Auto Parts 4Less Group, Inc. - Quarter Report: 2009 April (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
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|
For
the quarterly period ended April 30,
2009
|
|
[
]
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TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT
|
For the
transition period from ____________ to ______________
Commission
file number: 333-152444
RX SCRIPTED,
INC.
(Name of
registrant in its charter)
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Nevada
|
7389
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26-1580812
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|
(State
or jurisdiction
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(Primary
Standard
|
(IRS
Employer
|
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of
incorporation or
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Industrial
|
Identification
|
|
organization)
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Classification
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No.)
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|
Code
Number)
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201
Creekvista Drive
Holly Springs, North
Carolina 27540
(Address
of principal executive offices)
(919)
552-3133
(Registrant's
telephone number)
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, and
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.
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Large
accelerated filer ¨
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Accelerated
filer ¨
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Non-accelerated
filer ¨
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Smaller
reporting company x
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Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act. Yes x
No ¨
At June
4, 2009, there were 3,282,500 shares of the Issuer's common stock
outstanding.
PART
I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL
STATEMENTS
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RX
Scripted, Inc.
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||||||||
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(A
Development Stage Company)
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||||||||
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Balance
Sheets
|
||||||||
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(Unaudited)
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||||||||
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April
30, 2009
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January
31, 2009
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|||||||
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ASSETS
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||||||||
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CURRENT
ASSETS
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||||||||
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Cash
and cash equivalents
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$ | 228 | $ | 224 | ||||
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Accounts
receivable
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250 | - | ||||||
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TOTAL
ASSETS
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$ | 478 | $ | 224 | ||||
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LIABILITIES
AND STOCKHOLDERS' DEFICIT
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||||||||
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CURRENT
LIABILITIES
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||||||||
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Accounts
payable and accrued expenses
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$ | 191 | $ | 396 | ||||
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Accounts
payable and accrued expenses - related party
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10,846 | 7,591 | ||||||
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Advances
from related party
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2,950 | 2,950 | ||||||
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Notes
payable - related parties
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58,200 | 53,000 | ||||||
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TOTAL LIABILITIES
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72,187 | 63,937 | ||||||
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STOCKHOLDERS'
DEFICIT
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||||||||
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Preferred
stock, $0.001 par value: 10,000,000 authorized, none
outstanding
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- | - | ||||||
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Common
stock, $0.001 par value, 100,000,000 authorized, 3,282,500 and 3,282,500
issued and outstanding, respectively
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3,283 | 3,283 | ||||||
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Additional
paid-in capital
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27,967 | 27,967 | ||||||
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Deficit
accumulated during development stage
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(102,959 | ) | (94,963 | ) | ||||
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TOTAL
STOCKHOLDERS' DEFICIT
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(71,709 | ) | (63,713 | ) | ||||
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TOTAL
LIABILITIES AND STOCKHOLDERS' DEFICIT
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$ | 478 | $ | 224 | ||||
| See notes to financial statements | ||||||||
F-1
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RX
Scripted, Inc.
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||||||||||||
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(A
Development Stage Company)
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||||||||||||
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Statements
of Operations
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||||||||||||
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For
the Three Months Ended April 30, 2009, and 2008,
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||||||||||||
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and
December 30, 2004 (Inception) to April 30, 2009
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||||||||||||
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(Unaudited)
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||||||||||||
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Three
Months Ended April 30,
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Inception
to April 30,
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|||||||||||
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2009
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2008
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2009
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||||||||||
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REVENUES
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||||||||||||
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Services
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$ | 250 | $ | - | $ | 29,867 | ||||||
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EXPENSES
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||||||||||||
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Selling,
general and administrative
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7,481 | 9,569 | 128,311 | |||||||||
| 7,481 | 9,569 | 128,311 | ||||||||||
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LOSS
FROM OPERATIONS
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(7,231 | ) | (9,569 | ) | (98,444 | ) | ||||||
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OTHER
EXPENSES
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||||||||||||
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Interest
expense
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765 | 668 | 4,515 | |||||||||
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NET
LOSS
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$ | (7,996 | ) | $ | (10,237 | ) | $ | (102,959 | ) | |||
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NET
LOSS PER SHARE – Basic and diluted
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$ | (0.00 | ) | $ | (0.00 | ) | ||||||
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WEIGHTED
AVERAGE NUMBER OF
COMMON
SHARES OUTSTANDING – Basic and diluted
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3,282,500 | 3,000,000 | ||||||||||
| See notes to financial statements | ||||||||||||
F-2
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RX
Scripted, Inc.
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||||||||||||
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(A
Development Stage Company)
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||||||||||||
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Statements
of Cash Flows
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||||||||||||
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For
the Three Months Ended April 30, 2009 and 2008
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||||||||||||
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and
For the Period December 30, 2004 (Inception) through April 30,
2009
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||||||||||||
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(Unaudited)
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||||||||||||
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Three
Months Ended April 30,
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Inception
through January 31,
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|||||||||||
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2009
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2008
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2009
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||||||||||
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CASH
FLOWS FROM OPERATING ACTIVITIES
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||||||||||||
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Net
loss
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$ | (7,996 | ) | $ | (10,237 | ) | $ | (102,959 | ) | |||
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Adjustments
to reconcile net loss to net
|
||||||||||||
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cash
from operating activities:
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||||||||||||
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Share-based
compensation
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- | - | 7,000 | |||||||||
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Changes
in operating assets and liabilities:
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||||||||||||
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Accounts
receivable
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(250 | ) | - | (250 | ) | |||||||
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Prepaid
and other assets
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- | 3,611 | 30,000 | |||||||||
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Accounts
payable and accrued expenses
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(205 | ) | 4,130 | 1,088 | ||||||||
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Accounts
payable and accrued expenses – related party
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3,255 | 668 | 9,949 | |||||||||
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NET
CASH USED IN OPERATING ACTIVITIES
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(5,196 | ) | (1,828 | ) | (55,172 | ) | ||||||
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CASH
FLOWS FROM FINANCING ACTIVITIES
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||||||||||||
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Proceeds
from sale of member units
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- | - | 1,000 | |||||||||
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Proceeds
from sale of common stock
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- | - | 23,250 | |||||||||
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Proceeds
of shareholder loans
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- | - | 2,950 | |||||||||
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Proceeds
of note payable – related party
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5,200 | - | 30,700 | |||||||||
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Payments
of note payable - related party
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- | - | (2,500 | ) | ||||||||
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NET
CASH PROVIDED BY FINANCING ACTIVITIES
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5,200 | - | 55,400 | |||||||||
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NET
INCREASE (DECREASE) IN CASH
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4 | (1,828 | ) | 228 | ||||||||
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CASH
AT BEGINNING OF PERIOD
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224 | 1,959 | - | |||||||||
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CASH
AT END OF PERIOD
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$ | 228 | $ | 131 | $ | 228 | ||||||
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SUPPLEMENTAL
DISCLOSURES
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||||||||||||
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CASH
PAID FOR:
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||||||||||||
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Interest
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$ | - | $ | - | $ | - | ||||||
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Income
Taxes
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- | - | - | |||||||||
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NONCASH
INVESTING AND FINANCING ACTIVITIES:
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||||||||||||
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Recapitalization
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$ | - | $ | - | $ | 1,000 | ||||||
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Issuance
of note payable to related party for prepaid legal fees
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- | - | 30,000 | |||||||||
| See notes to financial statements | ||||||||||||
F-3
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RX
Scripted, Inc.
