UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 June 30, 2010
¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 333-150954
GLOBAL RISK MANAGEMENT & INVESTIGATIVE SOLUTIONS
(Exact name of registrant as specified in its charter)
|
Nevada
|
26-0674103
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
2190 E. Pebble Road
Suite 150
(Address of principal executive offices)
(Registrant’s telephone number, including area code)
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 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.
| Large accelerated filer ¨ |
Accelerated filer ¨ |
| Non-accelerated filer ¨ (Do not check if a smaller reporting company) |
Smaller reporting company x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
The number of shares of Common Stock, $0.001 par value, outstanding on November 15, 2010, was 5,554,110.
|
PART I.
|
FINANCIAL INFORMATION
|
Page
|
| |
|
|
|
Item 1.
|
|
2
|
|
Item 2.
|
|
12
|
|
Item 3.
|
|
15
|
|
Item 4T.
|
|
15
|
| |
|
|
|
PART II.
|
OTHER INFORMATION
|
|
| |
|
|
|
Item 1.
|
|
16
|
|
Item 1A.
|
|
16
|
|
Item 2.
|
|
16
|
|
Item 3.
|
|
16
|
|
Item 4.
|
|
16
|
|
Item 5.
|
|
17
|
|
Item 6.
|
|
18
|
| |
|
|
|
|
|
19
|
PART I - FINANCIAL INFORMATION
Global Risk Management & Investigative Solutions
(a Development Stage Company)
Condensed Balance Sheets
| |
|
June 30, |
|
|
December 31, |
|
| |
|
2010
|
|
|
2009
|
|
|
Assets
|
|
|
|
|
(Audited)
|
|
| |
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash
|
|
$ |
476 |
|
|
$ |
4,478 |
|
|
Accounts receivable
|
|
|
6,989 |
|
|
|
8,145 |
|
|
Prepaid expenses
|
|
|
2,056 |
|
|
|
252 |
|
|
Total current assets
|
|
|
9,521 |
|
|
|
12,875 |
|
| |
|
|
|
|
|
|
|
|
|
Total assets
|
|
$ |
9,521 |
|
|
$ |
12,875 |
|
| |
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity (Deficit)
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$ |
2,743 |
|
|
$ |
17,016 |
|
|
Accrued expenses
|
|
|
19,543 |
|
|
|
11,953 |
|
|
Accrued expenses - related party
|
|
|
- |
|
|
|
47,865 |
|
|
Accrued compensation - related party
|
|
|
- |
|
|
|
31,250 |
|
|
Total current liabilities
|
|
|
22,286 |
|
|
|
108,084 |
|
| |
|
|
|
|
|
|
|
|
|
Stockholders’ equity (deficit):
|
|
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par value, 10,000,000 shares
|
|
|
|
|
|
|
|
|
|
authorized, no shares issued and outstanding
|
|
|
- |
|
|
|
- |
|
|
Common stock, $0.001 par value, 100,000,000 shares
|
|
|
|
|
|
|
|
|
|
authorized, 5,554,110 and 4,804,110 shares issued and outstanding
|
|
|
|
|
|
|
|
|
|
as of June 30, 2010 and December 31, 2009, respectively
|
|
|
5,554 |
|
|
|
4,804 |
|
|
Additional paid in capital
|
|
|
527,348 |
|
|
|
356,223 |
|
|
(Deficit) accumulated during development stage
|
|
|
(545,667 |
) |
|
|
(456,236 |
) |
|
Total stockholders’ equity (deficit)
|
|
|
(12,765 |
) |
|
|
(95,209 |
) |
| |
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity (deficit)
|
|
$ |
9,521 |
|
|
$ |
12,875 |
|
The accompanying notes are an integral part of the condensed financial statements.
