This Annual Report on Form 10-K contains
certain forward-looking statements, including information about or related to our future results, certain projections and business
trends. We intend for our forward-looking statements to be covered by the safe harbor provisions for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of invoking these
safe harbor provisions.
Assumptions relating to forward-looking
statements involve judgments with respect to, among other things, future economic, competitive and market conditions and future
business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. When
used in this report, the words “believes,” “anticipates,” “estimates,” “expects,”
“intends,” “plans,” “seeks,” “will,” “may,” “should,” “would,”
“projects,” “predicts,” “continues,” and similar expressions or the negative of these terms
constitute forward-looking statements that involve risks and uncertainties are intended to identify forward-looking statements.
Although we believe that our assumptions
underlying our forward-looking statements are reasonable, any or all of the assumptions could prove inaccurate, and we may not
realize the results contemplated by our forward-looking statements. Indeed, because our forward-looking statements are not historical
facts, are based largely upon our current expectations and assumptions and are subject to a number of risks and uncertainties,
our actual results could differ materially from those contemplated by such forward-looking statements. Moreover, management decisions
are subjective in many respects and susceptible to interpretations and periodic revisions based upon actual experience and business
developments, the impact of which may cause us to alter our business strategy or capital expenditure plans that may, in turn, cause
our actual results to differ materially from those contemplated by our forward-looking statements.
We cannot assure you that we will be successful
in our efforts to acquire an operating business or that any such acquisition will result in our future profitability. Our failure
to successfully acquire an operating business could have a material adverse effect on the market price of our common stock and
our business, financial condition and results of operations.
In light of the significant uncertainties
inherent in the forward-looking information included in this report, you should not regard the inclusion of such information as
our representation that we will achieve any strategy, objectives or other plans. The forward-looking statements contained in this
report speak only as of the date of this report, and we have no obligation to update publicly or revise any of these forward-looking
statements, even if new information becomes available or other events occur.
Item 1A. Risk Factors.
In addition to other information in this
Annual Report on Form 10-K, the following risk factors should be carefully considered in evaluating our business because such factors
may have a significant impact on our business, operating results, liquidity and financial condition. As a result of the risk factors
set forth below, actual results could differ materially from those projected in any forward-looking statements. Additional risks
and uncertainties not presently known to us, or that we currently consider to be immaterial, may also impact our business, operating
results, liquidity and financial condition. If any of the following risks occur, our business, operating results, liquidity and
financial condition could be materially adversely affected. In such case, the trading price of our securities could decline, and
you may lose all or part of your investment.
RISKS RELATED TO SANDSTON CORPORATION
WE HAVE HAD NO OPERATING HISTORY SINCE APRIL 2004 AND NO
REVENUES OR EARNINGS FROM OPERATIONS SINCE APRIL 2004
We have had no operations, revenues, or
earnings since April 2004. We have no material assets. We will, in all likelihood, sustain operating expenses without corresponding
revenues, at least until the consummation of a business combination. This may result in us incurring a net operating loss that
will increase continuously until we can consummate a business combination with a profitable business entity. There is no assurance
that we can continue financing our administrative expenses out of available funds or that we will be able to raise additional funds
to cover any shortfall. There is no assurance that we can identify such a business entity and consummate such an agreement or combination.
WE WILL HAVE NO OPERATING HISTORY AND THEREFORE WE WILL BE
SUBJECT TO THE RISKS INHERENT IN ESTABLISHING A NEW BUSINESS
We have not identified what our new line
of business will be; therefore, we cannot fully describe the specific risks presented by such business. It is likely that we will
have had no operating history in the new line of business and it is possible that the target company may have a limited operating
history in its business. Accordingly, there can be no assurance that our future operations will generate operating or net income,
and as such our success will be subject to the risks, expenses, problems and delays inherent in establishing a new line of business
for us. The ultimate success of such new business cannot be assured.
