Attached files
file | filename |
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EX-32.2 - GLOBAL DYNAMICS CORP | v194967_ex32-2.htm |
EX-31.1 - GLOBAL DYNAMICS CORP | v194967_ex31-1.htm |
EX-31.2 - GLOBAL DYNAMICS CORP | v194967_ex31-2.htm |
EX-32.1 - GLOBAL DYNAMICS CORP | v194967_ex32-1.htm |
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
(Mark
One)
x QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period
ended June 30, 2010
¨ TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the
transition period from to
Commission
File Number:
333-156154
CONSUMER
PRODUCTS SERVICES GROUP, INC.
(Exact
name of Registrant as specified in its charter)
Delaware
(State or
other jurisdiction of Incorporation or organization)
98-0593668
(IRS
Employee Identification No.)
10 Grand
Blvd.
Deer
Park, New York 11729
(Address
of principal executive offices)
(631)
492-2500
(Registrant’s
telephone number, including area code)
Global
Dynamics Corp
43
Hakablan Street
Jerusalem,
Israel 93874
(Former
name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the
registrant (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 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 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 (§232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to submit
and post such files). Yes ¨ No
¨
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 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
|
|
(Do
not check if a smaller reporting company)
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Yes ¨ No
x
The
number of shares of common stock of the issuer outstanding as of August 20, 2010
was 45,004,500
shares of common stock.
TABLE OF
CONTENTS
CONSUMER
PRODUCTS SERVICES GROUP, INC.
Part
I – Financial Information - Unaudited
|
||
Item
1.
|
Financial
Statements
|
F-1
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
3
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risks
|
6
|
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||
Item
4.
|
Controls
and Procedures
|
6
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Part
II – Other Information
|
||
Item
1.
|
Legal
Proceedings
|
7
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Item
1A.
|
Risk
Factors
|
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
7
|
Item
3.
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Defaults
Upon Senior Securities
|
7
|
Item
4.
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Submission
of Matters to a Vote of Security Holders
|
8
|
Item
5.
|
Other
Information
|
8
|
Item
6.
|
Exhibits
|
8
|
2
ITEM
1. UNAUDITED FINANCIAL STATEMENTS
CONSUMER
PRODUCTS SERVICES GROUP INC.
(A
DEVELOPMENT STAGE COMPANY)
INDEX
TO FINANCIAL STATEMENTS
JUNE
30, 2010
Financial
Statements-
|
|
Balance
Sheets as of June 30, 2010 and December 31, 2009
|
F-2
|
Statements
of Operations for the Three Months and Six Months Ended
|
|
June
30, 2010 and 2009 and Cumulative from Inception
|
F-3
|
Statement
of Changes in Stockholders’ Equity for the Period from
Inception
|
|
Through
June 30, 2010
|
F-4
|
Statements
of Cash Flows for the Six Months Ended June 30, 2010 and
2009
|
|
and
Cumulative from Inception
|
F-5
|
Notes
to Financial Statements
|
F-6
|
F-1
CONSUMER PRODUCTS
SERVICES GROUP INC.
(A
DEVELOPMENT STAGE COMPANY)
BALANCE
SHEETS
AS
OF JUNE 30, 2010 AND DECEMBER 31, 2009
As of
|
As of
|
|||||||
June 30,
|
December 31,
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|||||||
2010
|
2009
|
|||||||
(Unaudited)
|
(Audited)
|
|||||||
ASSETS
|
||||||||
Current
Assets:
|
||||||||
Cash
and cash equivalents
|
$ | 75 | $ | 21,192 | ||||
Total
current assets
|
75 | 21,192 | ||||||
Other
Assets:
|
||||||||
Patent,
net of $2,460 amortization
|
- | 23,540 | ||||||
Deferred
acquisition costs
|
65,000 | - | ||||||
Loan
receivable CPS, LLC
|
1,165,175 | - | ||||||
Total
other assets
|
1,230,175 | 23,540 | ||||||
Total
Assets
|
$ | 1,230,250 | $ | 44,732 | ||||
LIABILITIES
AND STOCKHOLDERS' (DEFICIT)
|
||||||||
Current
Liabilities:
|
||||||||
Accounts
payable and accrued liabilities
|
$ | 15,694 | $ | 27,316 | ||||
Loans
payable
|
850,000 | - | ||||||
Convertible
note payable, net of unamortized discounts
|
256,000 | |||||||
Loans
from related parties - directors and stockholders
|
- | 10,000 | ||||||
Total
current liabilities
|
1,121,694 | 37,316 | ||||||
Total
liabilities
|
1,121,694 | 37,316 | ||||||
Commitments
and Contingencies
|
||||||||
Stockholders'
Equity(Deficit):
|
||||||||
Preferred
stock, par value $.0001 per share, 50,000,000 shares authorized; 0 shares
issued and outstanding
|
- | - | ||||||
Common
stock, par value $.0001 per share, 1,000,000,000 shares authorized;
45,004,500 shares issued and outstanding
|
4,500 | 4,500 | ||||||
Additional
paid-in capital
|
228,600 | 55,800 | ||||||
(Deficit)
accumulated during the development stage
|
(124,544 | ) | (52,884 | ) | ||||
Total
stockholders' equity(deficit)
|
108,556 | 7,416 | ||||||
Total
Liabilities and Stockholders' Equity(Deficit)
|
$ | 1,230,250 | $ | 44,732 |
The
accompanying notes are an integral part of these financial
statements.
