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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB/A
(Amendment No. 1)
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2005
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to _________
COMMISSION FILE NO.: 000-50944
GLOBAL RESOURCE CORPORATION
(f/k/a Advanced Healthcare Technologies, Inc.)
(Exact name of registrant as specified in its charter)
Nevada 84-1565820
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9444 Waples Street, Suite 290
San Diego, CA 92121
(Address of principal executive offices)
Issuer's telephone number: (858) 646-7410
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes |X| No |_|
APPLICABLE ONLY TO CORPORATE ISSUERS
As of August 21, 2006, 72,151 shares of Global Resource's common stock were
outstanding.
Transitional Small Business Disclosure Format: Yes |_| No |X|
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EXPLANATORY NOTE
This quarterly report on Form 10-QSB/A ("Form 10-QSB/A") is being filed to amend
our quarterly report on Form 10-QSB for the quarter ended December 31, 2005 (the
"Original Form 10-QSB"), which was originally filed with the Securities and
Exchange Commission ("SEC") on February 14, 2006. Accordingly, pursuant to rule
12b-15 under the Securities Exchange Act of 1934, as amended, the Form 10-QSB/A
contains complete text of Items 1, 2 and 3 of Part I and Items 2 and 4 of Part
II, as amended, as well as currently dated certifications from the Principal
Executive Officer and the Principal Financial Officer.
In connection with the review of the unaudited interim financial statements for
the nine months ended December 31, 2005 and the fiscal year ended March 31,
2005, our external auditors noted that the Original Form 10-QSB did not reflect
the effects of the Company's reverse stock split of 100 to 1. The reverse stock
split became effective as of the close of trading on Friday, August 11, 2006.
On July 3, 2006, the Company concluded that it was necessary to restate its
financial results for the fiscal year ended March 31, 2005 and for the interim
periods ended September 30 and December 31, 2004 and 2005 and for the interim
period ended June 30, 2005 to reflect additional non-operating gains and losses
related to the classification of and accounting for convertible debentures
issued in fiscal 2005. The Company had previously determined a beneficial
conversion feature, valued the conversion features at the intrinsic value and
classified the convertible instruments as equity. After further review, the
Company has determined that these instruments should have been classified as
derivative liabilities and therefore, the fair value of each instrument must be
recorded as a derivative liability on the Company's balance sheet. Changes in
the fair values of these instruments will result in adjustments to the amount of
the recorded derivative liabilities and the corresponding gain or loss will be
recorded in the Company's statement of operations. At the date of the conversion
of each respective instrument or portion thereof, the corresponding derivative
liability will be reclassified as equity.
2
PART 1: FINANCIAL INFORMATION
ITEM 1 - CONDENSED FINANCIAL STATEMENTS
GLOBAL RESOURCE CORPORATION
(A Development Stage Company)
BALANCE SHEETS
ASSETS
December 31, March 31,
2005 2005
----------- -----------
(Unaudited)
(Restated) (Restated)
CURRENT ASSETS
Cash $ 131 $ 175
----------- -----------
Total Current Assets 131 175
----------- -----------
OTHER ASSETS
Investments (Note 6) - 57,073
----------- -----------
Total Other Assets - 57,073
----------- -----------
TOTAL ASSETS $ 131 $ 57,248
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 46,763 $ 5,438
Accounts payable - related party 54,004 52,795
Accrued expenses - related party 1,000 --
Wages payable 190,000 150,000
Accrued interest 12,888 4,716
Derivative liability 173,239 168,896
Convertible debentures, net of $18,591
debt discount at March 31, 2005 102,345 119,309
----------- -----------
Total Current Liabilities 580,239 501,154
----------- -----------
STOCKHOLDERS' DEFICIT
Preferred stock: 50,000,000 shares authorized
of $0.001 par value, no shares issued and
outstanding -- --
Common stock: 2,000,000,000 shares authorized,
of $0.001 par value, 72,151 shares
issued and outstanding 72 72
Additional paid-in capital 6,892,663 6,887,163
Accumulated deficit (7,472,843) (7,331,141)
----------- -----------
Total Stockholders' Deficit (580,108) (443,906)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
DEFICIT $ 131 $ 57,248
=========== ===========
The accompanying notes are an integral part of these financial statements.
F-1
GLOBAL RESOURCE CORPORATION
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
For the three months ended For the nine months ended
December 31, December 31,
------------------------------ ------------------------------
2005 2004 2005 2004
------------- ------------- ------------- -------------
(Restated) (Restated) (Restated) (Restated)
REVENUES $ -- $ -- $ -- $ --
COST OF GOODS SOLD -- -- -- --
------------- ------------- ------------- -------------
GROSS PROFIT -- -- -- --
OPERATING EXPENSES 31,834 129,251 89,079 180,395
------------- ------------- ------------- -------------
LOSS FROM OPERATIONS (31,834) (129,251) (89,079) (180,395)
OTHER INCOME (EXPENSE)
Interest Expense (2,656) (54,943) (26,763) (54,943)
Derivative expense -- (80,685) -- (80,685)
Gain (loss) on derivative 83,595 38,910 (4,342) 38,910
Unrealized loss on Investment -- -- (21,518) --
------------- ------------- ------------- -------------
Total Other Income (Expense) 80,939 (96,718) (52,623) (96,718)
INCOME (LOSS) BEFORE
DISCONTINUED OPERATIONS 49,105 (225,969) (141,702) (277,113)
------------- ------------- ------------- -------------
LOSS FROM DISCONTINUED
OPERATIONS (NOTE 5) -- -- -- (116,946)
------------- ------------- ------------- -------------
NET INCOME (LOSS) $ 49,105 $ (225,969) $ (141,702) $ (394,059)
============= ============= ============= =============
BASIC LOSS PER SHARE
Continuing Operations $ 0.68 $ (4.51) $ (1.96) $ (8.47)
Discontinued Operations -- -- -- (3.57)
------------- ------------- ------------- -------------
Total Gain (Loss) per Share $ 0.68 $ (4.51) $ (1.96) $ (12.04)
============= ============= ============= =============
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 72,151 50,130 72,151 32,742
============= ============= ============= =============
The accompanying notes are an integral part of these financial statements.