WE MAY BE UNABLE TO SUCCESSFULLY IDENTIFY AND ACQUIRE A SUITABLE
MERGER PARTNER OR ACQUISITION CANDIDATE
We are pursuing a strategy of identifying
suitable merger partners and acquisition candidates that will serve as a platform company. Although we are not targeting specific
business industries for potential acquisitions, we plan to seek businesses with operations and free cash flow, experienced management
teams, and operations in markets offering significant growth opportunities. In identifying, evaluating and selecting a target business
for a potential acquisition, we expect to encounter intense competition from other entities having a business objective similar
to ours including other blank check companies, private equity groups, venture capital funds, leveraged buyout funds, and operating
businesses seeking strategic acquisitions. Many of these entities are well-established and have extensive experience identifying
and effecting business combinations directly or through affiliates. Moreover, many of these competitors possess greater financial,
technical, human and other resources than us which will give them a competitive advantage in pursuing the acquisition of certain
target businesses. We may not be able to successfully identify such a business, obtain financing for such acquisition, or successfully
operate any business that we identify. We have been working without success since April 2004 to identify a suitable merger partner
and consummate an acquisition.
Even if we identify an appropriate acquisition
opportunity, we may be unable to negotiate favorable terms for that acquisition. We may be unable to select, manage or absorb or
integrate any future acquisitions successfully. Any acquisition, even if effectively integrated, may not benefit our stockholders.
Any acquisitions that we attempt or complete may involve a number of unique risks including: (i) executing successful due diligence;
(ii) our exposure to unforeseen liabilities of acquired companies; and (iii) our ability to integrate and absorb the acquired company
successfully. We may be unable to address these problems successfully. Our failure to consummate a business combination with a
profitable business entity could have a material adverse effect on the market price of our common stock and our business, financial
condition and results of operations.
RECENT TURMOIL ACROSS VARIOUS SECTORS OF THE FINANCIAL MARKETS
MAY NEGATIVELY IMPACT OUR ABILITY TO COMPLETE AN ACQUISITION
Over the last several years, various sectors
of the credit markets and the financial services industry have been experiencing a period of unprecedented turmoil and upheaval
characterized by the disruption in credit markets and availability of credit and other financing, the failure, bankruptcy, collapse
or sale of various financial institutions and an unprecedented level of intervention from the United States federal government.
While the ultimate outcome of these events cannot be predicted, they may have a material adverse effect on our ability to obtain
financing necessary to effectively execute our business strategy and on our ability to acquire an operating business.
WE WILL INCUR SIGNIFICANT COSTS IN CONNECTION WITH OUR EVALUATION
OF SUITABLE MERGER PARTNERS AND ACQUISITION CANDIDATES
As part of our plan to acquire or invest
in strategically positioned companies, our management is seeking, analyzing and evaluating potential acquisition and merger candidates.
We have incurred and will continue to incur significant costs, such as due diligence and legal and other professional fees and
expenses, as part of these efforts. Notwithstanding these efforts and expenditures, we cannot give any assurance that we will identify
an appropriate acquisition opportunity in the near term, or at all.
SINCE WE HAVE NOT YET SELECTED A PARTICULAR INDUSTRY OR TARGET
BUSINESS TO ACQUIRE, YOU WILL BE UNABLE TO CURRENTLY ASCERTAIN THE MERITS OR RISKS OF THE INDUSTRY OR BUSINESS IN WHICH WE MAY
ULTIMATELY OPERATE
Because we may consummate a merger or acquisition
with a company in any industry and are not limited to any particular type of business there is no current basis for you to evaluate
the possible merits or risks of the particular industry in which we may ultimately operate or the target business which we may
ultimately acquire. If we complete a merger or acquisition with an entity in an industry characterized by a high level of risk,
we may be affected by the currently unascertainable risks of that industry. Although our management will endeavor to evaluate the
risks inherent in a particular industry or target business, we cannot assure you that we will properly ascertain or assess all
of the significant risk factors. Even if we properly assess those risks, some of them may be outside of our control or ability
to affect. We also cannot assure you that an investment in our securities will not ultimately prove to be less favorable to our
stockholders than a direct investment, if an opportunity were available, in a target business.