Global Risk Management & Investigative Solutions
(a Development Stage Company)
Condensed Statements of Operations
(Unaudited)
|
|
|
The Three Months Ended
|
|
|
The Six Months Ended
|
|
|
(Inception) to
|
|
| |
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
| |
|
|
|
|
2009 |
|
|
|
|
|
2009 |
|
|
2010
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$ |
10,575 |
|
|
$ |
12,002 |
|
|
$ |
22,635 |
|
|
$ |
12,280 |
|
|
$ |
184,750 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct costs
|
|
|
449 |
|
|
|
1,793 |
|
|
|
1,433 |
|
|
|
3,048 |
|
|
|
111,920 |
|
|
Direct costs - related party
|
|
|
3,292 |
|
|
|
10,614 |
|
|
|
20,159 |
|
|
|
10,707 |
|
|
|
69,080 |
|
|
General and administrative expenses
|
|
|
19,529 |
|
|
|
18,986 |
|
|
|
38,481 |
|
|
|
28,291 |
|
|
|
116,126 |
|
|
Professional fees
|
|
|
- |
|
|
|
12,250 |
|
|
|
- |
|
|
|
19,020 |
|
|
|
200,898 |
|
|
Promotional and marketing
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
24,058 |
|
|
Executive compensation
|
|
|
31,250 |
|
|
|
31,250 |
|
|
|
62,500 |
|
|
|
62,500 |
|
|
|
218,750 |
|
|
Total expenses
|
|
|
54,520 |
|
|
|
74,893 |
|
|
|
122,573 |
|
|
|
123,566 |
|
|
|
740,832 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating (loss)
|
|
|
(43,945 |
) |
|
|
(62,891 |
) |
|
|
(99,938 |
) |
|
|
(111,286 |
) |
|
|
(556,082 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on debt settlement
|
|
|
- |
|
|
|
- |
|
|
|
10,511 |
|
|
|
- |
|
|
|
10,511 |
|
|
Interest expense
|
|
|
(5 |
) |
|
|
- |
|
|
|
(5 |
) |
|
|
(1 |
) |
|
|
(96 |
) |
|
Total other (expense)
|
|
|
(5 |
) |
|
|
- |
|
|
|
10,506 |
|
|
|
(1 |
) |
|
|
10,415 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
|
|
$ |
(43,950 |
) |
|
$ |
(62,891 |
) |
|
$ |
(89,432 |
) |
|
$ |
(111,287 |
) |
|
$ |
(545,667 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shares outstanding -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
basic and fully diluted
|
|
|
4,865,144 |
|
|
|
4,804,110 |
|
|
|
4,808,231 |
|
|
|
4,761,569 |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) per share -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
basic and fully diluted
|
|
$ |
(0.01 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.02 |
) |
|
|
|
|
The accompanying notes are an integral part of these condensed financial statements.
Global Risk Management & Investigative Solutions
(a Development Stage Company)
Condensed Statements of Cash Flows
(Unaudited)
| |
|
Six Months Ended
June 30,
|
|
May 2, 2007
(Inception) to
June 30,
|
|
| |
|
2010
|
|
|
2009
|
|
2010
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
Net (loss)
|
|
$ |
(89,432 |
) |
|
$ |
(111,287 |
) |
|
$ |
(545,667 |
) |
|
Shares issued for compensation - related party
|
|
|
93,750 |
|
|
|
62,500 |
|
|
|
218,750 |
|
|
Shares issued for services - related party
|
|
|
78,125 |
|
|
|
- |
|
|
|
78,125 |
|
|
Shares issued for services
|
|
|
- |
|
|
|
- |
|
|
|
25,903 |
|
|
Gain on debt settlement
|
|
|
10,511 |
|
|
|
- |
|
|
|
10,511 |
|
|
Adjustments to reconcile net (loss) to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
net cash (used) in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
1,156 |
|
|
|
(11,158 |
) |
|
|
(6,989 |
) |
|
Prepaid expenses
|
|
|
(1,804 |
) |
|
|
740 |
|
|
|
(2,056 |
) |
|
Accounts payable
|
|
|
(24,784 |
) |
|
|
(4,080 |
) |
|
|
(7,769 |
) |
|
Accrued expenses
|
|
|
(40,274 |
) |
|
|
32,846 |
|
|
|
19,543 |
|
|
Accrued compensation - related party
|
|
|
(31,250 |
) |
|
|
- |
|
|
|
- |
|
|
Net cash (used) by operating activities
|
|
|
(4,002 |
) |
|
|
(30,439 |
) |
|
|
(209,649 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock
|
|
|
- |
|
|
|
5,000 |
|
|
|
210,125 |
|
|
Net cash provided by financing activities
|
|
|
- |
|
|
|
5,000 |
|
|
|
210,125 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash
|
|
|
(4,002 |
) |
|
|
(25,439 |
) |
|
|
476 |
|
|
Cash, beginning
|
|
|
4,478 |
|
|
|
45,503 |
|
|
|
- |
|
|
Cash, ending
|
|
$ |
476 |
|
|
$ |
20,064 |
|
|
$ |
476 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$ |
5 |
|
|
$ |
1 |
|
|
$ |
96 |
|
|
Income taxes paid
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash disclosures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for compensation - related party
|
|
$ |
93,750 |
|
|
$ |
62,500 |
|
|
$ |
218,750 |
|
|
Shares issued for services - related party
|
|
$ |
78,125 |
|
|
$ |
- |
|
|
$ |
78,125 |
|
|
Shares issued for services
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
25,903 |
|
The accompanying notes are an integral part of the condensed financial statements.