F-2
GLOBAL RESOURCE CORPORATION
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
For the nine months ended
December 31,
---------------------------
2005 2004
----------- -----------
(Restated) (Restated)
CASH FLOWS FROM OPERATING ACTIVITES
Net loss $ (141,702) $ (394,059)
Adjustments to reconcile net loss to
net cash used by operating activities:
Unrealized loss on investment 21,518 --
Depreciation and amortization -- 509
Contributed services 5,500 --
Stock issued for services -- 875
(Gain) / Loss on derivative 4,342 --
Interest expense for debt discount amortization 18,591 --
Changes in assets and liabilities:
Increase in accounts payable and accounts
payable - related party 42,535 35,805
Increase in accrued expenses and accrued
expenses - related party 49,172 128,670
Increase in derivative liability -- 141,775
(Increase) in debt discount -- (46,727)
Changes in discontinued assets
and liabilities -- 106,679
----------- -----------
Net Cash Used by Operating Activities (44) (26,473)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES -- --
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash used for partner draw -- (12,006)
Cash contributed by former officer -- 20,000
Common stock sold or subscribed for cash -- 12,200
Proceeds from issuance of note payable -- 15,500
Change from cash overdraft -- (13,736)
Proceeds from convertible debenture -- 100,000
----------- -----------
Net Cash Provided by Financing
Activities $ -- $ 121,958
----------- -----------
The accompanying notes are an integral part of these financial statements.
F-3
GLOBAL RESOURCE CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS (CONTINUED)
(Unaudited)
For the nine months
ended December 31,
----------------------------
2005 2004
----------- -----------
(Restated) (Restated)
NET INCREASE (DECREASE) IN CASH (44) 95,485
CASH AT BEGINNING OF PERIOD 175 --
----------- -----------
CASH AT END OF PERIOD $ 131 $ 95,485
=========== ===========
CASH PAID FOR
Interest $ -- $ --
Income taxes $ -- $ --
SCHEDULE OF NON CASH FINANCING ACTIVITIES
Contributed capital by shareholders $ 5,500 $ 247,546
The accompanying notes are an integral part of these financial statements.
F-4
GLOBAL RESOURCE CORPORATION
(A Development Stage Company)
Notes to the Financial Statements
December 31, 2005
NOTE 1 - FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by the Company without
audit. In the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position,
results of operations and cash flows at December 31, 2005 and for all periods
presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted. It is suggested
that these financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's March 31, 2005 audited
financial statements. The results of operations for the period ended December
31, 2005 are not necessarily indicative of the operating results for the full
year.
On December 15, 2005, after a thorough review of the costs and potential
regulatory requirements of complying with the Investment Company Act of 1940,
the Board of Directors of the Company approved "Notification of Withdrawal" on
Form n-54C with the Securities and Exchange Commission to withdraw our election
to be subject to sections 55 through 65 of the Investment Company Act of 1940.
On December 19, 2005, our "Notification of Withdrawal" on Form n-54C was filed
with the Securities and Exchange Commission. As such, and with the transfer of
the Well Renewal, LLC interest, the Company has become a Development Stage
Company. Although we became a Development Stage Company on December 15, 2005,
the inception disclosures on the Statement of Operations and the Statement of
Cash Flows will begin January 1, 2006.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using the accounting principles
generally accepted in the United States of America applicable to a going
concern, which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. However, the Company has had a
change in control and has changed its business plan and it has not generated any
revenues. The future of the Company is dependent upon its ability to obtain
financing and upon future profitable operations from the development of its new
business opportunities. Management plans to research possible acquisitions of
various entities and an officer of the Company has agreed to loan the Company
funds as needed to sustain business for a period of twelve months. However, the
Company is dependent upon its ability to secure equity and/or debt financing and
there are no assurances that the Company will be successful, without sufficient
financing it would be unlikely for the Company to continue as a going concern.
These conditions raise substantial doubt about the Company's ability to continue
as a going concern. These financial statements do not include any adjustments
that might arise from this uncertainty.
NOTE 3 - RESTATEMENT AND RECLASSIFICATION OF PREVIOUSLY ISSUED FINANCIAL
STATEMENTS
SUMMARY OF RESTATEMENT ITEMS
On July 3, 2006, GRSU concluded that it was necessary to restate its financial
results for the fiscal year ended March 31, 2005 and for the interim periods
ended September 30 and December 31, 2004 and 2005 and for the interim period
ended June 30, 2005 to reflect additional non-operating gains and losses related
to the classification of and accounting for convertible debentures issued in
fiscal 2005. GRSU had previously determined a beneficial conversion feature,
valued the conversion features at the intrinsic value and classified the
convertible instruments as equity. After further review, GRSU has determined
that these instruments should have been classified as derivative liabilities and
therefore, the fair value of each instrument must be recorded as a derivative
liability on GRSU's balance sheet. Changes in the fair values of these
instruments will result in adjustments to the amount of the recorded derivative
liabilities and the corresponding gain or loss will be recorded in GRSU's
statement of operations. At the date of the conversion of each respective
instrument or portion thereof, the corresponding derivative liability will be
reclassified as equity.
