FORM
10-Q





U.S.
SECURITIES AND EXCHANGE COMMISSION


Washington,
D.C. 20549





x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE


SECURITIES
EXCHANGE ACT OF 1934





For the
quarterly period ended March 31, 2010





OR





 ̈
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE


SECURITIES
EXCHANGE ACT OF 1934





For the
transition period from ________ to ________





Commission
file number 000-52087





Scout Acquisition,
Inc.


(Exact
name of registrant as specified in its charter)





Delaware
              26-0133324(State
      or other jurisdiction
              (I.R.S.
      Employer Identification Number)of
      incorporation or organization)





c/o Sands Brothers Venture
Capital LLC, 601 Lexington Avenue, New York, NY 10022


(Address
of principal executive offices)





(212)
953-4999


(Registrant’s
telephone number, including area code)





15 Valley Drive, Greenwich,
CT 06831


(Former
name, former address and former fiscal year, if changed since last
report)





Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. Yes x No  ̈.





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





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


Large
      accelerated filer  ̈
            Accelerated
      filer
             ̈Non-accelerated
      filer    ̈
            Smaller
      reporting company
            x.(Do
      not check if a smaller reporting company)





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





APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING


THE
PRECEDING FIVE YEARS:





Indicate by check mark whether the
registrant has filed all documents and reports required to be filed by Sections
12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court. Yes  ̈ No  ̈.





APPLICABLE
ONLY TO CORPORATE ISSUERS:





Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date: 1,500,000shares of common stock,
par value $.0001 per share, outstanding as of May 17, 2010.









SCOUT
ACQUISITION, INC.





-
INDEX -





PagePART
      I – FINANCIAL INFORMATION:Item
      1.
                      Financial
      Statements:
                      
                      1Balance
      Sheets as of March 31, 2010 (Unaudited) and December 31,
    2009
                      
                      1Statements
      of Operations (Unaudited) for the Three Months Ended March 31, 2010 and
      March 31, 2009 and for the Cumulative Period from January 3, 2006
      (Inception) to March 31, 2010
                      
                      2Statement
      of Stockholders’ Deficiency for the Period from January 3, 2006
      (Inception) to March 31, 2010 (Unaudited)
                      
                      3Statements
      of Cash Flows (Unaudited) for the Three Months Ended March 31, 2010 and
      March 31, 2009 and for the Cumulative Period from January 3, 2006
      (Inception) to March 31, 2010
                      
                      4Notes
      to Unaudited Financial Statements
                      
                      5Item
      2.
                      Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                      
                      9Item
      3.
                      Quantitative
      and Qualitative Disclosures About Market Risk
                      
                      12Item
      4T.
                      Controls
      and Procedures
                      
                      12PART II – OTHER
      INFORMATION:Item
      1.
                      Legal
      Proceedings
                      
                      12Item
      1A.
                      Risk
      Factors
                      
                      12Item
      2.
                      Unregistered
      Sales of Equity Securities and Use of Proceeds
                      
                      12Item
      3.
                      Defaults
      Upon Senior Securities
                      
                      12Item
      4.
                      Removed
      and Reserved.
                      
                      12Item
      5.
                      Other
      Information
                      
                      13Item
      6.
                      Exhibits
                      
                      13Signatures
                      
                      
                      15







PART I – FINANCIAL
INFORMATION





Item
1.  Financial Statements.





SCOUT ACQUISITION,
INC.


A
Development Stage Company


BALANCE
SHEETS





March 31, 2010
                  (Unaudited)
              
              
              December 31,
                  2009ASSETSCURRENT
      ASSETS:Cash
              
              $
              5,042
              
              
              $
              7,542Prepaid
      expenses
              
              
              3,125
              
              
              
              5,000TOTAL
      ASSETS
              
              $
              8,167
              
              
              $
              12,542LIABILITIES
      AND STOCKHOLDERS’ DEFICIENCYCURRENT
      LIABILITIES:Accounts
      payable and accrued expenses
              
              $
              10,000
              
              
              $
              4,000Loans
      payable to stockholders
              
              
              128,750
              
              
              
              88,750Accrued
      interest payable to stockholders
              
              
              21,272
              
              
              
              16,305TOTAL
      CURRENT LIABILITIES
              
              
              160,022
              
              
              
              109,055LONG
      TERM LIABILITIES:Loans
      payable to stockholders
              
              
              -
              
              
              
              40,000Accrued
      interest payable
              
              
              -
              
              
              
              2,512-
              
              
              
              42,512TOTAL
      LIABILITIES
              
              
              160,022
              
              
              
              151,567STOCKHOLDERS’
      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
              
              
              (176,855
              )
              
              
              (164,025
              )TOTAL
      STOCKHOLDERS’ DEFICIENCY
              
              
              (151,855
              )
              
              
              (139,025
              )TOTAL
      LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
              
              $
              8,167
              
              
              $
              12,542




See
accompanying notes to unaudited financial statements.




