SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): MARCH 31, 2009
GLOBAL RESOURCE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 000-50944 84-1565820
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(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
1000 ATRIUM WAY, SUITE 100
MOUNT LAUREL, NEW JERSEY 08054
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (856) 767-5665
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the Company under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
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ITEM 4.02 NON-RELIANCE ON PREVIOUSLY ISSUED FINANCIAL STATEMENTS OR A RELATED
AUDIT REPORT OR COMPLETED INTERIM REVIEW.
On March 31, 2009, the Company's Audit Committee concluded, upon the advice of
management, that its previously issued consolidated financial statements
contained in the Company's annual report on Form 10-KSB for the years ended
December 31, 2007 and 2006 and its quarterly reports on Form 10-QSB for the
periods ended March 31, June 30 and September 30, 2007 and Form 10-Q for the
periods ended March 31, June 30 and September 30, 2008 will require restatement
and should no longer be relied upon. The Company's decision to restate was made
in connection with comment letters received from the U.S. Securities and
Exchange Commission ("SEC") in connection with the Company's filings of
Registration Statements on Form S-1, including amendments thereto, in 2008. The
issues raised by the SEC included the presentation of certain transactions
reported in the financial statements for the years ended December 31, 2006 and
2007.
The Audit Committee has discussed with its independent registered public
accounting firm, Rothstein, Kass & Company, P.C. ("Rothstein, Kass"), the
matters disclosed in this Current Report on Form 8-K under Item 4.02.
Based upon the issues raised by the SEC, the Audit Committee has concluded that
the Company should restate its consolidated financial statements for years ended
December 31, 2007 and 2006 as follows:
CONSOLIDATED BALANCE SHEET AND STOCKHOLDERS' EQUITY ADJUSTMENTS
For year ended December 31, 2006
--------------------------------
o Elimination of the deferred compensation balance as of January 1, 2006
in the amount of $436,000 from the stockholders' equity section to
comply with the adoption of SFAS 123(R), "Share-Based Payments, as
amended", effective January 1, 2006; additional paid-in-capital was
reduced by the same $436,000. This change had a neutral impact on
stockholders' equity and statements of operations.
For year ended December 31, 2007
--------------------------------
o Reclassified contra-equity account from the stockholders' equity
section of the consolidated balance sheet, in the amount of $1,808,042,
to the current assets section as prepaid services. The total current
assets balance was changed to $2,588,467 from $780,425.
o Elimination of deferred compensation in the amount of $218,000 from the
stockholders' equity section to comply with SFAS 123(R); additional
paid-in-capital was reduced by the same $218,000. This change had a
neutral impact on stockholders' equity and statement of operations.
o Inclusion of the audited 2006 Balance sheet previously not included in
the 2007 Form 10-KSB but now required in the 10-K.
o Addition of prepaid patent costs in the amount of $143,063 to other
assets. This change was a result of reclassification of legal fees
associated with the filing of patents that were previously expensed in
the consolidated statement of operations as part of professional fees.
o Inclusion of detailed activity in the statement of stockholders' equity
to comply with SFAS 7, "Accounting and Reporting by Development Stage
Companies", which requires stock transactions to include the date and
share price for each issuance. Prior submissions of the stockholders
equity statements had summary transaction information.