F-2
CONSUMER
PRODUCTS SERVICES GROUP INC.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENTS
OF OPERATIONS
FOR
THE THREE MONTHS AND SIX MONTHD ENDED JUNE 30, 2010 and 2009
AND
CUMULATIVE FROM INCEPTION (SEPTEMBER 2, 2008)
THROUGH
JUNE 30, 2010
(Unaudited)
Three Months
|
Three Months
|
Six Months
|
Six Months
|
|||||||||||||||||
Ended
|
Ended
|
Ended
|
Ended
|
Cumulative
|
||||||||||||||||
June 30,
|
June 30,
|
June 30,
|
June 30,
|
From
|
||||||||||||||||
2010
|
2009
|
2010
|
2009
|
Inception
|
||||||||||||||||
Revenues
|
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
Expenses:
|
||||||||||||||||||||
General
and administrative-
|
||||||||||||||||||||
Amortization
|
- | 615 | - | 1,230 | 2,460 | |||||||||||||||
Impairement
loss
|
23,540 | 23,540 | ||||||||||||||||||
Professional
fees
|
10,800 | 18,294 | 15,825 | 21,670 | 65,422 | |||||||||||||||
Legal
- incorporation
|
- | - | 1,500 | |||||||||||||||||
Other
|
465 | 156 | 550 | 241 | 1,069 | |||||||||||||||
Total
general and administrative expenses
|
11,265 | 19,065 | 39,915 | 23,141 | 93,991 | |||||||||||||||
(Loss)
from Operations
|
(11,265 | ) | (19,065 | ) | (39,915 | ) | (23,141 | ) | (93,991 | ) | ||||||||||
Other
Income (Expense)
|
(30,533 | ) | 1,447 | (31,745 | ) | 1,447 | (30,553 | ) | ||||||||||||
Provision
for Income Taxes
|
- | - | - | - | - | |||||||||||||||
Net
(Loss)
|
$ | (41,798 | ) | $ | (17,618 | ) | $ | (71,660 | ) | $ | (21,694 | ) | $ | (124,544 | ) | |||||
(Loss)
Per Common Share:
|
||||||||||||||||||||
Basic
and Fully Diluted
|
$ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | ||||||||
Weighted
Average Number of Common Shares Outstanding - Basic and
Diluted
|
45,004,500 | 38,476,373 | 45,004,500 | 32,771,233 |
The
accompanying notes to an integral part of these statements.
F-3
CONSUMER
PRODUCTS SERVICES GROUP INC.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT
OF CHANGES IN STOCKHOLDERS' EQUITY
FOR
THE PERIOD FROM INCEPTION (SEPTEMBER 2, 2008)
THROUGH
JUNE 30, 2010
(Unaudited)
Accumulated
|
||||||||||||||||||||
Additional
|
During the
|
|||||||||||||||||||
Common stock
|
Paid-in
|
Development
|
||||||||||||||||||
Shares
|
Par Value
|
Capital
|
Stage
|
Totals
|
||||||||||||||||
Balance
- September 2, 2008
|
- | $ | - | $ | - | $ | - | $ | - | |||||||||||
Common
stock issued for cash
|
27,002,700 | 2,700 | (2,400 | ) | - | 300 | ||||||||||||||
Net
(loss) for the period
|
- | - | - | (11,629 | ) | (11,629 | ) | |||||||||||||
Balance
- December 31, 2008
|
27,002,700 | 2,700 | (2,400 | ) | (11,629 | ) | (11,329 | ) | ||||||||||||
Common
stock issued for cash
|
18,001,800 | 1,800 | 58,200 | - | 60,000 | |||||||||||||||
Net
(loss) for the period
|
- | - | - | (41,255 | ) | (41,255 | ) | |||||||||||||
Balance
- December 31, 2009
|
45,004,500 | 4,500 | 55,800 | (52,884 | ) | 7,416 | ||||||||||||||
Beneficial
conversion feature related to convertible note
|
94,400 | 94,400 | ||||||||||||||||||
Value
of warrant related to convertible note
|
78,400 | 78,400 | ||||||||||||||||||
Net
(loss) for the period
|
- | - | - | (71,660 | ) | (71,660 | ) | |||||||||||||
Balance
- June 30, 2010
|
45,004,500 | $ | 4,500 | $ | 228,600 | $ | (124,544 | ) | $ | 108,556 |
The
accompanying notes are an integral part of financial
statements.
