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EX-32 - 2-TRACK10Q3Q09EX32 - 2-Track Global, Inc.ex3209.htm
EX-31.1 - 2-TRACK10Q3Q09EX311 - 2-Track Global, Inc.ex31109.htm
EX-31.2 - 2-TRACK10Q3Q09EX312 - 2-Track Global, Inc.ex31209.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC  20549



FORM 10-Q

 

 [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2009

 

[   ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE

EXCHANGE ACT FOR THE TRANSITION PERIOD FROM

_______________ to _______________

 

Commission File Number       333-89208

 

2-TRACK GLOBAL, INC.

(Exact name of small business issuer as specified in its charter)



NEVADA

 

41-2036671

(State of Incorporation
incorporation or organization)

 

(I.R.S. Employer Identification
Number)



 
1270 Broadway #501, New York, NY

 

 
10001

(Address of Principal Executive Offices)

 

(Zip Code)



Issuer's telephone number:

 

(732) 927-3820



Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:

Yes

X

 

No

 


The number of shares of the issuer's common stock outstanding as of June 30, 2009 was 56,577,280.

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act).

Yes

 

 

No

X


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer           

 

Accelerated filer           

Non-accelerated filer           

 

Smaller reporting company     X   




Page - 1


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes

 

 

No

X


















Page - 2


INDEX



  Page of Report
PART I - FINANCIAL INFORMATION 4
         ITEM 1. FINANCIAL STATEMENTS 4
         ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                        CONDITION AND RESULTS OF OPERATIONS
 13
 
         ITEM 4T. CONTROLS AND PROCEDURES 17
PART II - OTHER INFORMATION 17
         ITEM 1A. RISK FACTORS 17
         ITEM 6. EXHIBITS 20
SIGNATURES 20









Page - 3


PART I - FINANCIAL INFORMATION


ITEM 1.    FINANCIAL STATEMENTS


INDEX TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


Consolidated Balance Sheets as of September 30, 2009 (Unaudited)
December 31, 2008 (Audited)                                                                                                               5


Consolidated Statements of Operations for the Three and Nine months ended
September 30, 2009 and 2008 (Unaudited)                                                                                       6


Consolidated Statements of Cash Flows for the Nine months ended
September 30, 2009 and 2008 (Unaudited)                                                                                       7


Notes to Unaudited Consolidated Financial Statements                                                                 8



















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2-TRACK GLOBAL INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(Expressed in US Dollars)

    September 30,
2009
  December 31,
2008
ASSETS (Unaudited)   (Audited)
Current Assets
    Cash  $ 4,759  $ 2,900
    Accounts receivable 12,947 29,385
    Inventories 120,750 85,700
    Prepaid expense 12,952 -
TOTAL CURRENT ASSETS 151,408 117,985
Property and Equipment, net of accumulated depreciation of $25,361 and $22,316 respectively 12,822 10,710
Intangible Assets, net of accumulated amortization of $10,176 and $7,044, respectively  32,524 28,023
TOTAL ASSETS $ 196,754 $ 156,718
 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current Liabilities 
    Accounts payable and accrued expenses payable $ 1,778,135 $ 1,454,487
    Amounts due to related parties and former directors  824,892 586,343
    Loans payable  384,952 132,500
Total Current Liabilities 2,986,979 2,172,330
Stockholders' Equity (Deficiency) 
    Common stock, par value $0.001 per share; authorized    
        75,000,000 shares, issued and outstanding     
        56,577,280 and 56,577,280 shares, respectively 56,577 56,577
    Additional paid-in capital 2,391,565 2,385,217
    Retained earnings (deficit) (5,224,999) (4,514,455)
    Accumulated other comprehensive income (loss) (13,368) 57,049
TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY) (2,790,225) (2,015,612)
TOTAL CURRENT LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) $ 196,754 $ 156,718

See notes to consolidated financial statements.






