UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-KSB
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(Mark one)
[X] Annual Report Under Section 13 or 15(d) of The Securities Exchange Act of
1934
For the fiscal year ended December 31, 2006
[_] Transition Report Under Section 13 or 15(d) of The Securities Exchange Act
of 1934
For the transition period from ______________ to _____________
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Commission File Number: 0-52108
BTHC VI, Inc.
(Exact name of small business issuer as specified in its charter)
Delaware 20-4494098
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(State of incorporation) (IRS Employer ID Number)
12890 Hilltop Road, Argyle, TX 76226
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(Address of principal executive offices)
(972) 233-0300
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(Issuer's telephone number)
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Securities registered under Section 12 (b) of the Exchange Act - None
Securities registered under Section 12(g) of the Exchange Act:
- Common Stock - $0.001 par value
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Check whether the issuer has (1) filed all reports required to be files by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period the Company was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
----- -----
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of Company's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act): Yes X No
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The issuer's revenues for the fiscal year ended December 31, 2006 were $-0-.
The aggregate market value of voting common equity held by non-affiliates as of
February 19, 2007 was approximately $-0-, based on no trading activity and/or
posted quotations.
As of February 19, 2007, there were 500,000 shares of Common Stock issued and
outstanding.
Transitional Small Business Disclosure Format : Yes No X
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2
BTHC VI, Inc.
Index to Contents
Page Number
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Part I
Item 1 Description of Business 4
Item 2 Description of Property 14
Item 3 Legal Proceedings 14
Item 4 Submission of Matters to a Vote of Security Holders 14
Part II
Item 5 Market for Company's Common Equity, Related Stockholders Matters
and Small Business Issuer Purchasers of Equity Securities 14
Item 6 Management's Discussion and Analysis or Plan of Operation 17
Item 7 Financial Statements 21
Item 8 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 22
Item 8A Controls and Procedures 22
Part III
Item 9 Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act 22
Item 10 Executive Compensation 27
Item 11 Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters 27
Item 12 Certain Relationships and Related Transactions 28
Item 13 Exhibits 28
Item 14 Principal Accountant Fees and Services 29
Signatures 21
3
Caution Regarding Forward-Looking Information
---------------------------------------------
Certain statements contained in this annual filing, including, without
limitation, statements containing the words "believes", "anticipates", "expects"
and words of similar import, constitute forward-looking statements. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the Company, or industry results, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements.
Such factors include, among others, the following: international, national and
local general economic and market conditions: demographic changes; the ability
of the Company to sustain, manage or forecast its growth; the ability of the
Company to successfully make and integrate acquisitions; existing government
regulations and changes in, or the failure to comply with, government
regulations; adverse publicity; competition; fluctuations and difficulty in
forecasting operating results; changes in business strategy or development
plans; business disruptions; the ability to attract and retain qualified
personnel; and other factors referenced in this and previous filings.
Given these uncertainties, readers of this Form 10-KSB and investors are
cautioned not to place undue reliance on such forward-looking statements. The
Company disclaims any obligation to update any such factors or to publicly
announce the result of any revisions to any of the forward-looking statements
contained herein to reflect future events or developments.
PART I
Item 1 - Description of Business
General
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BTHC VI, Inc. was organized on June 7, 2005 as a Delaware corporation to effect
the reincorporation of BTHC VI, LLC, a Texas limited liability company, mandated
by the plan of reorganization discussed below. In accordance with the confirmed
plan of reorganization, our current business plan is to seek to identify a
privately-held operating company desiring to become a publicly held company by
merging with us through a reverse merger or acquisition. We are a development
stage company and a shell company as defined in Rule 405 under the Securities
Act of 1933, or the Securities Act, and Rule 12b-2 under the Securities Exchange
Act of 1934, or the Exchange Act. As a shell company, we have no operations and
no or nominal assets. Although we have no assets or operations, we believe we
possess a stockholder base which will make us an attractive merger or
acquisition candidate to an operating, privately-held company seeking to become
publicly held. Our principal office is located at 12890 Hilltop Road, Argyle, TX
76226, and our telephone number is (972) 233-0300.
History
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In September 1999, Ballantrae Healthcare LLC and affiliated limited liability
companies including BTHC VI, LLC, (collectively Ballantrae) were organized for
the purpose of operating nursing homes throughout the United States. Ballantrae
did not own the nursing facilities. Instead, they operated the facilities
pursuant to management agreements and/or real property leases with the owners of
each of the respective facilities. Although Ballantrae continued to increase the
number of nursing homes it operated and in June 2000 had received a substantial
equity investment, it was unable to achieve profitability. During 2001 and 2002,
Ballantrae continued to experience severe liquidity problems and did not
generate enough revenues to cover its overhead costs. Despite obtaining
additional capital and divesting unprofitable nursing homes, by March, 2003,
Ballantrae was out of cash and unable to meet its payroll obligations.
4
On March 28, 2003, Ballantrae filed a petition for reorganization under Chapter
11 of the United States Bankruptcy Code. On November 29, 2004, the bankruptcy
court approved the First Amended Joint Plan of Reorganization, or the Plan, as
presented by Ballantrae, its affiliates and their creditors. On April 11, 2006,
pursuant to the Plan, BTHC VI, LLC was merged into BTHC VI, Inc., a Delaware
corporation.
Plan of Reorganization
----------------------
Halter Financial Group, Inc. or HFG, participated with Ballantrae and their
creditors in structuring the Plan. As part of the Plan, HFG provided $76,500 to
be used to pay professional fees associated with the Plan confirmation process.
HFG was granted an option to be repaid through the issuance of equity securities
in 17 of the reorganized Ballantrae entities, including BTHC VI, Inc.
HFG exercised the option, and as provided in the Plan, 70% of our outstanding
common stock, or 350,000 shares , were issued to HFG, in satisfaction of HFG's
administrative claims. The remaining 30% of our outstanding common stock, or
150,000 shares, were issued to 499 holders of administrative and tax claims and
unsecured debt. The 500,000 shares, or Plan Shares, were issued pursuant to
Section 1145 of the Bankruptcy Code.
As further consideration for the issuance of the 350,000 Plan Shares to HFG, the
Plan required HFG to assist us in identifying a potential merger or acquisition
candidate. HFG is responsible for the payment of our operating expenses and HFG
will provide us for no cost with consulting services, including assisting us
with formulating the structure of any proposed merger or acquisition.
Additionally, HFG is responsible for paying our expenses incurred in
consummating a merger or acquisition.
We will remain subject to the jurisdiction of the bankruptcy court until we
consummate a merger or acquisition. Pursuant to the confirmation order, if we do
not consummate a business combination prior to June 20, 2008, the Plan Shares
will be deemed canceled, and the discharge and injunction provisions of the
confirmation order, as they pertain to us, shall be deemed dissolved without
further order of the bankruptcy court. If we timely consummate a merger or
acquisition, we will have met the requirements of the Plan and the discharge and
injunction provisions granted to us under the confirmation order shall continue
to be effective.
On February 15, 2006, HFG transferred its 350,000 Plan Shares to Halter
Financial Investments L.P., or HFI, a Texas limited partnership controlled by
Timothy P. Halter.
Timothy P. Halter is the sole officer, director and shareholder of HFG and an
officer and member of Halter Financial Investments GP, LLC, general partner of
HFI. Mr. Halter currently serves as our president and sole director.
Business Plan
-------------
Our current business plan is to seek and identify a privately-held operating
company desiring to become a publicly held company by combining with us through
a reverse merger or acquisition type transaction. Private companies wishing to
have their securities publicly traded may seek to merge or effect an exchange
transaction with a shell company with a significant stockholder base. As a
result of the merger or exchange transaction, the stockholders of the private
company will hold a majority of the issued and outstanding shares of the shell
company. Typically, the directors and officers of the private company become the
directors and officers of the shell company. Often the name of the private
company becomes the name of the shell company.
We have no capital and must depend on HFG to provide us with the necessary funds
to implement our business plan. We intend to seek opportunities demonstrating
the potential of long-term growth as opposed to short-term earnings. However, at
5
the present time, we have not identified any business opportunity that we plan
to pursue, nor have we reached any agreement or definitive understanding with
any person concerning an acquisition or merger.
Timothy P. Halter, our sole officer and director, will be primarily responsible
for investigating combination opportunities. However, we believe that business
opportunities may also come to our attention from various sources, including
HFG, professional advisors such as attorneys, and accountants, securities
broker-dealers, venture capitalists, members of the financial community, and
others who may present unsolicited proposals. We have no plan, understanding,
agreements, or commitments with any individual for such person to act as a
finder of opportunities for us.
No direct discussions regarding the possibility of a combination are currently
ongoing and we can give no assurances that we will be successful in finding or
acquiring a desirable business opportunity, given the limited funds that are
expected to be available to us for implementation of our business plan.
Furthermore, we can give no assurances that any acquisition, if it occurs, will
be on terms that are favorable to us or our current stockholders.
We do not propose to restrict our search for a candidate to any particular
geographical area or industry, and therefore, we are unable to predict the
nature of our future business operations. Our management's discretion in the
selection of business opportunities is unrestricted, subject to the availability
of such opportunities, economic conditions, and other factors.
Any entity which has an interest in being acquired by, or merging into us, is
expected to be an entity that desires to become a public company and establish a
public trading market for its securities. In connection with such a merger or
acquisition, it is anticipated that an amount of common stock constituting
control of us would be issued by us.
We do not foresee that we will enter into a merger or acquisition transaction
with any business with which HFG, HFI or Timothy P. Halter is currently
affiliated.
Investigation and Selection of Business Opportunities
-----------------------------------------------------
Certain types of business acquisition transactions may be completed without
requiring us to first submit the transaction to our stockholders for their
approval. If the proposed transaction is structured in such a fashion our
stockholders (other than HFI our majority stockholder) will not be provided with
financial or other information relating to the candidate prior to the completion
of the transaction.
If a proposed business combination or business acquisition transaction is
structured that requires our stockholder approval, and we are a reporting
company, we will be required to provide our stockholders with information as
applicable under Regulations 14A and 14C under the Exchange Act.
The analysis of business opportunities will be undertaken by or under the
supervision of Timothy P. Halter, our president and sole director. In analyzing
potential merger candidates, our management will consider, among other things,
the following factors:
* Potential for future earnings and appreciation of value of securities;
* Perception of how any particular business opportunity will be received
by the investment community and by our stockholders;
* Eligibility of a candidate, following the business combination, to
qualify its securities for listing on a national exchange or on a
national automated securities quotation system, such as NASDAQ.
* Historical results of operation;
* Liquidity and availability of capital resources;
* Competitive position as compared to other companies of similar size
and experience within the industry segment as well as within the
industry as a whole;
6
* Strength and diversity of existing management or management prospects
that are scheduled for recruitment;
* Amount of debt and contingent liabilities; and
* The products and/or services and marketing concepts of the target
company.
There is no single factor that will be controlling in the selection of a
business opportunity. Our management will attempt to analyze all factors
appropriate to each opportunity and make a determination based upon reasonable
investigative measures and available data. Potentially available business
opportunities may occur in many different industries and at various stages of
development, all of which will make the task of comparative investigation and
analysis of such business opportunities extremely difficult and complex. Because
of our limited capital available for investigation and our dependence on one
person, Timothy P. Halter, we may not discover or adequately evaluate adverse
facts about the business opportunity to be acquired.
