Forward Looking Statement Notice
Certain statements made in this Quarterly Report on Form 10-Q are “forward-looking statements” (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of Acquired Sales Corp. (“we”, “us”, “our” or the “Company”) to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. Our plans and objectives are based, in part, on assumptions involving the continued expansion of business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance the forward-looking statements included in this Quarterly Report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved.
The Company is presently operating as a vehicle to investigate and, if such investigation warrants, acquire a target company or business seeking the perceived advantages of being a publicly held corporation. Our principal business objective for the next 12 months and beyond such time will be to achieve long-term growth potential through a combination with a business rather than immediate, short-term earnings. The Company will not restrict potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire any type of business.
Results of Operations
Revenues, Operating Costs and Losses
For the three months ending June 30, 2010, we had no revenues and incurred general and administrative expenses of $6,457 compared to $2,442 for the comparable 2009 period. For the nine months ending June 30, 2010, we had no revenues and incurred general and administrative expenses totaling $19,321. These expenses for both periods are substantially due to legal, accounting, audit and other professional service fees incurred in relation to corporate governance and SEC-related compliance matters all of which increased during these periods as a result of revision of our internal controls and procedures and modification and enhancement of our certain public disclosures. These changes stemmed from and were consistent with several rounds of written comments directed to the Company by the SEC. We believe that these SEC comments, which were first received on February 26, 2010 and as of the date of this filing have been resolved, stemmed from a routine, general SEC review of the Company’s accounting and narrative disclosures. For the period from inception of our new developmental stage (May 27, 2004) through June 30, 2010, we had no activities that produced revenues from operations and has had a net loss of $(115,811) since inception of the Company’s new developmental stage and $(7,042) in the three months ended June 30, 2010. These losses are primarily due to the legal, accounting, audit and other professional service fees incurred in relation to corporate governance and SEC-related compliance matters referenced above.
The following is a summary of the Company's cash flows from operating, investing, and financing activities for the Cumulative Period from Inception of our new developmental stage (May 27, 2004) through June 30, 2010.
|
|
June 30, 2010
|
|
|
For the period
May 27, 2004
(Date of
Inception
of
the
Development
Stage) through
June 30, 2010
|
|
Net Cash (Used) by Operating Activities
|
|
$
|
(13,001
|
)
|
|
$
|
(162,799
|
)
|
Net Cash (Used) Provided by Financing Activities
|
|
$
|
14,000
|
|
|
$
|
219,000
|
|
Net Increase (Decrease) in Cash
|
|
$
|
(999
|
)
|
|
$
|
(1,011
|
)
|
The Company has nominal assets and has generated no revenues since inception of our new developmental stage. The Company is also dependent upon the receipt of capital investment or other financing to fund its ongoing operations and to execute its business plan of seeking a combination with a private operating company. If continued funding and capital resources are unavailable at reasonable terms, the Company may not be able to implement its plan of operations.
Plan of Operations
The Company currently does not engage in any business activities that provide cash flow. The costs of investigating and analyzing business combinations for the next 12 months and beyond such time will be paid with money in our treasury. In some cases, we have funded our treasury with cash received from related parties. In the next 12 months, cash will need to be raised in order for us to conduct our plan of operations. There is no assurance that such cash can be raised on acceptable terms, if at all.
During the next twelve months we anticipate incurring costs related to:
|
(i)
|
filing of reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and
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|
(ii)
|
consummating an acquisition.
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We believe we will be able to meet these costs through use of funds in our treasury, through deferral of fees by certain service providers and additional amounts, as necessary, to be loaned to or invested in us by our stockholders, management or other investors. However, no such loans or investments have yet been arranged, and the willingness of our stockholders, management or other investors to make such loans or investments, or on reasonable terms, cannot be guaranteed.
The Company may consider a business which has recently commenced operations, is a developing company in need of additional funds for expansion into new products or markets, is seeking to develop a new product or service, or is an established business which may be experiencing financial or operating difficulties and is in need of additional capital. In the alternative, a business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital, but which desires to establish a public trading market for its shares, while avoiding, among other things, the time delays, significant expense, and loss of voting control which may occur in a public offering.
Since the commencement of our new developmental stage, our officers and directors have had limited contact or discussions with representatives of other entities regarding a business combination with us. Any target business that is selected may be a financially unstable company or an entity in its early stages of development or growth, including entities without established records of sales or earnings. In that event, we will be subject to numerous risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies. In addition, we may effect a business combination with an entity in an industry characterized by a high level of risk, and, although our management will endeavor to evaluate the risks inherent in a particular target business, there can be no assurance that we will properly ascertain or assess all significant risks.
We anticipate that the selection of a business combination will be complex and extremely risky. Because of general economic conditions, rapid technological advances being made in some industries and shortages of available capital, our management believes that there are numerous firms seeking even the limited additional capital which we will have and/or the perceived benefits of becoming a publicly traded corporation. Such perceived benefits of becoming a publicly traded corporation include, among other things, facilitating or improving the terms on which additional equity financing may be obtained, providing liquidity for the principals of and investors in a business, creating a means for providing incentive stock options or similar benefits to key employees, and offering greater flexibility in structuring acquisitions, joint ventures and the like through the issuance of stock. Potentially available business combinations 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.
The United States and North American economies are currently undergoing profound recessions that are negatively affecting our ability to identify, assess, negotiate and finance a potential acquisition. We cannot predict when this recessionary period will end or when the climate for effectively executing our business plan will improve.
Liquidity and Capital Resources
At June 30, 2010, the Company had a cash position of $1,011, accounts payable of $10,233 and a principal amount of $24,000 due to related parties as a result of notes payable as described below. As of June 30, 2010, the Company had substantially no assets and current liabilities of $34,233 as of June 30, 2010. During January 2009, in November 2009 and again in April 2010, the Company issued unsecured demand promissory notes for cash received that each bear interest at 10% per annum to CEO and Director Gerard M. Jacobs’ spouse. The two notes issued in 2009 were in the amounts of $10,000 each, payable to Mr. Jacobs’ spouse, and during the nine months ended June 30, 2010, the Company incurred interest expense of $1,388 and made cash payments of $1,485 for interest. At June 30, 2010, the total principal amount of these two notes was $20,000. The note issued during April 2010 in the amount of $4,000 was to Miss Mimi Corporation, an entity related to Mr. Jacobs, and during the nine months ended June 30, 2010, we incurred interest expense of $80 and made cash payments of the same amount for interest. At June 30, 2010, the total principal amount of the Miss Mimi Corporation note was $4,000.
Need for Additional Financing
Additional funding will be required in order for the Company to survive as a going concern and to finance growth and to achieve our strategic objectives. Management is actively pursuing additional sources of funding. If we do not raise sufficient funds in the future, we may not be able to fund expansion, take advantage of future opportunities, meet our existing debt obligations or respond to unanticipated requirements. Financing transactions in the future may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms.
The amount and timing of our future capital requirements will depend upon many factors, including the level of funding received from possible future private placements of our common stock and the level of funding obtained through other financing sources, and the timing of such funding.
We intend to retain any future earnings to retire any existing debt, finance the expansion of our business and any necessary capital expenditures, and for general corporate purposes.
Going Concern
The accompanying financial statements have been prepared assuming we will continue as a going concern. We have had substantial operating losses for the past years and are dependent upon outside financing to continue operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. It is management’s plan to raise necessary funds from shareholders to satisfy the expense requirements of the Company.
Governmental Regulations
None.
Research and Development
None.
Employees
We currently have no full time employees.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.