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2-TRACK GLOBAL INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(Expressed in US Dollars)

  Three Months Ended September 30, Nine Months Ended September 30,
  2009 2008 2009 2008
   (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Sales  $ 19,660 $ 228,387 $ 87,546 $ 724,552
Cost of Sales  $ 5,145 $ 199,821 $ 44,067 $ 458,990
Gross Profit (Loss)  14,515 28,566 43,479 265,562
Operating expenses: 
         Selling, general and administrative  84,180 156,893 481,404 494,492
         Research and development  89,353 10,901 262,692 326,198
         Depreciation of property and equipment  1,230 1,349 3,045 7,868
         Amortization of intangible assets  1,044 858 3,132 2,548
         Total operating expenses  175,807 170,001 750,273 831,106
Income(Loss) From Operations  (161,292) (141,435) (706,794) (565,544)
Other Income(Expenses)     
         Interest income  - 48 - 230
         Interest expense  (1,250) (1,324) (3,750) (4,089)
         Other income (expense) - net  (1,250) (1,276) (3,750) (3,859)
Income(Loss) before income taxes  (162,542) (142,711) (710,544) (569,403)
Income Taxes  - - - -
Net Income (Loss)  $ (162,542) $ (142,711) $ (710,544) $ (569,403)
Net loss per common share - basic and diluted  $ (0.00) $ (0.00) $ (0.01) $ (0.01)
Weighted average number of common shares outstanding - basic and diluted  56,577,280  56,377,280 56,577,280 56,370,263

See notes to consolidated financial statements.






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2-TRACK GLOBAL, INC. AND SUBIDIARIES

Consolidated Statements of Cash Flows

(Expressed in U.S.Dollars)

 Nine Months Ended September 30,
 2009 2008
 (Unaudited) (Unaudited)
Cash Flows from Operating Activities 
         Net loss $ (710,544) $ (569,403)
         Adjustments to reconcile net loss to net cash provided by
         (used in) operating activities
 
                 Stock - based compensation 6,348 6,348
                 Depreciation of property and equipment 3,045 7,868
                 Amortization of intangible assetst 3,132 2,547
                 Foreign currency translation adjustment (70,417) 154,812
         Changes in operating assets and liabilities: 
                 Accounts receivable 16,438 58,304
                 Inventories (35,050) (67,616)
                 Prepaid expenses (12,952) 5,861
                 Accounts payable and accrued expenses payable 323,648 241,931
Cash provided by (used in) operating activities (476,352) (159,348)
Cash Flow from Investing Activities 
         Property and Equipment additions (5,157) -
         Intangible assets additions (7,633) (5,674)
Cash used in investing activities (12,790) (5,674)
Cash Flow from Financing Activities 
         Proceeds from sales of common stock - 2,798
         Proceeds from loans 238,549 -
         Amounts due to related parties and former director 252,452 166,276
Cash provided by (used in) financing activities 491,001 169,074
Increase (decrease) in cash 1,859 4,052
Cash, Beginning of period 2,900 5,735
Cash, End of period $ 4,759 $ 9,787
       
Supplemental disclosures of cash flow information:    
         Interest paid $ 3,750  $ 4,089
         Income taxes paid - -

See notes to consolidated financial statements.




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2-TRACK GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

(UNAUDITED)

Note 1.   ORGANIZATION AND BUSINESS OPERATIONS


2-Track Global, Inc. ("TOTG") was incorporated in the state of Nevada on March 12, 2002 under the name ECP Ventures, Inc. From March 12, 2002 (inception) to November 30, 2004, TOTG pursued mineral exploration activities. Since November 30, 2004, TOTG has been a holding company.

On November 30, 2004, TOTG acquired 2-Track Limited ("Limited"), a British corporation formed on October 11, 2002, in exchange for 18,000,000 shares of TOTG's common stock (representing 60% of TOTG's issued and outstanding common stock after the exchange transaction). Until November 17, 2008, Limited sold computer applications primarily used by customers for vessel and vehicle fleet management. On November 17, 2008, the Company decided to liquidate Limited (which liquidation was effectuated on February 17, 2009) and transferred certain assets and operations to 2-Track U.S.A., Inc. ("TTNY"), another wholly owned subsidiary of TOTG, which was incorporated in the State of New York on January 4, 2007. TTNY sells devices and software applications primarily used by business customers for security purposes.