We are unable to predict when we may participate in a business opportunity. We
expect, however, that the analysis of specific proposals and the selection of a
business opportunity may take several months.
Prior to making a decision to participate in a business transaction, we will
generally request that we be provided with written materials regarding the
business opportunity containing as much relevant information as possible,
including, but not limited to, a description of products, services and company
history; management resumes; financial information; available projections, with
related assumptions upon which they are based; an explanation of proprietary
products and services; evidence of existing patents, trademarks, or service
marks, or rights thereto; present and proposed forms of compensation to
management; a description of transactions between such company and its
affiliates during the relevant periods; a description of present and required
facilities; an analysis of risks and competitive conditions; a financial plan of
operation and estimated capital requirements; audited financial statements, or
if audited financial statements are not available, unaudited financial
statements, together with reasonable assurance that audited financial statements
would be able to be produced to comply with the requirements of a Current Report
on Form 8-K to be filed with the Securities and Exchange Commission, or
Commission, upon consummation of the business combination.
As part of our investigation, our executive officer may meet personally with
management and key personnel, may visit and inspect material facilities, obtain
independent analysis or verification of certain provided information, check
references of management and key personnel, and take other reasonable
investigative measures, to the extent of our limited financial and management
resources.
We believe that various types of potential candidates might find a business
combination with us to be attractive. These include candidates desiring to
create a public market for their securities in order to enhance liquidity for
current stockholders, candidates which have long-term plans for raising capital
through public sale of securities and believe that the prior existence of a
public market for their securities would be beneficial, and candidates which
plan to acquire additional assets through issuance of securities rather than for
cash, and believe that the development of a public market for their securities
will be of assistance in that process. Companies, which have a need for an
immediate cash infusion, are not likely to find a potential business combination
with us to be a prudent business transaction alternative.
Employees
---------
The Company currently has no employees. Management of the Company expects to use
consultants, attorneys and accountants as necessary, and does not anticipate a
need to engage any full-time employees so long as it is seeking and evaluating
business opportunities. The need for employees and their availability will be
addressed in connection with the decision whether or not to acquire or
participate in specific business opportunities.
7
Risk Factors
------------
The Company's business and plan of operation is subject to numerous risk
factors, including, but not limited to, the following:
Limited Operating History Makes Potential Difficult to Assess
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The Company has had no operating history nor any revenues or earnings from
operations since the Company's emergence from bankruptcy. The Company has
limited financial resources and no operating activities. The Company will,
in all likelihood, continue to sustain operating expenses without
corresponding revenues, at least until the consummation of a business
combination. This will most likely result in the Company incurring a net
operating loss which will increase continuously until the Company can
consummate a business combination with a target company. There is no
assurance that the Company can identify such a target company and
consummate such a business combination.
There Is No Agreement for a Business Combination and No Minimum Requirements for
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a Business Combination
----------------------
The Company has no current arrangement, agreement or understanding with
respect to engaging in a business combination with a specific entity. There
can be no assurance that the Company will be successful in identifying and
evaluating suitable business opportunities or in concluding a business
combination. No particular industry or specific business within an industry
has been selected for a target company. The Company has not established a
specific length of operating history or a specified level of earnings,
assets, net worth or other criteria which it will require a target company
to have achieved, or without which the Company would not consider a
business combination with such business entity. Accordingly, the Company
may enter into a business combination with a business entity having no
significant operating history, losses, limited or no potential for
immediate earnings, limited assets, negative net worth or other negative
characteristics. There is no assurance that the Company will be able to
negotiate a business combination on terms favorable to the Company.
No Assurance of Success or Profitability
----------------------------------------
There is no assurance that the Company will acquire a favorable business
opportunity. Even if the Company should become involved in a business
opportunity, there is no assurance that it will generate revenues or
profits, or that the market price of the Company's outstanding shares will
be increased thereby.
Type of Business Acquired
-------------------------
The business to be acquired may wish to avoid effecting its own public
offering and the accompanying expense, delays, and uncertainties. Because
of the Company's limited capital, it is more likely than not that any
acquisition by the Company will involve other parties whose primary
interest is the acquisition of control of a publicly traded Company.
Moreover, any business opportunity acquired may be currently unprofitable
or present other negative factors.
Lack of Diversification
-----------------------
Because of the limited financial resources that the Company has, it is
unlikely that the Company will be able to diversify its acquisitions or
operations. The Company's probable inability to diversify its activities
into more than one area will subject the Company to economic fluctuations
within a particular business or industry and therefore increase the risks
associated with the Company's operations.
8
Dependence upon Management; Limited Participation of Management
---------------------------------------------------------------
Because management consists of only one person, while seeking a business
combination, Timothy P. Halter, the President of the Company, will be the
only person responsible in conducting the day-to-day operations of the
Company. The Company does not benefit from multiple judgments that a
greater number of directors or officers would provide, and the Company will
rely completely on the judgment of its one officer and director when
selecting a target company. Mr. Halter anticipates devoting only a limited
amount of time per month to the business of the Company. Mr. Halter has not
entered into a written employment agreement with the Company and he is not
expected to do so. The Company does not anticipate obtaining key man life
insurance on Mr. Halter. The loss of the services of Mr. Halter would
adversely affect development of the Company's business and its likelihood
of continuing operations.
Conflicts of Interest
---------------------
The Company's sole officer and director has other business interests to
which he currently devotes attention, and is expected to continue to do so.
As a result, conflicts of interest may arise that can be resolved only
through their exercise of judgment in a manner which is consistent with his
fiduciary duties to the Company. (See Management, Conflicts of Interest.)
It is anticipated that the Company's principal stockholder may actively
negotiate or otherwise consent to the purchase of a portion of their common
stock as a condition to, or in connection with, a proposed merger or
acquisition transaction. In this process, the Company's principal
stockholder may consider his own personal pecuniary benefit rather than the
best interest of other Company stockholders. Depending upon the nature of a
proposed transaction, Company stockholders other than the principal
stockholder may not be afforded the opportunity to approve or consent to a
particular transaction.
Possible Need for Additional Financing
--------------------------------------
The Company has very limited funds, and such funds, may not be adequate to
take advantage of any available business opportunities. Even if the
Company's currently available funds prove to be sufficient to pay for its
operations until it is able to acquire an interest in, or complete a
transaction with, a business opportunity, such funds will clearly not be
sufficient to enable it to exploit the opportunity. Thus, the ultimate
success of the Company will depend, in part, upon its availability to raise
additional capital. In the event that the Company requires modest amounts
of additional capital to fund its operations until it is able to complete a
business acquisition or transaction, such funds, are expected to be
provided by the principal stockholder. The Company has not investigated the
availability, source, or terms that might govern the acquisition of the
additional capital which is expected to be required in order to exploit a
business opportunity, and will not do so until it has determined the level
of need for such additional financing. There is no assurance that
additional capital will be available from any source or, if available, that
it can be obtained on terms acceptable to the Company. If not available,
the Company's operations will be limited to those that can be financed with
its modest capital.
Dependence Upon Outside Advisors
--------------------------------
To supplement the business experience of its officer and director, the
Company may be required to employ accountants, technical experts,
appraisers, attorneys, or other consultants or advisors. The selection of
any such advisors will be made by the Company's officer, without any input
by stockholders. Furthermore, it is anticipated that such persons may be
engaged on an as needed basis without a continuing fiduciary or other
obligation to the Company. In the event the officer of the Company
considers it necessary to hire outside advisors, he may elect to hire
persons who are affiliates, if those affiliates are able to provide the
required services.
9
Regulation of Penny Stocks
--------------------------
The U. S. Securities and Exchange Commission (SEC) has adopted a number of
rules to regulate "penny stocks." Such rules include Rule 3a51-1 and Rules
15g-1 through 15g-9 under the Securities Exchange Act of 1934, as amended.
Because the securities of the Company may constitute "penny stocks" within
the meaning of the rules (as any equity security that has a market price of
less than $5.00 per share or with an exercise price of less than $5.00 per
share, largely traded in the National Association of Securities Dealers'
(NASD) OTC Bulletin Board or the "Pink Sheets", the rules would apply to
the Company and to its securities. The Commission has adopted Rule 15g-9
which established sales practice requirements for certain low price
securities. Unless the transaction is exempt, it shall be unlawful for a
broker or dealer to sell a penny stock to, or to effect the purchase of a
penny stock by, any person unless prior to the transaction: (I) the broker
or dealer has approved the person's account for transactions in penny stock
pursuant to this rule and (ii) the broker or dealer has received from the
person a written agreement to the transaction setting forth the identity
and quantity of the penny stock to be purchased. In order to approve a
person's account for transactions in penny stock, the broker or dealer
must: (a) obtain from the person information concerning the person's
financial situation, investment experience, and investment objectives; (b)
reasonably determine that transactions in penny stock are suitable for that
person, and that the person has sufficient knowledge and experience in
financial matters that the person reasonably may be expected to be capable
of evaluating the risks of transactions in penny stock; (c) deliver to the
person a written statement setting forth the basis on which the broker or
dealer made the determination (I) stating in a highlighted format that it
is unlawful for the broker or dealer to affect a transaction in penny stock
unless the broker or dealer has received, prior to the transaction, a
written agreement to the transaction from the person; and (ii) stating in a
highlighted format immediately preceding the customer signature line that
(iii) the broker or dealer is required to provide the person with the
written statement; and (iv) the person should not sign and return the
written statement to the broker or dealer if it does not accurately reflect
the person's financial situation, investment experience, and investment
objectives; and (d) receive from the person a manually signed and dated
copy of the written statement. It is also required that disclosure be made
as to the risks of investing in penny stock and the commissions payable to
the broker-dealer, as well as current price quotations and the remedies and
rights available in cases of fraud in penny stock transactions. Statements,
on a monthly basis, must be sent to the investor listing recent prices for
the Penny Stock and information on the limited market. Stockholders should
be aware that, according to Securities and Exchange Commission Release No.
34-29093, the market for penny stocks has suffered in recent years from
patterns of fraud and abuse. Such patterns include (I) control of the
market for the security by one or a few broker-dealers that are often
related to the promoter or issuer; (ii) manipulation of prices through
prearranged matching of purchases and sales and false and misleading press
releases; (iii) "boiler room" practices involving high-pressure sales
tactics and unrealistic price projections by inexperienced sales persons;
(iv) excessive and undisclosed bid-ask differential and markups by selling
broker-dealers; and (v) the wholesale dumping of the same securities by
promoters and broker dealers after prices have been manipulated to a
desired level, along with the resulting inevitable collapse of those prices
and with consequent investor losses. The Company's management is aware of
the abuses that have occurred historically in the penny stock market.
Although the Company does not expect to be in a position to dictate the
behavior of the market or of broker-dealers who participate in the market,
management will strive within the confines of practical limitations to
prevent the described patterns from being established with respect to the
Company's securities.