The accompanying financial statements for the periods ended December 31, 2005
and 2004 have been restated to effect the changes described above. The impact of
the adjustments related to the classification of and the accounting for the
conversion features and the accounting for the beneficial conversion feature for
the quarters ended December 31, 2005 and 2004 are summarized below:
F-5
GLOBAL RESOURCE CORPORATION
(A Development Stage Company)
Notes to the Financial Statements
December 31, 2005
STATEMENT OF OPERATIONS
AS NINE MONTHS ENDED
PREVIOUSLY DECEMBER 31, 2005
REPORTED ADJUSTMENT AS RESTATED
------------ ------------ ------------
Gross profit $ -- $ -- $ --
Operating expenses 89,079 -- 89,079
------------ ------------ ------------
Loss from operations (89,079) -- (89,079)
Non operating income (expense)
Interest expense (8,172) (18,591)(A) (26,763)
Loss on investment valuation (21,518) -- (21,518)
Loss on derivative liability -- (4,342)(B) (4,342)
----------- ------------ ------------
Total non-operating income (expense) (29,690) (22,933) (52,623)
Loss before minority interest, income taxes,
and discontinued operations (118,769) (22,933) (141,702)
------------ ------------- -------------
Loss from discontinued operations -- -- --
Net income (loss) $ (118,769) $ (22,933) $ (141,702)
============ ============ ============
Basic and diluted income (loss) per share $ (1.65) $ (.31)(C) $ (1.96)
Weighted average shares outstanding 72,151 72,151
(A) CHANGE DUE TO AMORTIZATION OF DEBT DISCOUNT RELATED TO THE DERIVATIVE
LIABILITY AND REVERSING THE IMPACT OF AMORTIZATION OF DEBT DISCOUNT RELATED
TO THE BENEFICIAL CONVERSION FEATURE.
(B) TO RECORD LOSS ON DERIVATIVES BASED UPON FAIR VALUES AT DECEMBER 31, 2005.
(C) TO REFLECT BASIC AND DILUTED EARNINGS PER SHARE BASED UPON CORRECTED NET
INCOME.
F-6
GLOBAL RESOURCE CORPORATION
(A Development Stage Company)
Notes to the Financial Statements
December 31, 2005
BALANCE SHEET IMPACT
In addition to the effects on GRSU's December 31, 2005 statement of operations
discussed above, the restatement impacted GRSU's balance sheet as of December
31, 2005. The following table sets forth the effects of the restatement
adjustments on GRSU's balance sheet as of December 31, 2005:
DECEMBER 31,
2005 DECEMBER 31,
AS PREVIOUSLY 2005
REPORTED ADJUSTMENT (RESTATED)
----------- ----------- -----------
ASSETS
Current assets
Cash and equivalents $ 131 $ -- $ 131
----------- ----------- -----------
Total current assets 131 -- 131
----------- ----------- -----------
Total assets $ 131 $ -- $ 131
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts Payable $ 46,763 $ -- $ 46,763
Accounts payable - related party 54,004 -- 54,004
Accrued expenses 203,888 -- 203,888
Debt discount -- (155,000)(A) --
155,000 (B)
Derivative liability -- 282,086 (C) 173,239
(108,847)(D)
Convertible debentures 102,345 -- 102,345
----------- ----------- -----------
Total current liabilities 407,000 173,239 580,239
----------- ----------- -----------
Total liabilities $ 407,000 $ 173,239 $ 580,239
STOCKHOLDERS' DEFICIT
Preferred stock: 50,000,000 shares authorized
of $0.001 par value, no shares issued and
outstanding -- -- --
Common stock: 2,000,000,000 shares authorized, of $0.001
par value, 72,151 shares issued and outstanding 7,215 (7,143)(G) 72
Additional paid in capital 7,065,520 (172,857)(E) 6,892,663
Accumulated deficit (7,479,604) 6,761 (F) (7,472,843)
----------- ---------- -----------
Total stockholders' deficit (406,869) (173,239) (580,108)
----------- ----------- -----------
Total liabilities and stockholders' deficit $ 131 $ -- $ 131
=========== =========== ===========
(A) TO RECORD THE INITIAL DEBT DISCOUNT ASSOCIATED WITH THE DERIVATIVE
LIABILITIES.
(B) CHANGE DUE TO AMORTIZATION OF DEBT DISCOUNT.
(C) TO RECORD INITIAL CARRYING VALUE OF DERIVATIVES IN FISCAL 2005 INCLUDING
$90,342 FOR THE NOVEMBER 2004 TRANSNIX GLOBAL CORPORATION DEBENTURE,
$90,342 FOR THE NOVEMBER 2004 EDIFY CAPITAL GROUP DEBENTURE, $45,916 FOR
THE JANUARY 2005 EDIFY CAPITAL GROUP DEBENTURE AND $55,486 FOR THE JANUARY
2005 TRANSNIX GLOBAL CORPORATION DEBENTURE.
(D) TO RECORD GAIN OF $108,847 ON DERIVATIVES BASED UPON FAIR VALUES AT
DECEMBER 31, 2005.
