U.S.
SECURITIES AND EXCHANGE COMMISSION


Washington,
D.C. 20549





Form
10-K





(Mark
One)





x ANNUAL REPORT
UNDER SECTION 13 OR 15(d)


OF
THE SECURITIES EXCHANGE ACT OF 1934





For the
fiscal year ended December 31, 2009





o TRANSITION REPORT
UNDER SECTION 13 OR 15(d)


OF
THE SECURITIES EXCHANGE ACT OF 1934





For the
transition period from ______________ to ______________





Commission
File Number 000-52087








SCOUT
ACQUISITION, INC.


(Exact
name of registrant as specified in its charter)





Delaware
                    
                    26-0133324(State
      or other jurisdiction of
                    
                    (I.R.S.
      Employerincorporation
      or organization)
                    
                    Identification
      No.)





c/o Sands
Brothers Venture Capital LLC, 15 Valley Drive, Greenwich, CT 06831





(Address
of principal executive offices)





(203)
661-7500





(Registrant’s
telephone number, including area code)







Securities
registered under Section 12(b) of the Exchange Act:





None.





Securities
registered under Section 12(g) of the Exchange Act:





Common
Stock, $0.0001 par value per share





(Title
of Class)





Check
whether the registrant is a well-known seasoned issuer, as defined in Rule 405
of the Securities Act.  Yes o  No x





Check
whether the registrant is required to file reports pursuant to Section 13 or
15(d) of the Exchange Act.Yes o No x





Check
whether the registrant (1) has filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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





Check
whether the registrant has submitted electronically and posted on its corporate
website, 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





Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-K (§229.405 of this chapter) contained herein, and no disclosure
will be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. x





Check
whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company.  See
definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):





Large
      Accelerated Filer o
                
                Accelerated
      Filer                    
      oNon-accelerated
      Filer    o
                
                Smaller
      Reporting Company  x(Do
      not check if a smaller reporting company.)





Check
whether the issuer is a shell company (as defined in Rule 12b-2 of the Exchange
Act).  Yes x  No o





As of
December 31, 2009, there were no non-affiliate holders of common stock of the
Company.





APPLICABLE
ONLY TO CORPORATE REGISTRANTS





As of
March 30, 2010, there were 1,500,000 shares of common stock, par value $.0001,
outstanding.








FORWARD-LOOKING
STATEMENTS





Certain
statements made in this Annual Report on Form 10-K 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 Scout Acquisition,
Inc. (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. The Company's 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 the control of the
Company. Although the Company believes its 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 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.


2





PART I





Item 1. Description of Business.





Scout
Acquisition, Inc. (“we”, “us”, “our”, or the “Company”) was incorporated in the
State of Delaware on January 3, 2006 and maintains its principal executive
offices at c/o Sands Brothers Venture Capital LLC, 90 Park Avenue, 31st Floor,
New York, New York 10016. Since inception, the Company has been engaged in
organizational efforts and obtaining initial financing. The Company was formed
as a vehicle to pursue a business combination.  The Company filed a
registration statement on Form 10-SB with the U.S. Securities and Exchange
Commission (the “SEC”) on June 30, 2006, and since its effectiveness, the
Company has begun efforts to identify a possible business
combination.  However, the Company has not entered into a letter of
intent or any definitive agreement concerning any target business. The business
purpose of the Company is to seek the acquisition of, or merger with, an
existing company.





The
Company, based on proposed business activities, is a “blank check” company. The
SEC defines those companies as "any development stage company that is issuing a
penny stock, within the meaning of Section 3(a)(51) of the Exchange Act, and
that has no specific business plan or purpose, or has indicated that its
business plan is to merge with an unidentified company or companies." Many
states have enacted statutes, rules and regulations limiting the sale of
securities of "blank check" companies in their respective jurisdictions. The
Company is also a “shell company,” defined in Rule 12b-2 under the Exchange Act
as a company with no or nominal assets (other than cash) and no or nominal
operations. Management does not intend to undertake any efforts to cause a
market to develop in our securities, either debt or equity, until we have
successfully concluded a business combination. The Company intends to comply
with the periodic reporting requirements of the Exchange Act for so long as we
are subject to those requirements.





The
Company was organized 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. The Company’s principal business objective
for the next 12 months and beyond such time will be to achieve long-term growth
potential through a combination with an operating business. The Company will not
restrict its potential candidate target companies to any specific business,
industry or geographical location and, thus, may acquire any type of
business.





The analysis of new business
opportunities is undertaken by or under the supervision of the officers and
directors of the Company.  As of this date the Company has not entered
into any definitive agreement with any party.  The Company has
unrestricted flexibility in seeking, analyzing and participating in potential
business opportunities. In its efforts to analyze potential acquisition targets,
the Company will consider the following kinds of factors:





(a)         Potential
for growth, indicated by new technology, anticipated market expansion or new
products;





(b)        
Competitive position as compared to other firms of similar size and experience
within the industry segment as well as within the industry as a
whole;





(c)         Strength
and diversity of management, either in place or scheduled for
recruitment;





(d)         Capital
requirements and anticipated availability of required funds, to be provided by
the Company or from operations, through the sale of additional securities,
through joint ventures or similar arrangements or from other
sources;





(e)         The
cost of participation by the Company as compared to the perceived tangible and
intangible values and potentials;


3


(f)          The
extent to which the business opportunity can be advanced;





(g)         The
accessibility of required management expertise, personnel, raw materials,
services, professional assistance and other required items; and





(h)         Other
relevant factors.





In
applying the foregoing criteria, no one of which will be controlling, management
will attempt to analyze all factors and circumstances 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. Due to the Company's limited capital available for investigation,
the Company may not discover or adequately evaluate adverse facts about the
opportunity to be acquired.





COMPETITION





The
Company faces vast competition from other shell companies with the same
objectives.  The Company is in a highly competitive market for a small
number of business opportunities which could reduce the likelihood of
consummating a successful business combination.  A large number of
established and well-financed entities, including small public companies and
venture capital firms, are active in mergers and acquisitions of companies that
may be desirable target candidates for us.  Nearly all these entities
have significantly greater financial resources, technical expertise and
managerial capabilities than we do; consequently, we will be at a competitive
disadvantage in identifying possible business opportunities and successfully
completing a business combination.  These competitive factors may
reduce the likelihood of our identifying and consummating a successful business
combination.





FORM OF
ACQUISITION





The
manner in which the Company participates in an opportunity will depend upon the
nature of the opportunity, the respective needs and desires of the Company and
the promoters of the opportunity, and the relative negotiating strength of the
Company and such promoters.