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|
|
(A
Development Stage Company)
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|
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Notes
to Financial Statements
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(Unaudited)
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1.
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Organization and
Significant Accounting
Policies
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Organization
– RX Scripted, LLC (the “Company”) was formed on December 30, 2004 as a
North Carolina limited liability company and converted to a Nevada C
Corporation as RX Scripted, Inc. on December 5, 2007. The
Company is an event planning consulting company which plans and executes
medical meetings and educational programs for nurses, physicians,
pharmacists and other health care professionals. RX Scripted
offers a variety of event planning services based on its customers’
individual program needs.
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|
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Basis
of Presentation – The
accompanying unaudited interim financial statements of RX Scripted, Inc.
have been prepared in accordance with accounting principles generally
accepted in the United States of America and the rules of the Securities
and Exchange Commission and should be read in conjunction with the audited
financial statements and notes thereto contained in RX Scripted’s Annual
Financial Statements filed with the SEC on Form 10-K. In the opinion of
management, all adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of financial position and the results of
operations for the periods presented have been reflected
herein. The results of operations for interim periods are not
necessarily indicative of the results to be expected for the full
year. Notes to the financial statements that would
substantially duplicate the disclosure contained in the audited financial
statements for the most recent fiscal year as reported in the Form 10-K,
have been omitted.
|
Reclassifications – Certain prior year
amounts have been reclassified to conform with the current year
presentation.
Accounting
Estimates – The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the amounts
reported in the consolidated financial statements and the accompanying notes.
The actual results could differ from those estimates.
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2.
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Going
Concern
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RX
Scripted’s financial statements are prepared using United States generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities in
the normal course of business. RX Scripted has incurred
cumulative operating losses through April 30, 2009 of $102,959 and has a
working capital deficit at April 30, 2009 of
$71,709.
|
|
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Revenues
have not been sufficient to cover its operating costs and to allow it to
continue as a going concern. The potential proceeds from the
sale of common stock and other contemplated debt and equity financing, and
increases in operating revenues from new development and business
acquisitions would enable RX Scripted to continue as a going
concern. There can be no assurance that RX Scripted can or will
be able to complete any debt or equity financing. RX Scripted’s
financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
|
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3.
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Note Payable – Related
Parties
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|
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RX
Scripted’s short-term debt of $58,200 at April 30, 2009, consisted of
$30,700 from a relative of the sole director bearing interest at 4% per
annum and with a maturity date of October 31, 2009, and a convertible
promissory note of $27,500, bearing interest at 7% per
annum. Balances on these notes at January 31, 2009, were
$25,500 and $27,500, respectively.
|
|
|
On
December 12, 2007, RX Scripted entered into a Revolving Credit Promissory
Note with Kevin McAdams, the husband of RX Scripted’s Chief Executive
Officer. The note provided a $25,000 line of
credit. The note was subsequently amended on March 18, 2009 to
increase the amount available under the note to $37,500. A
total of $30,700 had been borrowed pursuant to the Note as of April 30,
2009. The note has an interest rate of 4% per
annum. The note originally had a due date of December 31, 2008,
which date has since been extended until October 31, 2009 pursuant to the
amendment.
|
F-4
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|
The
Convertible Note bears interest at the rate of seven percent (7%) per
annum until paid in full and any past due amounts bear interest at the
rate of fifteen percent (15%) per annum. A total of $2,500 of
the amount due under the $30,000 Convertible Note was due five days after
the end of the Private Placement Memorandum offering, which amount has
been paid to date, and the remaining amount of the Note was due on October
31, 2008. On November 19, 2008, the Company entered into an Amended
and Restated Convertible Promissory Note with Mr. Loev that replaced and
superseded the original Convertible Note. The amended
Convertible Note extended the date the note is due and payable to April
30, 2009. On April 28, 2009, the Company entered into a Second
Amended and Restated Convertible Promissory Note which further extended
the due date to October 31, 2009. Other than the extensions of
the due dates, the terms and conditions of both amended Convertible Notes
are identical to the terms and conditions of the Convertible Note. If not
paid by the maturity date, any accrued and unpaid principal then
outstanding under the Second Amended Convertible Note can be convertible
into shares of the Company’s common stock at the rate of one share of
common stock for each $0.10 owed under the Convertible
Note.
|
|
|
RX
Scripted’s advances of $2,950 from a shareholder do not bear
interest.
|
|
4.
|
Equity
|
|
|
In
August 2008, the Company entered into an agreement with a transfer agent
to maintain the stock ownership and transfer records. Terms of
the agreement require a cash payment of $5,000 and 50,000 shares of common
stock, which shares were issued in December
2008.
|
|
|
In
May 2008, RX Scripted offered through a Confidential Private Placement,
500,000 common shares at $0.10 per Share on a “best efforts, no minimum
basis”. The Offering was made in reliance upon an exemption from
registration under the federal securities laws provided by Rule 506 of
Regulation D of the Securities Act of 1933, as amended. The Offering was
to terminate upon the earlier of (i) the sale of the 500,000 Shares or
(ii) May 31, 2008, unless extended by RX Scripted for up to an additional
thirty days. The Company extended the Offering to June 30, 2008. RX
Scripted sold 232,500 shares and raised $23,250 from 34 investors through
the Offering.
|
|
5.
|
COMMITMENTS
AND CONTINGENCIES
|
|
|
The
Company may from time to time be involved with various litigation and
claims that arise in the normal course of business. As of April 30, 2009,
no such matters were outstanding.
|
F-5
ITEM 2. MANAGEMENT'S
DISCUSSION AND ANALYSIS
CERTAIN
STATEMENTS IN THIS QUARTERLY REPORT ON FORM 10-Q (THIS "FORM 10-Q"), CONSTITUTE
"FORWARD LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT OF 1934, AS AMENDED, AND THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995 (COLLECTIVELY, THE "REFORM ACT"). CERTAIN, BUT NOT NECESSARILY ALL, OF SUCH
FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING
TERMINOLOGY SUCH AS "BELIEVES", "EXPECTS", "MAY", "SHOULD", OR "ANTICIPATES", OR
THE NEGATIVE THEREOF OR OTHER VARIATIONS THEREON OR COMPARABLE TERMINOLOGY, OR
BY DISCUSSIONS OF STRATEGY THAT INVOLVE RISKS AND UNCERTAINTIES. SUCH
FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND
OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF
RX SCRIPTED, INC. ("THE COMPANY", "RX SCRIPTED", "WE", "US" OR "OUR") TO BE
MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS
EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. REFERENCES IN THIS FORM
10-Q, UNLESS ANOTHER DATE IS STATED, ARE TO APRIL 30, 2009.
DESCRIPTION
OF BUSINESS
Overview
The
Company was originally incorporated as a North Carolina limited liability
corporation on December 30, 2004. In December 2007, its manager
decided it was in the best interests of the limited liability company to convert
to a Nevada corporation, and as such, we filed Articles of Conversion on
December 5, 2007 to reincorporate in Nevada. Through the conversion,
the sole interest holder of the limited liability company, MaryAnne McAdams, our
sole officer and Director, exchanged 100% of the membership interests in the
limited liability company for 1,500,000 shares of the Company’s common
stock. Other than the change from a North Carolina limited liability
company to a Nevada corporation, the operations of the Company, debts,
liabilities, employees and contracts all remained the same. Our
mailing address is 201 Creekvista Drive, Holly Springs, North Carolina 27540,
our telephone number is (919) 552-3133, and our fax number is
919-552-3133.
