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Appgate, Inc. - Quarter Report: 2009 December (Form 10-Q)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended: December 31, 2009

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from _________ to __________

Commission file number: 000-52776

NEWTOWN LANE MARKETING, INCORPORATED
(Exact name of registrant as specified in its charter)

 

 

 

Delaware

 

20-3547231

(State or other jurisdiction of
incorporation or organization)

 

(IRS Employer
Identification No.)

 

 

 

15 Linden Drive
Madison, NJ 07940

(Address of principal executive offices)

 

973-635-4047

(Issuer’s telephone number)

 

(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 o

 

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 o No o

 

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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


 

 

 

 

 

Large Accelerated filer o

 

Accelerated filer o

 

Non-accelerated filer o

 

Smaller reporting company x


 

 

 

Indicate by check mark whether the issuer is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

 

 

 

Yes x No o

 

 

 

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: There were a total of 1,375,755 shares of the issuer’s common stock, par value $.001 per share, outstanding as of February 9, 2010.



NEWTOWN LANE MARKETING, INCORPORATED

TABLE OF CONTENTS

 

 

 

 

 

 

Page

 

 


PART I.

FINANCIAL INFORMATION

 

 

 

 

 

 

ITEM 1.

FINANCIAL STATEMENTS

 

 

 

 

 

 

 

Balance Sheets as of December 31, 2009 (unaudited) and March 31, 2009

 

3

 

 

 

 

 

Statements of Expenses for the Three Months and Nine Months Ended December 31, 2009 and 2008 and the Period from September 26, 2005 (Date of Inception) to December 31, 2009 (unaudited)

 

4

 

 

 

 

 

Statements of Changes in Stockholders’ Equity (Deficit) for the Period from September 26, 2005 (Date of Inception) to December 31, 2009 (unaudited)

 

5

 

 

 

 

 

Statements of Cash Flows for the for the Nine Months Ended December 31, 2009 and 2008 and the Period from September 26, 2005 (Date of Inception) to December 31, 2009 (unaudited)

 

6

 

 

 

 

 

NOTES TO FINANCIAL STATEMENTS (unaudited)

 

7

 

 

 

 

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

 

10

 

 

 

 

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

12

 

 

 

 

ITEM 4T.

CONTROLS AND PROCEDURES

 

12

 

 

 

 

PART II

OTHER INFORMATION

 

 

 

 

 

 

ITEM 6.

EXHIBITS

 

12

 

 

 

 

SIGNATURES

 

13

FORWARD-LOOKING STATEMENTS

          Certain statements made in this Quarterly Report on Form 10-Q are “forward-looking statements” regarding the plans and objectives of management for future operations and market trends and expectations. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements 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. Our plans and objectives are based, in part, on assumptions involving the continued expansion of our 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 our control. Although we believe that our assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved. We undertake no obligation to revise or update publicly any forward-looking statements for any reason. The terms “we”, “our”, “us”, or any derivative thereof, as used herein refer to Newtown Lane Marketing, Incorporated, a Delaware corporation, and its predecessors.

2


PART I. – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS:

NEWTOWN LANE MARKETING, INCORPORATED
(A Development Stage Company)
BALANCE SHEETS
(unaudited)

 

 

 

 

 

 

 

 

 

 

December 31,
2009

 

March 31,
2009

 

 

 





ASSETS

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

16,452

 

$

28,396

 

 

 







TOTAL CURRENT ASSETS

 

$

16,452

 

$

28,396

 

 

 







 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

13,529

 

$

32,767

 

 

 







TOTAL CURRENT LIABILITIES

 

 

13,529

 

 

32,767

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

 

Preferred stock, $0.001 par value, 1,000,000 shares authorized, none issued and outstanding

 

 

 

 

 

Common stock, $0.001 par value; 100,000,000 shares authorized, 1,375,755 issued and outstanding

 

 

1,376

 

 

1,376

 

Additional paid-in capital

 

 

1,963,088

 

 

1,934,088

 

Deficit accumulated during the development stage

 

 

(1,961,541

)

 

(1,939,835

)

 

 







 

 

 

 

 

 

 

 

TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

(2,923

)

 

(4,371

)

 

 







 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

$

16,452

 

$

28,396

 

 

 







The accompanying notes are an integral part of these unaudited financial statements.