It is
likely that the Company will acquire its participation in a business opportunity
through the issuance of common stock or other securities of the Company.
Although the terms of any such transaction cannot be predicted, it should be
noted that in certain circumstances the criteria for determining whether or not
an acquisition is a so-called "tax free" reorganization under Section 368(a)(1)
of the Internal Revenue Code of 1986, as amended (the "Code") depends upon
whether the owners of the acquired business own 80% or more of the voting stock
of the surviving entity. If a transaction were structured to take advantage of
these provisions rather than other "tax free" provisions provided under the
Code, all prior stockholders would in such circumstances retain 20% or less of
the total issued and outstanding shares of the surviving entity. Under other
circumstances, depending upon the relative negotiating strength of the parties,
prior stockholders may retain substantially less than 20% of the total issued
and outstanding shares of the surviving entity. This could result in substantial
additional dilution to the equity of those who were stockholders of the Company
prior to such reorganization.





The
present stockholders of the Company will likely not have control of a majority
of the voting securities of the Company following a reorganization transaction.
As part of such a transaction, all or a majority of the Company's directors may
resign and one or more new directors may be appointed without any vote by
stockholders.


4


In the
case of an acquisition, the transaction may be accomplished upon the sole
determination of management without any vote or approval by stockholders. In the
case of a statutory merger or consolidation directly involving the Company, it
will likely be necessary to call a stockholders' meeting and obtain the approval
of the holders of a majority of the outstanding securities. The necessity to
obtain such stockholder approval may result in delay and additional expense in
the consummation of any proposed transaction and will also give rise to certain
appraisal rights to dissenting stockholders. Most likely, management will seek
to structure any such transaction so as not to require stockholder
approval.





It is
anticipated that the investigation of specific business opportunities and the
negotiation, drafting and execution of relevant agreements, disclosure documents
and other instruments will require substantial management time and attention and
substantial cost for accountants, attorneys and others. If a decision is made
not to participate in a specific business opportunity, the costs theretofore
incurred in the related investigation might not be recoverable. Furthermore,
even if an agreement is reached for the participation in a specific business
opportunity, the failure to consummate that transaction may result in the loss
to the Registrant of the related costs incurred.





We
presently have no employees apart from our management. Our officers and
directors are engaged in outside business activities and anticipate that they
will devote to our business very limited time until the acquisition of a
successful business opportunity has been identified. We expect no significant
changes in the number of our employees other than such changes, if any, incident
to a business combination.





Item 1A. Risk Factors





As a
“smaller reporting company” as defined by Item 10 of Regulation S-K, the Company
is not required to provide this information.





Item
1B.  Unresolved Staff Comments





As a
“smaller reporting company” as defined by Item 10 of Regulation S-K, the Company
is not required to provide this information.





Item
2. Description of Property.





The
Company neither rents nor owns any properties. The Company utilizes the office
space and equipment of its management at no cost. Management estimates such
amounts to be immaterial.  The Company currently has no policy with
respect to investments or interests in real estate, real estate mortgages or
securities of, or interests in, persons primarily engaged in real estate
activities.





Item
3. Legal Proceedings.





To the best knowledge of our officers
and directors, the Company is not a party to any legal proceeding or
litigation.





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





None.


5





PART
II





Item
5. Market for Common Equity, Related Stockholder Matters and Small Business
Issuer Purchases of Equity Securities.





Common
Stock





Our
Certificate of Incorporation authorizes the issuance of up to 75,000,000 shares
of common stock, par value $.0001 per share (the “Common Stock”).  The
Common Stock is not listed on a publicly-traded market.  As of March
30, 2010, there were 4 holders of record of the Common Stock.





Preferred
Stock





Our
Certificate of Incorporation authorizes the issuance of up to 10,000,000 shares
of preferred stock, par value $.0001 per share (the “Preferred
Stock”).  The Company has not yet issued any of its preferred
stock.




Dividend
Policy





The Company has not declared or paid
any cash dividends on its common stock and does not intend to declare or pay any
cash dividend in the foreseeable future. The payment of dividends, if any, is
within the discretion of the Board of Directors and will depend on the Company’s
earnings, if any, its capital requirements and financial condition and such
other factors as the Board of Directors may consider.





Securities
Authorized for Issuance under Equity Compensation Plans





The
Company does not have any equity compensation plans or any individual
compensation arrangements with respect to its common stock or preferred stock.
The issuance of any of our common or preferred stock is within the discretion of
our Board of Directors, which has the power to issue any or all of our
authorized but unissued shares without stockholder approval.





Recent
Sales of Unregistered Securities





The Company has not issued any
unregistered securities during the fiscal quarter ended December 31,
2009.





On
January 3, 2006, the Registrant sold an aggregate of 1,500,000 shares of Common
Stock to Sands Brothers Venture Capital LLC (“SBV”), Sands Brothers Venture
Capital II LLC (“SBV-II”), Sands Brothers Venture Capital III LLC (“SBV-III”),
and Sands Brothers Venture Capital IV LLC (“SBV-IV”) for an aggregate investment
of $25,000.  The Registrant sold these shares of Common Stock under
the exemption from registration provided by Section 4(2) of the Securities
Act.





No
securities have been issued for services. Neither the Registrant nor any person
acting on its behalf offered or sold the securities by means of any form of
general solicitation or general advertising. No services were performed by any
purchaser as consideration for the shares issued.





Issuer
Purchases of Equity Securities





None.





Item
6.  Selected Financial Data





As a
“smaller reporting company” as defined by Item 10 of Regulation S-K, the Company
is not required to provide this information.


6





Item
7.  Management’s Discussion and Analysis of Financial Condition and
Results of Operation





The
Company was organized 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 our potential candidate
target companies to any specific business, industry or geographical location
and, thus, may acquire any type of business.





The Company currently does not engage
in any business activities that provide cash flow.  During the next
twelve months we anticipate incurring costs related to:





(i)         
filing Exchange Act reports, and


(ii)         investigating,
analyzing and consummating an acquisition.





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.





The Company may consider acquiring 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.





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.





The Company anticipates 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.





Liquidity
and Capital Resources





As of December 31, 2009, the Company
had assets equal to $12,542, comprised exclusively of cash and prepaid
assets.  This compares with the Company’s assets equal to $5,438, as
of December 31, 2008.  The Company’s current liabilities as of
December 31, 2009 totaled $109,555, comprised exclusively of accounts payable
and accrued expenses, loans payable to stockholders, and accrued interest
payable to stockholders.  This compares with the Company’s current
liabilities of $3,861 as of December 31, 2008, comprised exclusively of accounts
payable and accrued expenses.  The Company can provide no assurance
that it can continue to satisfy its cash requirements for at least the next
twelve months.


