FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements reflect the Company’s views with respect to future events based upon information available to it at this time. These forward-looking statements are subject to certain uncertainties and other factors that could cause actual results to differ materially from these statements. These uncertainties and other factors include, but are not limited to: the ability of the Company to locate a business opportunity for acquisition or participation by the Company; the terms of the Company’s acquisition of or participation in a business opportunity; the operating and financial performance of any business opportunity following its acquisition or participation by the Company and the risk factors described herein under the caption “Risk Factors.” The words “anticipates,” “believes,” “estimates,” “expects,” “plans,” “projects,” “targets” and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, changes in assumptions, future events or otherwise.
Part I
Item 1. Description of Business
General
Bioethics, Ltd., (the “Registrant” or the “Company”) is a shell company that conducts no active business operations and is seeking business opportunities for acquisition or participation by the Company.
History
The Company was incorporated in 1990 as a Nevada corporation. The Company has not yet generated any
significant revenues and is considered a development stage company.
Since its organization in 1990, the Company has not engaged in active business operations and its activities have consisted of its search for and evaluation of potential business opportunities for acquisition or participation by the Company. During this period, the Company has incurred limited operating expenses necessary to maintain its status as a corporation in good standing and has incurred expenses in connection with its search for and evaluation of potential business opportunities. Due to the lack of active operations and the Company’s stated purpose of seeking to acquire a currently unknown business opportunity, the Company may be classified as a “shell” company subject to all the risks of a new business together with the substantial risks associated with the search for and acquisition of business opportunities.
In May 1998, the Company sold 10,000,000 shares of its common stock in a private offering for an aggregate purchase price of $40,000. The shares sold represented approximately 91% of the issued and outstanding shares of the Company’s common stock and the transaction resulted in a change in control of the Company. In connection with the private offering, the former officers and directors of the Company resigned from their respective positions and a new person was appointed as the sole officer and director of the Company.
Business Plan
The Company intends to continue to seek, investigate and, if warranted, acquire an interest in a business opportunity. Management has not established any firm criteria with respect to the type of business with which the Company desires to become involved and will consider participating in a business enterprise in a variety of different industries or areas with no limitation as to the geographical location of the enterprise. The Company’s management will have unrestricted discretion in reviewing, analyzing, and ultimately selecting a business enterprise for acquisition or participation by the Company. It is anticipated that any enterprise ultimately selected will be selected by management based on its analysis and evaluation of the business and financial condition of the enterprise, as well as its business plan, potential for growth, and other factors, none of which can be anticipated to be controlling. If the Company is able to locate a suitable business enterprise, the decision to acquire or participate in the enterprise may be made by the Company’s board of directors without stockholder approval. Approval may also be obtained pursuant to the consent of a majority of the Company’s stockholders and, since the principal stockholders of the Company own
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approximately 47% of the Company’s outstanding shares, they would be able to approve any transaction with the affirmative vote of a limited number of additional shares. Further, it is anticipated that the acquisition of or participation in an enterprise may involve the issuance by the Company of a controlling interest in the Company which would dilute the respective equity interests of the Company’s stockholders and may also result in a reduction of the Company’s net tangible asset value per share.
The activities of the Company will continue to be subject to several significant risks which arise primarily as a result of the fact that the Company has no specific business and may acquire or participate in a business opportunity based on the decision of management which will, in all probability, act without the consent, vote, or approval of the Company’s stockholders. The risks faced by the Company are further increased as a result of its limited resources and its inability to provide a prospective business opportunity with a significant amount of capital. (See “Item 1A. Risk Factors.”)
Although management believes that it is in the best interest of the Company to acquire or participate in a business enterprise, there is no assurance that the Company will be able to locate a business enterprise which management believes is suitable for acquisition or participation by the Company or that if an enterprise is located, it can be acquired on terms acceptable to the Company. Similarly, there can be no assurance that if any business opportunity is acquired, it will perform in accordance with management’s expectations or result in any profit to the Company or appreciation in the market price for the Company’s shares.
