided by the principal stockholder. The Company has not investigated the
availability, source, or terms that might govern the acquisition of the
additional capital which is expected to be required in order to exploit a
business opportunity, and will not do so until it has determined the level
of need for such additional financing. There is no assurance that
additional capital will be available from any source or, if available, that
it can be obtained on terms acceptable to the Company. If not available,
the Company's operations will be limited to those that can be financed with
its modest capital.
Dependence Upon Outside Advisors
To supplement the business experience of its officer and director, the
Company may be required to employ accountants, technical experts,
appraisers, attorneys, or other consultants or advisors. The selection of
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any such advisors will be made by the Company's officer, without any input
by stockholders. Furthermore, it is anticipated that such persons may be
engaged on an as needed basis without a continuing fiduciary or other
obligation to the Company. In the event the officer of the Company
considers it necessary to hire outside advisors, he may elect to hire
persons who are affiliates, if those affiliates are able to provide the
required services.
Regulation of Penny Stocks
The U. S. Securities and Exchange Commission (SEC) has adopted a number of
rules to regulate "penny stocks." Such rules include Rule 3a51-1 and Rules
15g-1 through 15g-9 under the Securities Exchange Act of 1934, as amended.
Because the securities of the Company may constitute "penny stocks" within
the meaning of the rules (as any equity security that has a market price of
less than $5.00 per share or with an exercise price of less than $5.00 per
share, largely traded in the National Association of Securities Dealers'
(NASD) OTC Bulletin Board or the "Pink Sheets", the rules would apply to
the Company and to its securities. The Commission has adopted Rule 15g-9
which established sales practice requirements for certain low price
securities. Unless the transaction is exempt, it shall be unlawful for a
broker or dealer to sell a penny stock to, or to effect the purchase of a
penny stock by, any person unless prior to the transaction: (I) the broker
or dealer has approved the person's account for transactions in penny stock
pursuant to this rule and (ii) the broker or dealer has received from the
person a written agreement to the transaction setting forth the identity
and quantity of the penny stock to be purchased. In order to approve a
person's account for transactions in penny stock, the broker or dealer
must: (a) obtain from the person information concerning the person's
financial situation, investment experience, and investment objectives; (b)
reasonably determine that transactions in penny stock are suitable for that
person, and that the person has sufficient knowledge and experience in
financial matters that the person reasonably may be expected to be capable
of evaluating the risks of transactions in penny stock; (c) deliver to the
person a written statement setting forth the basis on which the broker or
dealer made the determination (I) stating in a highlighted format that it
is unlawful for the broker or dealer to affect a transaction in penny stock
unless the broker or dealer has received, prior to the transaction, a
written agreement to the transaction from the person; and (ii) stating in a
highlighted format immediately preceding the customer signature line that
(iii) the broker or dealer is required to provide the person with the
written statement; and (iv) the person should not sign and return the
written statement to the broker or dealer if it does not accurately reflect
the person's financial situation, investment experience, and investment
objectives; and (d) receive from the person a manually signed and dated
copy of the written statement. It is also required that disclosure be made
as to the risks of investing in penny stock and the commissions payable to
the broker-dealer, as well as current price quotations and the remedies and
rights available in cases of fraud in penny stock transactions. Statements,
on a monthly basis, must be sent to the investor listing recent prices for
the Penny Stock and information on the limited market. Stockholders should
be aware that, according to Securities and Exchange Commission Release No.
34-29093, the market for penny stocks has suffered in recent years from
patterns of fraud and abuse. Such patterns include (I) control of the
market for the security by one or a few broker-dealers that are often
related to the promoter or issuer; (ii) manipulation of prices through
prearranged matching of purchases and sales and false and misleading press
releases; (iii) "boiler room" practices involving high-pressure sales
tactics and unrealistic price projections by inexperienced sales persons;
(iv) excessive and undisclosed bid-ask differential and markups by selling
broker-dealers; and (v) the wholesale dumping of the same securities by
promoters and broker dealers after prices have been manipulated to a
desired level, along with the resulting inevitable collapse of those prices
and with consequent investor losses. The Company's management is aware of
the abuses that have occurred historically in the penny stock market.