3


NEWTOWN LANE MARKETING, INCORPORATED
(A Development Stage Company)
STATEMENTS OF EXPENSES
(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 26,
2005
(Inception)
Through
December 31, 2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
December 31,

 

Nine Months Ended
December 31,

 

 

 

 

 

2009

 

2008

 

2009

 

2008

 

 

 

 

 









 




Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

$

6,807

 

$

10,465

 

$

21,713

 

$

27,082

 

 

$

1,518,667

 

Interest income, net

 

 

(1

)

 

 

 

(7

)

 

(23

)

 

 

288,038

 

 

 













 




Total expense

 

 

6,806

 

 

10,465

 

 

21,706

 

 

27,059

 

 

 

1,806,705

 

 

 













 




Loss from continuing operations

 

 

(6,806

)

 

(10,465

)

 

(21,706

)

 

(27,059

)

 

 

(1,806,705

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from discontinued operations

 

 

 

 

 

 

 

 

 

 

 

(154,836

)

 

 

















Net loss

 

$

(6,806

)

$

(10,465

)

$

(21,706

)

$

(27,059

)

 

$

(1,961,541

)

 

 

















 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share - basic and dliuted

 

$

(0.01

)

$

(0.01

)

$

(0.02

)

$

(0.02

)

 

 

 

 

 

 













 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic and diluted

 

 

1,375,755

 

 

1,329,722

 

 

1,375,755

 

 

1,323,755

 

 

 

 

 

 

 













 

 

 

 

The accompanying notes are an integral part of these financial statements.

4


NEWTOWN LANE MARKETING, INCORPORATED
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
For the Period from September 26, 2005 (Inception) through December 31, 2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deficit
Accumulated
During the
Development
Stage

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total
Stockholders’
Equity
(Deficit)

 

 

 

Preferred Stock

 

Common Stock

 

Additional
Paid-in
Capital

 

 

 

 

 




 

 

 

 

 

 

Shares

 

Amount

 

Shares

 

Amount

 

 

 

 

 

 















 

Founders shares issued at inception

 

 

 

$

 

 

67,000

 

$

67

 

$

74,933

 

$

 

$

75,000

 

Stock issued for services

 

 

 

 

 

 

7,000

 

 

7

 

 

8,743

 

 

 

 

8,750

 

Stock issued in connection with convertible notes

 

 

 

 

 

 

10,972

 

 

11

 

 

159,992

 

 

 

 

160,003

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

(363,474

)

 

(363,474

)

 

 






















Balances at March 31, 2006 (Audited)

 

 

 

 

 

 

84,972

 

 

85

 

 

243,668

 

 

(363,474

)

 

(119,721

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accrued consulting fees converted to stock

 

 

 

 

 

 

5,184

 

 

5

 

 

64,795

 

 

 

 

64,800

 

Stock issued for services to founders

 

 

 

 

 

 

12,000

 

 

12

 

 

149,988

 

 

 

 

150,000

 

Transfer of officer’s shares

 

 

 

 

 

 

 

 

 

 

78,750

 

 

 

 

78,750

 

Issuance of stock options

 

 

 

 

 

 

 

 

 

 

83,100

 

 

 

 

83,100

 

Stock issued in exchange for options

 

 

 

 

 

 

2,500

 

 

3

 

 

49,997

 

 

 

 

50,000

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

(1,124,608

)

 

(1,124,608

)

 

 






















Balances at March 31, 2007 (Audited)

 

 

 

 

 

 

104,656

 

 

105

 

 

670,298

 

 

(1,488,082

)

 

(817,679

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock transferred for services

 

 

 

 

 

 

 

 

 

 

19,000

 

 

 

 

19,000

 

Stock issued to retire debt and accrued interest

 

 

 

 