The accompanying consolidated financial statements include the accounts of TOTG and its wholly owned subsidiaries Limited and TTNY (collectively, the "Company"). All intercompany accounts and transactions have been eliminated in consolidation.

Going Concern

These financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America applicable to a going concern which assumes that the Company will realize its assets and discharge its liabilities in the normal course of business. The Company has incurred losses of $5,224,999 since inception and has a working capital deficiency of $2,790,225 as at September 30, 2009. These factors create substantial doubt as to the ability of the Company to continue as a going concern. Realization values may be substantially different from the carrying values as shown in these financial statements should the Company be unable to continue as a going concern. Management is in the process of identifying sources for additional financing to fund the ongoing development of the Company's business.


Note 2.   INTERIM FINANCIAL STATEMENTS


The unaudited financial statements as of September 30, 2009 and for the three and nine months ended September 30, 2009 and 2008 have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with instructions to Form 10-Q. In the opinion of management, the unaudited financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position as of September 30, 2009 and the results of operations and cash flows for the periods ended September 30, 2009 and 2008. The financial data and other information disclosed in these notes to the interim financial statements related to these periods are unaudited. The results for the three and nine months ended September 30, 2009 is not necessarily indicative of the results to be expected for any subsequent quarter of the entire year ending December 31, 2009. The balance sheet at December 31, 2008 has been derived from the audited financial statements at that date.





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Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the Securities and Exchange Commission's rules and regulations. These unaudited financial statements should be read in conjunction with our audited financial statements and notes thereto for the year ended December 31, 2008 as included in our report on Form 10-K.




Note 3.   AMOUNTS DUE TO RELATED PARTIES AND FORMER DIRECTORS


Amounts due to related parties and former director consist of:



   September 30,  December 31,
   2009  2008
   (Unaudited)  (Audited)
Unpaid compensation
           Chief executive officer$84,839$30,000
           Consultant and former directors 413,000 323,000
           Former director 24,000 24,000
Laons and advances payable, non interest bearing, due on demand:
           Chief executive officer295,685203,312
           Consultant and former directors 2,279 942
           Former director 5,089 5,089
Total$824,892$586,343

Total compensation costs accrued to related parties and former directors (and included in selling, general and administrative expenses) for the nine months ended September 30, 2009 and 2008 were $180,000 and $180,000, respectively.






Page - 9


Note 4.   LOAN PAYABLE


Loans payable consist of:



   September 30,  December 31,
   2009  2008
   (Unaudited)  (Audited) 
Due Octagon Investment, S.A., interest at 5%, due in
monthly installments commencing February 22, 2010,
convertible into shares of common stock at a price of
$.39 per share



$



100,000



$



100,000
Due investor, interest at 10.7%, due on demand28,00028,000
Due investors, interest at 0%, due on demand 255,952 3,500
Total$383,952$131,500



Note 5.   INCOME TAXES


No provision for income taxes was recorded in the three and nine months ended September 30, 2009 and 2008 since TOTG, TTNY and Limited incurred net losses in these periods.

Based on management's present assessment, the Company has not yet determined it to be more likely than not that a deferred tax asset attributable to the future utilization of the United States and United Kingdom net operating loss carryforwards as of September 30, 2009 will be realized. Accordingly, the Company has provided a 100% allowance against the deferred tax asset in the financial statements at September 30, 2009. The Company will continue to review this valuation allowance and make adjustments as appropriate. The net operating loss carryforwards expire in varying amounts from year 2022 to 2029.

Current United States tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited.



Note 6.   PENSION AND EMPLOYMENT LIABILITIES


The Company does not have liabilities as at September 30, 2009 for pension, post-employment benefits or post-retirement benefits. The Company does not have a pension plan.






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Note 7.   STOCKHOLDERS' EQUITY


In January 2006, the Company adopted a stock incentive plan in order to provide an incentive to eligible employees, consultants, directors and officers of the Company. The Employee Stock Incentive Plan is a qualified plan authorizing the issuance of up to 3,000,000 shares pursuant to the Plan. Awards would be in the form of incentive stock options or restricted stock awards and will be administered by a compensation committee or, in the absence of such committee, by the Board of Directors. The Plan has a term of ten years.