(E) TO REDUCE PAID IN CAPITAL FOR REVERSAL OF THE BENEFICIAL CONVERSION FEATURE
IMPACT.
(F) TO REFLECT AGGREGATE EFFECT OF INCOME STATEMENT ADJUSTMENTS.
(G) TO REFLECT THE 100 TO 1 REVERSE STOCK SPLIT
F-7
GLOBAL RESOURCE CORPORATION
(A Development Stage Company)
Notes to the Financial Statements
December 31, 2005
STATEMENT OF OPERATIONS
NINE MONTHS ENDED
AS PREVIOUSLY DECEMBER 31, 2004
REPORTED ADJUSTMENT AS RESTATED
------------- ------------- -------------
Gross profit $ -- $ -- $ --
Operating expenses 204,520 (24,125) 180,395
------------- ----------- -------------
Loss from operations (204,520) 24,125 (180,395)
Non operating income (expense)
Interest expense (126,670) 71,727 (A) (54,943)
Derivative expense -- (80,685) (80,685)
Gain on derivative liability -- 38,910 (B) 38,910
------------- ----------- --------------
Total non-operating income (expense) (126,670) 29,952 (96,718)
Loss before minority interest, income taxes,
and discontinued operations (331,190) 54,077 (277,113)
------------- ----------- --------------
Loss from discontinued operations (116,946) -- (116,946)
------------- ----------- --------------
Net income (loss) $ (448,136) $ 54,077 $ (394,059)
============= ============= =============
Basic and diluted income (loss) per share $ (13.69) $ 1.65 (C) $ (12.04)
Weighted average shares outstanding 32,742 -- 32,742
(A) CHANGE DUE TO AMORTIZATION OF DEBT DISCOUNT RELATED TO THE DERIVATIVE
LIABILITY AND REVERSING THE IMPACT OF AMORTIZATION OF DEBT DISCOUNT RELATED
TO THE BENEFICIAL CONVERSION FEATURE.
(B) TO RECORD GAIN ON DERIVATIVES BASED UPON FAIR VALUES AT DECEMBER 31, 2004.
(C) TO REFLECT BASIC EARNINGS PER SHARE BASED UPON CORRECTED NET INCOME.
F-8
GLOBAL RESOURCE CORPORATION
(A Development Stage Company)
Notes to the Financial Statements
December 31, 2005
NOTE 4 - DERIVATIVES
Global Resource evaluated the application of SFAS 133 and EITF 00-19 for the
convertible debentures issued in fiscal 2005. Based on the guidance in SFAS 133
and EITF 00-19, Global Resource concluded all of these instruments were required
to be accounted for as derivatives. SFAS 133 and EITF 00-19 require Global
Resource to bifurcate and separately account for the conversion features of the
debentures as embedded derivatives. Pursuant to SFAS 133, Global Resource
bifurcated the conversion feature from the debentures because the economic
characteristics and risks of the conversion features were determined to not be
clearly and closely related to the economic characteristics and risks of the
debentures. In addition, because there was no explicit cap on the amount of
shares that might be required to be issued pursuant to the conversion features,
Global Resource determined that the conversion features met the attributes of a
liability and therefore recorded the fair value of the conversion features as
current liabilities. Global Resource is required to record the fair value of the
conversion features on its balance sheet at fair value with changes in the
values of these derivatives reflected in the statement of operations as "Gain
(loss) on derivative." These derivative liabilities were not previously
classified as such in Global Resource's historical financial statements. In
order to reflect these changes, Global Resource has restated its financial
statements for the quarters ended December 31, 2005 and 2004.
The impact of the application of SFAS 133 and EITF 00-19 on the balance sheet as
of December 31, 2005 and the impact on the statement of operations as of
December 31, 2005 are as follows:
MARCH 31, DECEMBER 31,
2005 LOSS 2005
----------- ----------- -----------
Derivative liability - debentures $ 168,896 4,342 $ 173,239
Global Resource uses the Black Scholes valuation model for calculation of the
value of derivative liabilities. The company uses volatility rates based upon
the closing stock price of its common stock. Global Resource uses a risk free
interest rate which is the U.S. Treasury bill rate for securities with a
maturity that approximates the estimated expected life of a derivative. Global
Resource uses the closing market price of the common stock on the date of
issuance of a derivative or at the end of a quarter when a derivative is valued
at fair value. The volatility factor used in the Black Scholes pricing model has
a significant effect on the resulting valuation of the derivative liabilities on
the balance sheet. The volatility has ranged from 241% to 491% during the years
ending December 31, 2005 and 2004. The following table shows the volatility,
risk free rate and market price used in the calculation of the Black Scholes
call value for the debentures at issuance date and for the years ended December
31, 2005 and 2004.
ISSUE DATE VOLATILITY RISK FREE MARKET PRICE TERM IN MONTHS
RATE
At Issuance date for:
November 2004 Debentures 11/4/2004 457% 2.34% $ 0.035 5 mos.
January 2005 Debentures Warrants 1/7/2005 442% 2.82% $ 0.0135 6 mos.
January 2005 Debentures 1/17/2005 474% 2.82% $ 0.01 5.5 mos.