If business opportunities become available, the selection of an opportunity in which to participate will be complex and extremely risky and may be made on management’s analysis of the quality of the other company’s management and personnel, the anticipated acceptability of new products or marketing concepts, the merit of technological changes, and numerous other factors which are difficult, if not impossible to analyze through the application of any objective criteria. There is no assurance that the Company will be able to identify and acquire any business opportunity which will ultimately prove to be beneficial to the Company and its stockholders.
It is anticipated that business opportunities may be introduced to the Company from a variety of sources, including its sole officer and director, and his business and social contacts, professional advisors such as attorneys and accountants, securities broker-dealers, venture capitalists, members of the franchise community, and others who may present unsolicited proposals.
The Company will not restrict its search to any particular business, industry, or geographical location. The Company may enter into a business or opportunity involving a “start-up” or new company or an established business. It is impossible to predict the status of any business in which the Company may become engaged.
The period within which the Company may participate in a business opportunity cannot be predicted and will depend on circumstances beyond the Company’s control, including the availability of business opportunities, the time required for the Company to complete its investigation and analysis of prospective business opportunities, the time required to prepare the appropriate documents and agreements providing for the Company’s participation, and other circumstances.
It is impossible to predict the manner in which the Company may participate in a business opportunity. Specific business opportunities will be reviewed and, on the basis of that review, the legal structure or method deemed by management to be most suitable will be selected. The structure may include, but is not limited to, mergers, reorganizations, leases, purchase and sale agreements, licenses, joint ventures, and other contractual arrangements. The Company may act directly or indirectly through an interest in a partnership, corporation, or other form of organization. Implementing the structure may require the merger, consolidation, or reorganization of the Company with other corporations or forms of business organization, and there is no assurance that the Company would be the surviving entity. In addition, the current stockholders of the Company may not have control of a majority of the voting shares of the Company following a reorganization transaction. As part of the transaction, all or a majority of the Company’s directors may resign and new directors may be appointed without any vote by the stockholders.
The Company will most likely acquire a business opportunity by issuing shares of the Company’s common stock to the owners of the business opportunity. Although the terms of the transaction cannot be predicted, in many instances the business opportunity entity will require that the transaction by which the Company acquires its participation be “tax-free” under Sections 351 or 368 of the Internal Revenue Code of 1986 (the “Code”). It is anticipated that any business opportunity acquisition will result in substantial additional dilution to the equity of those who were stockholders of the Company prior to the acquisition.
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Notwithstanding the fact that the Company is technically the acquiring entity in the foregoing circumstances, generally accepted accounting principles will ordinarily require that the transaction be accounted for as if the Company had been acquired by the other entity owning the business venture or opportunity and, therefore, will not permit a write up in the carrying value of the assets of the other company.
It is anticipated that securities issued in a transaction of this type would be issued in reliance on exemptions from registration under applicable federal and state securities laws. In some circumstances, however, as a negotiated element of the transaction, the Company may agree to register such securities either at the time the transaction is consummated or under certain conditions or at specified times thereafter. The issuance of a substantial number of additional securities and their potential sale into any trading market which may develop in the Company’s Common Stock may have a depressive effect on the market price for the Company’s common stock.
The Company will participate in a business opportunity only after the negotiation and execution of a written agreement. Although the terms of the agreement cannot be predicted, generally the agreement would require specific representations and warranties by all of the parties thereto, specify certain events of default, detail the terms of closing and the conditions which must be satisfied by each of the parties thereto prior to the closing, set forth remedies on default, and include miscellaneous other terms.
It is emphasized that management of the Company has broad discretion in determining the manner by which the Company will participate in a prospective business opportunity and may enter into transactions having a potentially adverse impact on the current stockholders in that their percentage ownership in the Company may be reduced without any increase in the value of their investment or that the business opportunity in which the Company acquires an interest may ultimately prove to be unprofitable. The transaction may be consummated without being submitted to the stockholders of the Company for their consideration. In some instances, however, the proposed participation in a business opportunity may be submitted to the stockholders for their consideration, either voluntarily by the board of directors to seek the stockholders’ advice or consent or because of a requirement to do so by state law.