7





The following is a summary of the
Company's cash flows provided by (used in) operating, investing, and financing
activities for the years ended December 31, 2009 and December 31, 2008 and for
the cumulative period from January 3, 2006 (Inception) to December 31,
2009.





The Year
                  Ended
                  December 31,
                  2009
                
                
                The Year
                  Ended
                  December 31,
                  2008
                
                
                For the
                  Cumulative
                  Period from
                  January 3, 2006
                  (Inception) to
                  December 31,
                  2009Net Cash
      (Used in) Operating Activities
                
                $
                (34,146
                )
                
                $
                (39,766
                )
                
                $
                (146,208
                )Net
      Cash (Used in) Investing Activities
                
                
                -
                
                
                
                -
                
                
                
                -Net
      Cash Provided by Financing Activities
                
                $
                40,000
                
                
                $
                35,000
                
                
                $
                153,750Net
      Increase (Decrease) in Cash
                
                $
                5,854
                
                
                $
                (4,766
                )
                
                $
                7,542





The
Company has nominal assets and has generated no revenues since inception. 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. In addition, the Company
is dependent upon certain related parties to provide continued funding and
capital resources. If continued funding and capital resources are unavailable at
reasonable terms, the Company may not be able to implement its plan of
operations.





Results
of Operations





The
Company has not conducted any active operations since inception, except for its
efforts to locate suitable acquisition candidates. No revenue has been
generated by the Company from January 3, 2006 (Inception) to December 31,
2009.  It is unlikely the Company will have any revenues unless it is
able to effect an acquisition or merger with an operating company, of which
there can be no assurance.  It is management's assertion that these
circumstances may hinder the Company's ability to continue as a going
concern.  The Company’s plan of operation for the next twelve months shall
be to continue its efforts to locate suitable acquisition
candidates.





For the
fiscal year ended December 31, 2009, the Company had a net loss of $42,072,
consisting of legal, accounting, audit, and other professional service fees
incurred in relation to the preparation and filing of the Company’s periodic
reports.





For the
fiscal year ended December 31, 2008, the Company had a net loss of $41,323
comprised exclusively of legal, accounting, audit, and other professional
service fees incurred in relation to the preparation and filing of the Company’s
periodic reports.





For the
cumulative period from January 3, 2006 (Inception) to December 31, 2009, the
Company had a net loss of $164,025 comprised exclusively of legal, accounting,
audit, and other professional service fees incurred in relation to the formation
of the Company, the preparation and filing of the Company’s Registration
Statement on Form 10 in June of 2006, and the filing of the Company’s periodic
reports.


8





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.





Contractual
Obligations





As a “smaller reporting company” as
defined by Item 10 of Regulation S-K, the Company is not required to provide
this information.





Item
7A.  Quantitative and Qualitative Disclosures about Market
Risk.





As a “smaller reporting company” as
defined by Item 10 of Regulation S-K, the Company is not required to provide
this information.





Item
8.  Financial Statements and Supplementary Data.





Audited financial statements begin on
the following page of this report.


9





SCOUT ACQUISITION,
INC.


A
Development Stage Company


DECEMBER
31, 2009





-
TABLE OF CONTENTS -





Page(s)Financial
      Statements:Report
      of Independent Registered Public Accounting Firm
                
                F -
      2Balance
      Sheets
                
                F -
      3Statements
      of Operations
                
                F -
      4Statement
      of Stockholders’ Deficiency
                
                F -
      5Statements
      of Cash Flows
                
                F -
      6Notes
      to Financial Statements
                
                F -
      7 – F - 11







Report
of Independent Registered Public Accounting Firm




To the
Board of Directors and Stockholders of


Scout
Acquisition, Inc.


New York,
NY




We have
audited the accompanying balance sheets of Scout Acquisition, Inc. (a
development stage company) (the “Company”) as of December 31, 2009 and 2008, and
the related statements of operations, stockholders’ deficiency, and cash flows
for the years then ended, and the cumulative period January 3, 2006 (inception)
through December 31, 2009. The Company’s management is responsible for these
financial statements. Our responsibility is to express an opinion on these
financial statements based on our audits.




We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.




In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Scout Acquisition, Inc. as of
December 31, 2009 and 2008, and the results of its operations and its cash flows
for the years then ended and  the cumulative period January 3, 2006
(inception) through December 31, 2009, in conformity with accounting principles
generally accepted in the United States of America.




The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company is in the development stage and has incurred net losses
since inception. This raises substantial doubt about its ability to continue as
a going concern. Management’s plans in regards to these matters are also
described in Note 1. The accompanying financial statements do not include any
adjustments that might result from the outcome of this uncertainty.





/s/ Raich
Ende Malter & Co. LLP





Raich
Ende Malter & Co. LLP


New York,
New York


March 30,
2010


F-2





SCOUT ACQUISITION,
INC.


A
Development Stage Company


BALANCE
SHEETS





December 31,
                  2009
              
              
              December 31,
                  2008ASSETSCURRENT
      ASSETS:Cash
              
              $
              7,542
              
              
              $
              1,688Prepaid
      expenses
              
              
              5,000
              
              
              
              3,750TOTAL
      ASSETS
              
              $
              12,542
              
              
              $
              5,438LIABILITIES
      AND STOCKHOLDERS’ DEFICIENCYCURRENT
      LIABILITIES:Accounts
      payable and accrued expenses
              
              $
              4,000
              
              
              $
              3,861Loans
      payable to stockholders
              
              
              88,750
              
              
              
              -Accrued
      interest payable to stockholders
              
              
              16,305
              
              
              
              -TOTAL
      CURRENT LIABILITIES
              
              
              109,555
              
              
              
              3,861LONG
      TERM LIABILITIES:Loans
      payable to stockholders
              
              
              40,000
              
              
              
              88,750Accrued
      interest payable to stockholders
              
              
              2,512
              
              
              
              9,78042,512
              
              
              
              98,530TOTAL
      LIABILITIES
              
              
              151,567
              
              
              
              102,391STOCKHOLDERS’
      DEFICIENCY:Preferred
      stock, $.0001 par value; 10,000,000 shares authorized; none issued and
      outstanding
              
              
              -
              
              
              
              -Common
      stock, $.0001 par value; 75,000,000 shares authorized; 1,500,000 shares
      issued and outstanding
              
              
              150
              
              
              
              150Additional
      paid-in capital
              
              
              24,850
              
              
              
              24,850Deficit
      accumulated during the development stage
              
              
              (164,025
              )
              
              
              (121,953
              )TOTAL
      STOCKHOLDERS’ DEFICIENCY
              
              
              (139,025
              )
              
              
              (96,953
              )TOTAL
      LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
              
              $
              12,542
              
              
              $
              5,438





See
accompanying notes to financial statements.