THE REPORTING REQUIREMENTS UNDER RULES ADOPTED BY THE SECURITIES
AND EXCHANGE COMMISSION RELATING TO SHELL COMPANIES MAY DELAY OR PREVENT US FROM MAKING CERTAIN ACQUISITIONS
The reporting requirements under federal
securities law may delay or prevent us from making certain acquisitions.
Sections 13 and 15(d) of the Securities
Exchange Act of 1934, as amended, require companies subject thereto to provide certain information about significant acquisitions,
including certified financial statements for the company acquired, covering one, two, or three years, depending on the relative
size of the acquisition. The time and additional costs that may be incurred by some target entities to prepare such statements
may significantly delay or essentially preclude consummation of an otherwise desirable acquisition by us. Acquisition prospects
that do not have or are unable to obtain the required audited statements may not be appropriate for acquisition so long as the
reporting requirements of the Exchange Act are applicable.
In addition to the audited financial statements,
in the filing of the Form 8-K that we file to report an event that causes us to cease being a shell company, we will be required
to include that information that is normally reported by a company in a Form 10 or Form 10-K. The extensive registration-level
information includes a detailed description of a company’s business and properties, management, executive compensation, related
party transactions, legal proceedings and historical market price information, as well as audited historical financial statements
and management’s discussion and analysis of results of operations. The revised Form 8-K rules also require a shell company
to file pro forma financial statements giving effect to the acquisition not later than four business days after completion of the
acquisition, instead of 75 days as required by non-shell companies. The time and additional costs that may be incurred by some
target entities to prepare and disclose such information may significantly delay or essentially preclude consummation of an otherwise
desirable acquisition by us. The time and additional costs that may be incurred by some acquisition prospects to prepare such detailed
disclosures and obtain audited financial statements may significantly delay or essentially preclude consummation of an otherwise
desirable acquisition by us, or deter potential targets from negotiating with us.
OUR ABILITY TO BE SUCCESSFUL AFTER AN ACQUISITION MAY BE
DEPENDENT UPON THE CONTINUED EFFORTS OF OUR MANAGEMENT TEAM AND KEY PERSONNEL WHO MAY JOIN US FOLLOWING SUCH ACQUISITION
The role of our management team and key
personnel from the target business we acquire cannot presently be ascertained. While we intend to closely scrutinize any individuals
we engage after a redeployment of our assets, we cannot assure you that our assessment of these individuals will prove to be correct.
These individuals may be unfamiliar with the requirements of operating a public company which could cause us to have to expend
time and resources helping them become familiar with such requirements. This could be expensive and time-consuming and could lead
to various regulatory issues which may adversely affect our operations.
AS A RESULT OF AN ACQUISITION WE MAY BE REQUIRED TO SUBSEQUENTLY
TAKE WRITE-DOWNS OR WRITE-OFFS, RESTRUCTURING, AND IMPAIRMENT OR OTHER CHARGES THAT COULD HAVE A SIGNIFICANT NEGATIVE EFFECT ON
OUR FINANCIAL CONDITION, RESULTS OF OPERATIONS AND OUR STOCK PRICE, WHICH COULD CAUSE YOU TO LOSE SOME OR ALL OF YOUR INVESTMENT
We must conduct a due diligence investigation
of the target businesses we intend to acquire. Intensive due diligence is time consuming and expensive due to the operations, accounting,
finance and legal professionals who must be involved in the due diligence process. Even if we conduct extensive due diligence on
a target business with which we combine, we cannot assure you that this diligence will reveal all material issues that may affect
a particular target business, or that factors outside the control of the target business and outside of our control will not later
arise. If our diligence fails to identify issues specific to a target business, industry or the environment in which the target
business operates, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or
other charges that could result in our reporting losses. Even though these charges may be non-cash items and not have an immediate
impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us
or our common stock. In addition, charges of this nature may cause us to violate net worth or other covenants to which we may be
subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining post-combination debt
financing.