F-4
CONSUMER
PRODUCTS SERVICES GROUP INC.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENTS
OF CASH FLOWS
FOR
THE SIX MONTHS ENDED JUNE 30, 2010 AND 2009,
AND
CUMULATIVE FROM INCEPTION (SEPTEMBER 2, 2008)
THROUGH
JUNE 30, 2010
(Unaudited)
Six Months Ended
|
Cumulative
|
|||||||||||
June 30,
|
From
|
|||||||||||
2010
|
2009
|
Inception
|
||||||||||
Operating
Activities:
|
||||||||||||
Net
(loss)
|
$ | (71,660 | ) | $ | (21,694 | ) | $ | (124,544 | ) | |||
Adjustments
to reconcile net (loss) to net cash (used in) operating
activities:
|
||||||||||||
Amortization
|
28,800 | 1,230 | 31,260 | |||||||||
Impairment
loss
|
23,540 | - | 23,540 | |||||||||
Changes
in net assets and liabilities-
|
||||||||||||
Deferred
acquisition costs
|
(65,000 | ) | - | (65,000 | ) | |||||||
Accounts
payable and accrued liabilites
|
(11,622 | ) | 2,389 | 15,694 | ||||||||
Net
Cash Used in Operating Activities
|
(95,942 | ) | (18,075 | ) | (119,050 | ) | ||||||
Investing
Activities:
|
||||||||||||
Loans
receivable
|
(1,165,175 | ) | - | (1,165,175 | ) | |||||||
Acquisition
and costs of patent
|
- | - | (26,000 | ) | ||||||||
Net
Cash Used in Investing Activities
|
(1,165,175 | ) | - | (1,191,175 | ) | |||||||
Financing
Activities:
|
||||||||||||
Proceeds
from common stock issued
|
- | 80,000 | 60,300 | |||||||||
Proceeds
from convertible note payable
|
400,000 | 400,000 | ||||||||||
Proceeds
from loans
|
850,000 | - | 850,000 | |||||||||
Loans
from related parties - directors and stockholders
|
(10,000 | ) | 9,500 | - | ||||||||
Net
Cash Provided by Financing Activities
|
1,240,000 | 89,500 | 1,310,300 | |||||||||
Net
(Decrease) Increase in Cash
|
(21,117 | ) | 71,425 | 75 | ||||||||
Cash
- Beginning of Period
|
21,192 | 282 | - | |||||||||
Cash
- End of Period
|
$ | 75 | $ | 71,707 | $ | 75 | ||||||
Supplemental
disclosure of cash flow information:
|
||||||||||||
Cash
paid during the period for:
|
||||||||||||
Interest
|
$ | - | $ | - | $ | - | ||||||
Income
taxes
|
$ | - | $ | - | $ | - | ||||||
Beneficial
conversion feature related to convertible note
|
$ | 94,400 | $ | - | $ | 94,400 | ||||||
Value
of warrant related to convertible note
|
$ | 78,400 | $ | - | $ | 78,400 |
The
accompanying notes are an integral part of these financial
statements.
F-5
CONSUMER
PRODUCTS SERVICES GROUP INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
JUNE
30, 2010
(1) Summary of Significant Accounting
Policies
Basis
of Presentation and Organization
Consumer
Products Services Group Inc. formerly Global Dynamics Corp. (the “Company”) is a
Delaware corporation in the development stage and has not commenced operations.
The Company was incorporated under the laws of the State of Delaware on
September 2, 2008.
On March
19, 2010, the Company filed a Certificate of Amendment to the Certificate of
Incorporation of the Company with the Secretary of State of the State of
Delaware. The filing with the Secretary of State amended the name of
the Company to Consumer
Products Services Group, Inc., and amended the capital structure of the
Company to be 1,050,000,000 (One Billion Fifty Million), consisting of
1,000,000,000 (One Billion) shares of common stock, par value of $0.0001 and
50,000,000 (Fifty Million) shares of preferred stock, par value of $0.0001 per
shares.
On March
16, 2010, the Company entered into a Purchase Agreement, dated March 12, 2010
with Consumer Products Services LLC whereby the Company agreed to purchase all
of the membership interests of Consumer Products Services LLC subject to certain
terms and conditions including, but not limited to, the raising of a minimum of
$3,000,000 by the Company.
Consumer
Product Services, LLC (“CPS”) is engaged in returned product management, return
center services, remanufacturing, reprocessing, repairing and recycling of
consumer products.
Unaudited
Interim Financial Statements
The
interim financial statements of the Company as of June 30, 2010, and for the
period then ended, and cumulative from inception, are unaudited. However, in the
opinion of management, the interim financial statements include all adjustments,
including normal recurring adjustments, necessary to present fairly the
Company’s financial position as of June 30, 2010, and the results of its
operations and its cash flows for the periods then ended and cumulative from
inception. These results are not necessarily indicative of the results expected
for the calendar year ending December 31, 2010. The accompanying financial
statements and notes thereto do not reflect all disclosures required under
accounting principles generally accepted in the United States. Refer to the
Company’s audited financial statements as of December 31, 2009, filed with the
SEC, for additional information, including significant accounting
policies.
Cash
and Cash Equivalents
For
purposes of reporting within the statement of cash flows, the Company considers
all cash on hand, cash accounts not subject to withdrawal restrictions or
penalties, and all highly liquid debt instruments purchased with a maturity of
three months or less to be cash and cash equivalents.
Revenue
Recognition
The
Company is in the development stage and has yet to realize revenues from
operations. Once the Company has commenced operations, it will recognize
revenues when delivery of goods or completion of services has occurred provided
there is persuasive evidence of an agreement, acceptance has been approved by
its customers, the fee is fixed or determinable based on the completion of
stated terms and conditions, and collection of any related receivable is
probable.
F-6
Loss
per Common Share
Basic
loss per share is computed by dividing the net loss attributable to the common
stockholders by the weighted average number of shares of common stock
outstanding during the period. Fully diluted loss per share is computed
similarly to basic loss per share except that the denominator is increased to
include the number of additional common shares that would have been outstanding
if the potential common shares had been issued and if the additional common
shares were dilutive. There were no dilutive financial instruments issued or
outstanding for the period ended June 30, 2010.
Income
Taxes
Deferred
tax assets and liabilities are determined based on temporary differences between
the bases of certain assets and liabilities for income tax and financial
reporting purposes. The deferred tax assets and liabilities are classified
according to the financial statement classification of the assets and
liabilities generating the differences.
The
Company maintains a valuation allowance with respect to deferred tax assets. The
Company establishes a valuation allowance based upon the potential likelihood of
realizing the deferred tax asset and taking into consideration the Company’s
financial position and results of operations for the current period. Future
realization of the deferred tax benefit depends on the existence of sufficient
taxable income within the carryforward period under the federal tax
laws.