Prices and average rates at:
December 31, 2005 241% 4.38% $ 0.014
December 31, 2004 491% 2.22% $ 0.010
NOTE 5 - DISCONTINUED OPERATIONS
On June 30, 2004, the Company's CEO entered into an agreement to sell 1,260 of
the Company's common stock and his controlling interest to an unrelated
individual. This resulted in the Company's wholly owned subsidiary, NutraTek,
LLC, being spun off and left Advanced Healthcare Technologies Inc. as the
remaining shell company. All assets were associated with the discontinued
operations as well as all of the liabilities except for $247,546 which was
associated with Advanced.
F-9
GLOBAL RESOURCE CORPORATION
(A Development Stage Company)
Notes to the Financial Statements
December 31, 2005
NOTE 5 - DISCONTINUED OPERATIONS (CONTINUED)
The net loss from discontinued operations for the three months ended June 30,
2004 are the operations of NutraTek for the three months ended March 31, 2004
because the spin off of NutraTek took place three months after Advanced
Healthcare Technologies, Inc.'s year end and NutraTek had a December 31 year
end, therefore three months after NutraTek's year end would be March 31, 2004.
For the three
months ended
March 31,2004
-----------
REVENUES $ 15,349
COST OF GOODS SOLD 4,108
-----------
GROSS PROFIT 11,241
-----------
OPERATING EXPENSES
Payroll 53,930
Rent 2,271
Professional fees 49,104
Depreciation 509
General and administrative 21,362
-----------
Total Operating Expenses 127,176
-----------
LOSS FROM OPERATIONS (115,935)
-----------
OTHER EXPENSE
Interest expense (1,011)
-----------
Total Other Expense (1,011)
-----------
NET LOSS $ (116,946)
===========
BASIC LOSS PER SHARE $ (4.87)
===========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 24,000
===========
F-10
GLOBAL RESOURCE CORPORATION
(A Development Stage Company)
Notes to the Financial Statements
December 31, 2005
NOTE 6 - INVESTMENTS
During the year the Company held a 50% investment in Well Renewal, LLC (Well
Renewal). The Company paid $150,000 for a 50% controlling interest in Well
Renewal on January 11, 2005. The business plan of Well Renewal was to obtain
revenues via the management and operation of thirty oil wells located in
Oklahoma.
On December 15, 2005 Company entered into an agreement with Transnix Global
Corporation (Transnix) to exchange their 50% interest in Well Renewal in partial
satisfaction of certain debentures issued by Global Resource Corporation. Prior
to the execution of the agreement the Company's outstanding debentures totaled
$137,900 plus accrued interest and the investment in Well Renewal was on the
Company's books, valued at $35,555. The agreement stated that the payment amount
would be equal to the value of the investment on the Company's books at the date
of the agreement, therefore the Company gave Transnix their ownership rights in
Well Renewal and credited their investment account for $35,555, resulting in a
December 31, 2005 investment balance of $0, and debited their convertible
debentures liability for $35,555, resulting in a December 31, 2005 Debenture
balance of $102,345.
NOTE 7 - MATERIAL EVENTS
On June 17, 2005 Jimmy Villalobos resigned as president of the Company.
On December 15, 2005, after a thorough review of the costs and potential
regulatory requirements of complying with the Investment Company Act of 1940,
the Board of Directors of the Company approved the Companies election to
withdraw its election to be subject to sections 55 through 65 of the Investment
Company Act of 1940, pursuant to the provisions of section 54(c) of the Act. As
such, and with the transfer of the Well Renewal, LLC interest, the Company has
become a Development Stage Company. Although the company became a Development
Stage Company on December 15, 2005, the Company will disclose the from inception
columns on the Statement of Operations and on the Cash Flow Statement as though
it took place on December 31, 2005.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
From September 27, 2004 through December 6, 2004, the Company issued
approximately 48,150 shares of common stock (the "Shares") upon conversion of
certain outstanding convertible debentures. The Company did not register the
Shares under the Securities Act of 1933, as amended (the "Securities Act"), in
reliance on various exemptions from registration, including, but not limited to,
Section 3(b) of the Securities Act and Regulation E promulgated thereunder.
On June 17, 2005, the Division of Investment Management (the "Division") at the
Securities & Exchange Commission (the "SEC") has advised Global Resource that it
is the view of the Division that the Company cannot rely on the exemption
afforded by Regulation E and that it is unaware of any other exemptions from
registration for the issuance of the Shares. The Division also advised the
Company that, in the view of the Division, it appears that the issuance of the
Shares violated Section 5 of the Securities Act. The Company has advised the
Division that it is the Company's view that the issuance of the Shares was
exempt from registration under the Securities Act under various available
exemptions, including, but not limited to, Regulation E, and that the issuance
of the Shares did not violate Section 5 of the Act.
NOTE 9 - RELATED PARTY TRANSACTIONS
During the quarter ended June 30, 2005, a shareholder of the Company maintained
office space and provided services that resulted in rent expense of $500 and
payroll expense of $5,000. Both of these amounts were contributed to capital.
F-11
GLOBAL RESOURCE CORPORATION
(A Development Stage Company)
Notes to the Financial Statements
December 31, 2005
NOTE 9 - RELATED PARTY TRANSACTIONS (CONTINUED)
During the quarters ended September 30, 2005 and December 31, 2005, shareholders
of the company maintained office space and provided services that resulted in
rent expense of $1,000 and payroll expense of $40,000. Both of these amounts
were recorded as accrued liabilities in the Accrued Liabilities - Related Party
balance and in the Wages Payable balance, respectively.