 

 

27,420

 

 

27

 

 

479,784

 

 

 

 

479,811

 

Stock issued for cash proceeds

 

 

500

 

 

1

 

 

447,925

 

 

448

 

 

599,551

 

 

 

 

600,000

 

Series A preferred stock converted

 

 

(500

)

 

(1

)

 

740,754

 

 

741

 

 

(740

)

 

 

 

 

Contributed Capital

 

 

 

 

 

 

 

 

 

 

110,000

 

 

 

 

110,000

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

(376,382

)

 

(376,382

)

 

 






















Balances at March 31, 2008 (Audited)

 

 

 

 

 

 

1,320,755

 

 

1,321

 

 

1,877,893

 

 

(1,864,464

)

 

14,750

 

Stock issued for cash proceeds

 

 

 

 

 

 

55,000

 

 

55

 

 

1,945

 

 

 

 

2,000

 

Equity based compensation

 

 

 

 

 

 

 

 

 

 

11,750

 

 

 

 

11,750

 

Contributed Capital

 

 

 

 

 

 

 

 

 

 

42,500

 

 

 

 

42,500

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

(75,371

)

 

(75,371

)

 

 






















Balances at March 31, 2009 (Audited)

 

 

 

 

 

 

1,375,755

 

 

1,376

 

 

1,934,088

 

 

(1,939,835

)

 

(4,371

)

Contributed Capital

 

 

 

 

 

 

 

 

 

 

29,000

 

 

 

 

29,000

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

(21,706

)

 

(21,706

)

 

 






















Balances at December 31, 2009 (Unaudited)

 

 

 

$

 

 

1,375,755

 

$

1,376

 

$

1,963,088

 

$

(1,961,541

)

$

2,923

 

 

 






















The accompanying notes are an integral part of these unaudited financial statements

5


NEWTOWN LANE MARKETING, INCORPORATED
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 26, 2005
(Inception)
Through
December 31, 2009

 

 

Nine Months Ended

 

 

 

 

December 31,
2009

 

December 31,
2008

 

 

 

 


 


 



 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(21,706

)

$

(27,059

)

$

(1,961,541

)

Net loss from discontinued operations

 

 

 

 

 

 

(154,836

)

 

 



 



 




Net loss from continuing operations

 

 

(21,706

)

 

(27,059

)

 

(1,806,705

)

Adjustments to reconcile net loss to cash used in operating activities:

 

 

 

 

 

 

 

 

 

 

Share based compensation

 

 

 

 

 

 

401,350

 

Amortization of debt discount

 

 

 

 

 

 

160,003

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

Increase (decrease) in accounts payable and accruals

 

 

(19,238

)

 

(2,905

)

 

223,170

 

 

 



 



 




NET CASH USED IN OPERATING ACTIVITIES

 

 

(40,944

)

 

(29,964

)

 

(1,022,182

)

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

Issuance of notes payable

 

 

 

 

 

 

799,997

 

Principal payments made on notes payable

 

 

 

 

 

 

(625,030

)

Proceeds from issuance of common and preferred stock

 

 

 

 

2,000

 

 

837,003

 

Contributed capital

 

 

29,000

 

 

 

 

181,500

 

 

 



 



 




NET CASH PROVIDED BY FINANCING ACTIVITIES

 

 

29,000

 

 

2,000

 

 

1,193,470

 

 

 

 

 

 

 

 

 

 

 

 

DISCONTINUED OPERATIONS

 

 

 

 

 

 

 

 

 

 

Discontinued operating activities

 

 

 

 

 

 

(125,796

)

Discontinued investing activities

 

 

 

 

 

 

(29,040

)

 

 



 



 




NET CASH USED IN DISCONTINUED OPERATIONS

 

 

 

 

 

 

(154,836

)

 

 

 

 

 

 

 

 

 

 

 

NET CHANGE IN CASH AND CASH EQUIVALENTS

 

 

(11,944

)

 

(27,964

)

 

16,452

 

 

 

 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

 

28,396

 

 

28,972

 

 