Business
Operations
The
Company is an event planning consulting company engaged in the planning and
execution of medical meetings and educational programs for nurses, physicians,
pharmacists and other healthcare professionals. We plan to work with
pharmaceutical companies and other healthcare education consulting groups to
provide complete event planning services. We plan to provide these
services at a discounted rate, while maintaining the highest level of service
available in the industry to our customers. Our goal is to provide
each customer with personalized service throughout the planning and event
process by assigning each event an Executive Producer (“EP”). The EP
will assume all responsibilities for the event, including regular communication
with the client. While we currently have only one employee, our sole
officer and Director, MaryAnne McAdams, in the event we obtain contracts and
clients, and funding permitting, we plan to hire additional employees to serve
as EP’s on a going forward basis. RX Scripted plans to offer a variety of event
planning services, based on our customer’s individual program
needs. As of the date of this report, we have had limited to no
operations for the past two fiscal years. We did not generate any
significant revenues during the past fiscal year and have generated nominal
revenues to date.
Since the
Company’s inception in 2004 until May 2006, the Company planned and executed
over 50 medical meetings around the country. In May 2006, the Company
lost its largest client and as a result, revenues dropped
sharply. Subsequently in fiscal 2006, MaryAnne McAdams ceased
performing services for the Company to go on personal leave, and in the interim,
the Company ceased business operations. In November 2007, Mrs.
McAdams once again began performing services for the Company, and the Company is
currently in the planning stage of its business development, with limited
operations.
-2-
Over the
past few years, the medical meeting planning industry has seen many
changes. The biggest change in the industry is that pharmaceutical
and other healthcare agencies are trying to remove themselves from the planning
and execution process, in order to comply with new Pharmaceutical Research and
Manufacturers of America (“PhRMA”) Guidelines, which were enacted in
2005. We believe that this provides the Company with a unique
opportunity to “fill the gap” between the pharmaceutical/educational companies
and their need to continue to provide educational and promotional
events.
In order
to provide its future clients with a single source solution to their event
planning needs, the Company plans to offer a wide range of services that
encompass the event planning process including general management, concept
creation, and execution. The Company believes that its creative talent, personal
service, leadership and its willingness to commit capital to provide an increase
in personnel, and to develop or acquire new clients will provide it with a
competitive edge.
In July
2008, the Company entered into a verbal agreement with EM Corporation (“EM”),
pursuant to which the Company will handle all aspects of EM’s travel
planning. The Company also anticipates handling meeting logistics for
EM in the near future. There are no assurances however that this
business relationship will ever become a major revenue source for the
Company. Eddie Morgan, a principal of EM, is the father of MaryAnne
McAdams, our sole officer and Director. During the three months ended
July 31, 2008, we generated $100 from EM, but have not generated any other
revenues through the agreement with EM to date.
Industry and Market
Overview
The
Company believes that the events industry in the United States is highly
fragmented with several local and regional vendors that provide a limited range
of services in two main segments: 1) business communications and event
management; and 2) meeting, conferences and trade shows. The industry also
consists of specialized vendors such as production companies, meeting planning
companies, and destination logistics companies that may offer their services
outside of the events industry.
The
market for pharmaceutical meeting planning services is
robust. According to a report published in April of 2007 by the
Healthcare Exhibitors Association, attendance at healthcare meetings is up 13.8
percent since 2001. We believe that given the recent changes in the
regulatory climate in the healthcare industry, the majority of pharmaceutical
companies are looking to outside vendors to manage the meetings function and
keep them in compliance with regulations.
Principal Products and
Services
Our
current planned services (which are subject to change) may include:
|
·
|
venue
prospecting and management,
|
|
|
·
|
contract
negotiation,
|
|
|
·
|
menu
planning,
|
|
|
·
|
audio/visual
equipment rental arrangements,
|
|
|
·
|
car/limo
arrangements for program speaker(s) or attendees (as
appropriate),
|
|
|
·
|
travel/hotel
accommodations (as appropriate),
|
|
|
·
|
attendee
registration confirmation with name badges,
|
|
|
·
|
preparation
of an event resume to outline all program details,
|
|
|
·
|
generation
of an electronic flyer (e-flyer) to promote the event,
|
|
|
·
|
invoice
reconciliation,
|
|
|
·
|
managing
RSVP process (as requested):
|
|
|
·
|
coordination
and delivery of relevant materials for program (as
requested):
|
|
|
*
communication with fulfillment house regarding specific materials to be
delivered for program,
|
||
|
*
coordination and delivery of educational “props” for each program,
and
|
||
|
·
|
regular
communication to assess and evaluate planning process and program
execution.
|
-3-
Revenue Generation /
Management Service Fees
For all
events or programs the Meeting Planning and Management Fee will be based on
completing all of the above listed activities (as requested) and the number of
meeting participants as follows (which fees are subject to change):
|
<30
participants:
|
$35/person
|
|
|
31-74
participants:
|
$33/person
|
|
|
>75
participants:
|
$30/person
|
The
Meeting Planning and Management Fee for client staff attendees at each program
will be as follows (subject to change):
|
<5
Client attendees:
|
No
Charge
|
|
|
>5
Client attendees:
|
$150
flat rate
|
For those
meetings where the Company is not processing attendee registrations, there will
be a meeting planning fee of 5% of the total meeting costs.
For
meetings which are developed and accredited through the Company there is a fee
of 15% of the total meeting costs.
We
project that the Company will need an additional $125,000 of funding in order to
complete its business plan, which amount includes approximately $50,000 which
the Company will require for its ongoing operations for the next twelve
months. The Company also anticipates seeking to raise additional debt
and/or equity financing to support its ongoing activities.
Intellectual
Property
RX
Scripted, Inc. owns the rights to the internet domain name, www.rxscripted.com;
however, such website is not currently operational and the Company does not
anticipate that such website will be operational until the Company can raise
additional funds, if ever. The Company does not own any patents or
licenses related to its products or services nor any copyrights or
trademarks.
Marketing and Growth
Strategy
The major
focus of our growth strategy over the next several years will be the development
of new customers (pharmaceutical and medical educational companies) and
partnerships (continuing education accreditation companies); design and
enhancement of our website to enhance the ease of communication to our clients
and their customers (meeting attendees), as well as the deployment of
independent contractors to increase new business, funding
permitting.
We have
not entered into any preliminary negotiations or discussions with any new
business acquisition targets, nor do we have any definitive agreements in place
with any such businesses, except for Slate Pharmaceuticals,
Inc. However, if we have adequate funding at some time in the future,
of which there can be no assurance, we may take steps to acquire new business
targets to expand and increase our operations. Any such acquisition
would require raising substantial additional capital, of which there can be no
assurance.
-4-
We also
plan to fuel our growth through a broader, carefully designed growth strategy
that includes utilizing the various contacts that we have within the
pharmaceutical industry, as well as building new client relationships, expanding
our target list (by utilizing independent contractors) and developing new
marketing, advertising and public relations materials, of which there can be no
assurance.