NOTE 10 - SUBSEQUENT EVENTS
On June 7, 2006 an unrelated third party purchased the convertible debenture
owned by Transnix Corporation. As of the date of purchase, the principal amount
due on the debenture was $102,345 and the accrued but unpaid interest was
$16,274. Subsequent to June 30, 2006, under the terms of the purchase agreement,
Transnix used a substantial part of the proceeds received from the debenture
purchaser in the payment of the liabilities of the Company, other than the
principal and interest related to the debenture and an accounts payable balance.
Accordingly, as of July 11, 2006, the Company has no liabilities other than the
debenture and an accounts payable balance. In conjunction with the purchase of
the Transnix debenture, a change in control of the Company occurred. The then
directors and the then sole officer of the Company resigned, appointing Mary
Radomsky as the sole director and the sole officer.
On July 31, 2006, the Board of Directors of the Company declared a 100 to 1
reverse stock split of the Company's common stock. The reverse stock split is
effective as of the close of trading on Friday, August 11, 2006.
F-12
ITEM 2 - PLAN OF OPERATION
The following discussion and analysis should be read in conjunction with our
unaudited consolidated condensed financial statements and related notes included
in this report. This report contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. The statements
contained in this report that are not historic in nature, particularly those
that utilize terminology such as "may," "will," "should," "expects,"
"anticipates," "estimates," "believes," or "plans" or comparable terminology are
forward-looking statements based on current expectations and assumptions.
Various risks and uncertainties could cause actual results to differ materially
from those expressed in forward-looking statements. All forward-looking
statements in this document are based on information currently available to us
as of the date of this report, and we assume no obligation to update any
forward-looking statements. Forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause the actual results to
differ materially from any future results, performance or achievements expressed
or implied by such forward-looking statements.
CHANGE OF CONTROL
On June 30, 2004, Richard Mangiarelli purchased 1,260 shares of Global Resource
common stock from its former President, Chief Executive Officer, Director, and
majority stockholder, Johnny Sanchez. As a result, Mr. Mangiarelli then held
approximately 52.5% of the issued and outstanding common stock of Global
Resource.
In connection with this change in control, Mr. Sanchez resigned as our President
and Chief Executive Officer, Joel Rockwood resigned as our Vice President and
Chief Scientific Officer, and Michael MacArthur resigned as our Secretary. The
board of directors appointed Mr. Mangiarelli as the new President, Chief
Financial Officer, and Secretary. In addition, Mr. Sanchez, Mr. Rockwood,
Virginia Sanchez, Carmen Sanchez, and Joe V. Overcash resigned as directors of
Global Resource. The outgoing directors appointed Richard Mangiarelli to fill
the vacancies on the board.
On June 30, 2004, we entered into a Release and Indemnity Agreement with Johnny
Sanchez, our former President, Chief Executive Officer, Director, and majority
stockholder, pursuant to which we sold all of our membership interest in
NutraTek to Mr. Sanchez in exchange for Mr. Sanchez's agreement to do the
following: (a) release us from any and all claims that Mr. Sanchez may have had
against us; (b) indemnify us for any and all claims against or liabilities of
Global Resource that existed before June 30, 2004, and (c) to cooperate with and
assist Global Resource in connection with its reporting obligations or filing
requirements under the Securities Act of 1933, as amended, and Securities
Exchange Act of 1934, as amended, and to deliver such other instruments and take
such other actions as may be reasonably requested by us in order to carry out
the intent of the agreement.
Immediately after the spin-off of NutraTek, Global Resource had no operations.
Before the change of control described above, Global Resource's principal
business and operations were those of NutraTek. NutraTek researched, developed,
and thereafter contracted with third parties to manufacture its own line of
nutritional dietary supplements, functional food products and natural
sweeteners.
Global Resource's new management decided to terminate the nutritional products
business and elected to become a business development company. As a business
development company, Global Resource focused on making investments in
securities, and making available significant managerial assistance with respect
to the issuers of such securities. Since becoming a business development
company, we made one investment in Well Renewal LLC. Well Renewal manages and
operates oil wells in Oklahoma by utilizing a nitrogen and carbon dioxide gas
injection unit to "pump up" and re-pressure the wells to increase oil output. At
September 30, 2005, our investment in Well Renewal, valued at approximately
$35,555, with a cost of $150,000, consisted of the purchase of a 50% interest in
Well Renewal LLC.
On November 18, 2005 we entered into a pledge agreement (the "Pledge Agreement")
with Transix Global Corporation ("Transnix") pursuant to which we pledged our
50% membership interest in Well Renewal, LLC (the "Membership Interest") in
order to prevent Transnix from commencing legal action against us for repayment
of those certain 8% convertible debentures issued by us to Transnix (the
"Debentures") and to provide Transnix with additional security for repayment of
the Debentures. We subsequently defaulted on payment of the Debentures.
3
On December 15, 2005, we entered into an agreement with Transnix (the
"Collateral Foreclosure Agreement") pursuant to which (i) Transnix, pursuant to
the terms of the Pledge Agreement, accepted the Membership Interests (the
collateral under the Pledge Agreement) in satisfaction of $35,555 of principal
and interest obligations secured under the Debentures and (ii) we raised no
objection to Transnix accepting the Membership Interest in satisfaction of
$35,555 of principal and interest obligations under the Debentures and waived
any and all notice periods under the Uniform Commercial Code.
On December 15, 2005, after a thorough review of the costs and potential
regulatory requirements of complying with the Investment Company Act of 1940,
the Board of Directors of the Company approved "Notification of Withdrawal" on
Form n-54C with the Securities and Exchange Commission to withdraw our election
to be subject to sections 55 through 65 of the Investment Company Act of 1940.