The Non-Employee Directors and Consultants Retainer Stock Incentive Plan is a non-qualified plan authorizing the issuance of up to 3,000,000 shares pursuant to the Plan. Awards would be in the form of stock options or restricted stock awards and will be administered by a compensation committee or, in the absence of such committee, by the Board of Directors. The Plan has a term of ten years.

Common Stock Issuance

On January 9, 2007, the Company issued 500,000 shares of common stock to Frank Snortheim for accepting a position as director of the Company. This stock grant, which vested on January 18, 2008, was valued at a total of $35,000 and was charged to operations ratably over the one year requisite service period.

Stock options

On March 24, 2006, the Company granted a total of 300,000 stock options to nine parties: 51,000 options to an officer, 51,000 options to a director, a total of 39,150 options to two employees, and a total of 158,850 options to five consultants. The exercise price of the options is $ 0.21 per share. The 102,000 stock options granted to the officer and director vest at a rate of 12.5% per year and expire March 24, 2014; the remaining 198,000 stock options vest at a rate of 20% per year and expire March 24, 2011. For the nine months ended September 30, 2009, no options were exercised or forfeited and 300,000 stock options are outstanding at September 30, 2009, 183,225 of which are exercisable.




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The fair value of the stock options granted was estimated at $ 49,165 using a Black-Scholes valuation model with the following assumptions: (1) risk-free interest rate- 4.7%, (2) expected dividend yield-0%, (3) expected volatility-95%, and (4) expected term-8 years (for 102,000 stock options), 5 years (for 198,000 stock options). This $ 49,165 compensation cost is being recognized over the requisite service period of the respective parties. $ 6,348 was charged to operations in the three months ended September 30, 2009 and 2008 and $ 19,537 is the unrecognized compensation cost at September 30, 2009.


Note 8.   Business Concentrations.


One customer accounted for 25% of consolidated sales for the nine months ended September 30, 2009





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ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
                  OPERATIONS


Caution About Forward-Looking Statements


This Form 10-Q includes "forward-looking" statements about future financial results, future business changes and other events that have not yet occurred. For example, statements like 2-Track "expects," "anticipates" or "believes" are forward-looking statements. Investors should be aware that actual results may differ materially from 2-Track's expressed expectations because of risks and uncertainties about the future. 2-Track does not undertake to update the information in this Form 10-Q if any forward-looking statement later turns out to be inaccurate. Details about risks affecting various aspects of 2-Track's business are discussed throughout this Form 10-Q and should be considered carefully.



Plan of Operation for the Next Twelve Months


2-Track Limited was a London-based company formed in October 2002 and became the wholly-owned subsidiary of 2-Track on November 30, 2004. This subsidiary started reducing operations in November 2008 and was liquidated on February 17, 2009 and its assets and operations transferred to 2-Track U.S.A., Inc. ("TTNY"), another wholly-owned subsidiary of 2-Track. TTNY is now the primary operating entity of 2-Track. 2-Track also maintains a sales and research facility in New Jersey.



Business Operations Overview


Technical Roll-Out


Barring unexpected occurrences, management anticipates the following schedule of roll-outs for its family of products during the next 12 months:


Condor iTrac Fuel -3rd Generation Hardware with Fuel sensor Dec 2009
Condor iTrac Pro -3rd Generation Hardware with multi Integration April 2010
NavGuard II -2nd Generation Hardware with Wi-Fi Jan 2010
Condor FMS -MS mobile version software Jan 2010
mTrac III -3rd Geration Hardware Jan 2010
Asset Tracker -Asset Tracking Hardware Dec 2009
Condor iView -3G based DVR + Vehicle Tracking Dec 2009
Condor bTrac -Bike tracking hardware Jan 2010


Business Development


The primary business development targets for 2009 will be the continued expansion of distributor networks and OEM partners for the Condor FMS vehicle fleet management solution, the iTrac personal tracking system and the Starfish vessel fleet management solution. Condor, which currently sells in the UK, Africa, Middle East, and Asia in a GPRS format, will be expanded through the addition of LEO+GPRS as well as higher spec hardware for the US market.