Changes
in circumstances, such as the Company generating taxable income, could cause a
change in judgment about the realizability of the related deferred tax asset.
Any change in the valuation allowance will be included in income in the year of
the change in estimate.
Fair
Value of Financial Instruments
The
Company estimates the fair value of financial instruments using the available
market information and valuation methods. Considerable judgment is required in
estimating fair value. Accordingly, the estimates of fair value may not be
indicative of the amounts the Company could realize in a current market
exchange. As of June 30, 2010, the carrying value of accrued liabilities, and
loans from directors and stockholders approximated fair value due to the
short-term nature and maturity of these instruments.
Patent
and Intellectual Property
The
Company capitalizes the costs associated with obtaining a patent or other
intellectual property associated with its intended business plan. Such costs are
amortized over the estimated useful lives of the related assets.
Deferred
Acquisition Costs
The
Company defers, as Other Assets, the direct incremental costs of an acquisition
until such time as the acquisition is completed. As such, these costs are added
to the total cost of the acquisition at the time the acquisition is
completed.
Impairment
of Long-Lived Assets
The
Company evaluates the recoverability of long-lived assets and the related
estimated remaining lives when events or circumstances lead management to
believe that the carrying value of an asset may not be recoverable.
Common
Stock Registration Expenses
The
Company considers incremental costs and expenses related to the registration of
equity securities with the SEC, whether by contractual arrangement as of a
certain date or by demand, to be unrelated to original issuance transactions. As
such, subsequent registration costs and expenses are expensed as
incurred.
F-7
Estimates
The
financial statements are prepared on the basis of accounting principles
generally accepted in the United States. The preparation of financial statements
in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities as of June 30, 2010, and expenses for the period then ended, and
cumulative from inception. Actual results could differ from those estimates made
by management.
Recent
Accounting Pronouncements
In April
2009, the FASB issued FSP No. FAS 157-4, “Determining Fair Value When the Volume
and Level of Activity for the Asset or Liability Have Significantly Decreased
and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”), codified
in FASB ASC 820-10-65, which provides additional guidance for estimating fair
value in accordance with ASC 820-10 when the volume and level of activity for an
asset or liability have significantly decreased. ASC 820-10-65 also includes
guidance on identifying circumstances that indicate a transaction is not
orderly. The adoption of ASC 820-10-65 did not have an impact on the Company's
results of operations or financial condition.
In May
2009, the FASB issued SFAS No. 165, "Subsequent Events" ("SFAS 165") codified in
FASB ASC 855-10-05, which provides guidance to establish general standards of
accounting for and disclosures of events that occur after the balance sheet date
but before financial statements are issued or are available to be issued. FASB
ASC 855-10-05 also requires entities to disclose the date through which
subsequent events were evaluated as well as the rationale for why that date was
selected. FASB ASC 855-10-05 is effective for interim and annual periods ending
after June 15, 2009. FASB ASC 855-10-05 requires that public entities evaluate
subsequent events through the date that the financial statements are
issued.
In June
2009, the FASB issued SFAS No. 166, "Accounting for Transfers of Financial
Assets - an amendment of FASB Statement No. 140" ("SFAS 166"), codified as FASB
ASC 860, which requires entities to provide more information regarding sales of
securitized financial assets and similar transactions, particularly if the
entity has continuing exposure to the risks related to transferred financial
assets. FASB ASC 860 eliminates the concept of a "qualifying special-purpose
entity," changes the requirements for derecognizing financial assets and
requires additional disclosures. FASB ASC 860 is effective for fiscal years
beginning after November 15, 2009. The adoption of FASB ASC 860 did not have an
impact on the Company's financial condition, results of operations or cash
flows.
In June
2009, the FASB issued SFAS No. 167, "Amendments to FASB Interpretation No.
46(R)" ("SFAS 167"), codified as FASB ASC 810-10, which modifies how a company
determines when an entity that is insufficiently capitalized or is not
controlled through voting (or similar rights) should be consolidated. FASB ASC
810-10 clarifies that the determination of whether a company is required to
consolidate an entity is based on, among other things, an entity's purpose and
design and a company's ability to direct the activities of the entity that most
significantly impact the entity's economic performance. FASB ASC 810-10 requires
an ongoing reassessment of whether a company is the primary beneficiary of a
variable interest entity. FASB ASC 810-10 also requires additional disclosures
about a company's involvement in variable interest entities and any significant
changes in risk exposure due to that involvement. FASB ASC 810-10 is effective
for fiscal years beginning after November 15, 2009. The adoption of FASB ASC
810-10 did not have an impact on the Company's financial condition, results of
operations or cash flows.
In June
2009, the FASB issued FASB ASC 105, Generally Accepted Accounting Principles,
which establishes the FASB Accounting Standards Codification as the sole source
of authoritative generally accepted accounting principles. Pursuant to the
provisions of FASB ASC 105, we have updated references to GAAP in our financial
statements. The adoption of FASB ASC 105 did not impact the Company's financial
position or results of operations.
(2) Development Stage Activities and
Going Concern
The
Company is currently in the development stage and has no
operations.
F-8
On March
16, 2010, the Company entered into a Purchase Agreement, dated March 12, 2010
with Consumer Products Services LLC whereby the Company agreed to purchase all
of the membership interests of Consumer Products Services LLC subject to certain
terms and conditions including, but not limited to, the raising of a minimum of
$3,000,000 by the Company.