F-3


SCOUT ACQUISITION,
INC.


A
Development Stage Company


STATEMENTS OF
OPERATIONS





For the Year Ended
                  December 31,
                
                
                For the Year Ended
                  December 31,
                
                
                For the Period from
                  January 3, 2006
                  (Inception) to
                  December 31,2009
                
                
                2008
                
                
                2009REVENUE
                
                $
                -
                
                
                $
                -
                
                
                $
                -General
      and administrative expenses
                
                
                33,035
                
                
                
                35,377
                
                
                
                145,208LOSS
      BEFORE OTHER EXPENSES
                
                
                (33,035
                )
                
                
                (35,377
                )
                
                
                (145,208
                )OTHER
      EXPENSES:Interest
      expense
                
                
                9,037
                
                
                
                5,946
                
                
                
                18,817NET
      (LOSS)
                
                $
                (42,072
                )
                
                $
                (41,323
                )
                
                $
                (164,025
                )BASIC
      AND DILUTED NET (LOSS) PER SHARE
                
                $
                (.03
                )
                
                $
                (.03
                )WEIGHTED
      AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
                
                
                1,500,000
                
                
                
                1,500,000





See
accompanying notes to financial statements.


F-4


SCOUT ACQUISITION,
INC.


A
Development Stage Company


STATEMENT OF STOCKHOLDERS’
DEFICIENCY





(Deficit)AccumulatedAdditional
                      
                      
                      During thePreferred Stock
                      
                      
                      Common Stock
                      
                      
                      Paid-in
                      
                      
                      Development
                      
                      
                      Stockholders’Shares
                      
                      
                      Amount
                      
                      
                      Shares
                      
                      
                      Amount
                      
                      
                      Capital
                      
                      
                      Stage
                      
                      
                      DeficiencyBALANCE,
      JANUARY 3, 2006
                      
                      
                      -
                      
                      
                      $
                      -
                      
                      
                      
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      -Issuance
      of common stock
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      1,500,000
                      
                      
                      
                      150
                      
                      
                      
                      24,850
                      
                      
                      
                      -
                      
                      
                      
                      25,000Net
      (loss)
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (39,354
                      )
                      
                      
                      (39,354
                      )BALANCE,
      DECEMBER 31, 2006
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      1,500,000
                      
                      
                      
                      150
                      
                      
                      
                      24,850
                      
                      
                      
                      (39,354
                      )
                      
                      
                      (14,354
                      )Net
      (loss)
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (41,276
                      )
                      
                      
                      (41,276
                      )BALANCE,
      DECEMBER 31, 2007
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      1,500,000
                      
                      
                      
                      150
                      
                      
                      
                      24,850
                      
                      
                      
                      (80,630
                      )
                      
                      
                      (55,630
                      )Net
      (loss)
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (41,323
                      )
                      
                      
                      (41,323
                      )BALANCE,
      DECEMBER 31, 2008
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      1,500,000
                      
                      
                      
                      150
                      
                      
                      
                      24,850
                      
                      
                      
                      (121,953
                      )
                      
                      
                      (96,953
                      )Net
      (loss)
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (42,072
                      )
                      
                      
                      (42,072
                      )BALANCE,
      DECEMBER 31, 2009
                      
                      
                      -
                      
                      
                      $
                      -
                      
                      
                      
                      1,500,000
                      
                      
                      $
                      150
                      
                      
                      $
                      24,850
                      
                      
                      $
                      (164,025
                      )
                      
                      $
                      (139,025
                      )





See
accompanying notes to financial statements.


F-5


SCOUT ACQUISITION,
INC.


A
Development Stage Company


STATEMENTS OF CASH
FLOWS





For the Year
                  Ended
                  December 31,
                  2009
              
              
              For the Year
                  Ended
                  December 31,
                  2008
              
              
              For the
                  Period from
                  January 3,
                  2006
                  (Inception) to
                  December
                  31, 2009CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      (loss)
              
              $
              (42,072
              )
              
              $
              (41,323
              )
              
              $
              (164,025
              )Adjustments
      to reconcile net (loss) to net cash used in operating
      activities:Changes
      in operating assets and liabilities:(Increase)
      in prepaid expenses
              
              
              (1,250
              )
              
              
              (1,250
              )
              
              
              (5,000
              )Increase
      in accrued interest payable to stockholders
              
              
              9,037
              
              
              
              5,946
              
              
              
              18,817Increase
      (decrease) in accounts payable and accruedexpenses
              
              
              139
              
              
              
              (3,139
              )
              
              
              4,000Net
      cash used in operating activities
              
              
              (34,146
              )
              
              
              (39,766
              )
              
              
              (146,208
              )CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from issuance of common stock
              
              
              -
              
              
              
              -
              
              
              
              25,000Proceeds
      from stockholder loans
              
              
              40,000
              
              
              
              35,000
              
              
              
              128,750Net
      cash provided by financing activities
              
              
              40,000
              
              
              
              35,000
              
              
              
              153,750NET
      (DECREASE) INCREASE IN CASH
              
              
              5,854
              
              
              
              (4,766
              )
              
              
              7,542Cash,
      beginning of period
              
              
              1,688
              
              
              
              6,454
              
              
              
              -CASH,
      END OF PERIOD
              
              $
              7,542
              
              
              $
              1,688
              
              
              $
              7,542





See
accompanying notes to financial statements.


F-6


SCOUT ACQUISITION,
INC.


A
Development Stage Company


NOTES TO FINANCIAL
STATEMENTS


December
31, 2009





NOTE
      1    -
            ORGANIZATION
      AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES:





(a)
            Organization
      and Business:





Scout
Acquisition, Inc. (the Company) was incorporated in the state of Delaware on
January 3, 2006 for the purpose of raising capital that is intended to be
used in connection with its business plans which may include a possible merger,
acquisition or other business combination with an operating
business.





The
Company is currently in the development stage. All activities of the Company to
date relate to its organization, initial funding, share issuances, and filing of
the Company’s periodic reports.