There May Be a Scarcity of and/or Significant Competition for Business
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Opportunities and Combinations
------------------------------
The Company is and will continue to be an insignificant participant in the
business of seeking mergers with and acquisitions of business entities. A
large number of established and well-financed entities, including venture
capital firms, are active in mergers and acquisitions of companies which
may be merger or acquisition target candidates for the Company. Nearly all
such entities have significantly greater financial resources, technical
expertise and managerial capabilities than the Company and, consequently,
the Company will be at a competitive disadvantage in identifying possible
business opportunities and successfully completing a business combination.
10
Moreover, the Company will also compete in seeking merger or acquisition
candidates with other public shell companies, some of which may also have
funds available for use by an acquisition candidate.
Reporting Requirements May Delay or Preclude Acquisition
--------------------------------------------------------
Pursuant to the requirements of Section 13 of the Exchange Act, the Company
is required to provide certain information about significant acquisitions
including audited financial statements of the acquired company. Obtaining
audited financial statements are the economic responsibility of the target
company. The additional time and costs that may be incurred by some
potential target companies to prepare such financial statements may
significantly delay or essentially preclude consummation of an otherwise
desirable acquisition by the Company. Acquisition prospects that do not
have or are unable to obtain the required audited statements may not be
appropriate for acquisition so long as the reporting requirements of the
Exchange Act are applicable. Notwithstanding a target company's agreement
to obtain audited financial statements within the required time frame, such
audited financials may not be available to the Company at the time of
effecting a business combination. In cases where audited financials are
unavailable, the Company will have to rely upon unaudited information that
has not been verified by outside auditors in making its decision to engage
in a transaction with the business entity. This risk increases the prospect
that a business combination with such a business entity might prove to be
an unfavorable one for the Company.
Lack of Market Research or Marketing Organization
-------------------------------------------------
The Company has neither conducted, nor have others made available to it,
market research indicating that demand exists for the transactions
contemplated by the Company. In the event demand exists for a transaction
of the type contemplated by the Company, there is no assurance the Company
will be successful in completing any such business combination.
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Probable Change in Control of the Company and/or Management
-----------------------------------------------------------
In conjunction with completion of a business acquisition, it is anticipated
that the Company will issue an amount of the Company's authorized but
unissued common stock that represents the greater majority of the voting
power and equity of the Company, which will, in all likelihood, result in
stockholders of a target company obtaining a controlling interest in the
Company. The resulting change in control of the Company will likely result
in removal of the present officer and director of the Company and a
corresponding reduction in or elimination of his participation in the
future affairs of the Company.
Possible Dilution of Value of Shares upon Business Combination
--------------------------------------------------------------
A business combination normally will involve the issuance of a significant
number of additional shares. Depending upon the value of the assets
acquired in such business combination, the per share value of the Company's
common stock may increase or decrease, perhaps significantly.
No Public Market Exists
-----------------------
There is currently no public market for the Company's common stock, and no
assurance can be given that a market will develop or that a stockholder
ever will be able to liquidate his investment without considerable delay,
if at all. If a market should develop, the price may be highly volatile.
Factors such as those discussed in this "Risk Factors" section may have a
significant impact upon the market price of the securities offered hereby.
Owing to the low price of the securities, many brokerage firms may not be
willing to effect transactions in the securities. Even if a purchaser finds
a broker willing to effect a transaction in theses securities, the
combination of brokerage commissions, state transfer taxes, if any, and any
other selling costs may exceed the sales proceeds.
Registration of Shares Is Required
----------------------------------
It is the SEC's position that securities issued by a "shell" company cannot
be sold under the exemption from registration provided by Rule 144
promulgated under the Securities Act of 1933, but must be registered under
the Securities Act of 1933.
Blue Sky Consideration
----------------------
Because the securities registered hereunder have not been registered for
resale under the Blue Sky laws of any state, the holders of such shares and
persons who desire to purchase them in any trading market that might
develop in the future, should be aware, that there may be significant state
Blue Sky law restrictions upon the ability of investors to sell the
securities and of purchasers to purchase the securities. Accordingly,
investors should consider the secondary market for the Company's securities
to be a limited one.
Additional Risks--Doing Business in a Foreign Country
-----------------------------------------------------
The Company may effectuate a business combination with a merger target
whose business operations or even headquarters, place of formation or
primary place of business are located outside the United States of America.
In such event, the Company may face the significant additional risks
associated with doing business in that country. In addition to the language
barriers, different presentations of financial information, different
business practices, and other cultural differences and barriers that may
make it difficult to evaluate such a merger target, ongoing business risks
result from the international political situation, uncertain legal systems
and applications of law, prejudice against foreigners, corrupt practices,
uncertain economic policies and potential political and economic
instability that may be exacerbated in various foreign countries.
12
Taxation
--------
Federal and state tax consequences will, in all likelihood, be major
considerations in any business combination that the Company may undertake.
Currently, such transactions may be structured so as to result in tax-free
treatment to both companies, pursuant to various federal and state tax
provisions. The Company intends to structure any business combination so as
to minimize the federal and state tax consequences to both the Company and
the target entity; however, there can be no assurance that such business
combination will meet the statutory requirements of a tax-free
reorganization or that the parties will obtain the intended tax-free
treatment upon a transfer of stock or assets. A non-qualifying
reorganization could result in the imposition of both federal and state
taxes, which may have an adverse effect on both parties to the transaction.
13
Item 2 - Description of Property
The Company currently maintains a mailing address at 12890 Hilltop Road, Argyle,
Texas 76226. The Company's telephone number there is (972) 233-0300. Other than
this mailing address, the Company does not currently maintain any other office
facilities, and does not anticipate the need for maintaining office facilities
at any time in the foreseeable future. The Company pays no rent or other fees
for the use of the mailing address as these offices are used virtually full-
time by other businesses of the Company's sole officer and director.
It is likely that the Company will not establish an office until it has
completed a business acquisition transaction, but it is not possible to predict
what arrangements will actually be made with respect to future office
facilities.
Item 3 - Legal Proceedings
The Company is not a party to any pending legal proceedings, and no such
proceedings are known to be contemplated.
Item 4 - Submission of Matters to a Vote of Security Holders
The Company has not conducted any meetings of stockholders during the preceding
quarter or periods subsequent thereto.
PART II
Item 5 - Market for Company's Common Equity, Related Stockholder Matters and
Small Business Issuer Purchases of Equity Securities
Holders
-------
As of December 31, 2006, there were a total of 500,000 shares of our common
stock outstanding, held by approximately 499 stockholders of record.
Common Stock
------------
Our authorized capital stock consists of 40 million shares of common stock and
10 million shares of preferred stock. Each share of common stock entitles a
stockholder to one vote on all matters upon which stockholders are permitted to
vote. No stockholder has any preemptive right or other similar right to purchase
or subscribe for any additional securities issued by us, and no stockholder has
any right to convert the common stock into other securities. No shares of common
stock are subject to redemption or any sinking fund provisions. All the
outstanding shares of our common stock are fully paid and non-assessable.
Subject to the rights of the holders of the preferred stock, if any, our
stockholders of common stock are entitled to dividends when, as and if declared
by our board from funds legally available therefore and, upon liquidation, to a
pro-rata share in any distribution to stockholders. We do not anticipate
declaring or paying any cash dividends on our common stock in the foreseeable
future.
Pursuant to our Certificate of Incorporation, our board has the authority,
without further stockholder approval, to provide for the issuance of up to 10
million shares of our preferred stock in one or more series and to determine the
dividend rights, conversion rights, voting rights, rights in terms of
redemption, liquidation preferences, the number of shares constituting any such
14
series and the designation of such series. Our board has the power to afford
preferences, powers and rights (including voting rights) to the holders of any
preferred stock preferences, such rights and preferences being senior to the
rights of holders of common stock. No shares of our preferred stock are
currently outstanding. Although we have no present intention to issue any shares
of preferred stock, the issuance of shares of preferred stock, or the issuance
of rights to purchase such shares, may have the effect of delaying, deferring or
preventing a change in control of our company.
Provisions Having A Possible Anti-Takeover Effect
-------------------------------------------------
Our Certificate of Incorporation and Bylaws contain certain provisions that are
intended to enhance the likelihood of continuity and stability in the
composition of our board and in the policies formulated by our board and to
discourage certain types of transactions which may involve an actual or
threatened change of our control. Our board is authorized to adopt, alter, amend
and repeal our Bylaws or to adopt new Bylaws. In addition, our board has the
authority, without further action by our stockholders, to issue up to 10 million
shares of our preferred stock in one or more series and to fix the rights,
preferences, privileges and restrictions thereof The issuance of our preferred
stock or additional shares of common stock could adversely affect the voting
power of the holders of common stock and could have the effect of delaying,
deferring or preventing a change in our control.
Preferred Stock
The Company is also authorized to issue up to 50,000,000 shares of $0.001 par
value Preferred Stock and no shares are issued and outstanding as of the date of
this Report.
Market for Trading and Eligibility for Future Sale
We relied, based on the confirmation order we received from the Bankruptcy
Court, on Section 1145(a)(1) of the Bankruptcy Code to exempt from the
registration requirements of the Securities Act of 1933, as amended, both the
offer of the Plan Shares which may have been deemed to have occurred through the
solicitation of acceptances of the Plan of Reorganization and the issuance of
the Plan Shares pursuant to the Plan of Reorganization. In general, offers and
sale of securities made in reliance on the exemption afforded under Section
1145(a)(1) of the Bankruptcy Code are deemed to be made in a public offering, so
that the recipients thereof, are free to resell such securities without
registration under the Securities Act.
There is no active trading market for the Company's common stock as of the date
of this filing.
It is the intent, at some future date, for the Company to make application for
approval to trade on the OTC Bulletin Board under SEC Rule 15c2-11, Subsection
(a)(5).
Restricted Securities
We currently do not have any outstanding restricted securities as defined in
Rule 144. We do not intend to issue any securities prior to consummating a
reverse merger transaction. The securities we issue in a merger transaction will
most likely be restricted securities. Since we are a blank check or shell
company, we believe the resale of restricted securities we issue in a merger
transaction will be subject to the restrictions as stated in the Wulff Letter
discussed below.
Generally, restricted securities can be resold under Rule 144 once they have
been held for at least one year, provided that the securities satisfies the
current public information requirements of the Rule; no more than 1% of the
outstanding securities of the issuer are sold in any three month period; the
seller does not arrange or solicit the solicitation of buyers for the securities
in anticipation of or in connection with the sale transactions and does not make
15
any payment to anyone in connection with the sale transactions except the broker
dealer who executes the trade or trades in the securities; the shares are sold
in broker's transactions only; the seller files a Notice on Form 144 with the
Securities and Exchange Commission at or prior to the sales transactions; and
the seller has a bona fide intent to sell the securities within a reasonable
time of the filing. Once two years have lapsed, assuming the holder of the
securities is not an affiliate of the issuer, unlimited sales can be made
without further compliance with the terms and provisions of Rule 144.
In January 2000, Richard K. Wulff, the then-Chief of the Securities and Exchange
Commission's Office of Small Business, wrote a letter to Ken Worm, the Assistant
Director of the OTC Compliance Unit of NASD Regulation, Inc. (the Wulff Letter).
The Wulff Letter was written in response to a request for guidance from Mr.