Consumer
Product Services, LLC (“CPS”) is engaged in returned product management, return
center services, remanufacturing, reprocessing, repairing and recycling of
consumer products.
The
accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplate continuation of the Company as a going concern. The Company has not
established any source of revenue to cover its operating costs, and as such, has
incurred an operating loss since inception. Further, as of June 30, 2010, the
cash resources of the Company were insufficient to meet its current business
plan. These and other factors raise substantial doubt about the Company’s
ability to continue as a going concern. The accompanying financial statements do
not include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and classification of
liabilities that may result from the possible inability of the Company to
continue as a going concern.
(3) Patent
On
September 23, 2008, the Company entered into a Patent Transfer and Sale
Agreement whereby the Company acquired all of the rights, title and interest in
the patent known as the “Right angle wrench socket wrench adaptor” for
consideration of $26,000. The United States Patent Application 6,382,057 was
granted on May 7, 2002. Under the terms of the Patent Transfer and Sale
Agreement, the Company was assigned rights to the patent free of any liens,
claims, royalties, licenses, security interests or other encumbrances. The
historical cost of obtaining the patent ($26,000) has been capitalized by the
Company. As of March 31, 2010 the remaining value of the patent was expensed as
an impairment loss.
(4) Convertible Note
Payable
On June
1, 2010, the Company issued a convertible note to an investor for $400,000. The
note has a six month term and accrues interest at 8% per annum. However, the
note is payable upon the closing of any offering, including the sale of
securities or any debt or convertible offering, from which the Company shall
have raised the gross amount of $4,000,000 prior to the maturity
date. After 90 days the holder has the right to convert the note, in
whole or in part, plus accrued interest into shares of restricted common stock
at the greater of $.25 or 50% of the average closing bid price for the ten
trading days ending five days before the conversion date. Pursuant to a separate
written escrow agreement, a stockholder , who is also the Chairman and CEO of
the Company, has pledged 6,000,000 restricted common shares as additional
collateral for the benefit of the note holder. A warrant was also issued to this
investor to purchase up to 400,000 restricted common shares, with “piggy back”
registration rights, at a price of $.25 per shares, or net issuance in lieu of
cash, for a period of five years from the date of issuance. In addition, the
holder may, no later than 45 days after the completion of a capital raise with
gross proceeds of no less than $4,000,000, notify and demand the Company that
the shares covered by this warrant be registered. The Company must use its best
efforts to have the registration declared effective as soon as practicable prior
to the 90th day
following the demand date. All expenses incurred in connection with the
registration shall be paid by the Company.
At June
30, 2010, the Convertible Note consisted of;
Face
Value of Convertible Note
|
$ | 400,000 | ||
Beneficial
Conversion Feature, Net of accumulated amortization of
$15,733
|
( 78,667 | ) | ||
Value
Attributable to Warrants Issued, Net of accumulated amortization of
$13,067
|
( 65,333 | ) | ||
Convertible
Note, Net of Unamortized Discounts
|
$ | 256,000 |
F-9
In
accordance with Emerging Issues Task Force (“EITF”) 98-5, the Company recognized
an imbedded beneficial conversion feature present in this note. The Company
measured an aggregate of $94,400 of the proceeds, which is equal to the
intrinsic value of the imbedded beneficial conversion feature, and recognized it
as Additional Paid-In Capital and a discount against the Convertible Note. This
discount is being amortized as Interest Expense over the six month maturity
period of the Convertible Note.
In
accordance with EITF 00-27, the Company recognized the value attributable to the
Warrants in the amount of $78,400 as Additional Paid-In Capital and a discount
against the Convertible Note. The Company valued the Warrants using the
Black-Scholes pricing model. Assumptions used in the calculation included the
contractual term of the Warrants (five years) as the expected term, a risk free
rate of 2.1% and a market price volatility factor of 100%. The debt discount
attributable to these Warrants is being amortized as Interest Expense over the
six month maturity period of the Convertible Note.
(5) Common Stock
On
September 3, 2008, the Company issued 27,002,700 (post reverse stock split)
shares of its common stock to two individuals who are Directors and officers for
proceeds of $300.
The
Company commenced a capital raising activity and submitted a Registration
Statement on Form S-1 to the Securities and Exchange Commission (“SEC”) to
register and sell,in a self-directed offering, 18,001,800 (post reverse stock
split) shares of newly issued common stock at an offering price of $0.0004 for
total gross proceeds of up to $80,000. The Registration Statement on Form S-1
was filed with the SEC on December 16, 2008 and declared effective on January
13, 2009. The Company has issued 18,001,800 (post reverse stock split) shares of
common stock pursuant to the Registration Statement on Form S-1 and received
gross proceeds of $80,000. The Company incurred $20,000 of offering costs
related to this capital raising activity.
On April
19, 2010, the Company implemented a 1 for 11.11 reverse stock split on its
issued and outstanding shares of common stock to the holders of record as of
April 19, 2010. After the reverse split, the number of shares of common stock
issued and outstanding were 45,004,500 shares. The accompanying financial
statements and related notes thereto have been adjusted accordingly to reflect
the effect of this reverse stock split.