(b)
            Basis
      of Presentation:





The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern, which contemplates the recoverability of assets and
the satisfaction of liabilities in the normal course of business. The Company
has had no revenue and has incurred accumulated net losses from January 3, 2006
(inception) through December 31, 2009 of $164,025. In addition, the
Company’s development activities since inception have been financially sustained
through stockholder loans. The ability of the company to continue as a going
concern is dependent upon its ability to find a suitable acquisition/merger
candidate, raise additional capital from the sale of common stock, receive
additional loans from its shareholders and, ultimately, the achievement of
significant operating revenues. The accompanying financial statements do not
include any adjustments that might be required should the Company be unable to
recover the value of its assets or satisfy its liabilities. Management plans to
issue more shares of common stock in order to raise money and/or continue to
borrow from the Company’s existing stockholders until a business combination is
effective.





(c)
            Use
      of Estimates:





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the balance sheet and
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.





(d)
            Cash
      Equivalents:





For
purposes of the statement of cash flows, the Company considers highly liquid
financial instruments purchased with a maturity of three months or less to be
cash equivalents. There are no cash equivalents at the balance sheet
date.


F-7


NOTE
      1    -
            ORGANIZATION
      AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES


(Continued):





(e)
            Income
      Taxes:





The
Company utilizes the liability method of accounting for income taxes. Under the
liability method, deferred tax assets and liabilities are determined based on
the differences between financial reporting basis and the tax basis of the
assets and liabilities and are measured using enacted tax rates and laws that
will be in effect, when the differences are expected to reverse. An allowance
against deferred tax assets is recognized, when it is more likely than not, that
such tax benefits will not be realized.





The
Company recognizes the financial statement benefit of an uncertain tax position
only after considering the probability that a tax authority would sustain the
position in an examination. For tax positions meeting a "more-likely-than-not"
threshold, the amount recognized in the financial statements is the benefit
expected to be realized upon settlement with the tax authority. For tax
positions not meeting the threshold, no financial statement benefit is
recognized. The Company recognizes interest and penalties, if any, related to
uncertain tax positions in income tax expense. As of December 31, 2009, the
Company is unaware of any uncertain tax positions.





(f)
            Loss
      per Common Share:





Basic
loss per share is calculated using the weighted-average number of common shares
outstanding during each reporting period. Diluted loss per share includes
potentially dilutive securities such as outstanding options and warrants, using
various methods such as the treasury stock or modified treasury stock method in
the determination of dilutive shares outstanding during each reporting period.
The Company does not have any potentially dilutive instruments.





(g)
            Fair
      Value of Financial Instruments:





The
Company adopted the Financial Accounting Standards Board Fair Value
Measurements, as it applies to its financial statements. This standard defines
fair value, outlines a framework for measuring fair value, and details the
required disclosures about fair value measurements.





Fair
value is defined as the price that would be received to sell an asset, or paid
to transfer a liability, in an orderly transaction between market participants
at the measurement date in the principal or most advantageous market. The
standard establishes a hierarchy in determining the fair value of an asset or
liability. The fair value hierarchy has three levels of inputs, both observable
and unobservable. The standard requires the utilization of the lowest possible
level of input to determine fair value. Level 1 inputs include quoted market
prices in an active market for identical assets or liabilities. Level 2 inputs
are market data, other than Level 1, that are observable either directly or
indirectly. Level 2 inputs include quoted market prices for similar assets or
liabilities, quoted market prices in an inactive market, and other observable
information that can be corroborated by market data. Level 3 inputs are
unobservable and corroborated by little or no market data.


F-8


NOTE
      1    -
              ORGANIZATION
      AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES


(Continued):





(g)
            Fair
      Value of Financial Instruments
(Continued):





The
carrying value of current assets and liabilities approximates fair value due to
the short period of time to maturity. The carrying amount of notes payable
approximate their fair value, using level three inputs, as the current interest
rate on such instruments approximates current market rates on similar
instruments.





NOTE
      2    -
            LOANS
      PAYABLE TO STOCKHOLDERS:





On
January 3, 2006 and July 1, 2006, the Company entered into loan agreements with
certain of its stockholders in the aggregate amount of $12,500 and $6,250,
respectively. These loans accrue interest at 4.00%. These loans and all accrued
interest shall be repaid in full upon the completion of a merger, and if not,
the loans, including all accrued interest, will mature on December 31,
2010.




On
February 22, 2007, the Company entered into loan agreements with certain of its
stockholders in the aggregate amount of $35,000. These loans accrue interest at
8.25%. These loans and all accrued interest shall  be repaid in full
upon the completion of a merger, and if not, the loans, including all accrued
interest, were to mature on February 22, 2009. On March 27, 2009, the
Company entered into an Amended and Restated Promissory Note for each of these
loan agreements, extending the maturity dates to December 31, 2010.




On March
13, 2008, the Company entered into loan agreements with certain of its
stockholders in the aggregate amount of $35,000. These loans accrued interest at
8.25%. These loans and all accrued interest shall be repaid in full upon the
completion of a merger, and if not, the loans, including all accrued interest,
were to mature on March 13, 2010. On March 12, 2010, the Company entered into an
amended and restated promissory note for each of these loan agreements,
extending the maturity dates to December 31, 2010 and increasing the interest
rate to 12%.




On March
27, 2009, the Company entered into loan agreements with certain of its
stockholders in the aggregate amount of $40,000. These loans accrue interest at
8.25%. These loans and all accrued interest shall be repaid in full upon the
completion of a merger, and if not, the loans, including all accrued interest,
will mature on March 27, 2011.




NOTE
      3    -
            CAPITAL
      STOCK:





The total
number of shares of capital stock which the Company shall have authority to
issue is eighty five million (85,000,000). These shares shall be divided into
two classes with 75,000,000 shares designated as common stock at $.0001 par
value (the “Common Stock”) and 10,000,000 shares designated as preferred stock
at $.0001 par value (the “Preferred Stock”).





The
Preferred stock of the Company shall be issued by the Board of Directors of the
Company in one or more classes or one or more series within any class and such
classes or series shall have such voting powers, full or limited, or no voting
powers, and such designations, preferences, limitations or restrictions as the
Board of Directors of the Company may determine, from time to time.





Holders
of shares of Common stock shall be entitled to cast one vote for each share held
at all stockholders' meetings for all purposes, including the election of
directors. The Common Stock does not have cumulative voting rights.





On
January 3, 2006, the Company issued 1,500,000 shares of common stock at a
purchase price of $0.01667 per share, for an aggregate purchase price of
$25,000.


F-9


NOTE
      4    -
            INCOME
      TAXES:





As of
December 31, 2009, the Company has net operating loss carryforwards of
approximately $165,000 to reduce future federal and state taxable income through
2029.





The
Company currently has no federal or state tax examinations in progress nor has
it had any federal or state examinations since its inception. All of the
Company’s tax years are subject to federal and state tax
examination.