Worm. In his request, Mr. Worm referred to several situations in which
non-affiliate stockholders of blank check or shell companies had sought to treat
their shares as free trading or unrestricted securities. As defined in the Wulff
Letter, a blank check or shell company is a development stage company that has
no specific business plan or purpose or has indicated its business plan is to
engage in a merger or acquisition with an unidentified company or companies, or
other entity or person.
Citing the concerns of the United States Congress and the Securities and
Exchange Commission over potential fraud and market manipulations involving
blank check or shell companies, the Wulff Letter stated that the promoters and
affiliates of blank check or shell companies, as well as transferees of their
securities, are "underwriters" with respect to such securities. Accordingly,
transactions in these companies' securities by promoters, affiliates or their
transferees do not fall within the scope of the Rule 144 "safe harbor" resales
for securities that have been beneficially owned for at least one year and that
satisfy informational and certain other requirements of the Rule, or the Section
4(1) exemption from registration for resales under the Securities Act, that
exempts sales by persons other than "an issuer, underwriter or a dealer." As a
result, it is the position of the Securities and Exchange Commission that these
securities may be resold by these persons only pursuant to registration under
the Securities Act. According to the Wulff Letter, this restriction would
continue to apply even after the blank check or shell company completes a merger
or acquisition transaction with an operating entity.
16
Dividends
Dividends, if any, will be contingent upon the Company's revenues and earnings,
if any, and capital requirements and financial conditions. The payment of
dividends, if any, will be within the discretion of the Company's Board of
Directors. The Company presently intends to retain all earnings, if any, and
accordingly the Board of Directors does not anticipate declaring any dividends
prior to a business combination.
Transfer Agent
Our independent stock transfer agent is Securities Transfer Corporation. Their
address is 2591 Dallas Parkway, Suite 102, Frisco, Texas 75034. Their contact
numbers are (469) 633-0101 for voice calls and (469) 633-0088 for fax
transmissions. Their website is located at www.stctransfer.com.
Reports to Stockholders
The Company intends to remain compliant with its obligations under the
Securities Exchange Act of 1934, as amended, and, therefore, plans to furnish
its stockholders with an annual report for each fiscal year ending December 31
containing financial statements audited by its registered independent public
accounting firm. In the event the Company enters into a business combination
with another Company, it is the present intention of management to continue
furnishing annual reports to stockholders. Additionally, the Company may, in its
sole discretion, issue unaudited quarterly or other interim reports to its
stockholders when it deems appropriate. The Company intends to maintain
compliance with the periodic reporting requirements of the Securities Exchange
Act of 1934.
Item 6 - Management's Discussion and Analysis or Plan of Operation
(1) Caution Regarding Forward-Looking Information
Certain statements contained in this annual filing, including, without
limitation, statements containing the words "believes", "anticipates", "expects"
and words of similar import, constitute forward-looking statements. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the Company, or industry results, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements.
Such factors include, among others, the following: international, national and
local general economic and market conditions: demographic changes; the ability
of the Company to sustain, manage or forecast its growth; the ability of the
Company to successfully make and integrate acquisitions; existing government
regulations and changes in, or the failure to comply with, government
regulations; adverse publicity; competition; fluctuations and difficulty in
forecasting operating results; changes in business strategy or development
plans; business disruptions; the ability to attract and retain qualified
personnel; and other factors referenced in this and previous filings.
Given these uncertainties, readers of this Form 10-KSB and investors are
cautioned not to place undue reliance on such forward-looking statements. The
Company disclaims any obligation to update any such factors or to publicly
announce the result of any revisions to any of the forward-looking statements
contained herein to reflect future events or developments.
(2) General
BTHC VI, Inc. (Company) was reincorporated on June 7, 2005 under the laws of the
State of Delaware. The Company is the U. S. Bankruptcy Court mandated
reincorporation of and successor to BTHC VI, LLC, a Texas Limited Liability
17
Company which was discharged from bankruptcy on November 29, 2004. The effective
date of the merger of BTHC VI, Inc. and BTHC VI, LLC was April 11, 2006.
The Company's emergence from Chapter 11 of Title 11 of the United States Code on
November 29, 2004 created the combination of a change in majority ownership and
voting control - that is, loss of control by the then-existing stockholders, a
court-approved reorganization, and a reliable measure of the entity's fair value
- resulting in a fresh start, creating, in substance, a new reporting entity.
Accordingly, the Company, post bankruptcy, has no significant assets,
liabilities or operating activities. Therefore, the Company, as a new reporting
entity, qualifies as a "development stage enterprise" as defined in Statement of
Financial Accounting Standard No. 7, as amended.
The Company's post-bankruptcy business plan is to locate and combine with an
existing, privately-held company which is profitable or, in management's view,
has growth potential, irrespective of the industry in which it is engaged.
However, the Company does not intend to combine with a private company which may
be deemed to be an investment company subject to the Investment Company Act of
1940. A combination may be structured as a merger, consolidation, exchange of
the Company's common stock for stock or assets or any other form which will
result in the combined enterprise's becoming a publicly-held corporation.
(3) Results of Operations
The Company had no revenue for either of the years ended December 31, 2006 or
2005, respectively.
General and administrative expenses for each of the years ended December 31,
2006 and 2005 were approximately $18,000 and $-0-, respectively. These expenses
were directly related to the maintenance of the corporate entity and the
preparation and filing of the June 2006 Form 10-SB and other periodic reports
pursuant to the Securities Exchange Act of 1934, as required. It is anticipated
that future expenditure levels will increase as the Company intends to fully
comply with it's periodic reporting requirements. Earnings per share for the
respective nine month periods ended December 31, 2006 and 2005 were $(0.04) and
$0.00 based on the weighted-average shares issued and outstanding at the end of
each respective period.
It is anticipated that future expenditure levels will remain in line with the
Calendar 2006 expenditure levels until such time that the Company completes a
business combination transaction. Upon completion of a business combination
transaction, it is anticipated that the Company's expenses will increase
significantly.
The Company does not expect to generate any meaningful revenue or incur
operating expenses for purposes other than fulfilling the obligations of a
reporting company under the Securities Exchange Act of 1934 unless and until
such time that the Company's operating subsidiary begins meaningful operations.
At December 31, 2006 and 2005, respectively, the Company had working capital of
approximately $(17,000) and $-0-, respectively.
It is the intent of management and significant stockholders to provide
sufficient working capital necessary to support and preserve the integrity of
the corporate entity. However, there is no legal obligation for either
management or significant stockholders to provide additional future funding.
Should this pledge fail to provide financing, the Company has not identified any
alternative sources. Consequently, there is substantial doubt about the
Company's ability to continue as a going concern.
The Company's need for capital may change dramatically as a result of any
business acquisition or combination transaction. There can be no assurance that
the Company will identify any such business, product, technology or company
suitable for acquisition in the future. Further, there can be no assurance that
the Company would be successful in consummating any acquisition on favorable
18
terms or that it will be able to profitably manage the business, product,
technology or company it acquires.
(4) Plan of Business
General
The Company's current purpose is to seek, investigate and, if such
investigation warrants, merge or acquire an interest in business
opportunities presented to it by persons or companies who or which desire
to seek the perceived advantages of a Securities Exchange Act of 1934
registered corporation. As of the date of this registration statement, the
Company has no particular acquisitions in mind and has not entered into any
negotiations regarding such an acquisition, and neither the Company's
officer and director nor any promoter and affiliate has engaged in any
negotiations with any representatives of the owners of any business or
company regarding the possibility of a merger or acquisition between the
Company and such other company.
Pending negotiation and consummation of a combination, the Company
anticipates that it will have, aside from carrying on its search for a
combination partner, no business activities, and, thus, will have no source
of revenue. Should the Company incur any significant liabilities prior to a
combination with a private company, it may not be able to satisfy such
liabilities as are incurred.
If the Company's management pursues one or more combination opportunities
beyond the preliminary negotiations stage and those negotiations are
subsequently terminated, it is foreseeable that such efforts will exhaust
the Company's ability to continue to seek such combination opportunities
before any successful combination can be consummated. In that event, the
Company's common stock will become worthless and holders of the Company's
common stock will receive a nominal distribution, if any, upon the
Company's liquidation and dissolution.
Management
The Company is a blank check or shell corporation, and currently has no
full-time employees. Timothy P. Halter is the Company's sole officer,
director, and controlling shareholder. All references herein to management
of the Company are to Mr. Halter. Mr. Halter, as president of the Company,
has agreed to allocate a limited portion of his time to the activities of
the Company after the effective date of this Registration Statement without
compensation. Potential conflicts may arise with respect to the limited
time commitment by Mr. Halter and the potential demands of the Company's
activities. See Item 7, "Certain Relationships and Related Transactions -
Conflicts of Interest."
The amount of time spent by Mr. Halter on the activities of the Company is
not predictable. Such time may vary widely from an extensive amount when
reviewing a target company to an essentially quiet time when activities of
management focus elsewhere, or some amount in between. It is impossible to
predict with any precision the exact amount of time Mr. Halter will
actually be required to spend to locate a suitable target company. Mr.
Halter estimates that the business plan of the Company can be implemented
by devoting less than 5 hours per month but such figure cannot be stated
with precision.
Search for Business Opportunities
The Company's search will be directed toward small and medium-sized
enterprises, which have a desire to become reporting corporations and which
are able to provide audited financial statements. The Company does not
propose to restrict its search for investment opportunities to any
particular geographical area or industry, and may, therefore, engage in
essentially any business, to the extent of its limited resources. The
Company's discretion in the selection of business opportunities is
unrestricted, subject to the availability of such opportunities, economic
conditions, and other factors. No assurance can be given that the Company
19
will be successful in finding or acquiring a desirable business
opportunity, and no assurance can be given that any acquisition, which does
occur, will be on terms that are favorable to the Company or its current
stockholders.
The Company may merge with a company that has retained one or more
consultants or outside advisors. In that situation, the Company expects
that the business opportunity will compensate the consultant or outside
advisor. As of the date of this filing, there have been no discussions,
agreements or understandings with any party regarding the possibility of a
merger or acquisition between the Company and such other company.
Consequently, the Company is unable to predict how the amount of such
compensation would be calculated at this time. It is anticipated that any
finder that the target company retains would be a registered broker-dealer.
The Company will not restrict its search to any specific kind of firm, but
may acquire a venture, which is in its preliminary or development stage,
one which is already in operation, or in a more mature stage of its
corporate existence. The acquired business may need to seek additional
capital, may desire to have its shares publicly traded, or may seek other
perceived advantages which the Company may offer. The Company does not
intend to obtain funds to finance the operation of any acquired business
opportunity until such time as the Company has successfully consummated the
merger or acquisition transaction. There are no loan arrangements or
arrangements for any financing whatsoever relating to any business
opportunities.