WE MAY BE UNABLE TO REALIZE THE BENEFITS OF OUR NET OPERATING
LOSS (“NOL”) CARRYFORWARDS
NOLs may be carried forward to offset federal
and state taxable income in future years and eliminate income taxes otherwise payable on such taxable income, subject to certain
adjustments. Based on current federal corporate income tax rates, our NOL carryforwards could provide a benefit to us, if fully
utilized, of significant future tax savings. However, our ability to use these tax benefits in future years will depend upon the
amount of our otherwise taxable income. If we do not have sufficient taxable income in future years to use the tax benefits before
they expire, we will lose the benefit of these NOL carryforwards permanently. Consequently, our ability to use the tax benefits
associated with our substantial NOL will depend significantly on our success in identifying suitable merger partners and/or acquisition
candidates, and once identified, successfully consummate a merger with and/or acquisition of these candidates.
Additionally, if we underwent an ownership
change, the NOL carryforward limitations would impose an annual limit on the amount of the taxable income that may be offset by
our NOL generated prior to the ownership change. If an ownership change were to occur, we may be unable to use a significant portion
of our NOL to offset taxable income. In general, an ownership change occurs when, as of any testing date, the aggregate of the
increase in percentage points of the total amount of a corporation’s stock owned by “5-percent stockholders”
within the meaning of the NOL carryforward limitations whose percentage ownership of the stock has increased as of such date over
the lowest percentage of the stock owned by each such “5-percent stockholder” at any time during the three-year period
preceding such date is more than 50 percentage points. In general, persons who own 5% or more of a corporation’s stock are
“5-percent stockholders,” and all other persons who own less than 5% of a corporation’s stock are treated together
as a public group.
The amount of NOL carryforwards that we
have claimed has not been audited or otherwise validated by the U.S. Internal Revenue Service (the “IRS”). The IRS
could challenge our calculation of the amount of our NOL or our determinations as to when a prior change in ownership occurred
and other provisions of the Internal Revenue Code may limit our ability to carry forward our NOL to offset taxable income in future
years. If the IRS was successful with respect to any such challenge, the potential tax benefit of the NOL carryforwards to us could
be substantially reduced.
IF WE EFFECT AN ACQUISITION OR MERGER WITH A COMPANY LOCATED
OUTSIDE OF THE UNITED STATES, WE WOULD BE SUBJECT TO A VARIETY OF ADDITIONAL RISKS THAT MAY NEGATIVELY IMPACT OUR OPERATIONS
We may effect an acquisition or merger with
a company located outside of the United States. If we did, we would be subject to any special considerations or risks associated
with companies operating in the target business’ home jurisdiction, including any of the following:
• rules and regulations or currency
conversion or corporate withholding taxes on individuals;
• tariffs and trade barriers;
• regulations related to customs and
import/export matters;
• longer payment cycles;
• tax issues, such as tax law
changes and variations in tax laws as compared to the United States;
• currency fluctuations and exchange
controls;
• challenges in collecting accounts
receivable;
• cultural and language differences;
• employment regulations;
• crime, strikes, riots, civil disturbances,
terrorist attacks and wars; and
• deterioration of political relations
with the United States.
We cannot assure you that we would be able
to adequately address these additional risks. If we were unable to do so, our operations might suffer.