The
provision for (benefit from) income taxes consists of the following for the
Period January 3, 2006 (inception) to December 31, 2009.





For The Year Ended
                        December 31, 2009
                    
                    
                    For The Year Ended
                        December 31, 2008
                    
                    
                    For The
                        CumulativePeriod
                        fromJanuary 3
                        2006(Inception) to
                        December 31, 2009Current:Federal
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -Deferred
      tax asset:Federal
                    
                    
                    16,200
                    
                    
                    
                    15,400
                    
                    
                    
                    47,200Valuation
      allowance
                    
                    
                    (16,200
                    )
                    
                    
                    (15,400
                    )
                    
                    
                    (47,200
                    )$
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -




The
difference between the tax provision at the statutory federal income tax rate
and the tax provision attributable to loss before income taxes is as
follows:




For
      The Year Ended December 31,
                    2009
                
                
                For
      The Year Ended December 31,
                    2008
                
                
                For The
                    Cumulative
                    Period from
                    January 3, 2006
                    (Inception)
      to
                    December 31,
                    2009Statutory
      federal income tax rate
                
                
                (34
                )%
                
                
                (34
                )%
                
                
                (34
                )%Surtax
      exemption
                
                
                (5
                )%
                
                
                (3
                )%
                
                
                5
                %Valuation
      allowance
                
                
                39
                %
                
                
                37
                %
                
                
                29
                %Income
      tax rate
                
                
                0
                %
                
                
                0
                %
                
                
                0
                %





NOTE
      5    -
            RECENT
      ACCOUNTING PRONOUNCEMENTS:





Codification





In July
2009, the Financial Accounting Standards Board’s (FASB) Accounting Standards
Codification (ASC) became the single official source of authoritative,
nongovernmental generally accepted accounting principles (“US-GAAP” or “GAAP”)
in the United States. This guidance is contained in ASC Topic 105 “Generally
Accepted Accounting Principles.” The historical GAAP hierarchy was eliminated
and the ASC became the only level of authoritative GAAP, other than guidance
issued by the Securities and Exchange Commission. This guidance is effective for
interim and annual periods ending after September 15, 2009. The Company adopted
the provisions of this guidance as of September 30, 2009. The Company’s
accounting policies were not affected
by the conversion to the ASC. However, references to specific accounting
standards have been changed to refer to the appropriate section of the
ASC.


F-10


NOTE
      5    -
            RECENT
      ACCOUNTING PRONOUNCEMENTS
(Continued):




Fair
Value Measurements





In
September 2006, the FASB issued guidance that defines fair value, establishes a
framework for measuring fair value and expands disclosures about fair value
measurements. This guidance is contained in ASC Topic 820 “Fair Value
Measurements and Disclosures.” This guidance does not require any new fair value
measurements, but applies under other accounting pronouncements that require or
permit fair value measurements. The effective date of this guidance for
financial assets and liabilities that are recognized or disclosed at fair value
on a recurring basis was January 1, 2008, and the Company did adopt the
provisions of this guidance at that time as it related to financial assets and
liabilities recognized or disclosed at fair value on a recurring basis.
Effective January 1, 2009, pursuant to this guidance, the Company adopted the
provisions of this guidance as it relates to non financial assets and
liabilities that are not recognized or disclosed at fair value on a recurring
basis. The adoption of this guidance had no impact on the Company’s financial
statements.





In April
2009, the FASB issued guidance that extends the disclosure requirements
regarding the fair value of financial instruments to interim financial
statements of publicly traded companies. This guidance is primarily contained in
ASC Topic 825 “Financial Instruments” and ASC Topic 270 “Interim Reporting.”
This guidance is effective for interim periods ending after June 15, 2009. The
adoption of this guidance had no impact on the Company’s financial
statements.





Subsequent
Events





In
February 2010, the FASB issued an update to ASC Topic 855 “Subsequent Events.”
The update does not require significant changes regarding recognition or
disclosure of subsequent events, but does require evaluation of subsequent
events through the date the financial statements are issued. The update was
effective upon issuance.





NOTE
      6    -
            SUBSEQUENT
      EVENTS:





Subsequent
events have been evaluated through the time of the filing of our annual report
on Form 10-K


F-11


Item
9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure.





There are
not and have not been any disagreements between the Company and its accountants
on any matter of accounting principles, practices or financial statement
disclosure.





Item
9A(T). Controls and Procedures.





Evaluation of Disclosure
Controls and Procedures





The
Company’s management is responsible for establishing and maintaining a system of
disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e)
under the Exchange Act) that is designed to ensure that information required to
be disclosed by the Company in the reports that the Company files or submits
under the Exchange Act is recorded, processed, summarized and reported, within
the time periods specified in the Commission’s rules and
forms.  Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required
to be disclosed by an issuer in the reports that it files or submits under the
Exchange Act is accumulated and communicated to the issuer’s management,
including its principal executive officer or officers and principal financial
officer or officers, or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure.





In
accordance with Exchange Act Rules 13a-15 and 15d-15, an evaluation was
completed under the supervision and with the participation of the Company’s
management, including the Company’s President, Principal Financial Officer and
Secretary, of the effectiveness of the design and operation of the Company’s
disclosure controls and procedures as of the end of the period covered by this
Annual Report.  Based on that evaluation, the Company’s management
including the President, Principal Financial Officer and Secretary, concluded
that the Company’s disclosure controls and procedures were effective in
providing reasonable assurance that information required to be disclosed in the
Company’s reports filed or submitted under the Exchange Act was recorded,
processed, summarized, and reported within the time periods specified in the
Commission’s rules and forms.





Evaluation of Internal
Controls and Procedures





Our
management is also responsible for establishing and maintaining adequate
internal control over financial reporting.  The Company’s internal control
over financial reporting is designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles.





Our
internal control over financial reporting includes those policies and procedures
that:


·
            Pertain
      to the maintenance of records that, in reasonable detail, accurately and
      fairly reflect the transactions and dispositions of the assets of the
      Company;


·
            Provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with generally accepted
      accounting principles, and that our receipts and expenditures are being
      made only in accordance with authorizations of the Company’s management
      and directors; and


·
            Provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use or disposition of our assets that could have
      a material effect on the financial
statements.





As of December 31, 2009, we carried out
an evaluation of the effectiveness of our internal control over financial
reporting based on the framework in “Internal Control-Integrated Framework”
issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on our evaluation, our management concluded that our internal control over
financial reporting was effective as of December 31, 2009.


10


This
annual report does not include an attestation report of our registered public
accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the Securities and Exchange
Commission that permit us to provide only management’s report in this annual
report.