EMPLOYEES
As of the
date of this report, we have only one employee, MaryAnne McAdams, who is not
paid any salary or accruing any salary. Currently, Mrs. McAdams is
the Company’s sole officer and Director. Mrs. McAdams has employment separate
from the Company’s operations and therefore she is only able to spend a limited
amount of time on the Company’s operations. The Company does not have
an employment agreement with Mrs. McAdams.
COMPETITION
Companies
in the event planning industry compete based on service breadth and quality,
creativity, responsiveness, geographic proximity to clients, and price. Most
vendors of outsourced event services in the healthcare industry are large,
international corporations which are unable to provide customized, personal
service to their smaller clients. We will compete primarily with a large number
of national and regional firms as well as specialized vendors such as production
companies, meeting planning companies (such as Medpoint Communications and
Cardinal Health Communications) and destination logistics companies. Most of
these competitors and specialized vendors provide a much larger range of
services relative to what we hope to be able to offer to clients in the future,
funding permitting. However, we view this as a competitive
advantage. We plan to specialize in working with smaller
pharmaceutical and educational companies. We believe that we will be
able to provide them with a high level of customer service that the larger firms
would be unwilling to provide, based on the client’s limited marketing and/or
promotional budget. The Company plans to offer a comprehensive
solution to client organizations with the assurance of a high quality of service
and the opportunity to form a long-term relationship.
DESCRIPTION
OF PROPERTY
The
Company’s sole officer and Director, MaryAnne McAdams currently supplies the
Company the use of office space in her home free of charge. The
office space encompasses approximately 234 square feet. Neither the
Company nor Mrs. McAdams currently has any plans of seeking alternative
arrangements for the Company’s office space and/or changing the terms of the
Company’s use of such office space.
BLANK
CHECK COMPANY ISSUES
Rule 419
of the Securities Act of 1933, as amended (the “Act”) governs offerings by
“blank check companies.” Rule 419 defines a “blank check company” as
a development stage company that has no specific business plan or purpose or has
indicated that its business plan is to engage in a merger or acquisition with an
unidentified company or companies, or other entity or person; and issuing “penny
stock,” as defined in Rule 3a51-1 under the Securities Exchange Act of
1934.
Our
management believes that the Company does not meet the definition of a “blank
check company,” because, while we are in the development stage, we do have a
specific business plan and purpose as described above, and our current purpose
is not to engage in a merger or acquisition, and as such, we should not
therefore be characterized as a “blank check company.”
-5-
PLAN
OF OPERATION FOR THE NEXT TWELVE MONTHS
We
anticipate the need for approximately $50,000 in the next twelve (12) months to
continue our business operations and begin our growth strategy, including
building new client relationships, expanding our target list through independent
contractors and developing new marketing, advertising and public relations
materials. Further, we anticipate the need for approximately another
$50,000 to expand our operations and complete our business plan. We
have limited operations and revenues to date, and can make no assurances that
material sales of our services will develop in the future, if at
all. Moving forward, we hope to build awareness of our website,
www.rxscripted.com and in turn create demand for our products and services, of
which there can be no assurance.
Critical
Accounting Policies:
Our
discussion and analysis of our financial condition and results of operations is
based upon our audited financial statements, which have been prepared in
accordance with accounting principals generally accepted in the United States.
The preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses, and related disclosure of any contingent assets and liabilities. On an
on-going basis, we evaluate our estimates, including those related to
uncollectible receivable, investment values, income taxes, the recapitalization
and contingencies. We base our estimates on various assumptions that we believe
to be reasonable under the circumstances, the results of which form the basis
for making judgments about carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.
Revenue
Recognition –
Revenue from contracts for consulting services with fees based on time
and materials or cost-plus are recognized as the services are performed and
amounts are earned in accordance with the Securities Exchange Commission (the
“SEC”) Staff Accounting Bulletin (“SAB”) No. 101, “Revenue Recognition in
Financial Statements”, as amended by SAB No. 104 “Revenue Recognition”. We
consider amounts to be earned once evidence of an arrangement has been obtained,
services are delivered, fees are fixed or determinable, and collectability is
reasonably assured. For contracts with fixed fees, we recognize revenues as
amounts become billable in accordance with contract terms, provided the billable
amounts are not contingent, are consistent with the services delivered, and are
earned.
COMPARISON
OF OPERATING RESULTS
FOR
THE THREE MONTHS ENDED APRIL 30, 2009, COMPARED TO THE THREE MONTHS ENDED APRIL
30, 2008
We had
revenues of $250 for the three months ended April 30, 2009, compared to revenues
of $0 for the three months ended April 30, 2008, an increase in revenues of $250
from the prior period, which increase was mainly due to a one-time event planned
by us in Chicago, Illinois. We expect to have nominal to no revenues
until such time as we are able to establish a larger client base.
We had
selling, general and administrative expenses of $7,481 for the three months
ended April 30, 2009, compared to selling, general and administrative expenses
of $9,569 for the three months ended April 30, 2008, a decrease in selling,
general and administrative expenses of $2,088 or 21.8% from the prior
period. The decrease in selling, general and administrative expenses
was mainly due to a decrease in accounting fees and a decrease in certain
one-time office expenses, offset by an increase in legal fees related to our
periodic filings for the three months ended April 30, 2009, compared to the
three months ended April 30, 2008.
We had
net other expenses, consisting solely of interest expense, for the three months
ended April 30, 2009 of $765, compared to net other expenses for the three
months ended April 30, 2008 of $668, an increase in net other expenses of $97
from the prior period. The increase in net other expenses is due to us obtaining
an interest bearing line of credit and convertible promissory note during the
second half of the year ended January 31, 2008 and accordingly incurring
interest expense in connection with such notes.
-6-
We had a
net loss of $7,996 for the three months ended April 30, 2009, compared to a net
loss of $10,237 for the three months ended April 30, 2008, a decrease in net
loss of $2,241 or 21.9% from the prior period. The decrease in net loss was
attributable to the decrease in selling, general and administrative expenses and
the increase in revenue, offset by the increase in interest expense for the
three months ended April 30, 2009, compared to the three months ended April 30,
2008.
LIQUIDITY
AND CAPITAL RESOURCES
We had
total assets, consisting solely of current assets of $478 as of April 30, 2009,
which included cash and cash equivalents of $228 and accounts receivable of
$250.
We had
total liabilities consisting solely of current liabilities of $72,187 as of
April 30, 2009, which included $191 of accounts payable and accrued expenses,
$10,846 of accounts payable and accrued expenses-related party, $2,950 of
advances from related parties and $58,200 of notes payable to related parties in
connection with the notes described below.
We had
negative working capital of $71,709 and a total accumulated deficit of $102,959
as of April 30, 2009.
We had
net cash used in operating activities of $5,196 for the three months ended April
30, 2009, which was due to $7,996 of net loss, $250 of increase in accounts
receivable and $205 of decrease in accounts payable and accrued expenses, offset
by $3,255 of increase in accounts payable and accrued expenses-related
party.
We had
$5,200 of net cash provided by financing activities for the three months ended
April 30, 2009, which was solely due to $5,200 of proceeds of note payable,
related party.