Page - 13


Territorially there will be a strong emphasis on developing emerging markets in Africa and India markets characterized by a strong security need and being underserved through lack of GIS mapping technology, poor wireless network infrastructure, or political risk.


The 2-Track team is now started to deal with two large Corporate security firms as well as expanding to the retail market. 2-Track anticipates good support within the distribution and dealership communities. In October 2009, 2 Track appointed Niscayah as its US based distributor for corporate sector in the USA. By December 2009, 2-Track intends to appoint additional distributors in USA, Asia, Middle East, and Africa.



Results of Operation


From inception until the Exchange Transaction on November 30, 2004, 2-Track's predecessor, ECPV Ventures, Inc.'s ("ECPV") had not generated any revenues from inception to the closing of the Exchange Transaction. Since the Exchange Transaction, 2-Track (formerly ECPV) has been engaged in developing and marketing asset tracking and security technologies.


Three-Month Period Ended September 30, 2009 versus 2008


During the quarter ended September 30, 2009, we had revenues of $19,660 compared to $228,387 for the same quarter of 2008. The decreased revenue was attributable to the decreased sales activities due to the closing of our UK operation. Cost of sales decreased to $5,145 for the quarter ended September 30, 2009 compared to $199,821 for the quarter ended September 30, 2008. The substantial decrease in cost of sales was commensurate with the decreased sales. Gross profits were $14,515 compared to $28,566 for the same quarter of 2008 reflecting the substantial decrease in sales revenue for the third quarter of 2009. Cost of sales as a percentage of sales decreased from 88% in 2008 to 26% in the second quarter of 2009. The significant decrease is due to the sales of maintenance and software, instead of hardwares.


Operating expenses increased slightly from $170,001 for the quarter ended September 30, 2008 to $175,806 for the quarter ended September 30, 2009. The Company paid or accrued $337,496 of wages and salaries during the quarter ended September 30, 2009. The entire amount is related to unpaid salaries to employees in the liaison office. Professional and consulting fees were $35,661 for the quarter ended September 30, 2009. We incurred research and development expenses of $89,353 in this quarter primarily related to our FMS products compared to $10,901 spent in the quarter ended September 30, 2008. The increase is primarily due a $71,496 overaccrual of research and development expenses in the second quarter of 2008 which was reversed in the third quarter of 2008 which resulted in substantially lower research and development costs. We also incurred interest expense of $1,250 in this quarter compared to $1,324 of interest expense during the same quarter of 2008


We incurred a net loss of $162,542 for the quarter ended September 30, 2009 compared to a net loss of $142,711 for the same quarter in 2008. The higher loss is a result of lower sales revenue, lower gross profit and an increase in operating expenses.


Nine-Month Period Ended September 30, 2009 versus 2008


Revenues of 2-Track decreased by $637,006 to $87,546 for the nine months ended September 30, 2009 from $724,552 of revenue realized for the nine months ended September 30, 2008. 22% of the revenues were generated in the third quarter of 2009 and 89% of these revenues came from two customers. Cost of goods sold was $44,067 for the nine months ended September 30, 2009 compared to $458,990 of cost of goods sold for the same period ended September 30, 2008 which is commensurate with the sharp decline in sales revenue during 2009. Cost of goods sold as a percentage of sales decreased from 63% for the nine months ended September 30, 2008 to 50% in the same period of 2009.





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Operating expenses decreased modestly to $750,272 for the nine months ended September 30, 2009 from $831,106 for the same period ended September 30, 2008. The decreases were due primarily to the decreased expenses by the closing of UK operations. During the first nine months of 2009, the Company paid and accrued $337,494 of wages. Research and development costs of $262,692 were expensed during the first nine months of 2009 compared to $326,198 expensed for R&D during the first nine months of 2008. Professional and consulting fees during the first nine months of 2009 were $211,494 compared to $140,202 for the same period in 2008 reflecting an increase in fees paid to technical advisors. The net loss for the nine months ended September 30, 2009 was $710,544 compared to a net loss of $569,403 recorded for the nine months ended September 30, 2008 primarily due to the decrease in sales.