The investigation of specific business opportunities and the negotiation, drafting, and execution of relevant agreements, disclosure documents, and other instruments may require substantial management time and attention and substantial costs for accountants, attorneys, and others. If a decision is made not to participate in a specific business opportunity, the costs previously incurred in the related investigation would not be recoverable. Furthermore, even if an agreement is reached for the participation in a specific business opportunity, the failure to consummate that transaction may result in the loss to the Company of the related costs incurred.
The Company’s operations following its acquisition of an interest in a business opportunity will be dependent on the nature of the opportunity and interest acquired. The specific risks of a given business opportunity cannot be predicted at the present time.
The Company is not registered and does not propose to register as an “investment company” under the Investment Company Act of 1940 (the “Investment Act”). The Company intends to conduct its activities so as to avoid being classified as an “investment company” under the Investment Act and, therefore to avoid application of the registration and other provisions of the Investment Company Act and the related regulations.
Regulation
It is impossible to predict what government regulation the Company may be subject to until it has acquired an interest in a business opportunity. The use of assets and/or conduct of businesses which the Company may acquire could subject it to environmental, public health and safety, land use, trade, or other governmental regulations and state or local taxation. In selecting a business opportunity to acquire, management will endeavor to ascertain, to the extent of the limited resources of the Company, the effects of government regulation on the prospective business of the Company. In certain circumstances, however, such as the acquisition of an interest in a new or start-up business activity, it may not be possible to predict with any degree of accuracy the impact of government regulation.
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Competition
The Company encounters substantial competition in its efforts to locate a business opportunity. The primary competition for desirable investments comes from investment bankers, business development companies, venture capital partnerships and corporations, venture capital affiliates of large industrial and financial companies, small business investment companies, other shell companies, and wealthy individuals. Most of these entities have significantly greater experience, resources, and managerial capabilities than the Company and are in a better position than the Company to obtain access to attractive business opportunities.
Facilities
The Company’s offices are located at the residence of its sole officer and director at 1137 N. 120 W., American Fork, Utah 84003. Such space is provided to the Company without charge.
Employees
The Company has no employees and its business and affairs are handled by its sole officer and director who provides services to the Company on an as needed basis, without compensation. Management of the Company may engage consultants, attorneys, and accountants on an as needed basis, and does not anticipate a need to engage any full-time employees so long as it is seeking and evaluating business opportunities.
Item 1A. Risk Factors
Our financial statements contain a going concern qualification indicating that we do not have the necessary working capital for our planned activity which raises doubts about our ability to continue as a going concern.
The Company’s annual audited financial statements contain a going concern qualification indicating that the Company has incurred losses since inception, has no on-going operations and that these factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company has not entered into any agreements or arrangements for the provision of additional debt or equity financing except as described herein and there can be no assurance that the Company will be able to obtain the additional debt or equity capital required in order to continue its operations.
The Company is a “blank check” Company with no specified business plan and stockholders are unable to determine the future activities of the Company.
The business plan of the Company is to use its limited capital to search for, investigate, and acquire or participate in a business opportunity which has not yet been selected. A business opportunity will be selected by management, and management may select an opportunity without approval of the Company’s stockholders. Accordingly, stockholders are unable to determine the future activities of the Company and may have no opportunity to analyze the merits of any opportunity to be acquired by the Company. In addition, the Company has no employment contracts with its current management, no assurance can be given that the Company will continue to be managed by current management, and it is likely that current management will resign at such time as a business opportunity is acquired.
The Company has little or no capital for use in locating, investigating and acquiring a business opportunity, which will prevent the Company from acquiring a business opportunity that has capital requirements greater than the Company’s resources.
As of December 31, 2010, the Company had a working capital deficit of $21,967 and is dependent on loans or contributions from stockholders or sales of common stock to obtain the capital required to continue its operations. However, even if additional funding is received, it is not anticipated that it will be in an amount that is adequate to permit the Company to undertake an elaborate or extensive search for business opportunities. This limited capital will prevent the Company from participating in any business opportunity which requires immediate additional capital and may make it difficult or impossible for the Company to locate a business opportunity.
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The Company may issue a substantial number of additional shares in the future which could significantly dilute the ownership interest of current stockholders.