Global Risk Management & Investigative Solutions
(a Development Stage Company)
Notes to Condensed Financial Statements
(unaudited)
Note 1 - Basis of Presentation and summary of significant accounting principals
The unaudited condensed financial statements have been prepared in accordance with United States generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and reflect all adjustments which, in the opinion of management, are necessary for a fair presentation. All such adjustments are of a normal recurring nature. The results of operations for the interim period are not necessarily indicative of the results to be expected for a full year. Certain amounts in the prior year statements have been reclassified to conform to the current year presentations. The statements should be read in conjunction with the financial statements and footnotes thereto included in our annual report on form 10-K for the year ended December 31, 2009.
Use of Estimates - 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 and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates of coal, oil and gas reserves, asset retirement obligations, and impairment on unproved properties are inherently imprecise and may change materially in the near term.
Cash and Cash Equivalents - The Company considers all highly liquid debt instruments and other short-term investments with maturities of three months or less, when purchased, to be cash equivalents. The Company maintains cash balances at one financial institution that is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. As of June 30, 2010, the Company’s cash balances did not exceed the FDIC limits.
Accounts Receivable - Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company evaluates the need for an allowance for doubtful accounts based on review of historical write-off experience and industry data. As of June 30, 2010, there was no allowance for doubtful accounts, since all of the Company’s receivables were subsequently collected.
Income Taxes - Income taxes are accounted for under the asset and liability method in accordance with ASC Topic 740-10, formerly SFAS 109 "Accounting for Income Taxes." Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. When it is considered to be more likely than not that a deferred tax asset will not be realized, a valuation allowance is provided for the excess.
Revenue Recognition - The Company recognizes revenue as services are performed. Amounts billed and collected before services are performed are included in deferred revenue.
Financial Instruments - Financial instruments consist of cash, accounts receivable, accounts payable, notes payable and advances payable. Recorded values of cash, receivables, accounts payable and accrued liabilities approximate fair values due to the short maturities of such instruments. Recorded values for notes payable and related liabilities approximate fair values, since their stated or imputed interest rates are commensurate with prevailing market rates for similar obligations.
Share-Based Compensation - The Company measures and records compensation expense for all share-based payment awards to consultants, employees and directors based on estimated fair values. Additionally, compensation costs for share-based awards are recognized over the requisite service period based on the grant-date fair value.
Loss Per Share - The Company reports earnings (loss) per share in accordance with ASC Topic 260-10, formerly SFAS No. 128, "Earnings per Share." Basic earnings (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted average number of common shares available. Diluted earnings (loss) per share is computed similar to basic earnings (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.
Accounting Standards Updates
In August 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-21 (ASU 2010-21), Accounting for Technical Amendments to Various SEC Rules and Schedules: Amendments to SEC Paragraphs Pursuant to Release No. 33-9026: Technical Amendments to Rules, Forms, Schedules and Codification of Financial Reporting Policies. The Company does not expect the provisions of ASU 2010-21 to have a material effect on the financial position, results of operations or cash flows of the Company.
In July 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-20 (ASU 2010-20), Receivables (Topic 310): Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses. The amendments in this Update are to provide financial statement users with greater transparency about an entity’s allowance for credit losses and the credit quality of its financing receivables. The disclosures about activity that occurs during the reporting period are effective for interim and annual reporting periods beginning on or after December 15, 2010. The Company does not expect the provisions of ASU 2010-20 to have a material effect on the financial position, results of operations or cash flows of the Company.
In May 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-19 (ASU 2010-19), Foreign Currency (Topic 830): Multiple Foreign Currency Exchange Rates. The amendments in this Update are effective for reported balances in an entity’s financial statements that differ from their underlying U.S. dollar denominated values under Subtopic 830-30-S99-1 occurring in the first interim or annual period ending on or after March 15, 2010. The amendments are to be applied retrospectively. The Company does not expect the provisions of ASU 2010-19 to have a material effect on the financial position, results of operations or cash flows of the Company.