(6) Income Taxes
The
provision (benefit) for income taxes for the period ended June 30, 2010 and
2009, was as follows (assuming a 23% effective tax rate):
2010
|
2009
|
|||||||
Current
Tax Provision:
|
||||||||
Federal-
|
||||||||
Taxable
income
|
$ | - | $ | - | ||||
Total
current tax provision
|
$ | - | $ | - | ||||
Deferred
Tax Provision:
|
||||||||
Federal-
|
||||||||
Loss
carryforwards
|
$ | 9,858 | $ | 4,990 | ||||
Change
in valuation allowance
|
(9,858 | ) | (4,990 | ) | ||||
Total
deferred tax provision
|
$ | - | $ | - |
F-10
The
Company had deferred income tax assets as of June 30, 2010 and December 31,
2009, as follows:
2010
|
2009
|
|||||||
Loss
carryforwards
|
$ | 22,021 | $ | 12,163 | ||||
Less
- Valuation allowance
|
(22,021 | ) | (12,163 | ) | ||||
Total
net deferred tax assets
|
$ | - | $ | - |
The
Company provided a valuation allowance equal to the deferred income tax assets
for the periods ended June 30, 2010 and December 31, 2009, because, in
management’s opinion, it can not be reasonably determined that future taxable
income will be sufficient to utilize these losses during the carryforward
periods.
As of
June 30, 2010, the Company had approximately $75,000 in tax loss carryforwards
that can be utilized in future periods to reduce taxable income, and which will
expire by the year 2030.
(7) Related Party
Transactions
As
described in Note 5, on September 3, 2008, the Company issued 27,002,700 (post
reverse stock split) shares of its common stock to two individuals who are
directors and officers for proceeds of $300.
(8) Commitments
On
November 10, 2008, the Company entered into a Transfer Agent and Registrar
Agreement with Nevada Agency and Trust Company (“NATCO”). NATCO will
act as the Company’s transfer agent and registrar. Under the
Agreement, the Company agreed to pay to NATCO initial fees amounting to $1,800
plus future transaction fees as incurred.
(9) Concentration of Credit
Risk
The
Company’s cash and cash equivalents are invested in a major bank with
account balances below the FDIC maximum insurable amount of $250,000 per
institution. Management believes that the financial institution that holds the
Company’s investments is financially sound. Accordingly, minimal credit risk
exists with respect to these investments.
(10)
Business Combination and Related Loans
On March
16, 2010, the Company entered into a Purchase Agreement, dated March 12, 2010
with Consumer Products Services LLC whereby the Company agreed to purchase all
of the membership interests of Consumer Products Services LLC subject to certain
terms and conditions including, but not limited to, the raising of a minimum of
$3,000,000 by the Company. The consideration for the purchase will be the
issuance of 27,002,700 post reverse shares of restricted common stock of the
Company (see Note 11).
In
anticipation of the acquisition closing, the Company received several loans
totaling $850,000, issued a convertible note to one investor for $400,000 and
loaned $1,165,175 to Consumer Products Services LLC through June 30, 2010, the
Balance Sheet date. The loans are unsecured, non-interest bearing and payable on
demand. The convertible note is payable subject to various terms and conditions
as more fully described in Note 4.
(11)
Subsequent Events
On July
30, 2010 the Company received net proceeds of $240,000 related to a bridge loan
with a face amount of $250,000 after considering an upfront 4% discount, or
$10,000, charged by the lender. This loan is due in 30 days, is unsecured and
accrues interest at 18% per annum payable together with the principal sum of
$250,000 at maturity.
F-11
On August
2, 2010, the Company issued 27,002,700 shares of restricted common stock in
exchange for all of the membership interests of Consumer Products Services,
LLC.
On August
17, 2010 the Company received an additional loan of $200,000, which is
unsecured, non-interest bearing and payable on demand.
On August
17, 2010, the Company issued a convertible note to an investor for $200,000. The
note has a six month term and accrues interest at 8% per annum. After 90 days
the holder convert the note, in whole or in part, plus any accrued interest into
shares of restricted common stock at the greater of $.25 or 50% of the average
closing bid price for the ten trading days ending five days before the
conversion date. A warrant was also issued to this investor to purchase up to
400,000 restricted common shares, with “piggy back” registration rights at a
price of $.30 per shares for a period of five years from the date of
issuance.
The
Company has advanced an additional $640,000 to Consumer Product Services, LLC
from June 30, 2010, the Balance Sheet date, through August 20,
2010.
F-12
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
As used
in this Quarterly Report on Form 10-Q (this “Report”), references to the
“Company,” the “Registrant,” “we,” “our,” “us” or “Consumer Products Services
LLC , unless the context otherwise indicates .
Forward-Looking
Statements
This
Report contains forward-looking statements. For this purpose, any statements
contained in this Report that are not statements of historical fact may be
deemed to be forward-looking statements. Forward-looking information includes
statements relating to future actions, prospective products, future performance
or results of current or anticipated products, sales and marketing efforts,
costs and expenses, interest rates, outcome of contingencies, financial
condition, results of operations, liquidity, business strategies, cost savings,
objectives of management, and other matters. You can identify forward-looking
statements by those that are not historical in nature, particularly those that
use terminology such as “may,” “will,” “should,” “expects,” “anticipates,”
“contemplates,” “estimates,” “believes,” “plans,” “projected,” “predicts,”
“potential,” or “continue” or the negative of these similar terms. The Private
Securities Litigation Reform Act of 1995 provides a “safe harbor” for
forward-looking information to encourage companies to provide prospective
information about themselves without fear of litigation so long as that
information is identified as forward-looking and is accompanied by meaningful
cautionary statements identifying important factors that could cause actual
results to differ materially from those projected in the
information.