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CONDENSED SUMMARY BALANCE SHEETS AND STOCKHOLDERS' EQUITY STATEMENTS OF ADJUSTMENTS AND RECLASSIFICATION
--- FOR YEAR ENDED DECEMBER 31, 2007 ---- ---- FOR YEAR ENDED DECEMBER 31, 2006 ----
Adjustments Adjustments
As reported Reclassified Restated As reported Reclassified Restated
------------ ------------ ------------ ------------ ------------ ------------
Current assets $ 780,425 $ 1,808,042 $ 2,588,467 $ 1,770,002 -- $ 1,770,002
Other assets 447,995 143,063 591,058 633,940 -- 633,940
------------ ------------ ------------ ------------ ------------ ------------
TOTAL ASSETS $ 1,228,420 $ 1,951,105 $ 3,179,525 $ 2,403,942 $ -- $ 2,403,942
============ ============ ============ ============ ============ ============
Total Liabilities $ 362,181 $ -- $ 362,181 $ 445,270 $ -- $ 445,270
NET ASSETS $ 866,239 $ 1,951,105 $ 2,817,344 $ 1,958,672 $ -- $ 1,958,672
------------ ------------ ------------ ------------ ------------ ------------
Total Stockholders' Equity :
Preferred Stock A & B 35,237 -- 35,237 35,236 -- 35,236
Common Stock 30,358 -- 30,358 25,113 -- 25,113
Stock subscription receivable (185,693) -- (185,693) (660,693) -- (660,693)
Additional paid-in Capital 20,497,849 (218,000) 20,279,849 9,927,127 (436,000) 9,491,127
Accumulated deficit (17,418,997) 143,063 (17,275,934) (6,932,111) -- (6,932,111)
Treasury stock (66,473) -- (66,473) -- -- --
Prepaid services (1,808,042) 1,808,042 -- -- -- --
Deferred Compensation (218,000) 218,000 -- (436,000) 436,000 --
------------ ------------ ------------ ------------ ------------ ------------
TOTAL STOCKHOLDERS' EQUITY $ 866,239 $ 1,951,105 $ 2,817,344 $ 1,958,672 $ -- $ 1,958,672
============ ============ ============ ============ ============ ============
In 2008, the quarterly financial statements previously reported for March 31,
June 30 and September 30, 2008 on Form 10-Q recorded a patent expense for legal
fees associated with the filing of patents. These costs should have been
capitalized and reclassified as prepaid patent costs in other assets on the
consolidated balance sheet. Amounts to be restated in the consolidated balance
sheet and consolidated statements of operations on Form 10-Q are $37,140,
$119,970 and $14,920 for the first, second and third quarters of 2008,
respectively.
CONSOLIDATED STATEMENT OF OPERATIONS ADJUSTMENTS
For year ended December 31, 2006
--------------------------------
o Research and Development ("R&D") costs in the amount of $186,887 was
reclassified from general and administrative costs and presented as a
separate line item on the Statement of Operations to be in compliance
with SFAS 2, "Accounting for Research and Development Costs, as
amended".
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o Consulting fees, Professional fees, Investment relations fees and
depreciation expense was reclassified to General & Administrative costs
to be in compliance with SEC presentation requirements. This
reclassification had no impact on the accumulated loss for 2006.
For year ended December 31, 2007
--------------------------------
o The net operating loss for the year ended December 31, 2007 was reduced
by $143,063. Legal fees associated with the patent filling process were
reclassified from professional fees which were previously expensed in
the consolidated statement of operations to the consolidated balance
sheet as prepaid patent costs. The impact on the loss per common stock
share for this correction was a decrease of $0.01 from ($0.40) to
($0.39).
o Research and Development ("R&D") costs in the amount of $222,530 was
reclassified from general and administrative costs and presented as a
separate line item on the Statement of Operations to be in compliance
with SFAS 2, "Accounting for Research and Development Costs, as
amended".
o Consulting fees, Professional fees, Investment relations fees and
depreciation expense was reclassified to General & Administrative costs
to be in compliance with SEC presentation requirements. This
reclassification had no impact on the accumulated loss for 2007.
