Historically and through fiscal year ended December 31, 2007 our operations consisted of those of our recently dissolved American LAC subsidiary. During the fourth quarter of fiscal 2007 we discontinued those operations and in September 2008 dissolved American LAC, and we are now considered a "shell company" under Federal securities laws. Our business plan is to seek to acquire assets or shares of an entity actively engaged in business which generates revenues in exchange for our securities.
While we are engaged in the search for a suitable candidate for a business combination, we will continue to incur general operating expenses including accounting, audit and legal fees, and transfer agent fees associated with our reporting requirements under Federal securities laws. We will also incur expenses associated with our search for a suitable candidate for a business combination. Shareholders’ advances will be sufficient to pay our operating expenses until such time as we are able to identify and close a business combination with an operating entity.
During the year ended December 31, 2009 and the year ended December 31, 2008 we reported general expenses of $58,465 and $125,046, respectively. General expenses are costs associated with salaries and general overhead (only in 2008) in addition to audit, legal, transfer agent and edgarizing, and other professional fees, all associated with our reporting requirements under Federal securities laws. In addition, general expenses include interest expense attributable to our line of credit extended by our former principal shareholder (repaid in May 2008) as discussed later in this report. There was no similar expense for 2009. These expenses are relatively consistent from period to period. We are now considered a "shell company" under federal securities laws and our business plan is to seek to acquire assets or shares of an entity actively engaged in business which generates revenues in exchange for our securities. While we are engaged in the search for a suitable candidate for a business combination, we will continue to incur accounting, audit and legal fees, and transfer agent fees associated with our reporting requirements under Federal securities laws. We anticipate during 2010 our operating expenses will be approximately $35,000. We will also incur expenses associated with our search for a suitable candidate for a business combination. We are not able at this time to quantify the amount of such expenses, but intend to keep them to a minimum given our limited cash resources.
Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations and otherwise operate on an ongoing basis. At December 31, 2009 we had cash on hand of $ 0 and working capital of $ 0, as compared to cash on hand of $47,267 and working capital of $47,262 at December 31, 2008. Our former principal shareholder, Dr. Bishop, had extended us a line of credit until August 30, 2009 in the amount of $100,000 of which no amount is outstanding as of December 31, 2009. The line of credit was terminated in September 2009 in connection with Dr. Bishop’s private sale of his shares to a third party.
Shareholder advances to the Company will fund operating expenses and our search for a suitable business partner through December 31, 2010.
Net cash used in financing activities for the year ended December 31, 2009 was $0 compared to $359,200 for the year ended December 31, 2008 which represented the repayment of amounts due under the line of credit extended by our principal shareholder.
Our ability to continue as a going concern is dependent on our ability to identify and close a business combination with an operating entity. We have not yet identified any such opportunities, and we cannot assure you that we will be able to identify any appropriate business opportunities, or, if identified, that we will be able to close a transaction which is inevitably beneficial to our shareholders. In addition, as it is likely that if we enter into a business combination the structure of the transaction will be such that the approval of our shareholders is not necessary before the transaction is closed. As such, our shareholders are relying entirely upon the judgment of our management in structuring a transaction which provides some benefit to our shareholders.
In August 2009, the FASB issued Accounting Standards Update No. 2009-05,”Measuring Liabilities at Fair Value,” (“ASU 2009-05”). ASU 2009-05 provides guidance on measuring the fair value of liabilities and is effective for the first interim or annual reporting period beginning after its issuance. The Company’s adoption of ASU 2009-05 did not have an effect on its disclosure of the fair value of its liabilities.
In June 2009, the FASB issued Statement of Financial Accounting Standards No. 166, Accounting for Transfer of Financial Assets an amendment of FASB Statement No. 140 (“Statement No. 166”). Statement No.166 revises FASB Statement of Financial Accounting Standards No. 140, Accounting for Transfers and Extinguishment of Liabilities a replacement of FASB Statement 125 (“Statement No. 140”) and requires additional disclosures about transfer of financial assets. Although Statement No. 166 has not been incorporated into the Codification, in accordance with ASC 105, the standard shall remain authoritative until it is integrated. The Company does not expect Statement No. 166 will have a material effect on its financial position or results of operations.
In October 2009, the FASB issued changes to revenue recognition for multiple-deliverable arrangements. The changes become effective January 1, 2011. As the Company has no such arrangements, the Company has determined that these changes will have no impact of its financial statements.