On December 19, 2005, our "Notification of Withdrawal" on Form n-54C was filed
with the Securities and Exchange Commission. As such, and with the transfer of
the Well Renewal, LLC interest described above, we became a Development Stage
Company.
Although we became a Development Stage Company on December 15, 2005, we will
disclose the from inception columns on the Statement of Operations and the
Statement of Cash Flows as though it took place on December 31, 2005. We were
unable to attract sufficient investment capital as a Business Development
Company (BDC) to execute our strategy of acquiring and developing companies. We
believe we are now better able to address its capital structure since we are no
longer subject to the BDC Provisions.
The election to withdraw the Company as a BDC under the Investment Company Act
has resulted in a significant change in our required method of accounting. BDC
financial statement presentation and accounting utilizes the value method of
accounting used by investment companies, which allows BDC's to recognize income
and value their investments at market value as opposed to historical cost. As a
development stage company, the required financial statement presentation and
accounting for securities held will be either fair value or historical cost
methods of accounting, depending on the classification of the investment and our
intent with respect to the period of time we intend to hold the investment.
As an operating company, we must consolidate our financial statements with
subsidiaries, thus eliminating the portfolio company reporting benefits
available to BDC's.
LIQUIDITY AND CAPITAL RESOURCES
We currently have limited working capital with which to satisfy our cash
requirements, and we will require additional capital in order to conduct
operations. We anticipate that we will require at least $250,000 in additional
working capital in order to sustain operations for the next 12 months. This
requirement may increase substantially, depending on the nature and capital
requirements of the business opportunities it elects to pursue.
In order to obtain working capital, from October, 2004 to January, 2005, we
issued convertible debentures in the aggregate principal amount of $155,000 in a
private placement. The notes are due approximately five (5) months after
issuance and bear interest at a rate of eight percent (8%). The notes are
convertible into shares of our common stock, at the option of either us or the
holder of the note, at a floating conversion price of fifty percent (50%) of the
closing bid price per share on the day of conversion, or at the lowest price
allowable as set by us in an effective registration statement or exemption
notification as filed with the Securities and Exchange Commission. We are
obligated to register the resale of the shares of common stock issuable upon
conversion of the debenture under the Securities Act of 1933, as amended, or to
otherwise provide an acceptable exemption to registration under Regulation E of
the Securities Act of 1933, as amended.
In addition, in September 2004, we commenced an offering of our common stock
pursuant to Regulation E of the Securities Act of 1933, as amended. Pursuant to
this offering, we have sold 12,200 shares of common stock for $12,200, and
holders of the debentures referenced above have converted, in the aggregate,
approximately $17,100 of principal and interest due thereunder into 360 shares
of our common stock. Since that time, the issuance of a convertible debenture in
the principal amount of $25,000 to Javelin Holdings for services rendered has
been rescinded by mutual agreement between us and Javelin Holdings. Separate
from the convertible debenture, 1,750 shares were issued for consulting expenses
of $875.
4
In January 2005, we amended this offering to reduce the range of the price per
share of the offering. The Division of Investment Management of the Securities
and Exchange Commission ("SEC") has delivered comments to Global Resource
regarding this amended offering, and Global Resource is currently working with
the Division of Investment Management to address these comments. We will not
issue any shares in reliance on Regulation E until all comments from the SEC are
resolved. This offering may not provide Global Resources with the capital
necessary to fund its operations. In the interim, we will continue to seek
additional forms of capital and our management may provide additional financing
as required.
On December 15, 2005, pursuant to the terms of the Collateral Foreclosure
Agreement, we exchanged our Membership Interests in Well Renewal LLC in partial
satisfaction of the Debentures issued by us. Our debentures totaled $137,900
plus accrued interest. The transfer of the investment in Well Renewal, LLC was
made at its book value of $35,555. The remaining balance of the convertible
debenture is $102,345 plus accrued interest. As of December 31, 2005, we no
longer hold any interest in Well Renewal LLC.
OFF BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet financing arrangements.
ITEM 3 - CONTROLS AND PROCEDURES
Our disclosure controls and procedures are designed to ensure that information
required to be disclosed in reports that we file or submit under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported within the
time periods specified in the rules and forms of the Securities and Exchange
Commission. Our Chief Executive Officer and Chief Financial Officer has reviewed
the effectiveness of our "disclosure controls and procedures" (as defined in the
Securities Exchange Act of 1934 Rules 13a-14(c) and 15d-14(c)) within the last
ninety days and has concluded that the disclosure controls and procedures are
effective to ensure that material information relating to Global Resource
Corporation is recorded, processed, summarized, and reported in a timely manner.
There were no significant changes in our internal controls or in other factors
that could significantly affect these controls subsequent to the last day they
were evaluated by our Chief Executive Officer and Chief Financial Officer.
It should be noted that any system of controls, however well designed and
operated, can provide only reasonable, and not absolute, assurance that the
objectives of the system are met. In addition, the design of any control system
is based in part upon certain assumptions about the likelihood of future events.
Because of these and other inherent limitations of control systems, there can be
no assurance that any design will succeed in achieving its stated goals under
all potential future conditions. As a small organization, the effectiveness of
our controls heavily depends on the direct involvement of our Chief Executive
Officer and Chief Financial Officer.