In April 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-18 (ASU 2010-18), Receivables (Topic 310): Effect of a Loan Modification When the Loan is Part of a Pool That Is Accounted for as a Single Asset-a consensus of the FASB Emerging Task Force. The amendments in this Update are effective for modifications of loans accounted for within pools under Subtopic 310-30 occurring in the first interim or annual period ending on or after July 15, 2010. The amendments are to be applied prospectively. Early application is permitted. The Company does not expect the provisions of ASU 2010-18 to have a material effect on the financial position, results of operations or cash flows of the Company.
In April 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-17 (ASU 2010-17), Revenue Recognition-Milestone Method (Topic 605): Milestone Method of Revenue Recognition. The amendments in this Update are effective on a prospective basis for milestones achieved in fiscal years, and interim periods within those years, beginning on or after June 15, 2010. Early adoption is permitted. If a vendor elects early adoption and the period of adoption is not the beginning of the entity’s fiscal year, the entity should apply the amendments retrospectively from the beginning of the year of adoption. The Company does not expect the provisions of ASU 2010-17 to have a material effect on the financial position, results of operations or cash flows of the Company.
In April 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-16 (ASU 2010-16), Entertainment-Casinos (Topic 924): Accruals for Casino Jackpot Liabilities-a consensus of the FASB Emerging Issues Task. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2010. The amendments should be applied by recording a cumulative-effect adjustment to opening retained earnings in the period of adoption. The Company does not expect the provisions of ASU 2010-16 to have a material effect on the financial position, results of operations or cash flows of the Company.
In April 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-15 (ASU 2010-15), Financial Services-Insurance (Topic 944): How Investments held through Separate Accounts Affect an Insurer’s Consolidation Analysis of Those Investments-a consensus of the FASB Emerging Issues Task Force. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2010. Early adoption is permitted. The amendments in this Update should be applied retrospectively to all prior periods upon the date of adoption. The Company does not expect the provisions of ASU 2010-15 to have a material effect on the financial position, results of operations or cash flows of the Company.
In April 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-14 (ASU 2010-14), Accounting for Extractive Activities - Oil & Gas - Amendments to Paragraph 932-10-S99-1 (SEC Update). The Amendments are designed to modernize and update the oil and gas disclosure requirements to align them with current practices and changes in technology. The Company does not expect the provisions of ASU 2010-14 to have a material effect on the financial position, results of operations or cash flows of the Company.
In April 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-13 (ASU 2010-13), Compensation-Stock Compensation (Topic 718): Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades - a consensus of the FASB Emerging Issues Task Force. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. Earlier application is permitted. The Company does not expect the provisions of ASU 2010-13 to have a material effect on the financial position, results of operations or cash flows of the Company.
In April 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-12 (ASU 2010-12), Income Taxes (Topic 740): Accounting for Certain Tax Effects of the 2010 Health Care Reform Acts. After consultation with the FASB, the SEC stated that it “would not object to a registrant incorporating the effects of the Health Care and Education Reconciliation Act of 2010 when accounting for the Patient Protection and Affordable Care Act”. The Company does not expect the provisions of ASU 2010-12 to have a material effect on the financial position, results of operations or cash flows of the Company.
Note 2 - Going concern
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred a cumulative net loss of approximately $545,667 and working capital deficit of $12,765 as of the six months ended June 30, 2010.
These conditions give rise to doubt about the Company’s ability to continue as a going concern. These financial statements do not include adjustments relating to the recoverability and classification of reported asset amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company’s continuation as a going concern is dependent upon its ability to obtain additional financing or sale of its common stock as may be required and ultimately to attain profitability.
Management’s plan, in this regard, is to raise financing of approximately $500,000 through a combination of equity and debt financing. Management believes this amount will be sufficient to finance the continuing development for the next twelve months. However, there is no assurance that the Company will be successful in raising such financing.
Note 3 - Fair Value of Assets and Liabilities
Determination of Fair Value
The Company’s financial instruments consist of notes payable and loans payable. The Company believes all of the financial instruments’ recorded values approximate their fair values because of their nature and respective durations.
The Company complies with the provisions of ASC No. 820-10 (ASC 820-10), “Fair Value Measurements and Disclosures.” ASC 820-10 relates to financial assets and financial liabilities. ASC 820-10 defines fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (GAAP), and expands disclosures about fair value measurements. The provisions of this standard apply to other accounting pronouncements that require or permit fair value measurements and are to be applied prospectively with limited exceptions.
ASC 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820-10 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions, about market participant assumptions, that are developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC 820-10 are described below:
Level 1. Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2. Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3. Inputs that are both significant to the fair value measurement and unobservable. These inputs rely on management's own assumptions about the assumptions that market participants would use in pricing the asset or liability. The unobservable inputs are developed based on the best information available in the circumstances and may include the Company's own data.