Evaluation of Business Opportunities
The analysis of business opportunities will be under the supervision of the
Company's sole officer and director, who is not a professional business
analyst. In analyzing prospective business opportunities, management will
consider such matters as available technical, financial and managerial
resources; working capital and other financial requirements; history of
operations, if any; prospects for the future; nature of present and
expected competition; the quality and experience of management services
which may be available and the depth of that management; the potential for
further research, development, or exploration; specific risk factors not
now foreseeable, but which then may be anticipated to impact the proposed
activities of the Company; the potential for growth or expansion; the
potential for profit; the perceived public recognition or acceptance of
products, services, or trades; name identification; and other relevant
factors. In many instances, it is anticipated that the historical
operations of a specific business opportunity may not necessarily be
indicative of the potential for the future because of a variety of factors,
including, but not limited to, the possible need to expand substantially,
shift marketing approaches, change product emphasis, change or
substantially augment management, raise capital and the like. Management
intends to meet personally with management and key personnel of the target
business entity as part of its investigation. To the extent possible, the
Company intends to utilize written reports and personal investigation to
evaluate the above factors. Prior to making a decision to participate in a
business opportunity, the Company will generally request that it be
provided with written materials regarding the business opportunity
containing as much relevant information as possible. Including, but not
limited to, such items as a description of products, services and company
history; management resumes; financial information; available projections,
with related assumptions upon which they are based; an explanation of
proprietary products and services; evidence of existing patents,
trademarks, or service marks, or rights thereto; present and proposed forms
of compensation to management; a description of transactions between such
company and its affiliates during the relevant periods; a description of
present and required facilities;, an analysis of risks and competitive
conditions; a financial plan of operation and estimated capital
requirements; audited financial statements, or if they are not available at
that time, unaudited financial statements, together with reasonable
assurance that audited financial statements would be able to be produced
within a required period of time; and the like.
The Company is currently subject to the reporting requirements of the
Exchange Act since the effective date of the Company's June 2006 filing of
the Registration Statement on Form 10-SB. Under the Exchange Act, any
merger or acquisition candidate will become subject to the same reporting
requirements of the Exchange Act as the Company following consummation of
20
any merger or acquisition. Thus, in the event the Company successfully
completes the acquisition of or merger with an operating business entity,
that business entity must provide audited financial statements for at least
two most recent fiscal years or, in the event the business entity has been
in business for less than two years, audited financial statements will be
required from the period of inception. Acquisition candidates that do not
have or are unable to obtain the required audited statements will not be
considered appropriate for acquisition.
Management believes that various types of potential merger or acquisition
candidates might find a business combination with the Company to be
attractive. These include acquisition candidates desiring to create a
public market for their shares in order to enhance liquidity for current
stockholders, acquisition candidates which have long-term plans for raising
capital through public sale of securities and believe that the possible
prior existence of a public market for their securities would be
beneficial, and acquisition candidates which plan to acquire additional
assets through issuance of securities rather than for cash, and believe
that the possibility of development of a public market for their securities
will be of assistance in that process. Acquisition candidates, who have a
need for an immediate cash infusion, are not likely to find a potential
business combination with the Company to be an attractive alternative.
Nevertheless, the Company has not conducted market research and is not
aware of statistical data which would support the perceived benefits of a
merger or acquisition transaction for the owners of a business opportunity.
The Company is unable to predict when it may participate in a business
opportunity. It expects, however, that the analysis of specific proposals
and the selection of a business opportunity may take several months or
more. There can also be no assurances that we are able to successfully
pursue a business opportunity. In that event, there is a substantial risk
to the Company that failure to complete a business combination will
significantly restrict its business operation and force management to cease
operations and liquidate the Company.
(5) Liquidity and Capital Resources
At December 31, 2006 and 2005, respectively, the Company had working capital of
approximately $(17,000) and $-0-, respectively.
It is the belief of management and significant stockholders that sufficient
working capital necessary to support and preserve the integrity of the corporate
entity will be present. However, there is no legal obligation for either
management or significant stockholders to provide additional future funding.
Should this pledge fail to provide financing, the Company has not identified any
alternative sources. Consequently, there is substantial doubt about the
Company's ability to continue as a going concern.
The Company's need for working capital may change dramatically as a result of
any business acquisition or combination transaction. There can be no assurance
that the Company will identify any such business, product, technology or company
suitable for acquisition in the future. Further, there can be no assurance that
the Company would be successful in consummating any acquisition on favorable
terms or that it will be able to profitably manage the business, product,
technology or company it acquires.
The Company has no current plans, proposals, arrangements or understandings with
respect to the sale or issuance of additional securities prior to the location
of a merger or acquisition candidate. Accordingly, there can be no assurance
that sufficient funds will be available to the Company to allow it to cover the
expenses related to such activities.
Regardless of whether the Company's cash assets prove to be inadequate to meet
the Company's operational needs, the Company might seek to compensate providers
of services by issuances of stock in lieu of cash.
Item 7 - Index to Financial Statements
The required financial statements begin on page F-1 of this document.
21
Item 8 - Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
Item 8A - Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management,
including our principal executive officer and principal financial officer,
we conducted an evaluation of our disclosure controls and procedures, as
such term is defined under Rule 13a-15(e) promulgated under the Securities
Exchange Act of 1934, as amended (Exchange Act), as of December 31, 2006.
Based on this evaluation, our principal executive officer and principal
financial officer concluded that our disclosure controls and procedures are
effective in alerting them on a timely basis to material information
relating to our Company required to be included in our reports filed or
submitted under the Exchange Act.
(b) Changes in Internal Controls
There were no significant changes (including corrective actions with regard
to significant deficiencies or material weaknesses) in our internal
controls over financial reporting that occurred during the quarter ended
December 31, 2006 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
PART III
Item 9 - Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act
The directors and executive officers serving the Company are as follows:
Name Age Position Held and Tenure
---- --- ------------------------
Timothy P. Halter 40 President, Chief Executive Officer
Chief Financial Officer and Director
The director named above will serve until the next annual meeting of the
Company's stockholders or until any successors are duly elected and have
qualified. Directors will be elected for one-year terms at the annual
stockholders meeting. Officers will hold their positions at the pleasure of the
board of directors, absent any employment agreement, of which none currently
exists or is contemplated. There is no arrangement or understanding between any
of the directors or officers of the Company and any other person pursuant to
which any director or officer was or is to be selected as a director or officer,
and there is no arrangement, plan or understanding as to whether non-management
stockholders will exercise their voting rights to continue to elect the current
directors to the Company's board. There are also no arrangements, agreements or
understandings between non-management stockholders that may directly or
indirectly participate in or influence the management of the Company's affairs.
The sole director and officer will devote his time to the Company's affairs on
an as needed basis, which, depending on the circumstances, could amount to as
little as two hours per month, or more than forty hours per month, but more than
likely encompass less than four (4) hours per month. There are no agreements or
understandings for the officer or director to resign at the request of another
22
person, and he is not acting on behalf of, and will not act at the direction of,
any other person.
Biographical Information
Timothy P. Halter - Since 1995, Mr. Halter has been the president and the sole
stockholder of Halter Financial Group, Inc., a Dallas, Texas based consulting
firm specializing in the area of mergers, acquisitions and corporate finance. In
September 2005, Mr. Halter and other minority partners formed HFI. HFI conducts
no business operations.
Mr. Halter currently serves as a director of DXP Enterprises, Inc., a public
corporation (NASDAQ: DXPE), and is an officer and director of Point Acquisition
Corporation, a Nevada corporation; Nevstar Corporation, a Nevada corporation;
Concept Ventures Corporation, a Nevada corporation; Robcor Properties, Inc., a
Florida corporation;, BTHC VI, Inc., BTHC VII, Inc., BTHC VIII, Inc., and BTHC
X, Inc., each a Delaware corporation. Each of the afore-referenced companies is
current in the filing of their periodic reports with the SEC. Except for DXP
Enterprises, each of the afore-referenced companies for which Mr. Halter acts as
an officer and director may be deemed shell corporations. Mr. Halter will devote
as much of his time to our business affairs as may be necessary to implement our
business plan.
Indemnification of Officers and Directors.
We have the authority under the Delaware General Corporation Law to indemnify
our directors and officers to the extent provided for in such statute. Set forth
below is a discussion of Delaware law regarding indemnification which we believe
discloses the material aspects of such law on this subject. The Delaware law
provides, in part, that a corporation may indemnify a director or officer or
other person who was, is or is threatened to be made a named defendant or
respondent in a proceeding because such person is or was a director, officer,
employee or agent of the corporation, if it is determined that such person:
* conducted himself in good faith;
* reasonably believed, in the case of conduct in his official capacity
as a director or officer of the corporation, that his conduct was in
the corporation's best interest and, in all other cases, that his
conduct was at least not opposed to the corporation's best interests;
and
* in the case of any criminal proceeding, had no reasonable cause to
believe that his conduct was unlawful.
A corporation may indemnify a person under the Delaware law against judgments,
penalties, including excise and similar taxes, fines, settlement, unreasonable
expenses actually incurred by the person in connection with the proceeding. If
the person is found liable to the corporation or is found liable on the basis
that personal benefit was improperly received by the person, the indemnification
is limited to reasonable expenses actually incurred by the person in connection
with the proceeding, and shall not be made in respect of any proceeding in which
the person shall have been found liable for willful or intentional misconduct in
the performance of his duty to the corporation. The corporation may also pay or
reimburse expenses incurred by a person in connection with his appearance as
witness or other participation in a proceeding at a time when he is not a named
defendant or respondent in the proceeding.
Our Certificate of Incorporation provides that none of our directors shall be
personally liable to us or our stockholders for monetary damages for an act or
omission in such directors' capacity as a director; provided, however, that the
liability of such director is not limited to the extent that such director is
found liable for (a) a breach of the directors' duty of loyalty to us or our
stockholders, (b) an act or omission not in good faith that constitutes a breach
of duty of the director to us or an act or omission that involves intentional
misconduct or a knowing violation of the law, (c) a transaction from which the
director received an improper benefit, whether or not the benefit resulted from
23
an action taken within the scope of the director's office, or (d) an act or
omission for which the liability of the director is expressly provided under
Delaware law. Limitations on liability provided for in our Certificate of
Incorporation do not restrict the availability of non-monetary remedies and do
not affect a director's responsibility under any other law, such as the federal
securities laws or state or federal environmental laws.
We believe that these provisions will assist us in attracting and retaining
qualified individuals to serve as executive officers and directors. The
inclusion of these provisions in our Certificate of Incorporation may have the
effect of reducing a likelihood of derivative litigation against our directors
and may discourage or deter stockholders or management from bringing a lawsuit
against directors for breach of their duty of case, even though such an action,
if successful, might otherwise have benefitted us or our stockholders.
Our Bylaws provide that we will indemnify our directors to the fullest extent
provided by Delaware General Corporation Law and we may, if and to the extent
authorized by our board of directors, so indemnify our officers and other
persons whom we have the power to indemnify against liability, reasonable
expense or other matters.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
that the payment by BTHC VI, Inc., of expenses incurred or paid by a director,
officer or controlling person of BTHC VI, Inc., in the successful defense of any
action, suit or proceeding) is asserted by such director, officer, or
controlling person in connection with the securities being registered, we will
(unless in the opinion of our counsel the matter has been settled by controlling
precedent) submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
24
Compliance With Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act requires our executive officers and
directors and person who own more than 10% of our common stock to file reports
regarding ownership of and transactions in our securities with the Securities
and Exchange Commissioner and to provide us with copies of those filings. Based
solely on our review of the copies received by or a written representation from
certain reporting persons we believe that during fiscal year ended December 31,
2006, we believe that all eligible persons are in compliance with the
requirements of Section 16(a).