These
forward-looking statements are not guarantees of future performance and involve
risks, uncertainties and assumptions that we cannot predict. In evaluating these
forward-looking statements, you should consider various factors, including the
following: (a) those risks and uncertainties related to general economic
conditions, (b) whether we are able to manage our planned growth efficiently and
operate profitable operations, (c) whether we are able to generate sufficient
revenues or obtain financing to sustain and grow our operations, (d) whether we
are able to successfully fulfill our primary requirements for cash, which are
explained below under “Liquidity and Capital Resources.” We assume no obligation
to update forward-looking statements, except as otherwise required under the
applicable federal securities laws.
Corporate
Background
We were
incorporated in Delaware on September 2, 2008 and are a development stage
company. Our principal offices are located at 10 Grand Boulevard, Deer Park NY
11729. Our telephone number is 631-492-2500. Our registered office in Delaware
is located at 113 Barksdale Professional Center, Newark, DE 19711, and our
registered agent is Delaware Intercorp. Our fiscal year end is December
31st.
3
Business
Summary
On
September 23, 2008, we entered into an exclusive worldwide patent sale agreement
(the "Patent Transfer and Sale Agreement ") with Appelfeld Zer Fisher, in
relation to a patented technology (Patent Number: 6,382,057) for a right-angle
wrench socket wrench adaptor. The technology presents the design and development
of an adapter for adapting a right-angle wrench, such as an Allen wrench, to a
socket wrench or ratchet handle in exchange for a commitment to pay Appelfeld
Zer Fisher US $26,000, according to the condition specified in the Patent
Transfer and Sale Agreement related to the Patent Number: 6,382,057. Under
the terms of the Patent Transfer and Sale Agreement, the Company was assigned
rights to the patent free of any liens, claims, royalties, licenses, security
interests or other encumbrances. The historical cost of obtaining the patent
($26,000) has been capitalized by the Company. As of March 31, 2010 the
remaining value of the patent was expensed as an impairment loss.
On March
16, 2009, 2010, the Company entered into a Purchase Agreement, dated March 12,
2010 with Consumer Products Services LLC whereby the Registrant agreed to
purchase all of the membership interests of Consumer Products Services LLC
subject to certain terms and conditions including, but not limited to, the
raising of a minimum of $3,000,000 by the Company The consideration for the
purchase is the issuance of 27,002,700 post reverse shares of common stock of
the Registrant. On August 2, 2010, the Company issued 27,002,700 shares of
restricted common stock in exchange for all of the membership interests of
Consumer Products Services, LLC.
In late
March 2010, Messrs. Darren A. Krantz, Kevin O’Boyle and Richard Hamilton were
elected by the majority of shares entitled to vote to the GLOBAL Board of
Directors and naming Darren A. Krantz as Chairman and CEO of
Global.
The
Company has filed a Certificate of Amendment to its Certificate of Incorporation
with the Secretary of State of the State of Delaware to amend the name of the
corporation to Consumer Products Services Group, Inc. as well as amending the
capital structure as is more fully described under Item 8.01 below.
Consumer
Product Services, LLC (“CPS”) is engaged in “Reverse Supply Chain Services”
including, remanufacturing, return center services, reprocessing, repairing and
recycling of durable consumer products. For over two decades the management team
at CPS has been servicing some of the world's leading consumer product
manufacturers.
Instead
of discarding millions of defective, damaged, and un-repairable returned
products into America's overflowing landfills, which cost manufacturers millions
of dollars to transport, process and dispose of annually, CPS developed
environmentally conscious proprietary remanufacturing, reprocessing and
recycling processes with the highest recovery rate of those very products
without the use of new replacement parts.
4
CPS has
positioned itself as a returned product management and remanufacturing company,
offering the following services to consumer product manufacturers thru out North
America:
· Reverse
Logistics Services
· Return
Product Management
· Return
Center Services
· Quality
Assurance Inspection Services
· Defect
Data Reporting
· Re-qualification
Services
· Remanufacturing
Services
· Warranty
Repair Services
· Recycling
Services
· Warehousing
& Distribution of Remanufactured Products
· Re-marketing
Services
· Supply
Chain Consulting
CPS’s
rigorous proprietary remanufacturing; reprocessing and recycling processes are
utilized on all our customers' products by many of our factory trained
technicians followed by a strict schedule of final inspections and testing with
quality levels set to exceed manufacturers' specifications, consistently
producing products often “compare to new.” The facilities and remanufacturing
procedures exceed the stringent standard for both the US and Canadian listing
and approval requirements.
CPS
employs factory trained engineers, technicians, machinists, assemblers, material
handlers and warehousing personnel, as well as a full staff of product design,
mechanical and electrical engineers who manage and operate the engineering and
quality assurance departments.
Results
of Operations for the three months ended June 30, 2010 and June 30,
2009
We had no
revenues during either the three months ended June 30, 2010 or the three months
ended June 30, 2009. General administrative expenses were $11,265 during the
three months ended June 30, 2010 compared to $19,065 during the three months
ended June 30, 2009. This decrease was primarily due to a drop in
professional fees. We incurred a net loss of $ 41,798 during the three months
ended June 30, 2010 compared to a net loss of $17,618 during the three months
ended June 30, 2009. The increase in the loss was primarily due to the
amortization of convertible note discounts during the current
quarter.
Results
of Operations for the six months ended June 30, 2010 and June 30,
2009
We had no
revenues during either the six months ended June 30, 2010 or the six months
ended June 30, 2009. General administrative expenses were $39,915 during the six
months ended June 30, 2010 compared to $23,141 during the six months ended June
30, 2009. This increase was primarily due to the one time impairment
loss for the write down of the patent offset by a decrease of professional fees.
We incurred a net loss of $ 71,660 during the six months ended June 30, 2010
compared to a net loss of $21,694 during the six months ended June 30,
2009.