Application of Valuation Hierarchy
A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The following is a description of the valuation methodology used to measure fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy.
Notes Payable. The Company assessed that the fair value of these liabilities to approximate its carrying value based on the effective yields of similar obligations.
Loans Payable - Other. The Company assessed that the fair value of this liability approximates its carrying value due to its short-term nature.
The methodology described above may produce a current fair value calculation that may not be indicative of net realizable value or reflective of future fair values. If readily determined market values became available or if actual performance were to vary appreciably from assumptions used, assumptions may need to be adjusted, which could result in material differences from the recorded carrying amounts. The Company believes its method of determining fair value is appropriate and consistent with other market participants. However, the use of different methodologies or different assumptions to value certain financial instruments could result in a different estimate of fair value.
Note 4 - Stockholders’ equity
We are authorized to issue 10,000,000 shares of $0.001 par value preferred stock and 100,000,000 shares of $0.001 par value common stock.
In August 2007, we issued 3,500,000 founders shares for cash in the amount of $35,000.
In November 2007, we issued 440,000 shares of our common stock pursuant to subscription agreements for cash totaling $110,000.
In December 2007, we issued 100,000 shares of our common stock pursuant to subscription agreements for cash totaling $25,000.
In March 2008, we issued 140,500 shares of our common stock pursuant to subscription agreements for cash totaling $35,125.
In September 2008, we issued 103,610 shares of our common stock pursuant to a retainer agreement with our securities counsel. We recorded professional fees in the amount of $25,903 representing the fair value of the shares issued.
On February 3, 2009, we issued 500,000 shares of our common stock to our President and CEO valued at $125,000 in lieu of his initial base annual salary for the period beginning on October 2008 through October of 2009.
On March 2, 2009, we sold 20,000 shares of our common stock for cash totaling $5,000 to an individual.
On June 30, 2010, we authorized the issuance of 500,000 shares of our common stock in lieu of compensation to our CEO. The fair value of the shares issued was $93,750. As of June 30, 2010, the shares were unissued.
On June 30, 2010, we authorized the issuance of 250,000 shares of our common stock for accrued administrative services to a related party. The fair value of the shares issued was $78,125. As of June 30, 2010 the shares were unissued.
Note 5 - Related party transactions
On November 15, 2007, we entered into a “Strategic Alliance Agreement” with our founding shareholders. Pursuant to this agreement we agreed to facilitate a business development program whereby Global Risk Management would accept referrals from each founding member in exchange for a 5% referral fee. Further, in the event the referred services are to be performed by a member of the strategic alliance team, that member will receive approximately 90% of the proceeds received from the referral. During the periods ended June 30, 2010 and 2009, we paid referral fees to our founders pursuant to the strategic alliance agreement, totaling $20,159 and $10,707, respectively.
During the period ended September 30, 2009, we entered into an Administrative Rent and Service Agreement with Global Intelligence Network, Inc., which is controlled by a founding shareholder and director of the Company. Pursuant to this agreement, Global Intelligence has agreed to provide office space, administrative staff, supplies and equipment to the Company in exchange for a quarterly service fee of $15,625. The agreement is for a period of one year beginning on April 1, 2009 and terminating on June 30, 2010 for a total of $78,125. As of June 30, 2010, we have expensed $31,250 for the remainder of this agreement.
On February 3, 2009, and June 30, 2010 we authorized the issuance of 500,000 shares of our common stock, respectively, to our President and CEO valued at $218,750 in lieu of his base annual salary for the period beginning on October 2008 through June 30, 2010.
Note 6 - Subsequent events
On October 1, 2010 we issued a total of 750,000 shares previously authorized.
FORWARD-LOOKING STATEMENTS
This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objections of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing.
Forward-looking statements may include the words “may,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. We do not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the dates they are made. You should, however, consult further disclosures we make in this Quarterly Report on Form 10-Q, Annual Report on Form 10-K and Current Reports on Form 8-K.
Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. The factors impacting these risks and uncertainties include, but are not limited to:
|
·
|
deterioration in general or regional economic, market and political conditions;
|
|
·
|
our ability to diversify our operations;
|
|
·
|
actions and initiatives taken by both current and potential competitors;
|
|
·
|
inability to raise additional financing for working capital;
|
|
·
|
the fact that our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and they may require management to make estimates about matters that are inherently uncertain;
|
|
·
|
adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;
|
|
·
|
changes in U.S. GAAP or in the legal, regulatory and legislative environments in the markets in which we operate;
|
|
·
|
inability to efficiently manage our operations;
|
|
·
|
inability to achieve future operating results;
|
|
·
|
the unavailability of funds for capital expenditures;
|
|
·
|
our ability to recruit and hire key employees;
|
|
·
|
the inability of management to effectively implement our strategies and business plans; and
|
|
·
|
the other risks and uncertainties detailed in this report.
|
For a detailed description of these and other factors that could cause actual results to differ materially from those expressed in any forward-looking statement, please see “Risk Factors” in this document and in our Annual Report on Form 10-K for the year ended December 31, 2009.
In this form 10-Q references to “Global Risk”, “Global”, “the Company”, “we,” “us,” “our” and similar terms refer to Global Risk Management & Investigative Solutions.
OVERVIEW AND OUTLOOK
Global is a development stage company incorporated in the State of Nevada in May of 2007. We were formed to provide investigative, technical IT, background, document verification, and data banks of security information to a wide range of clients.
On November 15, 2007, we entered into a Strategic Alliance Agreement with Global Intelligence Network, a Nevada corporation, Attorney’s Process & Investigation Services, Inc., a Wisconsin corporation, Griffin Investigations, a Nevada corporation, AmericanChecked, Inc., a Oklahoma corporation, GGS-US Ltd., a Nevada corporation, International Investigative Solutions, a Nevada corporation and Veridocs (formerly AP-ID Incorporated), a Nevada corporation (hereinafter referred to individually as “Member” and collectively as “Members”), whereas the Members and Global agreed to market and perform certain complementary business consulting services.
As a result of the Strategic Alliance Agreement we have become a one source risk management and security solution for multiple industries.
Since our inception on May 2, 2007 through June 30, 2010, we have generated $184,750 in revenues and have incurred a net loss of $545,667. For the three and six months ended June 30, 2010, we generated $10,575 and $22,635 in revenues, respectively, and incurred a net loss of $43,950 and $89,432, respectively.
Merger with Guardian 8 Corporation
Subsequent to the quarter ended June 30, 2010, we entered into an agreement and plan of merger (the “Merger Agreement”) by and among us, G8 Acquisition Subsidiary, Inc., a Nevada corporation and our wholly-owned subsidiary (“G8S”), and Guardian 8 Corporation, a Nevada corporation (“Guardian 8”).
Under the terms of the Merger Agreement, G8S will be merged with and into Guardian 8, with Guardian 8 as the surviving corporation and new wholly owned subsidiary of us. Pursuant to the Merger Agreement, at the effective time of the merger each issued and outstanding share of Guardian 8 shall be cancelled and converted into one share of our restricted common stock.
The completion of the merger is subject to the satisfaction of several conditions. See Item 5 below for a further discussion of the Merger Agreement.
About Guardian 8
Guardian 8 Corporation has, through its founder, developed what it believes to be a unique and novel mobile/compact personal security device that may be used to draw attention and discourage attack. The device, known as the “PERSONAL SECURITY GUARDIAN”, will employ several countermeasures to allow a user to ward off an eminent attack, including:
|
·
|
Emit an audible alarm and strobe light to frighten an attacker, temporarily impair their vision, and alert others;
|
|
·
|
Ability to link to the user’s personal cell phone using Bluetooth technology to automatically dial 9-1-1 to communicate to police dispatch and transmit your GPS location;
|
|
·
|
Provide an audio and video recording of an incident;
|
|
·
|
Transmit the user’s GPS location;
|
|
·
|
Allow the user to accurately direct pepper-spray upon the attacker with a tracer substance to assist in subsequent identifications;
|
|
·
|
Providing a laser pointer for enhancing aiming accuracy;
|
|
·
|
Transmit a custom message-being attacked, name, age and license plate number and last 30 seconds of ambient audio prior to trigger, also sends video or video frame of attacker;
|
|
·
|
Enable a PTT-push to talk feature to talk with Police Dispatch directly;
|
|
·
|
Repeating audio and video transmission to Police Dispatch and after a certain amount of time defaulting to a communication device to Police Dispatch.
|
Operation Plan
During the next twelve months we plan to focus on the completion of the Guardian 8 merger described above. If we consummate the merger, our operations will switch to those of Guardian 8. However, if we do not complete the merger, we will seek out other merger or acquisition candidates.
Satisfaction of our cash obligations for the next 12 months.
As of June 30, 2010, our cash balance was $476. Our plan for satisfying our cash requirements for the next twelve months is through the consummation of the Guardian 8 merger. We anticipate sales-generated income will be minimal until we complete the merger.