 

 

 



 



 




CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

16,452

 

$

1,008

 

$

16,452

 

 

 



 



 




 

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION

 

 

 

 

 

 

 

 

 

 

Interest paid

 

$

 

$

 

$

 

Income taxes

 

 

 

 

 

 

 

Non-cash Transactions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity based compensation

 

$

 

$

 

$

11,750

 

Issuance of common stock for accounts payable

 

$

 

$

 

$

64,800

 

Issuance of common stock for debt and accrued interest

 

$

 

$

 

$

479,811

 

Conversion of Series A Preferred stock

 

$

 

$

 

$

37,038

 

The accompanying notes are an integral part of these unaudited financial statements.

6


NEWTOWN LANE MARKETING, INCORPORATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
(unaudited)

NOTE 1 - DESCRIPTION OF COMPANY

Newtown Lane Marketing Incorporated (“we”, “our”, “us” or “Newtown”) was incorporated in Delaware on September 26, 2005. We are a development stage company that held the exclusive license to exploit the Dreesen’s Donut Brand in the United States with the exception of the states of Florida and Pennsylvania, and in Suffolk County, New York, which the licensor, Dreesen’s, retained for itself. The license from Dreesen expired on December 31, 2007. In August 2007 there was a change in control, as detailed below, and we discontinued our efforts to promote the Dreesen’s Donut Brand at that time. Accordingly, prior operations in this regard are reflected in these financial statements as discontinued operations.

The interim financial information as of December 31, 2009 and for the three and nine month periods ended December 31, 2009 and 2008 has been prepared without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures made are adequate to provide for fair presentation. These financial statements should be read in conjunction with the financial statements and the notes thereto, included in our Annual Report on Form 10-K, for the fiscal year ended March 31, 2009, previously filed with the SEC.

In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair statement of our financial position as of December 31, 2009 and results of operations and cash flows for the nine months ended December 31, 2009 and 2008, as applicable, have been made. The results of operations for the nine months ended December 31, 2009 are not necessarily indicative of the operating results that may be expected for the full fiscal year or any future periods.

EQUITY TRANSACTIONS

On August 8, 2007 (the “Effective Date”), we entered into and closed a Stock Purchase Agreement (the “Purchase Agreement”) with Moyo Partners, LLC, a New York limited liability company (“Moyo”) and R&R Biotech Partners, LLC, a Delaware limited liability company (“R&R” collectively with Moyo, the “Purchasers”), pursuant to which we sold to them, in the aggregate, approximately, four hundred forty seven thousand nine hundred twenty five (447,925) shares (rounded-up) of our common stock, par value $0.001 per share (“Common Stock”) and five hundred (500) shares of our Series A Preferred Stock, par value $.001 per share (“Series A Preferred Stock”), each share convertible at the option of the holder into, approximately, one thousand four hundred eighty two (1,482) shares (rounded-up) of Common Stock, for aggregate gross proceeds to us of $600,000. The shares of Series A Preferred Stock were convertible only to the extent there were a sufficient number of shares of Common Stock available for issuance upon any such conversion.

On the Effective Date: (i) the Purchasers acquired control of Newtown, with (a) R&R acquiring nine hundred fifty thousand nine hundred forty four (950,944) shares (rounded-up) of Common Stock (assuming the conversion by R&R of the four hundred (400) shares of Series A Preferred Stock it acquired pursuant to the Purchase Agreement into five hundred ninety two thousand eight hundred (592,800) shares (rounded-up) of Common Stock) constituting 72% of the then issued and outstanding shares of Common Stock, and (b) Moyo acquiring two hundred thirty seven thousand seven hundred thirty six (237,736) shares (rounded-up) of Common Stock (assuming the conversion by Moyo of its one hundred (100) shares of Series A Preferred Stock it acquired pursuant to the Purchase Agreement into one hundred forty eight thousand one hundred fifty one (148,151) shares (rounded-up) of Common Stock) constituting 18% of the then issued and outstanding shares of Common Stock; and (ii) in full satisfaction of our obligations under outstanding convertible promissory notes in the principal amount of $960,000 (the “December Notes”), the Note holders of the December Notes converted an aggregate of $479,811 of principal and accrued interest into 27,420 shares (rounded-up) of Common Stock and accepted a cash payment from us in the aggregate amount of $625,030 for the remaining principal balance.