PART II: OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
From September 27, 2004 through December 6, 2004, we issued approximately 48,150
shares of common stock, of which 12,200 were issued for cash and 35,950 were
issued upon conversion of certain outstanding convertible debentures. We did not
register these shares under the Securities Act of 1933, as amended, in reliance
on various exemptions from registration, including, but not limited to, Section
3(b) of the Securities Act and Regulation E promulgated thereunder.
Since that time, the issuance of a convertible debenture in the principal amount
of $25,000 to Javelin Holdings for services rendered has been rescinded by
mutual agreement between us and Javelin Holdings. Separate from the convertible
debenture, 1,750 shares were issued for consulting expenses of $875.
5
On June 17, 2005, the Division of Investment Management at the Securities &
Exchange Commission advised us that it is the view of the Division that we
cannot rely on the exemption afforded by Regulation E and that it is unaware of
any other exemptions from registration for the issuance of the Shares. The
Division also advised us that, in the view of the Division, it appears that the
issuance of the Shares violated Section 5 of the Securities Act. We advised the
Division that it is our view that the issuance of the Shares was exempt from
registration under the Securities Act under various available exemptions,
including, but not limited to, Regulation E, and that the issuance of the Shares
did not violate Section 5 of the Act.
At this time, neither the SEC nor any private party has commenced any action
against us alleging that we issued the shares in violation of Section 5 of the
Securities Act. Further, the SEC has not, to our knowledge, commenced any formal
or informal inquiry with respect to its contention that the shares were issued
in violation of Section 5 of the Securities Act. In the event that any such
action or inquiry is commenced, we intend to defend against such allegations
vigorously.
ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3 - DEFAULT UPON SENIOR SECURITIES
(a) On November 18, 2005 we entered into a pledge agreement (the "Pledge
Agreement") with Transix Global Corporation ("Transnix") pursuant to which we
pledged our 50% membership interest in Well Renewal, LLC (the "Membership
Interest") in order to prevent Transnix from commencing legal action against us
for repayment of those certain 8% convertible debentures issued by us to
Transnix (the "Debentures") and to provide Transnix with additional security for
repayment of the Debentures. We subsequently defaulted on payment of the
Debentures.
On December 15, 2005, we entered into an agreement with Transnix (the
"Collateral Foreclosure Agreement") pursuant to which (i) Transnix, pursuant to
the terms of the Pledge Agreement, accepted the Membership Interests (the
collateral under the Pledge Agreement) in satisfaction of $35,555 of principal
and interest obligations secured under the Debentures and (ii) we raised no
objection to Transnix accepting the Membership Interest in satisfaction of
$35,555 of principal and interest obligations under the Debentures and waived
any and all notice periods under the Uniform Commercial Code.
Prior to our exchange of our Membership Interest, the Debentures totaled
$137,900 plus accrued interest. The remaining balance of the Debentures held by
Transnix is $102,345 plus accrued interest.
(b) None.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5 - OTHER INFORMATION
(a)
1. Pledge Agreement. On November 18, 2005 we entered into a pledge agreement
(the "Pledge Agreement") with Transix Global Corporation ("Transnix") pursuant
to which we pledged our 50% membership interest in Well Renewal, LLC (the
"Membership Interest") in order to prevent Transnix from commencing legal action
against us for repayment of those certain 8% convertible debentures issued by us
to Transnix (the "Debentures") and to provide Transnix with additional security
for repayment of the Debentures.
6
2. Collateral Foreclosure Agreement. On December 15, 2005, we entered into an
agreement with Transnix (the "Collateral Foreclosure Agreement") pursuant to
which (i) Transnix, pursuant to the terms of the Pledge Agreement, accepted the
Membership Interests (the collateral under the Pledge Agreement) in satisfaction
of $35,555 of principal and interest obligations secured under the Debentures
and (ii) we raised no objection to Transnix accepting the Membership Interest in
satisfaction of $35,555 of principal and interest obligations under the
Debentures and waived any and all notice periods under the Uniform Commercial
Code.
3. On December 19, 2005, we filed a "Notification of Withdrawal" on Form n-54C
with the Securities and Exchange Commission to withdraw our election to be
subject to sections 55 through 65 of the Investment Company Act of 1940. This
withdrawal of election was approved by our Board of Directors.
(b) None.
ITEM 6 - EXHIBITS
Item No. Description Method of Filing
-------- ----------- ----------------
10.1 Pledge Agreement, dated November 18, 2005 between Filed electronically herewith.
Global Resource Corporation and Transnix Global Corporation.
10.2 Agreement, dated December 15, 2005 bewteen Global Filed electronically herewith.
Resource Corporation and Transnix Global Corporation.
31.1 Certification of Frank G. Pringle pursuant to Filed electronically herewith.
Rule 13a-14(a)
31.2 Certification of Jeffrey J. Andrews pursuant Filed electronically herewith.
to Rule 13a-14(a)
32.1 President and Chief Executive Officer Certification Filed electronically herewith.
Certification pursuant to 18 U.S.C. ss. 1350 adopted
pursuant to Section 906 of the Sarbanes Oxley Act of
2002
32.1 Chief Financial Officer Certification pursuant to Filed electronically herewith.
18 U.S.C. ss. 1350 adopted pursuant to Section 906
of the Sarbanes Oxley Act of 2002
7
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GLOBAL RESOURCE CORPORATION
October 31, 2006 /s/ Frank G. Pringle
-------------------------------------------------
Frank G. Pringle
President and Chief Executive Officer
(Principal Executive Officer)
8