Going Concern
The consolidated financial statements included in this filing have been prepared in conformity with generally accepted accounting principles that contemplate the continuance of Global as a going concern. Global may not have a sufficient amount of cash required to pay all of the costs associated with operating and marketing of its services. Management intends to use borrowings and security sales to mitigate the effects of cash flow deficits, however no assurance can be given that debt or equity financing, if and when required, will be available. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and classification of liabilities that might be necessary should Global be unable to continue existence.
Summary of product and research and development that we will perform for the term of our plan.
We do not anticipate performing any significant product research and development under our plan of operation. In lieu of product research and development we anticipate maintaining control over our advertising to assist us in determining the allocation of our limited advertising dollars.
Expected purchase or sale of plant and significant equipment.
We do not anticipate the purchase or sale of any plant or significant equipment, as such items are not required by us at this time or in the next 12 months.
Significant changes in the number of employees.
We are a development stage company and as of June 30, 2010, we did not have any employees, other than Kyle Edwards, our President and Chief Executive Officer. We look to our officers and directors who collectively have a varied background in law enforcement, security, internet security and technology, loss prevention, background screening, private investigations, due diligence, customer service evaluations, and regulatory compliance. We do not anticipate hiring employees before the consummation of the Guardian 8 merger. We intend to use the services of consultants to perform various professional services. We believe that this use of third-party service providers may enhance our ability to contain general and administrative expenses.
Employment Agreement
Kyle Edwards. On October 10, 2008, we executed an employment agreement with our President and CEO, Kyle Edwards, wherein Mr. Edwards agreed to serve as the Company’s Chief Operating Officer to supervise and control all of the business and affairs of the Company. This agreement was terminated in June of 2010 through the issuance of 500,000 shares of restricted common stock to Mr. Edwards. In addition, we assigned all accounts receivable and bank balances to Mr. Edwards as additional consideration for cancellation of the employment agreement.
Liquidity and Capital Resources
Since inception, we have financed our cash flow requirements through issuance of common stock.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results or operations, liquidity, capital expenditures or capital resources that is material to investors.
Not applicable.
Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer, Kyle Edwards and Principal Financial Officer, Peter Maheu, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report. Based on that evaluation, Messrs. Edwards and Maheu concluded that our disclosure controls and procedures are effective in timely alerting them to material information relating to us (including our consolidated subsidiaries) required to be included in our periodic SEC filings and in ensuring that information required to be disclosed by us in the reports that we file or submit under the Act is accumulated and communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There has been no change in the Company’s internal controls over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
Internal control systems, no matter how well designed and operated, have inherent limitations. Therefore, even a system which is determined to be effective cannot provide absolute assurance that all control issues have been detected or prevented. Our systems of internal controls are designed to provide reasonable assurance with respect to financial statement preparation and presentation.
PART II--OTHER INFORMATION
We may become involved in various routine legal proceedings incidental to our business. However, to our knowledge as of the date of this report, there are no material pending legal proceedings to which we are a party or to which any of our property is subject.
Our significant business risks are described in Item 1A to Form 10-K for the year ended December 31, 2009 to which reference is made herein.
On June 30, 2010, we authorized the issuance of 500,000 shares of our common stock to Kyle Edwards as partial consideration for accrued compensation payable to Mr. Edwards under the terms of his employment agreement and for cancellation of the employment agreement. We believe that the authorization and issuance of the shares was exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2) thereof. These shares were issued in October of 2010.
On June 30, 2010, we authorized the issuance of 250,000 shares of our common stock to Global Intelligence Network as consideration for accrued expenses payable to Global Intelligence Network under the terms of a services and rent agreement and for cancellation of the agreement. We believe that the authorization and issuance of the shares was exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2) thereof. These shares were issued in October of 2010.
Issuer Purchases of Equity Securities
We did not repurchase any of our equity securities during the quarter ended June 30, 2010.
None.
On July 30, 2010, the Registrant entered into an agreement and plan of merger (the “Merger Agreement”) by and among the Registrant, G8 Acquisition Subsidiary, Inc., a Nevada corporation and wholly-owned subsidiary of the Registrant (“G8S”), and Guardian 8 Corporation, a Nevada corporation (“Guardian 8”).
Under the terms of the Merger Agreement, G8S will be merged with and into Guardian 8, with Guardian 8 as the surviving corporation and new wholly owned subsidiary of the Registrant. Pursuant to the Merger Agreement, at the effective time of the merger each issued and outstanding share of Guardian 8 shall be cancelled and converted into one share of the Registrant’s restricted common stock.