Conflicts of Interest
The sole officer of the Company will not devote more than a small portion of his
time to the affairs of the Company. There will be occasions when the time
requirements of the Company's business conflict with the demands of the
officer's other business and investment activities. Such conflicts may require
that the Company attempt to employ additional personnel. There is no assurance
that the services of such persons will be available or that they can be obtained
upon terms favorable to the Company.
The officer, director and principal stockholder of the Company may actively
negotiate for the purchase of a portion of their common stock as a condition to,
or in connection with, a proposed merger or acquisition transaction. It is
anticipated that a substantial premium may be paid by the purchaser in
conjunction with any sale of shares by the Company's officer, director and
principal stockholder made as a condition to, or in connection with, a proposed
merger or acquisition transaction. The fact that a substantial premium may be
paid to the Company's sole officer and director to acquire his shares creates a
conflict of interest for him and may compromise his state law fiduciary duties
to the Company's other stockholders. In making any such sale, the Company's sole
officer and director may consider his own personal pecuniary benefit rather than
the best interests of the Company and the Company's other stockholders, and the
other stockholders are not expected to be afforded the opportunity to approve or
consent to any particular buy-out transaction involving shares held by Company
management.
The Company has adopted a policy under which any consulting or finders fee that
may be paid to a third party for consulting services to assist management in
evaluating a prospective business opportunity would be paid in stock rather than
in cash. Any such issuance of stock would be made on an ad hoc basis.
Accordingly, the Company is unable to predict whether, or in what amount, such
stock issuance might be made.
It is not currently anticipated that any salary, consulting fee, or finders fee
shall be paid to any of the Company's directors or executive officers, or to any
other affiliate of the Company except as described under Executive Compensation
above.
Although management has no current plans to cause the Company to do so, it is
possible that the Company may enter into an agreement with an acquisition
candidate requiring the sale of all or a portion of the Common Stock held by the
Company's current stockholders to the acquisition candidate or principals
thereof, or to other individuals or business entities, or requiring some other
form of payment to the Company's current stockholders, or requiring the future
employment of specified officers and payment of salaries to them. It is more
likely than not that any sale of securities by the Company's current
stockholders to an acquisition candidate would be at a price substantially
higher than that originally paid by such stockholders. Any payment to current
stockholders in the context of an acquisition involving the Company would be
determined entirely by the largely unforeseeable terms of a future agreement
with an unidentified business entity.
25
Involvement on Certain Material Legal Proceedings During the Past Five (5) Years
(1) No director, officer, significant employee or consultant has been
convicted in a criminal proceeding, exclusive of traffic violations or
is subject to any pending criminal proceeding.
(2) No bankruptcy petitions have been filed by or against any business or
property of any director, officer, significant employee or consultant
of the Company nor has any bankruptcy petition been filed against a
partnership or business association where these persons were general
partners or executive officers.
(3) No director, officer, significant employee or consultant has been
permanently or temporarily enjoined, barred, suspended or otherwise
limited from involvement in any type of business, securities or
banking activities.
(4) No director, officer or significant employee has been convicted of
violating a federal or state securities or commodities law.
26
Item 10 - Executive Compensation
The current management and oversight of the Company requires less than four (4)
hours per month. As the Company's sole officer and director is engaged in other
full-time income producing activities, the Company's sole officer or director
has received any compensation from the Company. In future periods, subsequent to
the consummation of a business combination transaction, the Company anticipates
that it will pay compensation to its officer(s) and/or director(s). See Certain
Relationships and Related Transactions.
SUMMARY COMPENSATION TABLE
Change in
Pension
Value and
Nonqualified
Non-Equity Deferred
Name and Stock Option Incentive Plan Compensation All Other
Principal Position Year Salary ($) Bonus ($) Awards Awards Compensation Earnings Compensation Total
($) ($) ($) ($) ($) ($)
Timothy P. 2006 $-0- $-0- $-0- $-0- $-0- $-0- $-0- $-0-
Halter, 2005 $-0- $-0- $-0- $-0- $-0- $-0- $-0- $-0-
Principal 2004 $-0- $-0- $-0- $-0- $-0- $-0- $-0- $-0-
Executive
Officer
The Company has no other Executive Compensation issues which would require the
inclusion of other mandated table disclosures.
Item 11 - Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of the date of this Annual Report, the number
of shares of Common Stock owned of record and beneficially by executive
officers, directors and persons who hold 5% or more of the outstanding Common
Stock of the Company. Also included are the shares held by all executive
officers and directors as a group.
Shares Beneficially Owned (1)
Name and address (2) Number of Shares Percentage (3)
---------------- ---------------- ----------
Timothy P. Halter (4) 350,000 (5) 70.0%
Halter Financial Investments, LP (6) 350,000 70.0%
Olga Guerra (7) 58,294 11.7%
Directors and officers as a group 350,000 70.0%
(1 person)
(1) On February 19, 2007, there were 500,000 shares of our common stock
outstanding and no shares of preferred stock issued and outstanding. We
have no outstanding stock options or warrants.
(2) Under applicable SEC rules, a person is deemed the "beneficial owner" of a
security with regard to which the person directly or indirectly, has or
shares (a) the voting power, which includes the power to vote or direct the
voting of the security, or (b) the investment power, which includes the
power to dispose, or direct the disposition, of the security, in each case
irrespective of the person's economic interest in the security. Under SEC
27
rules, a person is deemed to beneficially own securities which the person
has the right to acquire within 60 days through the exercise of any option
or warrant or through the conversion of another security.
(3) In determining the percent of voting stock owned by a person on December
31, 2006 (a) the numerator is the number of shares of common stock
beneficially owned by the person, including shares the beneficial ownership
of which may be acquired within 60 days upon the exercise of options or
warrants or conversion of convertible securities, and (b) the denominator
is the total of (I) the 500,000 shares of common stock outstanding on
December 31, 2006, and (ii) any shares of common stock which the person has
the right to acquire within 60 days upon the exercise of options or
warrants or conversion of convertible securities. Neither the numerator nor
the denominator includes shares which may be issued upon the exercise of
any other options or warrants or the conversion of any other convertible
securities.
(4) Mr. Halter is our president and director. He also is a member of Halter
Financial Investments GP, LLC, the general partner of Halter Financial
Investments L.P. Mr. Halter's address is 12890 Hilltop Road, Argyle, TX
76226.
(5) Mr. Halter is deemed to beneficially own the Plan Shares owned by Halter
Financial Investments, L.P. (6) HFI's address is 12890 Hilltop Road,
Argyle, TX 76226. (7) Olga Guerra's address is i/c/o Avery McDaniel,
Attorney, 800 W. Weatherford Street, Fort Worth, Texas 76102.
Item 12 - Certain Relationships and Related Transactions
Other than the participation of HFG and Timothy P. Halter in our Plan of
Reorganization and the issuance to HFG of 350,000 shares of our common stock for
satisfaction of certain administrative claims and for HFG's agreement to provide
us with certain services as discussed in "Item 1- Description of Business",
there are no relationships or transactions between us and any of our directors,
officers and principal stockholders.
The Company currently maintains a mailing address at 12890 Hilltop Road, Argyle,
Texas 76226. The Company's telephone number there is (972) 233-0300. Other than
this mailing address, the Company does not currently maintain any other office
facilities, and does not anticipate the need for maintaining office facilities
at any time in the foreseeable future. The Company pays no rent or other fees
for the use of the mailing address as these offices are used virtually full-
time by other businesses of the Company's sole officer and director
Item 13 - Exhibits
2.1 First Amended Joint Plan of Reorganization filed by the Debtors and
Official Committee of Unsecured Creditors, In the United States
Bankruptcy Court, Northern District of Texas, Dallas Division, In Re:
Ballantrae Healthcare, LLC, et. al., Debtors, Case No.
03-33152-HDH-11, dated September 29, 2004. (*)
2.2 Order Confirming First Amended and Joint Plan of Reorganization,
Chapter 11, Case No. 03-33152-HDH-11, Signed November 29, 2004. (*)
3.1 Agreement and Plan of Merger by and between BTHC VI, Inc. and BTHC VI,
LLC, dated April 10, 2006. (*)
3.2 Certificate of Merger as filed with the Secretary of State of the
State of Delaware on April 11, 2006. (*)
3.3 Articles of Merger as filed with the Secretary of State of the State
of Texas on April 11, 2006. (*)
3.4 Certificate of Incorporation of BTHC VI, Inc. (*)
3.5 Bylaws of BTHC VI, Inc. (*)
4.1 Form of common stock certificate. (*)
31.1 Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
32.1 Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
28
(*) Incorporated by reference to the Company's Registration Statement on Form
10-SB (File No. 0-52127) on September 21, 2006.
Item 14 - Principal Accountant Fees and Services
The Company paid or accrued the following fees in each of the prior two fiscal
years to it's principal accountant, S. W. Hatfield, CPA of Dallas, Texas.
Year ended Year ended
December 31, December 31,
2006 2005
------------ ------------
1. Audit fees $1,890 $ --
1. Audit-related fees -- --
2. Tax fees 450 --
3. All other fees -- --
------ ------
Totals $2,340 $ --
====== ======
We have considered whether the provision of any non-audit services, currently or
in the future, is compatible with S. W. Hatfield, CPA maintaining its
independence and have determined that these services do not compromise their
independence.
Financial Information System Design and Implementation: S. W. Hatfield, CPA did
not charge the Company any fees for financial information system design and
implementation fees.
The Company has no formal audit committee. However, the entire Board of
Directors (Board) is the Company's defacto audit committee. In discharging its
oversight responsibility as to the audit process, the Board obtained from the
independent auditors a formal written statement describing all relationships
between the auditors and the Company that might bear on the auditors'
independence as required by Independence Standards Board Standard No. 1,
"Independence Discussions with Audit Committees." The Board discussed with the
auditors any relationships that may impact their objectivity and independence,
including fees for non-audit services, and satisfied itself as to the auditors'
independence. The Board also discussed with management, the internal auditors
and the independent auditors the quality and adequacy of the Company's internal
controls.
The Company's principal accountant, S. W. Hatfield, CPA, did not engage any
other persons or firms other than the principal accountant's full-time,
permanent employees.
(Remainder of this page left blank intentionally)
(Financial statements start on next page)
29
BTHC VI, Inc.
(a development stage company)
Contents
Page
----
Report of Independent Registered Certified Public Accounting Firm F-2
Financial Statements
Balance Sheets
as of December 31, 2006 and 2005 F-3
Statements of Operations and Comprehensive Loss
for the years ended December 31, 2006 and 2005 and
the period from November 29, 2004 (date of bankruptcy settlement)
through December 31, 2006 F-4
Statements of Changes in Stockholders' Equity
for the period from November 29, 2004 (date of bankruptcy settlement)
through December 31, 2006 F-5
Statements of Cash Flows
for the year ended December 31, 2006 and 2005 and
the period from November 29, 2004 (date of bankruptcy settlement)
through December 31, 2006 F-6
Notes to Financial Statements F-7
F-1
LETTERHEAD OF S. W. HATFIELD, CPA
---------------------------------
REPORT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM
-----------------------------------------------------------------
Board of Directors and Stockholders
BTHC VI, Inc.