CONDENSED SUMMARY OF ADJUSTMENTS AND RECLASSIFICATION IN STATEMENTS OF OPERATIONS
--- For years ended December 31, 2007 --- --- For years ended December 31, 2006 ---
Adjustments Adjustments
As reported Reclassified Restated As reported Reclassified Restated
------------ ------------ ------------ ------------ ------------ ------------
Operational expense:
------------------------------
Consulting fees &
Professional fees 690,292 (690,292) -- 682,085 (682,085) --
Investment and Investor
relations fees 4,813,322 (4,813,322) -- 1,078,936 (1,078,936) --
General & Administrative 4,799,415 5,231,885 10,031,300 2,495,840 1,632,288 4,128,128
Depreciation 93,864 (93,864) -- 58,154 (58,154) --
Research and Development -- 222,530 222,530 -- 186,887 186,887
------------ ------------ ------------ ------------ ------------ ------------
Total Operating expense $ 10,396,893 $ (143,063) $ 10,253,830 $ 4,315,015 $ -- $ 4,315,015
============ ============ ============ ============ ============ ============
Other Income (Expense) $ (89,993) $ -- $ (89,993) $ 68,957 $ -- $ 68,957
Net Loss applicable to common
stock shares $(10,486,886) $ 143,063 $(10,343,823) $ (4,246,058) $ -- $ 4,246,058
============ ============ ============ ============ ============ ============
Basic and Diluted loss per
common stock share $ (0.40) $ 0.01 $ (0.39) $ (0.09) $ -- $ (0.09)
Accumulated Deficit $(17,418,997) $ 143,063 $(17,275,934) $(13,172,939) $ -- $(13,172,939)
============ ============ ============ ============ ============ ============
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The Company intends to amend and restate its year-to-date totals in its
consolidated financial statements in its Annual Report on Form 10-K for the year
ended December 31, 2008. Upon filing of the 2008 Annual Report, the Company also
intends to amend and restate its consolidated financial statements for all prior
quarters for 2006, 2007 and 2008 as soon as practicable thereafter and to file
amendments to all applicable previously filed quarterly and annual reports.
In addition to the above restatements and in the context of addressing SEC
comments, the Company is revisiting the accounting and classification of
freestanding financial instruments impacted by 2006 plans and agreements of
reorganization with Carbon Recovery Corporation and Mobilestream Oil, Inc ("the
2006 Agreements"). Specifically, the Company is reviewing the guidance of
Statement of Financial Accounting ("SFAS") No. 133, "ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES" and Emerging Issues Task Force ("EITF") No.
00-19, "ACCOUNTING FOR DERIVATIVE FINANCIAL INSTRUMENTS INDEXED TO, AND
POTENTIALLY SETTLED IN, A COMPANY'S OWN COMMON STOCK". The 2006 Agreements
contain clauses which indicate that trustees of liquidating trusts (where the
financial instruments reside or resided pursuant to the Agreements) may serve
written demand on the Company that the shares held by the trust and the shares
issuable upon exercise of the warrants held by the trust be registered. The 2006
Agreements did not contain any language relative to the payment of liquidated
damages nor did they specify how settlement would be attained in the event that
the Company is unable to deliver registered shares.
Paragraph 14 of EITF No. 00-19 indicates that the events or actions necessary to
deliver registered shares are not controlled by a company. Paragraph 17 of EITF
No. 00-19 indicates that if (i) a derivative contract requires physical or
net-share settlement by delivery of registered shares and does not specify
circumstances under which net-cash settlement would be permitted or required and
(ii) the contract does not specify how the contract would be settled in the
event that the company is unable to deliver registered shares, then net-cash
settlement is assumed if the company is unable to deliver registered shares
(because it is unlikely that nonperformance would be an acceptable alternative).
Consequently, based on this analysis, the Company believes that the derivative
should be classified as a liability because share settlement is not within the
Company's control. The guidance in SFAS No. 133 references that all derivative
instruments (recognized as a liability) shall be measured at fair value at each
reporting period, with gains and losses being recognized in earnings.
Based on limited analysis, the Company believes the 2006 "equity to liability"
reclassification of certain financial instruments and the subsequent non-cash
charges to operations in 2007 and 2008 will be material to our consolidated
financial statements.
In light of the foregoing, the Company has determined that it would be prudent
to have its current auditors, Rothstein, Kass, reaudit its historical financial
statements and, accordingly, the Company has retained Rothstein, Kass to conduct
such reaudits.
Although no assurance can be given as to when such reaudits and restatements can
be completed, the Company intends to complete them as soon as practicable.
The Company believes that the restatements and reclassifications it intends to
make and which are referred to in this Form 8-K will not materially impact the
ability of the Company to implement its business plan on a going-forward basis
nor materially impact its current cash position, except for the payment of
additional auditing and legal fees incurred in connection with the reaudits,
restatements and reclassifications, as the anticipated restatements and
reclassifications relate solely to non-cash charges.
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Global Resource Corporation
Dated: April 1, 2009 By: /s/ Eric Swain
-------------------------
Eric Swain
Chief Executive Officer
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