Although the Company does not expect to be in a position to dictate the
behavior of the market or of broker-dealers who participate in the market,
management will strive within the confines of practical limitations to
prevent the described patterns from being established with respect to the
Company's securities.
There May Be a Scarcity of and/or Significant Competition for Business
Opportunities and Combinations
The Company is and will continue to be an insignificant participant in the
business of seeking mergers with and acquisitions of business entities. A
large number of established and well-financed entities, including venture
capital firms, are active in mergers and acquisitions of companies which
may be merger or acquisition target candidates for the Company. Nearly all
such entities have significantly greater financial resources, technical
expertise and managerial capabilities than the Company and, consequently,
the Company will be at a competitive disadvantage in identifying possible
business opportunities and successfully completing a business combination.
Moreover, the Company will also compete in seeking merger or acquisition
candidates with other public shell companies, some of which may also have
funds available for use by an acquisition candidate.
Reporting Requirements May Delay or Preclude Acquisition
Pursuant to the requirements of Section 13 of the Exchange Act, the Company
is required to provide certain information about significant acquisitions
including audited financial statements of the acquired company. Obtaining
audited financial statements are the economic responsibility of the target
company. The additional time and costs that may be incurred by some
potential target companies to prepare such financial statements may
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significantly delay or essentially preclude consummation of an otherwise
desirable acquisition by the Company. Acquisition prospects that do not
have or are unable to obtain the required audited statements may not be
appropriate for acquisition so long as the reporting requirements of the
Exchange Act are applicable. Notwithstanding a target company's agreement
to obtain audited financial statements within the required time frame, such
audited financials may not be available to the Company at the time of
effecting a business combination. In cases where audited financials are
unavailable, the Company will have to rely upon unaudited information that
has not been verified by outside auditors in making its decision to engage
in a transaction with the business entity. This risk increases the prospect
that a business combination with such a business entity might prove to be
an unfavorable one for the Company.
Lack of Market Research or Marketing Organization
The Company has neither conducted, nor have others made available to it,
market research indicating that demand exists for the transactions
contemplated by the Company. In the event demand exists for a transaction
of the type contemplated by the Company, there is no assurance the Company
will be successful in completing any such business combination.
Probable Change in Control of the Company and/or Management
In conjunction with completion of a business acquisition, it is anticipated
that the Company will issue an amount of the Company's authorized but
unissued common stock that represents the greater majority of the voting
power and equity of the Company, which will, in all likelihood, result in
stockholders of a target company obtaining a controlling interest in the
Company. The resulting change in control of the Company will likely result
in removal of the present officer and director of the Company and a
corresponding reduction in or elimination of his participation in the
future affairs of the Company.
Possible Dilution of Value of Shares upon Business Combination
A business combination normally will involve the issuance of a significant
number of additional shares. Depending upon the value of the assets
acquired in such business combination, the per share value of the Company's
common stock may increase or decrease, perhaps significantly.
Additional Risks--Doing Business in a Foreign Country
The Company may effectuate a business combination with a merger target
whose business operations or even headquarters, place of formation or
primary place of business are located outside the United States of America.
In such event, the Company may face the significant additional risks
associated with doing business in that country. In addition to the language
barriers, different presentations of financial information, different
business practices, and other cultural differences and barriers that may
make it difficult to evaluate such a merger target, ongoing business risks
result from the international political situation, uncertain legal systems
and applications of law, prejudice against foreigners, corrupt practices,
uncertain economic policies and potential political and economic
instability that may be exacerbated in various foreign countries.
Taxation
Federal and state tax consequences will, in all likelihood, be major
considerations in any business combination that the Company may undertake.
Currently, such transactions may be structured so as to result in tax-free
treatment to both companies, pursuant to various federal and state tax
provisions. The Company intends to structure any business combination so as
to minimize the federal and state tax consequences to both the Company and
the target entity; however, there can be no assurance that such business
combination will meet the statutory requirements of a tax-free
reorganization or that the parties will obtain the intended tax-free
treatment upon a transfer of stock or assets. A non-qualifying
reorganization could result in the imposition of both federal and state
taxes, which may have an adverse effect on both parties to the transaction.