It is likely that the Company would acquire an interest in a business opportunity through a reverse merger or other business reorganization involving the issuance by the Company of additional shares of the Company’s Common Stock. It is also likely that the Company would issue a controlling interest to the stockholders of the acquired company in which event the ownership interest of current stockholders would be substantially diluted. The board of directors, acting without stockholder approval, has authority to issue all or any part of the authorized but unissued stock of the Company. Thus, the board of directors could issue up to 14,000,000 additional shares of Common Stock without stockholder approval. (See “Item 1. Business: Business Plan.”)
The Company has had no history of operations and stockholders are unable to effectively evaluate the Company for investment purposes because it has not begun operations and it has not selected or established a business model.
The Company was incorporated under the laws of the state of Nevada in 1990, and has had no operations or significant revenues from operations. The Company faces all of the risks inherent in any new business, together with those risks specifically inherent in the search for and acquisition of business opportunities.
There is a limited market for the Company’s common stock and there can be no assurance that even the limited market will continue in the future.
There is no established or active market for the Company’s common stock. The Company’s common stock is quoted on only a sporadic basis on the OTC Bulletin Board and no assurance can be given that the Company’s common stock will continue to be quoted on the OTC Bulletin Board, the Pink Sheets or any other trading medium. (See “Item 5. Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.”)
The three principal stockholders of the Company own approximately 47% of the Company’s common stock and may effectively be able to determine the policies and practices of the Company.
The three principal stockholders of the Company own approximately 47% of the Company’s issued and outstanding shares of common stock. As a result, they may effectively be able to control the management and policies of the Company.
Our stock is subject to special sales practice requirements that could have an adverse impact on any trading market that may develop for our stock.
Our stock is subject to special sales practice requirements applicable to “penny stocks” which are imposed on broker-dealers who sell low-priced securities of this type. These rules may be anticipated to affect the ability of broker-dealers to sell our stock, which may in turn be anticipated to have an adverse impact on the market price for our stock if and when a trading market should develop. (See “Item 5: Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.”)
Item 2. Properties.
The Company’s offices are located at the residence of its sole officer and director at 1137 N. 120 W., American Fork, Utah 84003. Such space is provided to the Company without charge. The Company does not own or lease any other properties.
Item 3. Legal Proceedings.
The Company is not a party to any material legal proceedings and, to the best of its knowledge, no such legal proceedings have been threatened against it.
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Part II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
The Company’s common stock is included on the OTC Bulletin Board under the symbol “BOTH.” However, there currently are no published quotations and there is no active trading market for the Company's stock. There can be no assurance that an active or liquid trading market for the Company's stock will develop in the future.
On March 21, 2011, there were no published bid or asked quotations for the Company’s common stock on the OTC Bulletin Board.
At March 21, 2011, there were approximately 384 holders of record of the Company’s common stock, as reported by the Company’s transfer agent. In computing the number of holders of record, each broker-dealer and clearing corporation holding shares on behalf of its customers is counted as a single stockholder.
No dividends have ever been paid on the Company’s securities, and the Company has no current plans to pay dividends in the foreseeable future.
Special Sales Practice Requirements with Regard to “Penny Stocks”
To protect investors from patterns of fraud and abuse that have occurred in the market for low priced securities commonly referred to as “penny stocks,” the SEC has adopted regulations that generally define a “penny stock” to be any equity security having a market price (as defined) less than $5.00 per share, or an exercise price of less than $5.00 per share, subject to certain exceptions. Since the price of our stock is well below $5.00 per share, our stock is subject to the “penny stock” regulations. As a result, broker-dealers selling our common stock are subject to additional sales practices when they sell our stock to persons other than established clients and “accredited investors.” For transactions covered by these rules, before the transaction is executed, the broker-dealer must make a special customer suitability determination, receive the purchaser’s written consent to the transaction and deliver a risk disclosure document relating to the penny stock market. The broker-dealer must also disclose the commission payable to both the broker-dealer and the registered representative taking the order, current quotations for the securities and, if applicable, the fact that the broker-dealer is the sole market maker and the broker-dealer’s presumed control over the market. Monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Such “penny stock” rules may restrict trading in our common stock and may deter broker-dealers from effecting transactions in our common stock.