Off-Balance Sheet Arrangements


During the quarter ended September 30, 2009, 2-Track did not engage in any off-balance sheet arrangements as defined in Item 303 (a) of the SEC's Regulation S-K.




Liquidity and Sources of Capital


2-Track has incurred operating losses since its inception, and, as of September 30, 2009, 2-Track had an accumulated deficit of $5,224,999. At September 30, 2009, 2-Track had cash and cash equivalents of $4,759 and a working capital deficit of $2,835,571. With this deficit, 2-Track will require additional debt or equity capital to cover its business plan and growth, and the repayment of debt obligations. During the third quarter of 2009, we raised $2,798 in outside capital investments and 2-Track borrowed an additional $209,489 from primarily outside investors.


We hope to secure a minimum of $2.6 million in additional working capital during the next 12 month period to fund our business development and growth. It is our intention to pursue other equity and debt-based funding strategies through the issuance of additional stock and/or long-term borrowing commensurate with a responsible level of debt.


Due to our limited cash flow and operating losses, it is unlikely that we could obtain financing through commercial or banking sources. Consequently, we are dependent on continuous cash infusions from major investors, debt financing and the exercise of outstanding options in order to fund our current operations. If these sources of capital were unwilling or unable to provide additional working capital to us, we would probably not be able to sustain our full range of operations and could jeopardize our ability to continue operations. There is no written agreement or contractual obligation which would require our past funding sources to fund our future operations up to certain amounts or indeed continue to finance our operations at all. Although we believe that current and/or future investors will continue to fund our expenses, There is no assurance that such investors will continue to fund our ongoing operations or the term upon which such investments will be made.





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As of September 30, 2009, our principal commitments include a month by month lease commitment of $2,000 per month for our liaison office in Korea.




Critical Accounting Policies


Revenue Recognition


The Company enters into agreements to sell products (hardware or software), services, and other arrangements that include combinations of products and services. Revenue from product sales, net of trade discounts and allowances, is recognized provided that persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable, and collectability is reasonably assured. Delivery is considered to have occurred when title and risk of loss have transferred to the customer. Revenue is reduced for estimated product returns and distributor price protection, when appropriate. For sales that include customer-specified acceptance criteria, revenue is recognized after the acceptance criteria have been met. Revenue from services is deferred and recognized over the contractual period or as services are rendered and accepted by the customer. When arrangements include multiple elements, we use objective evidence of fair value to allocate revenue to the elements and recognize revenue when the criteria for revenue recognition have been met for each element. The amount of product revenue recognized is affected by our judgments as to whether an arrangement includes multiple elements and if so, whether vendor-specific objective evidence of fair value exists for those elements. Changes to the elements in an arrangement and the ability to establish vendor-specific objective evidence for those elements could affect the timing of the revenue recognition. Most of these conditions are subjective and actual results could vary from the estimated outcome, requiring future adjustments to revenue.


2-Track's discussion and analysis of its financial condition and results of operations are based upon its consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of financial statements requires managers to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses and disclosures on the date of the financial statements. On an on-going basis, 2-Track's accountants' evaluate the estimates, including, but not limited to, those related to revenue recognition. 2-Track uses authoritative pronouncements, historical experience and other assumptions as the basis for making judgments. Actual results could differ from those estimates.


2-Track has adopted the fair value based method of accounting prescribed in Accounting Standard Codification ("ASC") 718, "Compensation - Stock Compensation" for its employee stock option plans.





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ITEM 4T.   CONTROLS AND PROCEDURES


Disclosure Controls and Procedures


We have adopted and maintain disclosure controls and procedures (as such term is defined in Rules 13a-15 (e) and 15d-15 (e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act, is recorded, processed, summarized and reported within the time periods required under SEC's rules and forms and that the information is gathered and communicated to our management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), as appropriate, to allow for timely decisions regarding required disclosure.