IF WE EFFECT AN ACQUISITION OR MERGER WITH A COMPANY LOCATED
OUTSIDE OF THE UNITED STATES, THE LAWS APPLICABLE TO SUCH COMPANY WILL LIKELY GOVERN ALL OF OUR MATERIAL AGREEMENTS AND WE MAY
NOT BE ABLE TO ENFORCE OUR LEGAL RIGHTS
If we effect an acquisition or merger with
a company located outside of the United States, the laws of the country in which such company operates will govern almost all of
the material agreements relating to its operations. We cannot assure you that the target business will be able to enforce any of
its material agreements or that remedies will be available in this new jurisdiction. The system of laws and the enforcement of
existing laws in such jurisdiction may not be as certain in implementation and interpretation as in the United States. The inability
to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business, business opportunities
or capital. Additionally, if we acquire a company located outside of the United States, it is likely that substantially all of
our assets would be located outside of the United States and some of our officers and directors might reside outside of the United
States. As a result, it may not be possible for investors in the United States to enforce their legal rights, to effect service
of process upon our directors or officers or to enforce judgments of United States courts predicated upon civil liabilities and
criminal penalties of our directors and officers under Federal securities laws.
COMPLIANCE WITH THE SARBANES-OXLEY ACT OF 2002 WILL REQUIRE
SUBSTANTIAL FINANCIAL AND MANAGEMENT RESOURCES AND MAY INCREASE THE TIME AND COSTS OF COMPLETING AN ACQUISITION
Section 404 of the Sarbanes-Oxley Act of
2002 requires that we evaluate and report on our system of internal controls and requires that we have such system of internal
controls audited. If we fail to maintain the adequacy of our internal controls, we could be subject to regulatory scrutiny, civil
or criminal penalties and/or stockholder litigation. Any inability to provide reliable financial reports could harm our business.
Section 404 of the Sarbanes-Oxley Act also requires that our independent registered public accounting firm report on management’s
evaluation of our system of internal controls. An acquisition target may not be in compliance with the provisions of the Sarbanes-Oxley
Act regarding adequacy of their internal controls. The development of the internal controls of any such entity to achieve compliance
with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition. Furthermore, any failure
to implement required new or improved controls, or difficulties encountered in the implementation of adequate controls over our
financial processes and reporting in the future, could harm our operating results or cause us to fail to meet our reporting obligations.
Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have
a negative effect on the trading price of our stock.
AN ACQUISITION COULD CREATE A SITUATION WHERE WE WOULD BE
REQUIRED TO REGISTER UNDER THE INVESTMENT COMPANY ACT OF 1940 AND THUS BE REQUIRED TO INCUR SUBSTANTIAL ADDITIONAL COSTS AND EXPENSES
Although we will be subject to regulation
under the Securities Exchange Act of 1934, management believes the Company will not be subject to regulation under the Investment
Company Act of 1940, insofar as we will not be engaged in the business of investing or trading in securities. In the event we engage
in a business combination that results in us holding passive investment interests in a number of entities, we could be subject
to regulation under the Investment Company Act of 1940. In such event, we would be required to register as an investment company
and could be expected to incur significant registration and compliance costs. We have obtained no formal determination from the
Securities and Exchange Commission as to the status of our Company under the Investment Company Act of 1940 and, consequently,
any violation of such Act would subject us to material adverse consequences.
A MERGER OR ACQUISITION WOULD MOST LIKELY BE EXCLUSIVE, RESULTING
IN A LACK OF DIVERSIFICATION
Management anticipates that it may be able
to participate in only one potential business venture because a business partner might require exclusivity. This lack of diversification
should be considered a substantial risk to our shareholders because it will not permit us to offset potential losses from one venture
against gains from another.
RISKS RELATED TO OUR COMMON STOCK
OUR COMMON STOCK IS QUOTED ONLY ON THE OTC BULLETIN BOARD
AND THERE MAY NOT BE A SUSTAINED TRADING MARKET FOR OUR COMMON STOCK
Our shares are listed on the OTC Bulletin
Board (the “OTCBB”) under the symbol SDON.