Equity Compensation Plans
The Company does not have in effect any compensation plans under which equity securities of the Company are authorized for issuance and the Company does not have any outstanding stock options.
Transfer Agent
Colonial Stock Transfer Co., Inc., 66 Exchange Place, Suite 100, Salt Lake City, Utah 84111, telephone (801) 355-5740, serves as the transfer agent and registrar for our common stock.
Recent Sales of Unregistered Securities
We did not sell any unregistered securities during our 2010 fiscal year.
Issuer Purchases of Equity Securities
We have not adopted a stock repurchase plan and we did not purchase any shares of our equity securities during the 2010 fiscal year.
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Item 6. Selected Financial Data
Not Applicable. The Company is a “smaller reporting company.”
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion in conjunction with our financial statements, which are included elsewhere in this report. The following information contains forward-looking statements. (See “Forward Looking Statements” and “Risk Factors.”)
General
The Company is a shell company that conducts no active business operations and is seeking business opportunities for acquisition or participation by the Company.
The Report of Independent Registered Public Accounting Firm on the Company’s 2010 audited financial statements addresses an uncertainty about the Company’s ability to continue as a going concern, indicating that the Company has incurred losses since its inception and has no on-going operations. The report further indicates that these factors raise substantial doubt about the Company’s ability to continue as a going concern. At December 31, 2010, the Company had a working capital deficit of $21,967 and a stockholders’ deficit accumulated during the development state of $125,743. The Company incurred net losses of $16,800 and $21,941 for its fiscal years ended December 31, 2010 and 2009, respectively. The Company has not entered into any agreements or arrangements for the provision of additional debt or equity financing and there can be no assurance that it will be able to obtain the additional debt or equity capital required to continue its operations.
The Fiscal Year Ended December 31, 2010 Compared to the Fiscal Year Ended December 31, 2009
The Company did not conduct any operations during its fiscal years ended December 31, 2010 or 2009, respectively, and has no assets other than cash. At December 31, 2010, the Company had cash in the amount of $4,463 as compared to cash at December 31, 2009 in the amount of $3,257. The increase in cash from 2009 to 2010 is the result of a $25,000 demand loan from a stockholder during January 2010. At December 31, 2010, the Company had current liabilities of $26,430, consisting of accrued interest payable ($1,430) and note payable – stockholder ($25,000). At December 31, 2009, the Company had current liabilities of $8,424, consisting of accounts payable. The increase in current liabilities results from the $25,000 demand loan from a stockholder during January 2010. The Company had a working capital deficit of $21,967 at December 31, 2010 as compared to a working capital deficit of $5,167 at December 31, 2009.
The Company did not generate revenues during its 2010 or 2009 fiscal years. The Company incurred general and administrative expenses of $15,370 during the year ended December 31, 2010 as compared to $21,941 during the year ended December 31, 2009. The decrease in general and administrative expenses is primarily the result of lower legal and accounting expenses in 2010 as compared to 2009.
The Company incurred a net loss of $16,800 during the year ended December 31, 2010 as compared to a net loss of $21,941 during the year ended December 31, 2009. The $5,141 decrease in net loss in 2010 as compared to 2009 is primarily the result of lower general and administrative expenses in 2010 as discussed above, offset slightly by interest expense on the note payable to stockholder in 2010 in the amount of $1,430.
Net cash used by operating activities was $23,794 during the 2010 fiscal year resulting primarily from the net loss of $16,800 and an $8,424 decrease in accounts payable, which was partially offset by a $1,430 increase in accrued interest. Net cash used by operating activities was $16,337 for the 2009 fiscal year resulting primarily from the net loss of $21,941 partially offset by a $5,604 increase in accounts payable.
No cash was provided or used by investing activities during the 2010 or 2009 fiscal years.
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Net cash provided by financing activities was $25,000 during the year ended December 31, 2010 as a result of a demand loan from a stockholder which bears interest at 6% per annum. Net cash provided by financing activities was $17,776 for year ended December 31, 2009 as a result of a stockholder contribution to capital.