As required by SEC Rule 15d-15 (b) we carried out an evaluation, under the supervision and with the participation of management, including our CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act 15d-14 as of the end of the fiscal quarter covered by this report. Based upon that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective in timely alerting them to material information relating to 2-Track that is required to be included in our periodic SEC reports and to ensure that information required to be disclosed in our periodic SEC reports is accumulated and communicated to our management, including our CEO and CFO, to allow timely decisions regarding disclosure as a result of any deficiency detected in our internal control over financial reporting.



Changes in Internal Control Over Financial Reporting


There have been no significant changes in 2-Track's internal controls over financial reporting or in other factors which occurred during the quarter covered by this report, which could materially affect or are reasonably likely to materially affect 2-Track's internal controls over financial reporting.





PART II - OTHER INFORMATION



ITEM 1A.   RISK FACTORS


Despite having revenues for several years, we have continued to incur operating losses. As a result of the losses and negative cash flows from operations, our ability to continue operations will depend on our ability to generate increased revenues and the availability of equity/debt financing for working capital. If we are unable to generate sufficient revenues in the near future or obtain outside capital to cover operating expenses, we may be unable to establish or maintain desired levels of business operations.





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The audit report of our independent accounting firm includes a "going concern" explanation. In the independent accounting firm's opinion, our limited operating history and accumulated net deficit as of December 31, 2008, raise substantial doubt about our ability to continue as a going concern.


The success of our technology based business will depend on several factors including:


  • Our ability to maintain competitive prices which provide desired profit margins and expanding our product line;
  • Our success in finalizing the PRISMS technology development, in particular the radio frequency module (RFM) component required for scanning and reporting container data in difficult environments such as terminal yards and ship's holds
  • Our success in further developing our Condor product lines for US and other markets as well as commercial industry.
  • Our ability to increase consumer awareness of our products and services;
  • Our ability to provide comprehensive solutions which satisfy current and future anti-terrorism government regulation applicable to national and international commerce.

The development and marketing of technology products requires significant amounts of capital. To date, both 2-Track and its subsidiaries have relied on the sale of equity securities, loans, and limited sales revenue to meet their operational and capital requirements. Because we have limited revenues, it will be necessary to fund our ongoing operations by selling additional equity or debt securities, secure lines of credit or obtain other third-party financing. The timing and amount of such capital requirements cannot be determined at this time and will depend on a number of factors, including demand for our products and technologies.
There can be no assurance that additional financing will be available on satisfactory terms when needed, if at all. Failure to raise additional capital, secure other sources of financing or enter into other collaborative business transactions would have a material adverse effect on our ability to achieve our intended business objectives. Any future equity financing will result in dilution to current stockholders. Future debt financing will result in interest expense and the risk that we cannot repay such debt when due.



Page - 18


We are competing in the global tracking and monitoring market, a market characterized by intense competition from both established companies and start-up companies. Since the market demands both competitive prices and capabilities, our success depends in part on our ability to enhance existing products and introduce new technologies. This requires us to accurately predict future technology and pricing trends. Unexpected changes in technological standards, the rate of technology adoption, customer demand and pricing of competitive products could adversely affect our operating results if we are unable to respond effectively to such changes.


Our current manufacturing structure is particularly subject to various risks associated with its use of offshore contract manufacturers, including changes in costs of labor and materials, reliability of sources of supply and general economic conditions in foreign countries. Unexpected changes in foreign manufacturing or sources of supply, and changes in the availability, capability or pricing of foreign suppliers could adversely affect our business and results of operations. The impact of these risks on our operations is difficult to measure, but the inability to alter our strategic marketing, or react properly to changing economic conditions could have an adverse effect on our financial position.


Our target markets include end-users, resellers, systems integrators, major accounts and original equipment manufacturers. Due to the relative size of some customers, sales in any one market segment could fluctuate dramatically on a quarter-to-quarter basis. Fluctuations in major accounts and the OEM segment could materially adversely affect our financial condition and results of operations. Additionally, our revenues and results of operations could be adversely affected if we were to lose certain key distribution or development partners.