On the Effective Date: (i) Arnold P. Kling was appointed to our Board of Directors (“Board”) and served together with Vincent J. McGill, a then current director who continued to serve until August 20, 2007, the effective date of his resignation from our Board; (ii) all of our then officers and directors, with the exception of Mr. McGill, resigned from their respective positions with us; (iii) our Board appointed Mr. Kling as president and Kirk M. Warshaw as chief financial officer and secretary; and (iv) we relocated our headquarters to Chatham, New Jersey.

Following Mr. McGill’s resignation from our Board on August 20, 2007, Mr. Kling became our sole director and president.

7


NEWTOWN LANE MARKETING, INCORPORATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
(unaudited)

On October 19, 2007, we put into effect an amendment to our Certificate of Incorporation to increase to 100,000,000 the number of authorized shares of Common Stock available for issuance (the “Charter Amendment”). As a result of the Charter Amendment, as of October 19, 2007, we had adequate shares of Common Stock available for issuance upon the conversion of all the issued and outstanding shares of Series A Preferred Stock.

On December 19, 2007, the holders of all the issued and outstanding shares of Series A Preferred Stock elected to convert all of their shares into shares of Common Stock. As a result, the 500 shares of Series A Preferred Stock outstanding were exchanged for 740,754 shares of Common Stock.

On August 15, 2008 (the “Series A Preferred Elimination Date”), all 500 shares of the Series A Preferred Stock were returned to the status of authorized and unissued shares of undesignated preferred stock, par value $.001 per shares. None of the Series A Preferred Stock were outstanding as of the Series A Preferred Elimination Date.

On August 29, 2008 (the “Reverse Split Effective Date”), we implemented a 1 for 50 reverse stock split (the “Reverse Split”) of the Common Stock. Pursuant to the Reverse Split, each 50 shares of Common Stock issued and outstanding as of the Reverse Split Effective Date was converted into one (1) share of Common Stock. All share and per share data herein has been retroactively restated to reflect the Reverse Split.

In December 2008, we sold 55,000 shares of restricted common stock to our Chief Financial Officer, for $2,000. The issuance of these shares was exempt from registration pursuant to Sections 4(2) and 4(6) or the Securities Act of 1933, as amended (the “Act”). The stock certificate representing these shares was imprinted with a legend restricting transfer unless pursuant to an effective registration statement or an exemption from registration under the Act.

As of December 31, 2009, our authorized capital stock consisted of 100,000,000 shares of Common Stock and 1,000,000 shares of Preferred Stock of which 1,375,755 shares of Common Stock, and no shares of Preferred Stock, were issued and outstanding. All shares of Common Stock currently outstanding are validly issued, fully paid and non-assessable.

During the first nine months of 2009, a stockholder contributed an additional $29,000 to the Company.

THE COMPANY TODAY

Since the Effective Date, our main purpose has been to serve as a vehicle to acquire an operating business and we are currently considered a “shell” company in as much as we are not generating revenues, do not own an operating business, and have no specific plan other than to engage in a merger or acquisition transaction with a yet-to-be identified operating company or business. Our principal business objective for the next 12 months and beyond such time will be to achieve long-term growth potential through a combination with an operating business rather than immediate, short-term earnings. We will not restrict our potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire any type of business. The analysis of new business opportunities will be undertaken by or under the supervision of our officers and directors. We have no employees and no material assets.

Commencing with the filing of our Form 10-Q for the quarter ended December 31, 2007, all of our donut-related business services activities have been accounted for as Discontinued Operations. As such, all of the prior activity has been shown in the financials as one line item that is labeled “Loss from Discontinued Operations.” Our activities since August 2007 are shown in the Income Statement under the section labeled “Loss from Continuing Operations.” These amounts are for expenses incurred since August 2007 and are of the nature we expect to incur in the future, whereas the Loss from Discontinued Operations are from activities we are no longer engaged in.