On
December 12, 2007, we entered into a Revolving Credit Promissory Note with Kevin
McAdams, the husband of our Chief Executive Officer, MaryAnne McAdams (the
“Note”). The Note provided us with a $25,000 line of
credit. The Note was subsequently amended by an Amended Revolving
Credit Promissory Note entered into on or around March 18, 2009, which increased
the amount available under the Note to $37,500. A total of $25,500
had been borrowed pursuant to the Note as of January 31, 2009 and a total of
$30,700 had been borrowed as April 30, 2009. The Note has an interest
rate of 4% per annum. The note originally had a due date of December
31, 2008, which date has since been extended until October 31, 2009 pursuant to
the amendment.
On March
11, 2008, with an effective date of September 18, 2007, we entered into a
Convertible Promissory Note (the “Convertible Note”), with David M. Loev, our
attorney and a significant shareholder of the Company. The
Convertible Note evidenced amounts owed to Mr. Loev pursuant to the engagement
agreement entered into between us and Mr. Loev on September 18,
2007. Pursuant to the engagement agreement, Mr. Loev received $5,000
upon the parties’ entry into the engagement agreement, and an aggregate of
1,500,000 shares of our common stock, which amount of cash and shares have been
paid to date, and an additional $30,000 in the form of the Convertible
Note. The engagement agreement provided for Mr. Loev to perform
various legal services on our behalf including the preparation of articles of
incorporation, bylaws, organizational minutes, the Private Placement Memorandum
and related documents, the Registration Statement to register the shares sold
through the Private Placement Memorandum and amendments thereto, as well as
various services in connection with responding to FINRA comments in connection
with a 15c2-11 filing, as well as general corporate/securities matters requested
by us.
-7-
The
Convertible Note bears interest at the rate of seven percent (7%) per annum
until paid in full and any past due amounts bear interest at the rate of fifteen
percent (15%) per annum. A total of $2,500 of the amount due under
the $30,000 Convertible Note was due five days after the end of the Private
Placement Memorandum offering, which amount has been paid to date, and the
remaining amount of the Note was due on October 31, 2008. On November 19,
2008, we entered into an Amended and Restated Convertible Promissory Note with
Mr. Loev that replaced and superseded the original Convertible
Note. The amended Convertible Note extended the date the note was due
and payable to April 30, 2009. In April 2009, we entered into a
Second Amended and Restated Convertible Promissory Note with Mr. Loev that
replaced and superseded the Amended and Restated Convertible
Note. The Second Amended and Restated Convertible Note extended the
date the note is due and payable to October 31, 2009. Other than the
extension of the due date, the terms and conditions of the Second Amended and
Restated Convertible Note are identical to the terms and conditions of the
Convertible Note. If not paid by the maturity date, any accrued and unpaid
principal then outstanding under the amended Convertible Note can be convertible
into shares of our common stock at the rate of one share of common stock for
each $0.10 owed under the Convertible Note.
From May
1, 2008 to July 15, 2008, we sold a total of 232,500 shares of common stock for
an aggregate of $23,250, to certain investors through a Private Placement
Memorandum offering.
We
estimate the need for approximately $50,000 of additional funding during the
next 12 months to continue our business operations and an additional $50,000 to
expand our operations as planned. If we are unable to raise adequate
working capital for fiscal 2010, we will be restricted in the implementation of
our business plan and may be required to cease operations.
ITEM 3. QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Pursuant
to Item 305(e) of Regulation S-K (§ 229.305(e)), we are not required to provide
the information required by this Item as it is a “smaller reporting company,” as
defined by Rule 229.10(f)(1).
ITEM 4T. CONTROLS AND
PROCEDURES
(a) Evaluation
of disclosure controls and procedures. Our Chief Executive Officer and Principal
Financial Officer, after evaluating the effectiveness of our "disclosure
controls and procedures" (as defined in the Securities Exchange Act of 1934
Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this
Quarterly Report on Form 10-Q (the "Evaluation Date"), has concluded that as of
the Evaluation Date, our disclosure controls and procedures were not effective
to provide reasonable assurance that information we are required to disclose in
reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission rules and forms, and that such information is accumulated
and communicated to our management, including our Chief Executive Officer and
Chief Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure. The disclosure controls were not effective as our
independent auditor had to make adjustments to the audit of our financial
statements for the year ended January 31, 2009. Moving forward, we
hope that our Chief Executive Officer and Principal Financial Officer will be
able to devote the additional time and effort required so that our disclosure
controls and procedures are once again effective. Notwithstanding the
assessment that our internal controls and procedures were not effective, we
believe that our financial statements contained in our Annual Report on Form
10-K for the fiscal year ended January 31, 2009 and this Quarterly Report for
the quarter ended April 30, 2009, fairly present our financial position,
results of operations and cash flows for the years and months covered thereby in
all material respects.
(b) Changes
in internal control over financial reporting. There were no changes in our
internal control over financial reporting during our most recent fiscal quarter
that materially affected, or were reasonably likely to materially affect, our
internal control over financial reporting.
-8-
PART II - OTHER
INFORMATION
ITEM 1. LEGAL
PROCEEDINGS
From time
to time, we may become party to litigation or other legal proceedings that we
consider to be a part of the ordinary course of our business. We are not
currently involved in legal proceedings that could reasonably be expected to
have a material adverse effect on our business, prospects, financial condition
or results of operations. We may become involved in material legal proceedings
in the future.
ITEM 1A. RISK
FACTORS
An
investment in our common stock is highly speculative, and should only be made by
persons who can afford to lose their entire investment in us. You should
carefully consider the following risk factors and other information in this
annual report before deciding to become a holder of our common stock. If any of
the following risks actually occur, our business and financial results could be
negatively affected to a significant extent.
WE
REQUIRE ADDITIONAL CAPITAL IN ORDER TO TAKE THE NECESSARY STEPS TO GROW OUR
BUSINESS.
Currently,
RX Scripted does not have available funds to develop the marketing and
advertising materials or fund other operating and general and administrative
expenses necessary to grow its business. Further, the Company does
not have the funds available to hire independent contractors. The
Company does have an outstanding Revolving Credit Promissory Note with Kevin
McAdams, the husband of our Chief Executive Officer MaryAnne McAdams (the
“Note”) in the amount of $37,500; however, $30,700 available under the Note had
been borrowed as of April 30, 2009. If we cannot secure additional
financing, our growth and operations could be impaired by limitations on our
access to capital. There can be no assurance that capital from outside sources
will be available, or if such financing is available, that it will be on terms
that management deems sufficiently favorable. If we are unable to obtain
additional financing upon terms that management deems sufficiently favorable, or
at all, it would have a material adverse impact upon our ability to conduct our
business operations and pursue our expansion strategy. As of the date
of this report, we have only limited operations, and did not generate any
significant revenues during the year ended January 31, 2008 or 2009, or the
three months ended April 30, 2009. In the event we do not raise
additional capital from conventional sources, it is likely that we may need to
scale back or curtail implementing our business plan, which could cause any
securities in the Company to be worthless.
WE
HAVE HISTORICALLY GENERATED LIMITED REVENUES AND HAVE GENERATED ONLY NOMINAL
REVENUES FOR A PERIOD OF OVER TWO YEARS
We did
not generate any revenues for the year ended January 31, 2008. For
the year ended January 31, 2009, we generated nominal revenues of $100 and
for the three months ended April 30, 2009, we generated only nominal revenues of
$250. This lack of revenues is largely due to the fact that we lost
our largest client in mid-2006 and the president and Chief Executive Officer,
MaryAnne McAdams, went on personal leave shortly thereafter. Even
during the fiscal year ended January 31, 2007, the last time that we had
revenues prior to the three months ended July 31, 2008; the revenues totaling
$5,705 were insufficient to support our expenses. Furthermore, we
anticipate our expenses increasing in the future. Although, Mrs.