The OTCBB is a market maker or dealer-driven
system offering quotation and trading reporting capabilities - a regulated quotation service - that displays real-time quotes,
last-sale prices, and volume information in OTC equity securities. The OTCBB securities are not listed and traded on the floor
of an organized national or regional stock exchange. Instead, OTCBB securities transactions are conducted through a telephone and
computer network connecting market makers or dealers in stocks.
Given the nature of the OTCBB, stockholders
may find it difficult to dispose of, or to obtain accurate quotations as to the price of, our common stock, the liquidity of our
stock may be reduced, making it difficult for a stockholder to buy or sell our stock at competitive market prices or at all. Accordingly,
you should be able to bear the financial risk of losing your entire investment.
OUR COMMON STOCK MAY BE SUBJECT TO SIGNIFICANT RESTRICTION
ON RESALE DUE TO FEDERAL PENNY STOCK RESTRICTIONS
The Securities and Exchange Commission has
adopted rules that regulate broker or dealer practices in connection with transactions in penny stocks. Penny stocks generally
are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges
or quoted on the Nasdaq system, provided that current price and volume information with respect to transactions in such securities
is provided by the exchange system). The penny stock rules require a broker or dealer, prior to a transaction in a penny stock
not otherwise exempt from the rules, to deliver a standardized risk disclosure document prepared by the Securities and Exchange
Commission that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker
or dealer also must provide the customer with bid and offer quotations for the penny stock, the compensation of the broker or dealer,
and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the
customer’s account. The penny stock rules also require that prior to a transaction in a penny stock not otherwise exempt
from such rules, the broker or dealer must make a special written determination that a penny stock is a suitable investment for
the purchaser and receive the purchaser’s written agreement to the transaction.
These disclosure requirements may have the
effect of reducing the level of trading activity in any secondary market for our stock that becomes subject to the penny stock
rules, and accordingly, shareholders of our common stock may find it difficult to sell their securities, if at all.
WE ARE VULNERABLE TO VOLATILE MARKET CONDITIONS
The market prices of our common stock have
been highly volatile. The market has from time to time experienced significant price and volume fluctuations that are unrelated
to the operating performance of particular companies. Please see the table contained in Item 5 of this Report which sets forth
the range of high and low closing prices of our common stock for the calendar quarters indicated.
WE DO NOT EXPECT TO PAY DIVIDENDS ON OUR COMMON STOCK IN
THE FORESEEABLE FUTURE
Although our stockholders may receive dividends
if, as and when declared by our Board of Directors, we do not intend to pay dividends on our common stock in the foreseeable future.
Therefore, you should not purchase our common stock if you need immediate or future income by way of dividends from your investment.
OUR AMENDED AND RESTATED ARTICLES OF INCORPORATION AUTHORIZE
THE ISSUANCE OF SHARES OF PREFERRED STOCK
Our Amended and Restated Articles of Incorporation
provides that our Board of Directors will be authorized to issue from time to time, without further stockholder approval, up to
30,000,000 shares of preferred stock in one or more series and to fix or alter the designations, preferences, rights and any qualifications,
limitations or restrictions of the shares of each series, including the dividend rights, dividend rates, conversion rights, voting
rights, terms of redemption, including sinking fund provisions, redemption price or prices, liquidation preferences and the number
of shares constituting any series or designations of any series. Such shares of preferred stock could have preferences over our
common stock with respect to dividends and liquidation rights. We may issue additional preferred stock in ways which may delay,
defer or prevent a change in control of the Company without further action by our stockholders. Such shares of preferred stock
may be issued with voting rights that may adversely affect the voting power of the holders of our common stock by increasing the
number of outstanding shares having voting rights, and by the creation of class or series voting rights.