NOTE 2 – GOING CONCERN

As shown in the accompanying financial statements, we incurred recurring net losses of $21,706 and $27,059 for the nine month periods ended December 31, 2009 and 2008, respectively, and have an accumulated deficit of $1,961,541 and working capital of only $2,923 as of December 31, 2009. These conditions raise substantial doubt as to our ability to continue as a going concern and the financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. As mentioned above we are pursuing a merger with an operating company or business and will not commence operations until that target is identified and a merger completed.

8


NEWTOWN LANE MARKETING, INCORPORATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
(unaudited)

NOTE 3 – NEW ACCOUNTING PRONOUNCEMENTS

Management does not believe that any new accounting pronouncements not yet effective will have a material impact on the Company’s financial statements once adopted.

NOTE 4 – COMMITMENTS AND CONTINGENCIES

On January 29, 2009, we entered into an agreement with Kirk M. Warshaw, LLC (the “LLC”) for the use and occupancy, and administrative services, related to our principal offices. The agreement provides for quarterly payments from us to the LLC of $500. The effective date of the agreement was January 1, 2009.

NOTE 5 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events through February 8, 2010, and has determined that there were no subsequent events to recognize or disclose in these financial statements.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Use of Forward-Looking Statements

Some of the statements in this Form 10-Q, including some statements in “Management’s Discussion and Analysis or Plan of Operation” are forward-looking statements about what may happen in the future. They include statements regarding our current beliefs, goals, and expectations about matters such as our expected financial position and operating results, our business strategy, and our financing plans. These statements can sometimes be identified by our use of forward-looking words such as “anticipate,” “estimate,” “expect,” “intend,” “may,” “will,” and similar expressions. We cannot guarantee that our forward-looking statements will turn out to be correct or that our beliefs and goals will not change. Our actual results could be very different from and worse than our expectations for various reasons. You are urged to carefully consider these factors, as well as other information contained in this Form 10-Q and in our other periodic reports and documents filed with the United States Securities and Exchange Commission (“SEC”).

In our Form 10-K filed with the SEC for the year ended March 31, 2009, we have identified critical accounting policies and estimates for our business.

Plan of Operation

We are a development stage corporation with limited operations and have very limited revenues from our business operations since our incorporation in September 2005. Until December 31, 2007, we held the exclusive license to exploit the Dreesen’s Donut Brand in the United States with the exception of the states of Florida and Pennsylvania, and in Suffolk County, New York, which the licensor, Dreesen’s, retained for itself. The license from Dreesen expired on December 31, 2007.

On August 8, 2007 (the “Effective Date”), we entered into and closed a Stock Purchase Agreement (the “Purchase Agreement”) with Moyo Partners, LLC, a New York limited liability company (“Moyo”) and R&R Biotech Partners, LLC, a Delaware limited liability company (“R&R” collectively with Moyo, the “Purchasers”), pursuant to which we sold to them, in the aggregate, approximately, four hundred forty seven thousand nine hundred twenty five (447,925) shares (rounded-up) of our common stock, par value $0.001 per share (“Common Stock”) and five hundred (500) shares of our Series A Preferred Stock, par value $.001 per share (“Series A Preferred Stock”), each share convertible at the option of the holder into, approximately, one thousand four hundred eighty two (1,482) shares (rounded-up) of Common Stock, for aggregate gross proceeds to us of $600,000. The shares of Series A Preferred Stock were convertible only to the extent there were a sufficient number of shares of Common Stock available for issuance upon any such conversion.