We have audited the accompanying balance sheets of BTHC VI, Inc. (a Delaware
corporation and a development stage company) as of December 31, 2006 and 2005
and the related statements of operations and comprehensive loss, changes in
stockholders' equity and cash flows for the years ended December 31, 2006 and
2005 and for the period from November 29, 2004 (date of bankruptcy settlement)
through December 31, 2006, respectively. These financial statements are the sole
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of BTHC VI, Inc. (a development
stage company) as of December 31, 2006 and 2005 and the results of its
operations and cash flows for each of the years ended December 31, 1006 and 2005
and for the period from November 29. 2004 (date of bankruptcy settlement)
through December 31, 2006, respectively, in conformity with generally accepted
accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note D to the
financial statements, the Company has no viable operations or significant assets
and is dependent upon significant stockholders to provide sufficient working
capital to maintain the integrity of the corporate entity. These circumstances
create substantial doubt about the Company's ability to continue as a going
concern and are discussed in Note D. The financial statements do not contain any
adjustments that might result from the outcome of these uncertainties.
S. W. HATFIELD, CPA
Dallas, Texas
February 12, 2007
F-2
BTHC VI, Inc.
(a development stage company)
Balance Sheets
June 30, 2006, December 31, 2005 and 2004
June 30, December 31,
2006 2005
------------ ------------
ASSETS
------
Current Assets
Cash on hand and in bank $ -- $ --
Due from bankruptcy trust -- 1,000
------------ ------------
Total Assets $ -- $ 1,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
Current Liabilities
Accounts payable - trade $ -- $ --
Advances from controlling shareholder 16,813 --
------------ ------------
Total Liabilities 16,813 --
------------ ------------
Commitments and Contingencies
Stockholders' Equity (Deficit)
Preferred stock - $0.001 par value
10,000,000 shares authorized
None issued and outstanding -- --
Common stock - $0.001 par value
40,000,000 shares authorized
500,000 shares issued and outstanding 500 500
Additional paid-in capital 500 500
Deficit accumulated during the development stage (17,813) --
------------ ------------
Total Stockholders' Equity (Deficit) (16,813) 1,000
------------ ------------
Total Liabilities and
Stockholders' Equity (Deficit) $ -- $ 1,000
============ ============
The accompanying notes are an integral part of these financial statements.
F-3
BTHC VI, Inc.
(a development stage company)
Statements of Operations and Comprehensive Loss
Years ended December 31, 2006 and 2005 and
Period from November 29, 2004 (date of bankruptcy
settlement) through December 31, 2006
Period from
November 29,
2004
(date of
bankruptcy
Year Year settlement)
ended ended through
December 31, December 31, December 31,
2006 2005 2006
------------ ------------- ------------
Revenues $ -- $ -- $ --
------------ ------------- ------------
Operating expenses
Reorganization costs 1,511 -- 1,511
Registration fees 130 -- 130
Stock transfer costs 1,020 -- 1,020
Legal and professional fees 15,152 -- 15,152
------------ ------------- ------------
Income from operations (17,813) -- (17,813)
Provision for income taxes -- -- --
------------ ------------- ------------
Net loss (17,813) -- (17,813)
Other comprehensive income -- -- --
------------ ------------- ------------
Comprehensive loss $ (17,813) $ -- $ (17,813)
============ ============= ============
Loss per weighted-average share
of common stock outstanding,
computed on net loss - basic
and fully diluted $ (0.04) nil $ (0.04)
============ ============= ============
Weighted-average number of shares
of common stock outstanding -
basic and fully diluted 500,000 500,000 500,000
============ ============= ============
The accompanying notes are an integral part of these financial statements.
F-4
BTHC VI, Inc.
(a development stage company)
Statement of Changes in Stockholders' Equity (Deficit)
Period from November 29, 2004 (date of bankruptcy
settlement) through December 31, 2006
Deficit
accumulated
Common Stock Additional during the
------------ paid-in development
Shares Amount capital stage Total
----------- ----------- ----------- ----------- -----------
Stock issued through bankruptcy
settlement on November 29, 2004 500,000 $ 500 $ 500 $ -- $ 1,000
Net loss for the period -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Balances at December 31, 2004 500,000 500 500 -- 1,000
Net loss for the year -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Balances at December 31, 2005 500,000 500 500 -- 1,000
Net loss for the year -- -- -- (17,813) (17,813)
----------- ----------- ----------- ----------- -----------
Balances at December 31, 2006 500,000 $ 500 $ 500 $ (17,813) $ (16,813)
=========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements.
F-5
BTHC VI, Inc.
(a development stage company)
Statements of Cash Flows
Years ended December 31, 2006 and 2005 and
Period from November 29, 2004 (date of bankruptcy
settlement) through December 31, 2006
Period from
November 29,
2004
(date of
bankruptcy
Year Year settlement)
ended ended through
December 31, December 31, December 31,
2006 2005 2006
------------ ------------ ------------
Cash Flows from Operating Activities
Net loss for the period $ (17,813) $ -- $ (17,813)
Adjustments to reconcile net loss
to net cash provided by
operating activities
Increase in accounts payable-trade -- -- --
------------ ------------ ------------
Net cash used in operating activities (17,813) -- (17,813)
------------ ------------ ------------
Cash Flows from Investing Activities -- -- --
------------ ------------ ------------
Cash Flows from Financing Activities
Cash funded from bankruptcy trust 1,000 -- 1,000
Cash advanced by stockholder 16,813 -- 16,813
------------ ------------ ------------
Net cash provided by financing activities 17,813 -- 17,813
------------ ------------ ------------
Increase in Cash -- -- --
Cash at beginning of period -- -- --
------------ ------------ ------------
Cash at end of period $ -- $ -- $ --
============ ============ ============
Supplemental Disclosure of
Interest and Income Taxes Paid
Interest paid during the period $ -- $ -- $ --
============ ============ ============
Income taxes paid during the period $ -- $ -- $ --
============ ============ ============
Supplemental Disclosure of Non-Cash
Investing and Financing Activities
Recapitalization to be funded
by Bankruptcy Trust $ -- $ 1,000 $ 1,000
============ ============ ============
The accompanying notes are an integral part of these financial statements.
F-6
BTHC VI, Inc.
(a development stage company)
Notes to Financial Statements
December 31, 2006 and 2005
Note A - Background and Description of Business
BTHC VI, Inc. (Company) was reincorporated on June 7, 2005 under the laws of the
State of Delaware. The Company is the U. S. Bankruptcy Court mandated
reincorporation of and successor to BTHC VI, LLC, a Texas Limited Liability
Company which was discharged from bankruptcy on November 29, 2004. The effective
date of the merger of BTHC VI, Inc. and BTHC VI, LLC was April 11, 2006.
The Company's emergence from Chapter 11 of Title 11 of the United States Code on
November 29, 2004 created the combination of a change in majority ownership and
voting control - that is, loss of control by the then-existing stockholders, a
court-approved reorganization, and a reliable measure of the entity's fair value
- resulting in a fresh start, creating, in substance, a new reporting entity.
Accordingly, the Company, post bankruptcy, has no significant assets,
liabilities or operating activities. Therefore, the Company, as a new reporting
entity, qualifies as a "development stage enterprise" as defined in Statement of
Financial Accounting Standard No. 7, as amended.
The Company's post-bankruptcy business plan is to locate and combine with an
existing, privately-held company which is profitable or, in management's view,
has growth potential, irrespective of the industry in which it is engaged.
However, the Company does not intend to combine with a private company which may
be deemed to be an investment company subject to the Investment Company Act of
1940. A combination may be structured as a merger, consolidation, exchange of
the Company's common stock for stock or assets or any other form which will
result in the combined enterprise's becoming a publicly-held corporation.
Note B - Bankruptcy Action
Commencing on March 28, 2003, BTHC VI, LLC filed for protection under Chapter 11
of the Federal Bankruptcy Act in the United States Bankruptcy Court, Northern
District of Texas - Dallas Division (Bankruptcy Court). The Company's bankruptcy
action was part of a combined case (Case No. 03-33152-HDH-11) encompassing the
following related entities: Ballantrae Healthcare, LLC; Ballantrae Texas, LLC;
Ballantrae New Mexico, LLC; Ballantrae Missouri, LLC; Ballantrae Illinois, LLC;
BTHC I, LLC; BTHC II, LLC; BTHC III, LLC; BTHC IV, LLC; BTHC V, LLC; BTHC VI,
LLC; BTHC VII, LLC; BTHC VIII, LLC; BTHC X, LLC; BTHC XI, LLC; BTHC XII, LLC;
BTHC XIV, LLC; BTHC XV, LLC; BTHC XVII, LLC; BTHC XIX, LLC; BTHC XX, LLC; BTHC
XXI, LLC; BNMHC I, LLC; BMOHC II, LLC; BILHC I, LLC, BILHC II, LLC; BILHC III,
LLC; BILHC IV, LLC; BILHC V, LLC.
All assets, liabilities and other claims against the Company and it's affiliated
entities were combined for the purpose of distribution of funds to creditors.
Each of the entities otherwise remained separate corporate entities. From the
commencement of the bankruptcy proceedings through November 29, 2004 (the
effective date of the Plan of Reorganization), all secured claims and/or
administrative claims during this period were satisfied through either direct
payment or negotiation.
A Plan of Reorganization was approved by the United States Bankruptcy Court,
Northern District of Texas - Dallas Division on November 29, 2004. The Plan of
Reorganization, which contemplates the Company entering into a reverse merger
transaction, provided that certain identified claimants as well as unsecured
creditors, in accordance with the allocation provisions of the Plan of
Reorganization, and the Company's new controlling stockholder would receive
"new" shares of the Company's post-reorganization common stock, pursuant to
Section 1145(a) of the Bankruptcy Code. As a result of the Plan's approval, all
liens, security interests, encumbrances and other interests, as defined in the
Plan of Reorganization, attach to the creditor's trust. Specific injunctions
prohibit any of these claims from being asserted against the Company prior to
the contemplated reverse merger.
F-7
BTHC VI, Inc.
(a development stage company)
Notes to Financial Statements - Continued
December 31, 2006 and 2005
Note B - Bankruptcy Action - Continued
The cancellation of all existing shares at the date of the bankruptcy filing and
the issuance of "new" shares of the reorganized entity caused an issuance of
shares of common stock and a related change of control of the Company with more
than 50.0% of the "new" shares being held by persons and/or entities which were
not pre-bankruptcy stockholders. Accordingly, per American Institute of
Certified Public Accountants' Statement of Position 90-7, "Financial Reporting
by Entities in Reorganization Under the Bankruptcy Code", the Company adopted
"fresh-start" accounting as of the bankruptcy discharge date whereby all
continuing assets and liabilities of the Company were restated to the fair
market value. As of November 29, 2004, by virtue of the confirmed Plan of
Reorganization, the only asset of the Company was approximately $1,000 in cash
due from the Bankruptcy Estate.
Note C - Preparation of Financial Statements
The Company follows the accrual basis of accounting in accordance with generally
accepted accounting principles and retains the Company's pre-bankruptcy year-end
of December 31.