Changes in Internal Controls
over Financial Reporting





There
have been no significant changes to the Company’s internal controls over
financial reporting that occurred during our last fiscal quarter of the year
ended December 31, 2009, that materially affected, or were reasonably likely to
materially affect, our internal controls over financial reporting.





Item
9B. Other Information.





None.




PART
III





Item
10. Directors, Executive Officers, Promoters and Control Persons; Compliance
With Section 16(a) of the Exchange Act.





(a)  Identification
of Directors and Executive Officers.  The following table sets forth
certain information regarding the Company’s directors and executive
officers:





Name
              
              Age
              
              Position
              
              TermScott
      Baily
              
              52
              
              President,
      Secretary and Director
              
              January
      3, 2006 thru Present





Scott Baily, President, Secretary and
Director.  Scott Baily has served as President, Secretary and
director of the Company since its inception.  Mr. Baily is also the
sole officer and director of Lynx Acquisition, Inc., which is a
publicly-reporting, non-trading, blank check shell company.  Mr. Baily
is Chief Operating Officer (COO) and a director of Sands Brothers Venture
Capital LLC Funds I-IV. Mr. Baily is involved in all aspects of the management
and operation of the venture capital funds. Mr. Baily’s Wall Street career spans
nearly 25 years in a variety of senior executive positions at established
investment firms. Most recently, he was Senior Partner and Senior Analyst at JPS
Fund Group LLC, a hedge fund (2004-2005). From 2001-2004, Mr. Baily was CEO and
President of GrandView Partners, a financial advisory firm focused on the small
cap and emerging growth sectors. Previously, at BlueStone Capital Partners, from
1996-2001, Mr. Baily was a Senior Vice President, Director of Research, and
Senior Equity Analyst. In 2000, while at BlueStone Mr. Baily was named by the
Wall Street Journal as an All Star Analyst for his stock-picking ability in the
healthcare sector. Earlier in his career, Mr. Baily worked at Barrow Street
Research 1988-1996, Smith Barney, Harris Upham, Inc. 1984-1988, and Paine
Webber, Jackson & Curtis (1982-1984) in a variety of senior research
positions and investment banking.  Mr. Baily was educated at Alma
College, where he earned a double B.A. degree in Business Administration and
Corporate Relations in 1981. Mr. Baily did his graduate work in Business
Administration at Central Michigan University (1981-1982) and the University of
Detroit (1983).





The
Company’s officers and directors are elected annually for a one year term or
until their respective successors are duly elected and qualified or until their
earlier resignation or removal.





(b)  Significant
Employees.





As of the date hereof, the Company has
no significant employees.


11


(c)  Family
Relationships.





There are no family relationships among
directors, executive officers, or persons nominated or chosen by the issuer to
become directors or executive officers.




(d)   Involvement
in Certain Legal Proceedings.




There have been no events under any
bankruptcy act, no criminal proceedings and no judgments, injunctions, orders or
decrees material to the evaluation of the ability and integrity of any director,
executive officer, promoter or control person of Registrant during the past five
years.




Compliance
with Section 16(a) of the Exchange Act





Section 16(a)
of the Exchange Act requires the Company’s directors and officers, and persons
who beneficially own more than 10% of a registered class of the Company’s equity
securities, to file reports of beneficial ownership and changes in beneficial
ownership of the Company’s securities with the SEC on Forms 3, 4 and 5.
Officers, directors and greater than 10% stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms
they file.




Based solely on the Company’s review of
the copies of the forms received by it during the fiscal year ended
December 31, 2009 and written representations that no other reports were
required, the Company believes that no person who, at any time during such
fiscal year, was a director, officer or beneficial owner of more than 10% of the
Company’s common stock failed to comply with all Section 16(a) filing
requirements during such fiscal years.




Code
of Ethics




We have
not adopted a Code of Business Conduct and Ethics that applies to our principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions in that our officers and
directors serve in these capacities.





Nominating
Committee





We have not adopted any procedures by
which security holders may recommend nominees to our Board of
Directors.





Audit
Committee





The Board of Directors acts as the
audit committee. The Company does not have a qualified financial expert at this
time because it has not been able to hire a qualified candidate. Further, the
Company believes that it has inadequate financial resources at this time to hire
such an expert.  The Company intends to continue to search for a
qualified individual for hire.





Item
11. Executive Compensation.





The
following table sets forth the cash and other compensation paid by the Company
to its President and all other executive officers who earned annual compensation
exceeding $100,000 for services rendered during the fiscal year ended December
31, 2009 and December 31, 2008.


12





Name and Position
                                
                                Year
                                
                                Total CompensationScott
      Baily, President, Secretary and Director
                                
                                2009
                                
                                None2008
                                
                                None





Director
Compensation





We do not currently pay any cash fees
to our directors, nor do we pay directors’ expenses in attending board
meetings.





Employment
Agreements





The
Company is not a party to any employment agreements.





Item
12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.





(a)           The following tables set forth certain
information as of March 30, 2010, regarding (i) each person known by the Company
to be the beneficial owner of more than 5% of the outstanding shares of Common
Stock, (ii) each director, nominee and executive officer of the Company and
(iii) all officers and directors as a group.





Amount and Nature of
                                    
                                    
                                    PercentageName and Address
                                    
                                    Beneficial Ownership
                                    
                                    
                                    of ClassSands
      Brothers Venture Capital LLC (1)
                                      90
      Park Avenue, 31st
      Floor
                                      New
      York, New York 10016
                                    
                                    
                                    187,500
                                    
                                    
                                    
                                    12.5
                                    %Sands
      Brothers Venture Capital II LLC (1)
                                      90
      Park Avenue, 31st
      Floor
                                      New
      York, New York 10016
                                    
                                    
                                    375,000
                                    
                                    
                                    
                                    25
                                    %Sands
      Brothers Venture Capital III LLC (1)
                                      90
      Park Avenue, 31st
      Floor
                                      New
      York, New York 10016
                                    
                                    
                                    750,000
                                    
                                    
                                    
                                    50
                                    %Sands
      Brothers Venture Capital IV LLC (1)
                                      90
      Park Avenue, 31st
      Floor
                                      New
      York, New York 10016
                                    
                                    
                                    187,500
                                    
                                    
                                    
                                    12.5
                                    %Scott
      Baily (2)
                                      c/o
      Sands Brothers Venture Capital LLC
                                      90
      Park Avenue, 31st
      Floor
                                      New
      York, New York 10016
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    %All
      Directors and Officers as a Group
                                      (1
      individual)
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0
                                    %





(1)
            Mr.
      Steven B. Sands and Mr. Martin S. Sands, who are brothers, are the
      member-managers of SBV, SBV-II, SBV-III, and SBV-IV.  Each of
      SBV, SBV-II, SBV-III, and SBV-IV is owned by trusts for the benefit of
      members of the families of Steven B. Sands and Martin S.
      Sands.  Messrs. Steven B. Sands and Martin S. Sands serve as
      trustees of the trusts, and therefore have voting and investment control
      over the shares of Common Stock.