On the Effective Date: (i) the Purchasers acquired control of Newtown, with (a) R&R acquiring nine hundred fifty thousand nine hundred forty four (950,944) shares (rounded-up) of Common Stock (assuming the conversion by R&R of the four hundred (400) shares of Series A Preferred Stock it acquired pursuant to the Purchase Agreement into five hundred nine two thousand eight hundred (592,800) shares (rounded-up) of Common Stock) constituting 72% of the then issued and outstanding shares of Common Stock, and (b) Moyo acquiring two hundred thirty seven thousand seven hundred thirty six (237,736) shares (rounded-up) of Common Stock (assuming the conversion by Moyo of its one hundred (100) shares of Series A Preferred Stock it acquired pursuant to the Purchase Agreement into one hundred forty eight thousand one hundred fifty one (148,151) shares (rounded-up) of Common Stock) constituting 18% of the then issued and outstanding shares of Common Stock; and (ii) in full satisfaction of our obligations under outstanding convertible promissory notes in the principal amount of $960,000 (the “December Notes”), the Note holders of the December Notes converted an aggregate of $479,811 of principal and accrued interest into 27,420 shares (rounded-up) of Common Stock and accepted a cash payment from us in the aggregate amount of $625,030 for the remaining principal balance.

On October 19, 2007, we put into effect an amendment to our Certificate of Incorporation to increase to 100,000,000 the number of authorized shares of Common Stock available for issuance (the “Charter Amendment”). As a result of the Charter Amendment, as of October 19, 2007, we had adequate shares of Common Stock available for issuance upon the conversion of all the issued and outstanding shares of Preferred Stock.

On December 19, 2007, the holders of all the issued and outstanding shares of Series A Preferred Stock elected to convert all of their shares into shares of Common Stock. As a result, the 500 shares of Series A Preferred Stock outstanding were exchanged for 740,754 shares of Common Stock.

On August 15, 2008 (the “Series A Preferred Elimination Date”), all 500 shares of the Series A Preferred Stock were returned to the status of authorized and unissued shares of undesignated preferred stock, par value $.001 per shares. None of the Series A Preferred Stock were outstanding as of the Series A Preferred Elimination Date.

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On August 29, 2008 (the “Reverse Split Effective Date”), we implemented a 1 for 50 reverse stock split (the “Reverse Split”) of the Common Stock. Pursuant to the Reverse Split, each 50 shares of Common Stock issued and outstanding as of the Reverse Split Effective Date was converted into one (1) share of Common Stock. All share and per share data herein has been retroactively restated to reflect the Reverse Split.

In December 2008, we sold 55,000 shares of restricted common stock to our Chief Financial Officer, for $2,000.

As of December 31, 2009, our authorized capital stock consisted of 100,000,000 shares of Common Stock and 1,000,000 shares of Preferred Stock of which 1,375,755 shares of Common Stock, and no shares of Preferred Stock, were issued and outstanding. All shares of Common Stock currently outstanding are validly issued, fully paid and non-assessable.

As of the Effective Date, we discontinued our efforts to promote the Dreesen’s Donut Brand, we have no employees and our main purpose has been to effect a business combination with an operating business which we believe has significant growth potential. As of yet, we have no definitive agreements or understandings with any prospective business combination candidates and there are no assurances that we will find a suitable business with which to combine. The implementation of our business objectives is wholly contingent upon a business combination and/or the successful sale of our securities. We intend to utilize the proceeds of any offering, any sales of equity securities or debt securities, bank and other borrowings or a combination of those sources to effect a business combination with a target business which we believe has significant growth potential. While we may, under certain circumstances, seek to effect business combinations with more than one target business, unless and until additional financing is obtained, we will not have sufficient proceeds remaining after an initial business combination to undertake additional business combinations.

A common reason for a target company to enter into a merger with us is the desire to establish a public trading market for its shares. Such a company would hope to avoid the perceived adverse consequences of undertaking a public offering itself, such as the time delays and significant expenses incurred to comply with the various Federal and state securities law that regulate initial public offerings.

As a result of our limited resources, we expect to have sufficient proceeds to effect only a single business combination. Accordingly, the prospects for our success will be entirely dependent upon the future performance of a single business. Unlike certain entities that have the resources to consummate several business combinations or entities operating in multiple industries or multiple segments of a single industry, we will not have the resources to diversify our operations or benefit from the possible spreading of risks or offsetting of losses. A target business may be dependent upon the development or market acceptance of a single or limited number of products, processes or services, in which case there will be an even higher risk that the target business will not prove to be commercially viable.