McAdams is now involved in the day to day operations of the business, as well as
the strategy for future growth, we do not currently generate significant
revenues and have only limited operations. We can make no assurances
that we will be able to generate any revenues in the future, that we will have
sufficient funding to support our operations and pay our expenses and/or that we
will be able to gain clients in the future to build our business
operations. In the event we are unable to generate revenues and/or
support our operations, we will be forced to curtail and/or abandon our current
business plan and any investment in the Company could become
worthless.
-9-
SHAREHOLDERS
WHO HOLD UNREGISTERED SHARES OF OUR COMMON STOCK ARE SUBJECT TO RESALE
RESTRICTIONS PURSUANT TO RULE 144, DUE TO OUR STATUS AS A “SHELL
COMPANY.”
Pursuant
to Rule 144 of the Securities Act of 1933, as amended (“Rule 144”), a “shell
company” is defined as a company that has no or nominal operations; and, either
no or nominal assets; assets consisting solely of cash and cash equivalents; or
assets consisting of any amount of cash and cash equivalents and nominal other
assets. As such, we are a “shell company” pursuant to Rule 144, and
as such, sales of our securities pursuant to Rule 144 are not able to be made
until 1) we have ceased to be a “shell company; 2) we are subject to Section 13
or 15(d) of the Securities Exchange Act of 1934, as amended, and have filed all
of our required periodic reports for the prior one year period; and a period of
at least twelve months has elapsed from the date “Form 10 information” has been
filed with the Commission reflecting the Company’s status as a non-“shell
company.” Because none of our securities can be sold pursuant to Rule
144, until at least a year after we cease to be a “shell company”, any
securities you purchase in an offering or that we issue to consultants,
employees, in consideration for services rendered or for any other purpose will
have no liquidity until and unless such securities are registered with the
Commission, an exemption for sales can be relied upon other than Rule 144 and/or
until a year after we cease to be a “shell company” and have complied with the
other requirements of Rule 144, as described above. As a result, you
may never be able to sell shares you purchase in the Company, and it may be
harder for us to fund our operations and pay our consultants with our securities
instead of cash. Furthermore, it will be harder or us to raise
funding through the sale of debt or equity securities unless we agree to
register such securities with the Commission, which could cause us to expend
additional resources in the future. Our status as a “shell company”
could prevent us from raising additional funds, engaging consultants, using our
securities to pay for any acquisitions (although none are currently planned),
which could cause the value of our securities, if any, to decline in value or
become worthless. Furthermore, as we may not ever cease to be a
“shell company,” investors who purchase shares of our securities may be forced
to hold such securities indefinitely.
THE
SUCCESS OF THE COMPANY DEPENDS HEAVILY ON MARYANNE MCADAMS AND HER INDUSTRY
CONTACTS.
The
success of the Company will depend on the abilities of MaryAnne McAdams, the
President and Chief Executive Officer of the Company, to generate business from
her existing contacts and relationships within the pharmaceutical and healthcare
industry. The loss of Mrs. McAdams will have a material adverse
effect on the business, results of operations (if any) and financial condition
of the Company. In addition, the loss of Mrs. McAdams may force the
Company to seek a replacement who may have less experience, fewer contacts, or
less understanding of the business. Further, we can make no
assurances that we will be able to find a suitable replacement for Mrs. McAdams,
which could force the Company to curtail its operations and/or cause any
investment in the Company to become worthless. The Company does not
have an employment agreement with Mrs. McAdams nor any key man insurance on Mrs.
McAdams.
OUR
“AFFILIATES” EXERCISE MAJORITY VOTING CONTROL OVER THE COMPANY AND CONTROL OVER
CORPORATE DECISIONS INCLUDING THE APPOINTMENT OF NEW DIRECTORS.
MaryAnne
McAdams, our sole Director and officer can vote an aggregate of 1,500,000 shares
of our common stock, currently equal to 45.70% of our outstanding common stock,
and David M. Loev, our attorney, can vote an aggregate of 1,500,000 shares of
our common stock, currently equal to 45.70% of our outstanding common
stock. Therefore, Ms. McAdams and Mr. Loev, our “affiliates” can
currently vote 91.39% of our outstanding shares of common stock and will
therefore exercise control in determining the outcome of all corporate
transactions or other matters, including the election and removal of Directors,
mergers, consolidations, the sale of all or substantially all of our assets, and
also the power to prevent or cause a change in control. Any investors who
purchase shares will be minority shareholders and as such will have little to no
say in the direction of the Company and the election of Directors. Additionally,
it will be difficult if not impossible for investors to remove Mrs. McAdams as a
Director of the Company, which will mean she will remain in control of who
serves as officers of the Company as well as whether any changes are made in the
Board of Directors. As a potential investor in the Company, you should keep in
mind that even if you own shares of the Company's Common Stock and wish to vote
them at annual or special shareholder meetings, your shares will likely have
little effect on the outcome of corporate decisions.
-10-
OUR
SOLE OFFICER AND DIRECTOR HAS OTHER EMPLOYMENT OUTSIDE OF THE COMPANY, AND AS
SUCH, MAY NOT BE ABLE TO DEVOTE SUFFICIENT TIME TO OUR OPERATIONS.
MaryAnne
McAdams, our sole officer and Director, currently has employment outside of the
Company. As such, Mrs. McAdams only spends approximately 6 hours per
week on Company matters and 10 hours per week working as an independent sales
consultant to the Pharmaceutical Industry, and as such she may not be able to
devote a sufficient amount of time to our operations. This may be
exacerbated by the fact that MaryAnne McAdams is currently our only officer and
Director. If Mrs. McAdams is not able to spend a sufficient amount of
her available time on our operations, we may never gain any clients, may not
ever generate any revenue and/or any investment in the Company could become
worthless.
OUR
LIMITED OPERATING HISTORY MAKES IT DIFFICULT TO FORECAST OUR FUTURE RESULTS,
MAKING ANY INVESTMENT IN US HIGHLY SPECULATIVE.
We have a
limited operating history, and our historical financial and operating
information is of limited value in predicting our future operating
results. We may not accurately forecast customer behavior and
recognize or respond to emerging trends, changing preferences or competitive
factors facing us, and, therefore, we may fail to make accurate financial
forecasts. Our current and future expense levels are based largely on
our investment plans and estimates of future revenue. As a result, we
may be unable to adjust our spending in a timely manner to compensate for any
unexpected revenue shortfall, which could then force us to curtail or cease our
business operations.
OUR
LOSSES RAISE DOUBT AS TO WHETHER WE CAN CONTINUE AS A GOING
CONCERN.
We had
cumulative operating losses through April 30, 2009 of $102,959 and had a working
capital deficit at April 30, 2009 of $71,709. These factors among
others indicate that we may be unable to continue as a going concern,
particularly in the event that we cannot generate revenues, obtain additional
financing and/or attain profitable operations. As such, there is substantial
doubt as to our ability to continue as a going concern. The
accompanying financial statements do not include any adjustments that might
result from the outcome of this uncertainty and if we cannot continue as a going
concern, your investment in us could become devalued or worthless.
OUR
INDUSTRY IS HIGHLY COMPETITIVE.