WE MAY ISSUE A SUBSTANTIAL AMOUNT OF OUR COMMON STOCK IN
THE FUTURE, WHICH COULD CAUSE DILUTION TO CURRENT INVESTORS AND OTHERWISE ADVERSELY AFFECT OUR STOCK PRICE
A key element of our growth strategy is
to make acquisitions. As part of our acquisition strategy, we may issue additional shares of common stock as consideration for
such acquisitions. These issuances could be significant. To the extent that we make acquisitions and issue our shares of common
stock as consideration, your equity interest in us will be diluted. Any such issuance will also increase the number of outstanding
shares of common stock that will be eligible for sale in the future. Persons receiving shares of our common stock in connection
with these acquisitions may be more likely to sell off their common stock, which may influence the price of our common stock. In
addition, the potential issuance of additional shares in connection with anticipated acquisitions could lessen demand for our common
stock and result in a lower price than might otherwise be obtained. We may issue common stock in the future for other purposes
as well, including in connection with financings, for compensation purposes, in connection with strategic transactions or for other
purposes.
ACCOUNTING IN THE EVENT OF A BUSINESS COMBINATION
The Financial Accounting Standards Board’s
ASC 805, “Business Combinations,” (“ASC 805”), previously Statement of Financial Accounting Standards (“SFAS”)
No. 141R requires business combinations to be accounted for under the purchase method. ASC 805 establishes principles for how an
aquirer recognizes and measures identifiable assets aquired, liabilities assumed, any noncontrolling interest in the acquirer and
the goodwill acquired. ASC 850 was effective for business combinations starting with our fiscal year beginning January 1, 2009.
ASC 350, “Goodwill and Other Intangible Assets” (“ASC 350”), previously SFAS No. 142, “Goodwill and
Other Intangible Assets,” requires the use of a non-amortization approach to account for purchased goodwill and certain intangibles.
Goodwill is the excess of the acquisition costs of the acquired entity over the fair value of the identifiable net assets acquired.
The Company is required to test goodwill and intangible assets that are determined to have an indefinite life for impairments at
least annually. The provisions of ASC 350 require the completion of an annual impairment test with any impairment recognized in
current earnings. The provisions of ASC 805 and ASC 350 will be applicable to any business combination that we may enter into in
the future.
We have also been informed that most business
combinations will be accounted for as a reverse acquisition with us being the surviving registrant. As a result of any business
combination, if the acquired entity’s shareholders will exercise control over us, the transaction will be deemed to be a
capital transaction where we are treated as a non-business entity. Therefore, the accounting for the business combination is identical
to that resulting from a reverse merger, except no goodwill or other intangible assets will be recorded. For accounting purposes,
the acquired entity will be treated as the accounting acquirer and, accordingly, will be presented as the continuing entity.
IF WE DO ANY BUSINESS COMBINATION, EACH SHAREHOLDER WILL
MOST LIKELY HOLD A SUBSTANTIALLY LESSER PERCENTAGE OWNERSHIP IN THE COMPANY
If we enter a business combination with
a private concern, that, in all likelihood, would result in the Company issuing securities to shareholders of any such private
company. The issuance of our previously authorized and unissued Common Stock would result in reduction in percentage of shares
owned by our present and prospective shareholders and may result in a change in our control or in our management.
OUR CHIEF EXECUTIVE OFFICER IS OUR PRINCIPAL SHAREHOLDER
AND WILL BE ABLE TO APPROVE ALL CORPORATE ACTIONS WITHOUT SHAREHOLDER CONSENT AND WILL CONTROL OUR COMPANY
Our principal shareholder, Daniel J. Dorman,
owns or controls 57.88% of our common stock. His wife owns 4.56% of our common stock. Consequently, they will have significant
influence over all matters requiring approval by our shareholders, but not requiring the approval of the minority shareholders.
In addition, he is now an officer and director. Because Mr. Dorman and his wife own or control a majority of our common stock,
they will be able to elect all of the members of our board of directors, allowing them to exercise significant control of our affairs
and management. In addition, they may transact most corporate matters requiring shareholder approval by written consent, without
a duly-noticed and duly-held meeting of shareholders.