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 reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Management further acknowledges that it is solely responsible for adopting sound
accounting practices, establishing and maintaining a system of internal
accounting control and preventing and detecting fraud. The Company's system of
internal accounting control is designed to assure, among other items, that 1)
recorded transactions are valid; 2) valid transactions are recorded; and 3)
transactions are recorded in the proper period in a timely manner to produce
financial statements which present fairly the financial condition, results of
operations and cash flows of the Company for the respective periods being
presented
Note D - Going Concern Uncertainty
The Company has no post-bankruptcy operating history, no cash on hand, no assets
and has a business plan with inherent risk. Because of these factors, the
Company's auditors have issued an audit opinion on the Company's financial
statements which includes a statement describing our going concern status. This
means, in the auditor's opinion, substantial doubt about our ability to continue
as a going concern exists at the date of their opinion.
The Company's majority stockholder maintains the corporate status of the Company
and has provided all nominal working capital support on the Company's behalf
since the bankruptcy discharge date. Because of the Company's lack of operating
assets, its continuance is fully dependent upon the majority stockholder's
continuing support. The majority stockholder intends to continue the funding of
nominal necessary expenses to sustain the corporate entity.
The Company's continued existence is dependent upon its ability to generate
sufficient cash flows from operations to support its daily operations as well as
provide sufficient resources to retire existing liabilities and obligations on a
timely basis. Further, the Company faces considerable risk in it's business plan
and a potential shortfall of funding due to our inability to raise capital in
the equity securities market. If no additional operating capital is received
during the next twelve months, the Company will be forced to rely on existing
cash in the bank and additional funds loaned by management and/or significant
stockholders.
F-8
BTHC VI, Inc.
(a development stage company)
Notes to Financial Statements - Continued
December 31, 2006 and 2005
Note D - Going Concern Uncertainty - Continued
The Company's business plan is to seek an acquisition or merger with a private
operating company which offers an opportunity for growth and possible
appreciation of our stockholders' investment in the then issued and outstanding
common stock. However, there is no assurance that the Company will be able to
successfully consummate an acquisition or merger with a private operating
company or, if successful, that any acquisition or merger will result in the
appreciation of our stockholders' investment in the then outstanding common
stock.
The Company remains dependent upon additional external sources of financing;
including being dependent upon its management and/or significant stockholders to
provide sufficient working capital in excess of the Company's initial
capitalization to preserve the integrity of the corporate entity.
The Company anticipates offering future sales of equity securities. However,
there is no assurance that the Company will be able to obtain additional funding
through the sales of additional equity securities or, that such funding, if
available, will be obtained on terms favorable to or affordable by the Company.
The Company's certificate of incorporation authorizes the issuance of up to
10,000,000 million shares of preferred stock and 40,000,000 shares of common
stock. The Company's ability to issue preferred stock may limit the Company's
ability to obtain debt or equity financing as well as impede potential takeover
of the Company, which takeover may be in the best interest of stockholders. The
Company's ability to issue these authorized but unissued securities may also
negatively impact our ability to raise additional capital through the sale of
our debt or equity securities.
It is the intent of management and significant stockholders to provide
sufficient working capital necessary to support and preserve the integrity of
the corporate entity. However, no formal commitments or arrangements to advance
or loan funds to the Company or repay any such advances or loans exist. There is
no legal obligation for either management or significant stockholders to provide
additional future funding.
In such a restricted cash flow scenario, the Company would be unable to complete
its business plan steps, and would, instead, delay all cash intensive
activities. Without necessary cash flow, the Company may become dormant during
the next twelve months, or until such time as necessary funds could be raised in
the equity securities market.
While the Company is of the opinion that good faith estimates of the Company's
ability to secure additional capital in the future to reach its goals have been
made, there is no guarantee that the Company will receive sufficient funding to
sustain operations or implement any future business plan steps.
Note E - Summary of Significant Accounting Policies
1. Cash and cash equivalents
-------------------------
The Company considers all cash on hand and in banks, certificates of
deposit and other highly-liquid investments with maturities of three months
or less, when purchased, to be cash and cash equivalents.
2. Reorganization costs
--------------------
The Company has adopted the provisions of AICPA Statement of Position 98-5,
"Reporting on the Costs of Start-Up Activities" whereby all costs incurred
with the incorporation and reorganization, post-bankruptcy, of the Company
were charged to operations as incurred.
F-9
BTHC VI, Inc.
(a development stage company)
Notes to Financial Statements - Continued
December 31, 2006 and 2005
Note E - Summary of Significant Accounting Policies - Continued
3. Income taxes
------------
The Company uses the asset and liability method of accounting for income
taxes. At December 31, 2006 and 2005, respectively, the deferred tax asset
and deferred tax liability accounts, as recorded when material to the
financial statements, are entirely the result of temporary differences.
Temporary differences represent differences in the recognition of assets
and liabilities for tax and financial reporting purposes, primarily
accumulated depreciation and amortization, allowance for doubtful accounts
and vacation accruals.
As of December 31, 2006 and 2005, the deferred tax asset related to the
Company's net operating loss carryforward is fully reserved. Due to the
provisions of Internal Revenue Code Section 338, the Company may have no
net operating loss carryforwards available to offset financial statement or
tax return taxable income in future periods as a result of a change in
control involving 50 percentage points or more of the issued and
outstanding securities of the Company.
4. Income (Loss) per share
-----------------------
Basic earnings (loss) per share is computed by dividing the net income
(loss) available to common stockholders by the weighted-average number of
common shares outstanding during the respective period presented in our
accompanying financial statements.
Fully diluted earnings (loss) per share is computed similar to basic income
(loss) per share except that the denominator is increased to include the
number of common stock equivalents (primarily outstanding options and
warrants).
Common stock equivalents represent the dilutive effect of the assumed
exercise of the outstanding stock options and warrants, using the treasury
stock method, at either the beginning of the respective period presented or
the date of issuance, whichever is later, and only if the common stock
equivalents are considered dilutive based upon the Company's net income
(loss) position at the calculation date.
As of December 31, 2006 and 2005, and subsequent thereto, the Company had
no outstanding stock warrants, options or convertible securities which
could be considered as dilutive for purposes of the loss per share
calculation.
Note F - Fair Value of Financial Instruments
The carrying amount of cash, accounts receivable, accounts payable and notes
payable, as applicable, approximates fair value due to the short term nature of
these items and/or the current interest rates payable in relation to current
market conditions.
Interest rate risk is the risk that the Company's earnings are subject to
fluctuations in interest rates on either investments or on debt and is fully
dependent upon the volatility of these rates. The Company does not use
derivative instruments to moderate its exposure to interest rate risk, if any.
Financial risk is the risk that the Company's earnings are subject to
fluctuations in interest rates or foreign exchange rates and are fully dependent
upon the volatility of these rates. The Company does not use derivative
instruments to moderate its exposure to financial risk, if any.
F-10
BTHC VI, Inc.
(a development stage company)
Notes to Financial Statements - Continued
December 31, 2006 and 2005
Note G - Income Taxes
The components of income tax (benefit) expense for each of the years ended
December 31, 2006 and 2005 and for the period from November 29, 2004 (date of
bankruptcy settlement) through December 31, 2006, respectively, are as follows:
Period from
November 29,
2004
(date of
bankruptcy
settlement)
Year ended Year ended through
December 31, December 31, December 31,
2006 2005 2004
------------ ------------ ------------
Federal:
Current $ -- $ -- $ --
Deferred -- -- --
------------ ------------ ------------
-- -- --
------------ ------------ ------------
State:
Current -- -- --
Deferred -- -- --
------------ ------------ ------------
-- -- --
------------ ------------ ------------
Total $ -- $ -- $ --
============ ============ ============
As of December 31, 2006, the Company had an approximate $17,800 net operating
loss carryforward to offset future taxable income. The amount and availability
of any net operating loss carryforwards will be subject to the limitations set
forth in the Internal Revenue Code. Such factors as the number of shares
ultimately issued within a three year look-back period; whether there is a
deemed more than 50 percent change in control; the applicable long-term tax
exempt bond rate; continuity of historical business; and subsequent income of
the Company all enter into the annual computation of allowable annual
utilization of any net operating loss carryforward(s).
The Company's income tax expense for each of the years ended December 31, 2006
and 2005 and for the period from November 29, 2004 (date of bankruptcy
settlement) through December 31, 2006, respectively, are as follows:
Period from
November 29,
2004
(date of
bankruptcy
settlement)
Year ended Year ended through
December 31, December 31, December 31,
2006 2005 2006
------------ ------------ ------------
Statutory rate applied to income before income taxes $ (5,900) $ -- $ (5,900)
Increase (decrease) in income taxes resulting from:
State income taxes -- -- --
Difference between book method and
statutory recognition differences on
organization costs 400 -- 400
Other, including reserve for
deferred tax asset and application
of net operating loss carryforward 5,500 -- 5,500
------------ ------------ ------------
Income tax expense $ -- $ -- $ --
============ ============ ============
F-11
BTHC VI, Inc.
(a development stage company)
Notes to Financial Statements - Continued
December 31, 2006 and 2005
Note G - Income Taxes - Continued
The Company's only temporary differences as of December 31, 2006 and 2005 relate
to the Company's net operating loss and the statutory deferrals of expenses for
organizational costs pursuant to the applicable Federal Tax Law. Accordingly,
any deferred tax asset, as fully reserved, or liability, if any, as of December
31, 2006 and 2005, respectively, is nominal and not material to the accompanying
financial statements.
Note H - Capital Stock Transactions
Pursuant to the First Amended Joint Plan of Reorganization Proposed By The
Debtors affirmed by the U. S. Bankruptcy Court - Northern District of Texas -
Dallas Division on November 29, 2004, the Company "will include the issuance of
a sufficient number of Plan shares to meet the requirements of the Plan. Such
number is estimated to be approximately 500,000 Plan Shares relative to each
Post Confirmation Debtor. The Plan Shares shall all be of the same class."
As provided in the Plan, 70.0% of the Plan Shares of the Company were issued to
Halter Financial Group, Inc., the Company's controlling shareholder, in exchange
for the release of its Allowed Administrative Claims and for the performance of
certain services and the payment of certain fees related to the anticipated
reverse merger or acquisition transactions described in the Plan. The remaining
30.0% of the Plan Shares of the Company were issued to other holders of various
claims as defined in the Order Confirming First Amended Joint Plan of
Reorganization.
Based upon the calculations provided by the Creditor's Trustee, the Company
issued an aggregate 500,000 shares of the Company's "new" common stock to all
unsecured creditors and the controlling stockholder in settlement of all unpaid
pre-confirmation obligations of the Company and/or the bankruptcy trust.
(Remainder of this page left blank intentionally)
(Signatures follow on next page)
F-12
SIGNATURES
In accord with Section 13 or 15(d) of the Securities Act of 1933, as amended,
the Company caused this report to be signed on its behalf by the undersigned,
thereto duly authorized.
BTHC VI, Inc.
Dated: February 19, 2007 /s/ Timothy P. Halter
----------------- ------------------------------------
Timothy P. Halter
President, Chief Executive Officer
Chief Financial Officer and Director
In accordance with the Securities Exchange Act of 1934, as amended, this report
has been signed below by the following persons on behalf of the Company and in
the capacities and on the date as indicated.
Dated: February 19, 2007 /s/ Timothy P. Halter
----------------- ------------------------------------
Timothy P. Halter
President, Chief Executive Officer
Chief Financial Officer and Director
F-13