The
medical meeting and event planning industry is highly competitive and
fragmented. The Company expects competition to intensify in the future. The
Company competes in its market with numerous national, regional and local event
production companies, many of which have substantially greater financial,
managerial and other resources than those presently available to the Company.
Numerous well-established companies are focusing significant resources on
providing event marketing, design and production services that currently compete
and will compete with the Company's services in the future. Although
we believe that there is a need for a “niche” business, such as ours and that
can provide logistical expertise at a reduced cost, the Company can make no
assurance that it will be able to effectively compete with these other companies
or that competitive pressures, including possible downward pressure on the
prices we charge for our services, will not arise. In the event that the Company
cannot effectively compete on a continuing basis or competitive pressures arise,
such inability to compete or competitive pressures will have a material adverse
effect on the companies business, results of operations and financial
condition.
-11-
OUR
GROWTH WILL PLACE SIGNIFICANT STRAINS ON OUR RESOURCES.
Since
mid-2006, when Mrs. McAdams temporarily ceased performing services for the
Company (although she remained as a manager of the Company’s predecessor entity,
RX Scripted, LLC) to go on personal leave, the Company has had little to no
operations. In November 2007, Mrs. McAdams resumed performing
services for the Company, as the Company’s President and Chief Executive
Officer. The Company is currently in the planning stage, with only
limited operations, and is currently seeking out potential planning events and
sources of revenue, although it has not generated any significant revenues since
the year ended January 31, 2007, and such revenues were insufficient to support
its ongoing expenses. The Company's growth, if any, is expected to place a
significant strain on the Company's managerial, operational and financial
resources as MaryAnne McAdams is our only officer and employee and the Company
will likely continue to have limited employees in the
future. Furthermore, assuming the Company receives contracts, it will
be required to manage multiple relationships with various customers and other
third parties. These requirements will be exacerbated in the event of further
growth of the Company or in the number of its contracts. There can be no
assurance that the Company's systems, procedures or controls will be adequate to
support the Company's operations or that the Company will be able to achieve the
rapid execution necessary to successfully offer its services and implement its
business plan. The Company's future operating results, if any, will also depend
on its ability to add additional personnel commensurate with the growth of its
business, if any. If the Company is unable to manage growth effectively, the
Company's business, results of operations and financial condition will be
adversely affected.
OUR
ARTICLES OF INCORPORATION, AS AMENDED, AND BYLAWS LIMIT THE LIABILITY OF, AND
PROVIDE INDEMNIFICATION FOR, OUR OFFICERS AND DIRECTORS.
Our
Articles of Incorporation, generally limit our officers' and Directors' personal
liability to the Company and its stockholders for breach of fiduciary duty as an
officer or Director except for breach of the duty of loyalty or acts or
omissions not made in good faith or which involve intentional misconduct or a
knowing violation of law. Our Articles of Incorporation, as amended, and Bylaws
provide indemnification for our officers and Directors to the fullest extent
authorized by the Nevada Revised Statutes against all expense, liability, and
loss, including attorney's fees, judgments, fines excise taxes or penalties and
amounts to be paid in settlement reasonably incurred or suffered by an officer
or Director in connection with any action, suit or proceeding, whether civil or
criminal, administrative or investigative (hereinafter a "Proceeding") to which
the officer or Director is made a party or is threatened to be made a party, or
in which the officer or Director is involved by reason of the fact that he or
she is or was an officer or Director of the Company, or is or was serving at the
request of the Company as an officer or Director of another corporation or of a
partnership, joint venture, trust or other enterprise whether the basis of the
Proceeding is alleged action in an official capacity as an officer or Director,
or in any other capacity while serving as an officer or Director. Thus, the
Company may be prevented from recovering damages for certain alleged errors or
omissions by the officers and Directors for liabilities incurred in connection
with their good faith acts for the Company. Such an indemnification
payment might deplete the Company's assets. Stockholders who have questions
respecting the fiduciary obligations of the officers and Directors of the
Company should consult with independent legal counsel. It is the position of the
Securities and Exchange Commission that exculpation from and indemnification for
liabilities arising under the Securities Act of 1933, as amended and the rules
and regulations thereunder is against public policy and therefore
unenforceable.
-12-
IN
THE FUTURE, WE WILL INCUR SIGNIFICANT INCREASED COSTS AS A RESULT OF OPERATING
AS A FULLY REPORTING COMPANY IN CONNECTION WITH SECTION 404 OF THE SARBANES
OXLEY ACT, AND OUR MANAGEMENT WILL BE REQUIRED TO DEVOTE SUBSTANTIAL TIME TO NEW
COMPLIANCE INITIATIVES.
Moving
forward, we anticipate incurring significant legal, accounting and other
expenses in connection with our status as a fully reporting public company. The
Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") and new rules subsequently
implemented by the SEC have imposed various new requirements on public
companies, including requiring changes in corporate governance practices. As
such, our management and other personnel will need to devote a substantial
amount of time to these new compliance initiatives. Moreover, these rules and
regulations will increase our legal and financial compliance costs and will make
some activities more time-consuming and costly. In addition, the Sarbanes-Oxley
Act requires, among other things, that we maintain effective internal controls
for financial reporting and disclosure of controls and procedures. Our
compliance with Section 404 will require that we incur substantial accounting
expense and expend significant management efforts. We currently do not have an
internal audit group, and we will need to hire additional accounting and
financial staff with appropriate public company experience and technical
accounting knowledge. Moreover, if we are not able to comply with the
requirements of Section 404 in a timely manner, or if we or our independent
registered public accounting firm identifies deficiencies in our internal
controls over financial reporting that are deemed to be material weaknesses, the
market price of our stock could decline, and we could be subject to sanctions or
investigations by the SEC or other regulatory authorities, which would require
additional financial and management resources.
WE
DO NOT CURRENTLY HAVE A PUBLIC MARKET FOR OUR SECURITIES. IF THERE IS A MARKET
FOR OUR SECURITIES IN THE FUTURE, SUCH MARKET MAY BE VOLATILE AND
ILLIQUID.
In
November 2008, we obtained quotation for our common stock on the
Over-The-Counter Bulletin Board (“OTCBB”) under the symbol
RXSS.OB. However, there is currently no public market for our common
stock, and we can make no assurances that there will be a public market for our
common stock in the future. If there is a market for our common stock in the
future, we anticipate that such market would be illiquid and would be subject to
wide fluctuations in response to several factors, including, but not limited
to:
(1)
actual or anticipated variations in our results of operations;
(2) our
ability or inability to generate new revenues;
(3)
increased competition; and
(4)
conditions and trends in the medical event planning industry.
Furthermore,
our stock price may be impacted by factors that are unrelated or
disproportionate to our operating performance. These market fluctuations, as
well as general economic, political and market conditions, such as recessions,
interest rates or international currency fluctuations may adversely affect the
market price and liquidity of our common stock.
INVESTORS
MAY FACE SIGNIFICANT RESTRICTIONS ON THE RESALE OF OUR COMMON STOCK DUE TO
FEDERAL REGULATIONS OF PENNY STOCKS.