13




(2)
            Scott
      Baily is the President, Secretary and sole director of the
      Company.





(b)
            The
      Company currently has not authorized any compensation plans or individual
      compensation arrangements.


Item
13. Certain Relationships and Related Transactions.





On February 22, 2007, the Company
issued four promissory notes, bearing eight and one quarter percent (8.25%)
interest annually, in the principal amounts of $4,375, $8,750, $17,500, and
$4,375 to SBV, SBV-II, SBV-III, and SBV-IV, respectively (the “February 2007
Notes”).  The February 2007 Notes and all accrued interest mature upon
completion of a merger, and if no merger is consummated, then the February 2007
Notes were to reach maturity on February 22, 2009.  On March 27, 2009,
the Company entered into an Amended and Restated Promissory Note for each of the
February 2007 Notes, extending the maturity date of the February 2007 Notes to
December 31, 2010.





On March 13, 2008, the Company issued
four additional promissory notes, bearing eight and one quarter percent (8.25%)
interest annually, in the principal amounts of $4,375, $8,750, $17,500, and
$4,375 to SBV, SBV-II, SBV-III, and SBV-IV, respectively (the “March 2008
Notes”).  The March 2008 Notes and all accrued interest mature upon
completion of a merger, and if no merger is consummated, then the 2008 Notes
were to reach maturity on March 13, 2010.  On March 12, 2010, pursuant
to the terms and conditions of the March 2008 Notes, the Company amended and
restated the March 2008 Notes to extend the maturity date from March 13, 2010 to
December 31, 2010 in the event the Company does not complete a merger
transaction or similar transaction and to increase the interest rate to twelve
percent (12%) annually.  The noteholders, principal amounts and other
terms and conditions of the A&R Notes remain identical to the terms and
condition of the March 2008 Notes.





On March 27, 2009, the Company issued
four additional promissory notes, bearing eight and one quarter percent (8.25%)
interest annually, in the principal amounts of $5,000, $10,000, $20,000, and
$5,000 to SBV, SBV-II, SBV-III, and SBV-IV, respectively (the “March 2009
Notes”).  The March 2009 Notes and all accrued interest mature upon
completion of a merger, and if no merger is consummated, then the 2008 Notes
will reach maturity on March 27, 2011.





Director
Independence





The Company is not a listed issuer
whose securities are listed on a national securities exchange, or an
inter-dealer quotation system which has requirements that a majority of the
board of directors be independent.  Under NASDAQ Rule 5605(a)(2)(A), a
director is not considered to be independent if he or she also is an executive
officer or employee of the corporation.  Under such definition, Scott
Baily, our sole director, would not be considered independent as he also serves
as our sole officer of the Company.





Except as
otherwise indicated herein, there have been no related party transactions, or
any other transactions or relationships required to be disclosed pursuant to
Item 404 or 407(a) of Regulation S-K.





Item
14.  Principal Accounting Fees and Services





Raich Ende Malter & Co. LLP
(“Raich Ende”) is the Company's independent registered public accounting
firm.


14


Audit
Fees





The
aggregate fees billed by Raich Ende for professional services rendered for the
audit of our annual financial statements and review of financial statements
included in our quarterly reports on Form 10-Q or services that are normally
provided in connection with statutory and regulatory filings were approximately
$14,000for the
fiscal year ended December 31, 2009 and $17, 500 for the fiscal year ended
December 31, 2008.





Audit-Related
Fees





There
were no feesbilled
by Raich Endefor
assurance and related services that are reasonably related to the performance of
the audit or review of the Company’s financial statements for the fiscal years
ended December 31, 2009 and December 31, 2008.





Tax
Fees





There
were no fees billed by Raich
Endefor
professional services for tax compliance, tax advice, and tax planning for the
fiscal years ended December 31, 2009 and December 31, 2008.





All
Other Fees





There
were no fees billed by Raich
Endefor other
products and services for the fiscal years ended December 31, 2009 and December
31, 2008.





Audit
Committee’s Pre-Approval Process





The Board of Directors acts as
the audit committee of the Company, and accordingly, all services are approved
by all the members of the Board of Directors.





Part
IV





Item
15. Exhibits, Financial Statement Schedules





(a)  We
set forth below a list of our audited financial statements included in Item 8 of
this annual report on Form 10-K.





Statement
                
                Page*Index
      to Financial Statements
                
                F-1Report
      of Independent Registered Public Accounting Firm
                
                F-2Balance
      Sheets
                
                F-3Statement
      of Operations
                
                F-4Statement
      of Changes in Stockholder’s Equity (Deficit)
                
                F-5Statement
      of Cash Flows
                
                F-6Notes
      to Financial Statements
                
                F-7


*Page F-1
follows page 10 to this annual report on Form 10-K.


15


(b) Index
to Exhibits required by Item 601 of Regulation S-K.





Exhibit
                  
                  Description*3.1
                  
                  Certificate
      of Incorporation*3.2
                  
                  By-laws31.1
                  
                  Certification
      of the Company’s Principal Executive Officer pursuant to Section 302 of
      the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Annual
      Report on Form 10-K for the year ended December 31,
200931.2
                  
                  Certification
      of the Company’s Principal Financial Officer pursuant to Section 302 of
      the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Annual
      Report on Form 10-K for the year ended December 31,
200932.1
                  
                  Certification
      of the Company’s Principal Executive Officer pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of
      200232.2
                  
                  Certification
      of the Company’s Principal Financial Officer pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of
      2002





*
            Filed
      as an exhibit to the Company's registration statement on Form 10-SB, as
      filed with the SEC on June 30, 2006, and incorporated herein by this
      reference.


16


SIGNATURES





In accordance with Section 13 or 15(d)
of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.





SCOUT
      ACQUISITION, INC.Dated:
      March 30, 2010
                          By:
                          /s/ Scott BailyScott
      BailyPresident,
      Secretary and DirectorPrincipal
      Accounting OfficerPrincipal
      Executive OfficerPrincipal
      Financial
Officer





In accordance with Section 13 or 15(d)
of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.





Title
                  
                  Date/s/  Scott Baily
                  
                  President,
      Secretary
                  
                  March
      30, 2010Scott
      Baily
                  
                  and
      Director


17