1





SCOUTACQUISITION,
INC.


A
Development Stage Company


STATEMENTS OF
OPERATIONS


(Unaudited)





For the Three Months Ended
                  March 31,
              
              
              For the
                Cumulative
                Period from
                January 3, 2006
                (Inception) to
                March 31,2010
              
              
              2009
              
              
              2010REVENUE
              
              $
              -
              
              
              $
              -
              
              
              $
              -General
      and administrative expenses
              
              
              10,374
              
              
              
              9,948
              
              
              
              155,582LOSS
      BEFORE OTHER EXPENSES
              
              
              (10,374
              )
              
              
              (9,948
              )
              
              
              (155,582
              )OTHER
      EXPENSES:Interest
      expense
              
              
              2,456
              
              
              
              1,668
              
              
              
              21,273NET
      (LOSS)
              
              $
              (12,830
              )
              
              $
              (11,616
              )
              
              $
              (176,855
              )BASIC
      AND DILUTED NET LOSS PER SHARE
              
              $
              (.01
              )
              
              $
              (.01
              )NUMBER
      OF SHARES USED IN COMPUTING BASIC AND DILUTED NET LOSS PER
      SHARE
              
              
              1,500,000
              
              
              
              1,500,000




See
accompanying notes to unaudited financial statements.




2





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
                )Net
      (loss)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (12,830
                )
                
                
                (12,830
                )BALANCE,
      MARCH 31, 2010(UNAUDITED)
                
                
                -
                
                
                
                -
                
                
                
                1,500,000
                
                
                $
                150
                
                
                $
                24,850
                
                
                $
                (176,855
                )
                
                $
                (151,855
                )





See
accompanying notes to unaudited financial statements.




3





SCOUT ACQUISITION,
INC.


A
Development Stage Company


STATEMENTS OF CASH
FLOWS


(Unaudited)





For the Three Months Ended
                  March 31,
              
              
              For the
                Cumulative
                Period from
                January 3, 2006
                (Inception) to
                March 31,2010
              
              
              2009
              
              
              2010CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      (loss)
              
              $
              (12,830
              )
              
              $
              (11,616
              )
              
              $
              (176,855
              )Adjustments
      to reconcile net (loss) to net cash used in operating
      activities:Changes
      in operating assets and liabilities:Decrease
      (increase) in prepaid expenses
              
              
              1,875
              
              
              
              1,875
              
              
              
              (3,125
              )Increase
      in accrued interest payable
              
              
              2,455
              
              
              
              1,668
              
              
              
              21,272Increase
      in accounts payable and accrued expenses
              
              
              6,000
              
              
              
              7,713
              
              
              
              10,000Net
      cash used in operating activities
              
              
              (2,500
              )
              
              
              (360
              )
              
              
              (148,708
              )CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from issuance of common stock
              
              
              -
              
              
              
              -
              
              
              
              25,000Proceeds
      from stockholder loans
              
              
              -
              
              
              
              40,000
              
              
              
              128,750Net
      cash provided by financing activities
              
              
              -
              
              
              
              40,000
              
              
              
              153,750NET
      (DECREASE) INCREASE IN CASH
              
              
              (2,500
              )
              
              
              39,640
              
              
              
              5,042Cash,
      beginning of period
              
              
              7,542
              
              
              
              1,688
              
              
              
              -CASH,
      END OF PERIOD
              
              $
              5,042
              
              
              $
              41,328
              
              
              $
              5,042





See
accompanying notes to unaudited financial statements.




4





SCOUT ACQUISITION,
INC.


A
Development Stage Company


NOTES TO UNAUDITED FINANCIAL
STATEMENTS


March
31, 2010





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 March 31, 2010 of $176,855. 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.





5




SCOUT ACQUISITION,
INC.


A
Development Stage Company


NOTES TO UNAUDITED FINANCIAL
STATEMENTS


March
31, 2010





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 March 31, 2010, the Company
is unaware of any uncertain tax positions.





(f)
            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.





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.


6


SCOUT ACQUISITION,
INC.