Our officers are only required to devote a small portion of their time (less than 10%) to our affairs on a part-time or as-needed basis. We expect to use outside consultants, advisors, attorneys and accountants as necessary. We do not anticipate hiring any full-time employees so long as we are seeking and evaluating business opportunities.

We expect our present management to play no managerial role in our company following a business combination. Although we intend to scrutinize closely the management of a prospective target business in connection with our evaluation of a business combination with a target business, our assessment of management may be incorrect. We cannot assure you that we will find a suitable business with which to combine.

Our principal business objective for the next 12 months and beyond such time will be to achieve long-term growth potential through a combination with an operating business. We will not restrict our potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire any type of business. The analysis of new business opportunities will be undertaken by or under the supervision of our officers and directors.

Results of Operations

THREE AND NINE MONTH PERIODS ENDED DECEMBER 31, 2009 COMPARED TO THE THREE AND NINE MONTH PERIODS ENDED DECEMBER 31, 2008

We are a development stage corporation with limited operations and did not have any revenues during the three and nine month periods ended December 31, 2009 and 2008, respectively.

Total expenses from Continuing Operations for the three months ended December 31, 2009 and 2008 were $6,807 and $10,465, respectively. Total expenses from Continuing Operations for the nine months ended December 31, 2009 and 2008 were $21,713 and $27,082, respectively. These expenses primarily constituted general and administrative expenses.

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Liquidity and Capital Resources

At December 31, 2009, we did not have any revenues from operations. Absent a merger or other combination with an operating company, we do not expect to have any revenues from operations. No assurance can be given that such a merger or other combination will occur or that we can engage in any public or private sales of our equity or debt securities to raise working capital. We are dependent upon future loans or capital contributions from our present stockholders and/or management and there can be no assurances that our present stockholders or management will make any loans or capital contributions to us. At December 31, 2009, we had cash of $16,452 and working capital of $2,923.

Our present material commitments are professional and administrative fees and expenses associated with the preparation of our filings with the U.S. Securities and Exchange Commission and other regulatory requirements. In the event that we engage in any merger or other combination with an operating company, we will have additional material professional commitments.

Commitments

We do not have any commitments which are required to be disclosed in tabular form as of December 31, 2009.

Off-Balance Sheet Arrangements

As of December 31, 2009, we have no off-balance sheet arrangements such as guarantees, retained or contingent interest in assets transferred, obligation under a derivative instrument and obligation arising out of or a variable interest in an unconsolidated entity.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

A smaller reporting company is not required to provide the information required by this Item.

ITEM 4T. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures. Our management, with the participation of our president and our chief financial officer, carried out an evaluation of the effectiveness of our “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 (the “Exchange Act”) Rules 13a-15(e) and 15-d-15(e)) as of the end of the period covered by this report (the “Evaluation Date”). Based upon that evaluation, our president and our chief financial officer concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (ii) is accumulated and communicated to our management, including our president and our chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting. There were no changes in our internal controls over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. - OTHER INFORMATION

ITEM 6. EXHIBITS

 

 

 

 

 

 

Exhibit No.

 

Description

 

 


 


 

 

 

 

 

 

31.1

 

Certification of the President pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 

 

 

31.2

 

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 

 

 

32.1

 

Certification of the President pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

 

 

32.2

 

Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURES

          In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

 

 

 

Newtown Lane Marketing, Incorporated

 

 

 

 

Dated: February 9, 2010

 

/s/ Arnold P. Kling

 

 

 


 

 

 

Arnold P. Kling, President

 

 

 

(Principal Executive Officer)

 

 

 

 

 

Dated: February 9, 2010

 

/s/ Kirk M. Warshaw

 

 

 


 

 

 

Kirk M. Warshaw, Chief Financial Officer

 

 

(Principal Financial and Accounting Officer)

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