Once our
common stock will be subject to the requirements of Rule 15(g)9, promulgated
under the Securities Exchange Act as long as the price of our common stock is
below $5.00 per share. Under such rule, broker-dealers who recommend low-priced
securities to persons other than established customers and accredited investors
must satisfy special sales practice requirements, including a requirement that
they make an individualized written suitability determination for the purchaser
and receive the purchaser's consent prior to the transaction. The Securities
Enforcement Remedies and Penny Stock Reform Act of 1990, also requires
additional disclosure in connection with any trades involving a stock defined as
a penny stock. Generally, the Commission defines a penny stock as any equity
security not traded on an exchange or quoted on NASDAQ that has a market price
of less than $5.00 per share. The required penny stock disclosures include the
delivery, prior to any transaction, of a disclosure schedule explaining the
penny stock market and the risks associated with it. Such requirements could
severely limit the market liquidity of the securities and the ability of
purchasers to sell their securities in the secondary market.
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IF
WE ARE LATE IN FILING OUR QUARTERLY OR ANNUAL REPORTS WITH THE SEC, WE MAY BE
DE-LISTED FROM THE OVER-THE-COUNTER BULLETIN BOARD.
Pursuant
to Over-The-Counter Bulletin Board ("OTCBB") rules relating to the timely filing
of periodic reports with the SEC, any OTCBB issuer which fails to file a
periodic report (Form 10-Q's or 10-K's) by the due date of such report (not
withstanding any extension granted to the issuer by the filing of a Form
12b-25), three (3) times during any twenty-four (24) month period is
automatically de-listed from the OTCBB. Such removed issuer would not be
re-eligible to be listed on the OTCBB for a period of one-year, during which
time any subsequent late filing would reset the one-year period of de-listing.
If we are late in our filings three times in any twenty-four (24) month period
and are de-listed from the OTCBB, our securities may become worthless and we may
be forced to curtail or abandon our business plan.
SHAREHOLDERS
MAY BE DILUTED SIGNIFICANTLY THROUGH OUR EFFORTS TO OBTAIN FINANCING AND SATISFY
OBLIGATIONS THROUGH THE ISSUANCE OF ADDITIONAL SHARES OF OUR COMMON
STOCK.
We have
no committed source of financing. Wherever possible, our Board of Directors will
attempt to use non-cash consideration to satisfy obligations. In many instances,
we believe that the non-cash consideration will consist of restricted shares of
our common stock. Our Board of Directors has authority, without action or vote
of the shareholders, to issue all or part of the authorized but unissued shares
of common stock. In addition, if a trading market develops for our common stock,
we may attempt to raise capital by selling shares of our common stock, possibly
at a discount to market. These actions will result in dilution of the ownership
interests of existing shareholders, may further dilute common stock book value,
and that dilution may be material. Such issuances may also serve to enhance
existing management’s ability to maintain control of the Company because the
shares may be issued to parties or entities committed to supporting existing
management.
STATE
SECURITIES LAWS MAY LIMIT SECONDARY TRADING, WHICH MAY RESTRICT THE STATES IN
WHICH AND CONDITIONS UNDER WHICH YOU CAN SELL SHARES.
Secondary
trading in our common stock will not be possible in any state until the common
stock is qualified for sale under the applicable securities laws of the state or
there is confirmation that an exemption, such as listing in certain recognized
securities manuals, is available for secondary trading in the state. If we fail
to register or qualify, or to obtain or verify an exemption for the secondary
trading of the common stock in any particular state, the common stock could not
be offered or sold to, or purchased by, a resident of that state. In the event
that a significant number of states refuse to permit secondary trading in our
common stock, the liquidity for the common stock could be significantly
impacted.
BECAUSE
WE ARE NOT SUBJECT TO COMPLIANCE WITH RULES REQUIRING THE ADOPTION OF CERTAIN
CORPORATE GOVERNANCE MEASURES, OUR STOCKHOLDERS HAVE LIMITED PROTECTIONS AGAINST
INTERESTED DIRECTOR TRANSACTIONS, CONFLICTS OF INTEREST AND SIMILAR
MATTERS.
The
Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by the
SEC, the New York and American Stock Exchanges and the Nasdaq Stock Market, as a
result of Sarbanes-Oxley, require the implementation of various measures
relating to corporate governance. These measures are designed to enhance the
integrity of corporate management and the securities markets and apply to
securities that are listed on those exchanges or the Nasdaq Stock Market.
Because we are not presently required to comply with many of the corporate
governance provisions and because we chose to avoid incurring the substantial
additional costs associated with such compliance any sooner than legally
required, we have not yet adopted these measures.
-14-
Because
our Directors are not independent directors, we do not currently have
independent audit or compensation committees. As a result, our Directors have
the ability to, among other things, determine their own level of compensation.
Until we comply with such corporate governance measures, regardless of whether
such compliance is required, the absence of such standards of corporate
governance may leave our stockholders without protections against interested
director transactions, conflicts of interest, if any, and similar matters and
any potential investors may be reluctant to provide us with funds necessary to
expand our operations.
We intend
to comply with all corporate governance measures relating to director
independence as and when required. However, we may find it very difficult or be
unable to attract and retain additional qualified officers, Directors and
members of board committees required to provide for our effective management as
a result of the Sarbanes-Oxley Act of 2002. The enactment of the Sarbanes-Oxley
Act of 2002 has resulted in a series of rules and regulations by the SEC that
increase responsibilities and liabilities of Directors and executive officers.
The perceived increased personal risk associated with these recent changes may
make it more costly or deter qualified individuals from accepting these
roles.
ITEM 2. UNREGISTERED SALES
OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR
SECURITIES.
None.
ITEM 4. SUBMISSION OF
MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER
INFORMATION
None.
ITEM 6.
EXHIBITS
|
Exhibit Number
|
Description of Exhibit
|
|
Exhibit
3.1(1)
|
Articles
of Incorporation
|
|
Exhibit
3.2(1)
|
Bylaws
|
|
Exhibit
10.1(1)
|
Revolving
Credit Promissory Note with Kevin McAdams (December 12,
2007)
|
|
Exhibit
10.2(1)
Exhibit
10.3(2)
|
Convertible
Promissory Note with David M. Loev (March 11, 2008)
Amended
Convertible Promissory Note with David M. Loev
|
|
Exhibit
10.4(3)
|
Amended
Revolving Credit Promissory Note with Kevin McAdams
|
|
Exhibit
10.5(3)
|
Second
Amended Convertible Promissory Note with David M. Loev
|
|
Exhibit
31*
Exhibit
32*
|
Certificate
of the Chief Executive Officer and Principal Accounting Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
Certificate
of the Chief Executive Officer and Principal Accounting Officer pursuant
to Section 906 of the Sarbanes-Oxley Act of
2002
|
* Attached
hereto.
(1)
Filed as Exhibits to the Company’s Registration Statement on Form S-1 filed with
the Commission on July 22, 2008, and incorporated herein by
reference.
(2) Filed
as an Exhibit to the Company’s Quarterly Report on Form 10-Q filed with the
Commission on December 19, 2008, and incorporated herein by
reference.
(3) Filed
as an Exhibit to the Company’s Annual Report on Form 10-K filed with the
Commission on May 8, 2009, and incorporated herein by
reference.
-15-
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.
|
RX
SCRIPTED, INC.
|
|
|
DATED:
June 15, 2009
|
By:
/s/ MaryAnne
McAdams
|
|
MaryAnne
McAdams
|
|
|
Chief
Executive Officer (Principal Executive Officer)
|
|
|
And
Principal Financial Officer
|
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