A
Development Stage Company


NOTES TO UNAUDITED FINANCIAL
STATEMENTS


March
31, 2010





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 were to 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 were to 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 rates 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   -
            INCOME
      TAXES:





As of
March 31, 2010, the Company has net operating loss carryforwards of
approximately $177,000 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
Company has approximately $52,000 and $35,000 in deferred tax assets at March
31, 2010 and 2009, respectively, resulting from net operating loss
carryfowards.  At March 31, 2010 and 2009, a valuation allowance has
been recorded to fully offset these deferred tax assets because the future
realization of the related income tax benefit is uncertain.  The
difference between the statutory tax rate of 34% and the effective tax rate of
0% is due to the surtax exemption and the valuation allowance.




7





SCOUT ACQUISITION,
INC.


A
Development Stage Company


NOTES TO UNAUDITED FINANCIAL
STATEMENTS


March
31, 2010





NOTE
      4   -
            RECENT
      ACCOUNTING PRONOUNCEMENTS:





Management
does not believe that any recently issued, but not yet effective accounting
pronouncements would have a material effect on the accompanying financials
statements, if adopted.





NOTE
      5   -
            INTERIM
      FINANCIAL STATEMENTS:





The
accompanying interim financial statements of the Company have been prepared in
accordance with accounting principles generally accepted for interim financial
statements presentation and in accordance with the instructions to Regulation
S-X.  Accordingly, they do not include all the information and
footnotes required by accounting principles generally accepted in the United
States of America for complete financial statement presentation.  In
the opinion of management, all adjustments for a fair statement of the results
of operation and financial position for the interim periods presented have been
included.  All such adjustments are of a normal recurring nature. The
accompanying financial statements and the information included under the heading
Management’s Discussion and Analysis of Financial Condition and Results of
Operations should be read in conjunction with the Company’s audited financial
statements and related notes included in the Company’s Form 10-K as of December
31, 2009.  Interim results are not necessarily indicative of the
results for a full year.





NOTE
      6   -
            SUBSEQUENT
      EVENTS:





On April
7, 2010, the Company entered into loan agreements with certain of its
stockholders in the aggregate amount of $20,000. These loans accrue interest at
12%. 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, 2012.









Subsequent
events have been evaluated through the time of the filing of our Quarterly
Report on Form 10-Q.


8


Item
2.  Management’s Discussion and Analysis of Financial Condition and
Results of Operations.





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) in regard to 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. (“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. 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 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.





Description
of Business





The
Company was incorporated in the State of Delaware on January 3, 2006 and
maintains its principal executive office at c/o Sands Brothers Venture Capital
LLC, 601 Lexington Avenue, 51st Floor,
New York, NY 10022. 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 through the acquisition
of, or merger with, an operating business.  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 focused its efforts to identify a possible business
combination.





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 Securities Exchange
Act of 1934, as amended (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.




9





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.





Since our Registration Statement on
Form 10-SB went effective, our management has had contact and 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.





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 March 31, 2010, the Company had
assets equal to $8,167, comprised exclusively of cash and prepaid
expenses.  This compares with assets of $12,542, comprised exclusively
of cash and prepaid expenses, as of December 31, 2009.  The Company’s
current liabilities as of March 31, 2010 totaled $160,022, comprised exclusively
of accounts payable, accrued expenses loans payable to stockholders and accrued
interest payable to stockholders.  This compares to the Company’s
current liabilities as of December 31, 2009 of $109,055, comprised exclusively
of accounts payable, accrued expenses, loans payable to stockholders and accrued
interest payable to stockholders.The Company
can provide no assurance that it can continue to satisfy its cash requirements
for at least the next twelve months.





The following is a summary of the
Company's cash flows provided by (used in) operating, investing, and financing
activities for the three months ended March 31, 2010 and March 31, 2009 and for
the cumulative period from January 3, 2006 (inception) to March 31,
2010:


10




For the Three
                  Months Ended
                  March 31, 2010
                
                
                For the Three
                  Months Ended
                  March 31, 2009
                
                
                For the Cumulative Period
                  from January 3, 2006
                  (Inception) to March 31, 2010Net cash
      used in operating activities
                
                $
                (2,500
                )
                
                $
                (360
                )
                
                $
                (148,708
                )Net
      cash used in investing activities
                
                $
                -
                
                
                $
                -
                
                
                $
                -Net
      cash provided by financing activities
                
                $
                -
                
                
                $
                40,000
                
                
                $
                153,750Net
      increase/(decrease) in cash
                
                $
                (2,500
                )
                
                $
                39,640
                
                
                $
                5,042





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 March 31,
2010.  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
three months ended March 31, 2010, the Company had a net loss of $12,830
consisting of interest expense on stockholder loans and legal, accounting, audit
and other professional service fees incurred in relation to the filing of the
Company’s Annual Report on Form 10-K for the year ended December 31, 2009 in
March of 2010.  This compares with a net loss of $11,616 for the three
months ended March 31, 2009, consisting of interest expense on stockholder loans
and legal, accounting, audit and other professional service fees incurred in
relation to the filing of the Company’s Annual Report on Form 10-K for the year
ended December 31, 2008 in March of 2009.