The completion of the merger is subject to the satisfaction of several conditions, including the following: (i) the Registrant’s completion of a 1-for-4 reverse stock split; (ii) the Registrant’s completion of the filing of its delinquent 34 Act reports; (iii) the delivery by Guardian 8 of audited financial statements; (iv) approval of the merger by the Registrant’s and Guardian 8’s stockholders; and (v) such other customary conditions with respect to transactions of this type.
The Merger Agreement may be terminated at any time by either Guardian 8 or the Registrant if the merger has not closed on or before September 30, 2010, unless extended by the parties. The parties have agreed to extend the merger agreement until such time as the Registrant has completed the filing of its delinquent public reports.
The Merger Agreement was approved by the unanimous consent of the Registrant’s Board of Directors.
The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, attached to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 as Exhibit 2.1 and is incorporated into this Item by reference.
About Guardian 8
Guardian 8 Corporation has, through its founder, developed what it believes to be a unique and novel mobile/compact personal security device that may be used to draw attention and discourage attack. The device, known as the “PERSONAL SECURITY GUARDIAN”, will employ several countermeasures to allow a user to ward off an eminent attack, including:
|
·
|
Emit an audible alarm and strobe light to frighten an attacker, temporarily impair their vision, and alert others;
|
|
·
|
Ability to link to the user’s personal cell phone using Bluetooth technology to automatically dial 9-1-1 to communicate to police dispatch and transmit your GPS location;
|
|
·
|
Provide an audio and video recording of an incident;
|
|
·
|
Transmit the user’s GPS location;
|
|
·
|
Allow the user to accurately direct pepper-spray upon the attacker with a tracer substance to assist in subsequent identifications;
|
|
·
|
Providing a laser pointer for enhancing aiming accuracy;
|
|
·
|
Transmit a custom message-being attacked, name, age and license plate number and last 30 seconds of ambient audio prior to trigger, also sends video or video frame of attacker;
|
|
·
|
Enable a PTT-push to talk feature to talk with Police Dispatch directly;
|
|
·
|
Repeating audio and video transmission to Police Dispatch and after a certain amount of time defaulting to a communication device to Police Dispatch.
|
Forward-Looking Statements
This Quarterly Report and the exhibit filed with it contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include statements regarding expectations as to the completion of the Merger and the other transactions contemplated by the Merger Agreement. The forward-looking statements contained herein involve risks and uncertainties that could cause actual results to differ materially from those referred to in the forward-looking statements. Such risks include, but are not limited to, the ability of the parties to the Merger Agreement to satisfy the conditions to closing specified in the Merger Agreement. More information about the Registrant and risks related to the Registrant’s business are detailed in the Registrant’s most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2009, and its Quarterly Reports on Form 10-Q and Current Reports on Form 8-K as filed with the Securities and Exchange Commission. The Registrant does not undertake an obligation to update forward-looking statements.
| |
|
|
Incorporated by reference
|
|
Exhibit
|
Exhibit Description
|
Filed herewith
|
Form
|
Period ending
|
Exhibit
|
Filing date
|
|
2.1
|
Merger Agreement with Guardian 8 Corporation dated July 30, 2010
|
|
10-Q
|
06/30/09
|
2.1
|
08/06/10
|
|
3.1(i)(a)
|
Articles of Incorporation dated May 2, 2007
|
|
S-1
|
|
3.1(i)(a)
|
05/16/08
|
|
3.1(ii)(a)
|
Bylaws
|
|
S-1
|
|
3.1(ii)(a)
|
05/16/08
|
|
10.1
|
Strategic Alliance Agreement dated November 15, 2007
|
|
10-K
|
12/31/08
|
10.1
|
04/14/09
|
|
10.2
|
Employment Agreement with Kyle Edwards
|
|
10-K
|
12/31/08
|
10.2
|
04/14/09
|
|
31.1
|
|
X
|
|
|
|
|
|
31.2
|
|
X
|
|
|
|
|
|
32.1
|
|
X
|
|
|
|
|
|
32.2
|
|
X
|
|
|
|
|
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| |
GLOBAL RISK MANAGEMENT & INVESTIGATIVE SOLUTIONS
(Registrant)
|
|
| |
|
|
|
|
Date: November 24, 2010
|
By:
|
/s/ Peter Maheu
|
|
| |
|
Peter Maheu
|
|
| |
|
Principal Financial Officer
|
|
| |
|
(On behalf of the Registrant and as Principal Financial Officer)
|
|