Since the Company does not generate any revenues from operations, it is dependent on sales of securities, loans or contributions from its stockholders in order to pay its operating costs. During January 2010, the Company borrowed $25,000 from a stockholder pursuant to an unsecured demand note bearing interest at the rate of 6% per annum. However, as of December 31, 2010, such amount had been spent, the Company’s current liabilities exceeded its current assets by $21,967 and the Company required additional contributions to capital, loans or proceeds from sales of its common stock in order to continue its operations. In addition, in the event the Company locates a suitable candidate for potential acquisition, the Company will also require additional funds to pay the costs of negotiating and completing the acquisition of such candidate. The Company has not entered into any agreement or arrangement for the provision of any additional funding and no assurances can be given that such funding will be available to the Company on terms acceptable to it or at all.
The Company cannot presently foresee the cash requirements of any business opportunity which may ultimately be acquired by the Company. However, since it is likely that any business it acquires will be involved in active business operations, the Company anticipates that an acquisition will result in increased cash requirements as well as increases in the number of employees of the Company.
Off-Balance Sheet Arrangements
The Company has not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.
Critical Accounting Policies
Due to the lack of current operations and limited business activities, the Company does not have any accounting policies that it believes are critical to facilitate an investor’s understanding of the Company’s financial and operating status.
Recent Accounting Pronouncements
The Company has not adopted any new accounting policies that would have a material impact on the Company’s financial condition, changes in financial conditions or results of operations.
Item 7A. Quantitative and Qualitative Disclosure About Market Risk
Not Applicable. The Company is a “smaller reporting company.”
Item 8. Financial Statements
The following financial statements are being filed with this report and are located immediately following the signature page.
Financial Statements, December 31, 2010
Report of Independent Registered Public Accounting Firm
Balance Sheets, December 31, 2010 and 2009
Statements of Operations for the years ended December 31, 2010 and 2009 and from inception on July 26, 1990
through December 31, 2010
Statement of Stockholders’ Equity (Deficit) from inception on July 26, 1990 through December 31, 2010
Statements of Cash Flows, for the years ended December 31, 2010 and 2009 and from inception on July 26, 1990
through December 31, 2010
Notes to Financial Statements
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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A(T). Controls and Procedures
Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our Chief Executive Officer/Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“the Exchange Act”) as of December 31, 2010, the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer/Chief Financial Officer, who is our sole officer and director, concluded that our disclosure controls and procedures as of December 31, 2010 were effective such that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our Chief Executive Officer/Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management, with the participation of our Chief Executive Officer/Chief Financial Officer, evaluated the effectiveness of the Company’s internal control over financial reporting as of December 31, 2010. In making this evaluation, our management used the COSO framework, an integrated framework for the evaluation of internal controls issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management, with the participation of our Chief Executive Officer/Chief Financial Officer concluded that as of December 31, 2010, the Company’s internal control over financial reporting was effective.
In conducting its evaluation, our Chief Executive Officer/Chief Financial Officer identified a weakness in the Company’s internal control, which arises from the fact that the Company’s principal executive and principal financial officers are the same person, and that such person is also the sole member of the Company’s board of directors, which does not allow for segregation of duties or provide oversight by a board of directors with members other than the sole officer of the Company. The Chief Executive Officer/Chief Financial Officer believes the weakness is mitigated by the Company’s status as a shell company with no significant assets or liabilities, no business operations, a limited number of transactions each year, and the preparation of quarterly financial statements by an independent accounting firm. As such, our Chief Executive Officer/Chief Financial Officer does not believe the weakness has a material effect on the accuracy and completeness of our financial reporting and disclosure as included in this report or that the weakness constitutes a material weakness such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or deterred on a timely basis.
This Annual Report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this Annual Report.
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Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting during the quarter ended December 31, 2010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
None.
Part III
Item 10. Directors, Executive Officers and Corporate Governance
Directors and Executive Officers
The following table indicates the name, age, term of office and position held by each of our officers and directors. The term of office for each officer position is for one year or until his or her successor is duly elected and qualified by the board of directors. The term of office for a director is for one year or until his or her successor is duly elected and qualified by the stockholders.
|
Name
|
Age
|
Term
Of Office
|
Positions Held
|
|
Jed Beck
|
28
|
2011
|
President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director
|
Certain biographical information with respect to the Company’s sole officer and director is set forth below.