For the
cumulative period from January 3, 2006 (inception) to March 31, 2010, the
Company had a net loss of $176,855, consisting of interest expense on
stockholder loans and legal, accounting, audit and other professional service
fees incurred in relation to the formation of the Company, the filing of the
Company’s Registration Statement on Form 10-SB in June of 2006, the filing of
the Company’s Quarterly Reports on Form 10-QSB and Form 10-Q and the filing of
the Company’s Annual Reports on Form 10-KSB and Form 10-K.





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.




11




Item
3.  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
information required by this Item.





Item
4T.  Controls and Procedures.





Evaluation
of Disclosure Controls and Procedures





We maintain disclosure controls and
procedures that are designed to ensure that information required to be disclosed
in our reports filed pursuant to the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the SEC’s rules,
regulations and related forms, and that such information is accumulated and
communicated to our principal executive officer and principal financial officer,
as appropriate, to allow timely decisions regarding required
disclosure.





As of March 31, 2010, we carried out an
evaluation, under the supervision and with the participation of our principal
executive officer and our principal financial officer of the effectiveness of
the design and operation of our disclosure controls and procedures. Based on
this evaluation, our principal executive officer and our principal financial
officer concluded that our disclosure controls and procedures were effective as
of the end of the period covered by this report.





Changes
in Internal Controls





There have been no changes in our
internal controls over financial reporting during the quarter ended March 31,
2010 that have materially affected or are reasonably likely to materially affect
our internal controls.





PART II — OTHER
INFORMATION





Item
1.  Legal Proceedings.





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





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
information required by this Item.





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





None.





Item 3.  Defaults Upon
Senior Securities.





None.





Item
4.  Removed and Reserved.




12




Item 5.  Other
Information.





Departure
of Directors or Certain Officers; Election of Directors; Appointment of Certain
Officers.




(a)           On
May 14, 2010 and effective as of that date, the board of directors (the “Board”)
of Scout Acquisition, Inc. (the “Company”) elected Christopher Kelly to serve as
a director of the Company.





(b)           On
May 14, 2010 and effective immediately after the election of Christopher Kelly,
Scott Baily resigned from his positions of President, Secretary and
director of the Company.  Mr. Baily’s resignation letter is attached
hereto as Exhibit 17.1





(c)           On
May 14, 2010 and effective as of that date, the Board appointed Christopher
Kelly to serve as the Company’s President and Secretary to fill the vacancy
created by Mr. Baily’s resignation.





Biographical
Information




Christopher
Kelly,52,President and Secretary
of the Company since May 14, 2010, is a partner, and the Chief Operating Officer
and Chief Compliance Officer of Sands Brothers since April 2008. Mr. Kelly
joined Sands Brothers from Pirate Capital LLC, an investment advisor, where he
served as General Counsel and Chief Compliance Officer from February 2006 to
April 2008. Prior to that, he served as General Counsel of Gilman and Ciocia
Inc., a broker dealer holding company, from October of 2004 to February of
2006.  Mr. Kelly earned a bachelors of arts, with High Honors, from
the University of Virginia and a juris doctor from the University of Virginia
School of Law. Mr. Kelly’s legal knowledge and expertise as an officer of
investment management and advisory firms will be beneficial to the Company in
assessing and identifying target companies.





Item
6.  Exhibits.





(a)
  Exhibits required by Item 601 of Regulation S-K.




Exhibit
                  
                  Description*3.1
                  
                  Certificate
      of Incorporation, as filed with the Delaware Secretary of State on January
      3, 2006.*3.2
                  
                  By-Laws.17
                  
                  Resignation
      Letter from Scott Baily.
  13
  31.1
                  
                  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 Quarterly
      Report on Form 10-Q for the quarter ended March 31,
  2010.31.2
                  
                  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 Quarterly
      Report on Form 10-Q for the quarter ended March 31,
  2010.32.1
                  
                  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
      2002.32.2
                  
                  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 Securities and Exchange Commission on June 30, 2006 and
      incorporated herein by this
reference.


14


SIGNATURES





Pursuant to the requirements 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.




Dated:
      May 17, 2010
              SCOUT
      ACQUISITION, INC.By:
              /s/ Christopher
      KellyChristopher
      KellyPresident,
      Secretary, and DirectorPrincipal
      Executive OfficerPrincipal
      Financial Officer




15