During the fiscal year ended December 31, 2010 we incurred a net loss of $33,302 and a net loss per share of $0.09. During the fiscal year ended December 31, 2009 we incurred a net loss of $58,465 and a net loss per share of $0.15.
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. As of December 31, 2010 we had $159 in cash and total assets, $44,664 in current liabilities, a working capital deficit of $44,505 and an accumulated deficit of $3,127,706.
During the fiscal year ended December 31, 2010 we spent $30,174 on operating activities and our accrued interest and accounts payable and accrued expenses increased by $1,468 and $1,660 respectively. During the fiscal year ended December 31, 2009 we spent $47,267 on operating activities and our accounts payable and accrued interest increased by $11,198. The majority of our spending on operating activities during these years was attributable to our net loss for the periods.
As discussed in Note 2 to the financial statements, the Company’s lack of cash, losses, negative working capital, and shareholders’ deficit raise substantial doubt about its ability to continue as a going concern. The 2010 financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The Company accounts for income taxes under FASB ASC 740 “Income Taxes.” Under the asset and liability method of FASB ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under FASB ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.
The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet identified ongoing operations and is considered a “shell” company. The lack of cash, losses, negative working capital, and shareholders deficit raise substantial doubt about its ability to continue as a going concern.
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the company’s results of operations, financial position, or cash flow.
Management continuously estimates the realizability of its deferred tax assets based on its assessment of the sufficiency of future revenue streams. Due to the “shell” status of the Company, future revenue streams are uncertain. Additionally, the IRS imposes limitations on the use of loss carry forwards if the Company incurs a change in control.
The Company has not taken a tax position that, if challenged, would have a material effect on the financial statements for the year ended December 31, 2010 and 2009, or during the prior three years applicable under FASB ASC 740. The Company did not recognize any adjustment to the liability for uncertain tax position and therefore did not record any adjustment to the beginning balance of accumulated deficit on the consolidated balance sheet.
The Company has outstanding warrants to employees and non-employees allowing the purchase of stock at a price of $10.00 per share. None of the 49,500 non-employee warrants in 2010 or the 49,500 non-employee warrants in 2009, all of whose exercise price exceeded market value as of the date of the grant, have been exercised.
Management has evaluated events and transactions subsequent to the balance sheet date through the date of the auditor’s report (the date the financial statements were available to be issued) for potential recognition or disclosure in the financial statements. Management has not identified any items requiring recognition or disclosure.