Jed Beck is and has since March 2008 been a business development manager at the Salt Lake City office of Rinchem, Inc., a chemical management solutions company with headquarters in Albuquerque, New Mexico. From March 2007 through February 2008, Mr. Beck was a territory account manager for Rinchem, Inc. in Albuquerque, New Mexico. From May 2004 to March 2006, Mr. Beck was a student at Brigham Young University. From November 2004 through March 2007, Mr. Beck was also a Superintendent for Furst Construction in Salt Lake City, Utah. Mr. Beck received his Bachelor of Arts degree in Communications from Brigham Young University in 2006. Mr. Beck believes he has adequate experience to serve as a director of the Company as it searches for business opportunities.
Director Meetings and Stockholder Meeting Attendance
The Board of Directors held no formal meetings during 2010, and took action by unanimous written consents in lieu of meetings. Our policy is to encourage, but not require, members of the Board of Directors to attend annual stockholder meetings. We did not have an annual stockholder meeting during the prior year.
Board of Directors
Our board of directors consists of one person; Jed Beck. Our sole director is not “independent” within the meaning of Rule 4200(a)(15) of the NASDAQ Marketplace because he is an officer of the Company.
Our board of directors has not appointed any standing committees, there is no separately designated audit committee and the entire board of directors acts as our audit committee. The board of directors does not have an independent “financial expert” because it does not believe the scope of the Company’s activities to date has justified the expenses involved in obtaining such a financial expert. In addition, our securities are not listed on a national exchange and we are not subject to the special corporate governance requirements of any such exchange.
The Company does not have a compensation committee and does not pay any compensation to its sole officer and director.
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The Company does not have a standing nominating committee and the Company’s Board of Directors performs the functions that would customarily be performed by a nominating committee. The Board of Directors does not believe a separate nominating committee is required at this time due to the Company’s lack of business operations and the limited resources of the Company which do not permit it to compensate its directors. The Board of Directors has not established policies with regard to the consideration of director candidates recommended by security holders or the minimum qualifications of such candidates.
Communications with Directors
Stockholders may communicate with the Board of Directors by sending written communications addressed to the Board of Directors, or any individual director, to: Bioethics, Ltd., Attention: Corporate Secretary, 1137 N. 120 W., American Fork, Utah 84003. All communications will be compiled by the corporate secretary and forwarded to the Board of Directors or any individual director, as appropriate. In order to facilitate a response to any such communication, the Company’s Board of Directors suggests, but does not require, that any such submission include the name and contact information of the shareholder submitting the communication.
Section 16(a) Beneficial Ownership Reporting Compliance
The Company does not have a class of equity securities registered pursuant to Section 12 of the Securities Exchange Act of 1934. As a result, no reports are required to be filed pursuant to Section 16(a) of the Exchange Act by the Company’s directors and executive officers, and persons who own more than 10% of a registered class of the Company’s equity securities.
Code of Ethics
The Company has not adopted a Code of Ethics that applies to its executive officers, including its principal executive, financial and accounting officers. The Company does not believe the adoption of a code of ethics at this time would provide any meaningful additional protection to the Company because the Company has no employees, has only one officer who is also the sole director, and the Company does not conduct any active business operations.
Item 11. Executive Compensation
During the 2009 fiscal year Mark J. Cowan resigned from his positions as the sole officer and director of the Company and Jed Beck was appointed to such positions. Mr. Cowan did not receive any compensation, and Mr. Beck does not currently receive any compensation, from the Company. The Company has not paid any compensation to any officer during the past three years nor has the Company granted any stock options or restricted stock to its officers during the past three years.
The Company has no retirement, pension, profit sharing, or insurance or medical reimbursement plans covering its officers or directors, and is not contemplating implementing any of these plans at this time.
The Company’s directors do not receive any compensation for serving as directors of the Company and no compensation was paid to the Company’s sole director during the 2010 or 2009 fiscal years.