In summary, our net sales and operating results in any particular quarter may fluctuate as a result of a number of factors, including competition in the markets for our products; delays in new product introductions by us; market acceptance of new products and technologies by us or our competitors; changes in product pricing, material costs or customer discounts; the size and timing of customer orders; fluctuations in channel inventory levels; variations in the mix of product sales; manufacturing delays or disruptions in sources of supply; and the pace of change from the current unfavorable economic conditions. Our future operating results will depend, to a large extent, on our ability to anticipate and successfully react to these and other factors. Failure to anticipate and successfully react to these and other factors could adversely affect our business and financial condition.


In addition to the above, we are also susceptible to other factors that generally affect the market for stocks of technology companies. Factors including general fluctuations in securities markets, reaction to economic news and amount of market risk acceptable to investors, could affect the price of our stock and could cause such stock price to fluctuate significantly over short periods of time.





Page - 19


ITEM 2.   UNREGISTERED SALES OF EQUITY SECURITIES


During the quarter ended September 30, 2008, 2-Track issued 39,947 shares of restricted common stock valued at $0.07 per share for gross proceeds of $2,798. The issuance of stock was made without any public solicitation to one person and was acquired for investment purposes only. The individual had access to complete information about 2-Track and was deemed capable of evaluating the merits and risks of acquiring shares in 2-Track. The securities were issued pursuant to the private placement exemption provided by Section 4(2) of the Securities Act of 1933. These shares are deemed to be "restricted securities" as defined in rule 144 under the 1933 Act and bear a legend stating the restrictions on resale.


ITEM 6.   EXHIBITS


          (a) The following documents are filed as exhibits to this report:


Exhibits
31.1 Certification by CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification by CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification by CEO and CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.








SIGNATURES



In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



2-Track Global, Inc.


Dated: November 20, 2009

/s/ Woosun Jung         

Woosun Jung

Chief Executive Officer



Dated: November 20, 2009

/s/ Woosun Jung         

Woosun Jung

Chief Financial Officer






Page - 20


CERTIFICATION FOR QUARTERLY REPORTS ON FORM 10-Q

 

I, Woosun Jung, certify that:


1.          I have reviewed this quarterly report on Form 10-Q of 2-Track Global, Inc.("Registrant");


2.          Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.          Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows as of, and for, the periods presented in this quarterly report;


4.          The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the Registrant and have:

a)            designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)           designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the generally accepted accounting principles;

c)            evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)           disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and

5.          The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of Registrant's board of directors (or persons performing the equivalent function):



a)            all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and

b)           any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.


Date: November 20, 2009




/s/ Woosun Jung         

Name: Woosun Jung

Title: Chief Executive Officer



Exhibit 31.1


CERTIFICATION FOR QUARTERLY REPORTS ON FORM 10-Q

 

I, Woosun Jung, certify that:



1.          I have reviewed this quarterly report on Form 10-Q of 2-Track Global, Inc.;


2.          Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.          Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows as of, and for, the periods presented in this quarterly report;


4.          The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the Registrant and have:

a)            designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)           designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the generally accepted accounting principles;

c)            evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)           disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and

5.          The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of Registrant's board of directors (or persons performing the equivalent function):

a)            all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and

b)           any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.


Date: November 20, 2009




/s/ Woosun Jung         

Name: Woosun Jung

Title: Chief Financial Officer



Exhibit 31.2


CERTIFICATION

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(SUBSECTIONS (a) AND (b) OF SECTION 1350, CHAPTER 63 OF
TITLE 18, UNITED STATES CODE)

 

          Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of Title 18, United States Code), the undersigned officer of 2-Track Global, Inc., a Nevada corporation (the "Company"), does hereby certify with respect to the Quarterly Report of the Company on Form 10-Q for the quarter ended June 30, 2009 as filed with the Securities and Exchange Commission (the "10-Q Report") that:


(1)   the 10-Q Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)   the information contained in the 10-Q Report fairly presents, in all material respects, the financial condition and results of operations of the Company.




Dated: November 20, 2009                                                2-TRACK GLOBAL, INC.


/s/ Woosun Jung         

Chief Executive Officer and

Chief Financial Officer

 

 

 

 

 




Exhibit 32