The
increase in the loss was primarily due to the amortization of convertible note
discounts and the one time impairment loss for the write down of the
patent.
5
Liquidity
and Capital Resources
The
Company currently has no liquidity and its capital resources are minimal. The
focus over the past six months has been on raising the financing required
pursuant to the acquisition agreement with CPS. The Company is currently in the
process of raising additional equity through a private placement under a formal
investment banking agreement. It is anticipated that equity raised in the near
term will be sufficient to meet its obligations pursuant to the acquisition
agreement with CPS as well as its working capital needs for the next twelve
months.
Going
Concern
The
Company has not established any source of revenue to cover its operating costs,
and as such, has incurred an operating loss since inception. Further, as of June
30, 2010, the cash resources of the Company were insufficient to meet its
current business plan. These and other factors raise substantial doubt about the
Company’s ability to continue as a going concern.
Off-Balance
Sheet Arrangements
We are
not a party to any off-balance sheet arrangements, and we do not engage in
trading activities involving non-exchange traded contracts. In addition, we do
not have any financial guarantees, debt or lease agreements or other
arrangements that could trigger a requirement for an early payment or that could
change the value of ours assets.
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
Inapplicable
as we are a smaller reporting company.
ITEM
4. CONTROLS AND PROCEDURES
Disclosure
Controls and Procedures
Under the
supervision and with the participation of management, including our Chief
Executive Officer and our Chief Financial Officer, we have evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures. Disclosure controls and procedures are controls and
procedures that are designed to ensure that information required to be disclosed
in our reports filed or submitted under the Securities Exchange Act of 1934
(“Exchange Act”) is recorded, processed, summarized and reported within the time
periods specified in the SEC’s rules and forms. Based on this
evaluation, our Chief Executive Officer and Chief Financial Officer have
concluded that our disclosure controls and procedures were effective as of the
end of the period covered by this report.
6
Changes
in Internal Controls over Financial Reporting
Our
management, with the participation of our Chief Executive Officer and Chief
Financial Officer, performed an evaluation as to whether any change in the
internal controls over financial reporting (as defined in Rules 13a-15 and
15d-15 under the Exchange Act occurred during the period covered by this report.
Based on that evaluation, management and the chief executive officer/chief
financial officer concluded that no change occurred in the internal controls
over financial reporting during the period covered by this report that
materially affected, or is reasonably likely to materially affect, the internal
controls over financial reporting.
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements and even when determined to be effective, can
only provide reasonable assurance with respect to financial statement
preparation and presentation. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
PART
II - OTHER INFORMATION
ITEM
1. LEGAL PROCEEDINGS
None
ITEM
1A. RISK FACTORS
A small
business reporting company is not required to report
ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
None
ITEM
3. DEFAULTS UPON SENIOR SECURITIES
None
7
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On March
16, 2010 the majority of shares entitled vote approved the amending the name of
the corporation to Consumer Products Services Group, Inc. and to effectuate a
reverse split of the shares of Common Stock of the Corporation ELEVEN point
ELEVEN (11.11) old shares of common stock for ONE (1) new share of common stock
of the Corporation and to increase the capitalization of the Corporation as
contained in the Certificate of Incorporation and to file a Certificate of
Amendment to the Certificate of Incorporation, amending the capital structure of
the Corporation to 1,050,000,000 (One Billion Fifty Million), consisting of
1,000,000,000 (One Billion) shares of common stock, par value of $0.0001 and
50,000,000 (Fifty Million) shares of preferred stock, par value of $0.0001 per
shares. The changes were effective April 16, 2010, and the trading
symbol was changed to “CPSV.”
ITEM
5. OTHER INFORMATION
None
ITEM
6. EXHIBITS
Index
to Exhibits
3.1
(1)
|
Articles
of Incorporation of the Company
|
3.11(2)
|
Amended
Articles of Incorporation
|
3.2
(1)
|
Bylaws
of the Company
|
3.3
(1)
|
Form
of Common Stock Certificate of the Company
|
10.1(1)
|
Patent
Transfer and Sale Agreement dated September 23 2008, between the
Company and the Patent assignor
|
31.1
(3)
|
Certification
of Principal Executive Officer Pursuant to Exchange Act Rule
13A-14(A)/15D-14(A) as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
31.2
(3)
|
Certification
of Principal Financial Officer Pursuant to Exchange Act Rule
13A-14(A)/15D-14(A) as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
32.1
(3)
|
Certification
of Principal Executive Officer pursuant to Section 302(a) of the
Sarbanes-Oxley Act of 2002
|
32.2
(3)
|
Certification
of Principal Financial Officer pursuant to Section 302(a) of the
Sarbanes-Oxley Act of 2002
|
|
(1)
|
Incorporated
by reference to similarly numbered exhibit on Form S1, filed with the
Securities and Exchange Commission on December 16,
2008
|
|
(2)
|
Incorporated
by reference to similarly numbered exhibit on Form 8-K filed with the
Securities and Exchange Commission on March 19,
2010
|
|
(3)
|
Filed
herewith
|
8
Signatures
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this Report to be signed on behalf of the
undersigned thereunto duly authorized on August 23, 2010.
Consumer Products Services
Group, Inc.
|
||
Date:
August 23, 2010
|
By:
|
/s/ Darren A. Krantz
|
Darren
A. Krantz, Chief Executive Officer
|
||
Date:
August 23, 2010
|
By:
|
/s/ Kevin O’Boyle
|
Kevin
O’Boyle
|
||
Chief
Financial Officer
|
9