UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
| (Mark One) | ||
X | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Proguard Acquisition Corp.
(Exact name of registrant as specified in its charter)
| Florida | 33-1093761 | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. employer identification no.) | |
3040 E. Commercial Blvd. Ft. Lauderdale, FL | 33308 | |
| (Address of principal executive offices) | (Zip code) |
Registrant's telephone number, including area code: (954) 491-0704
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [ x ]
Indicate by check mark if the registrant is required to file reports pursuant to Section 13 or 15(d) of the Exchange act. Yes [ x ] No [ ]
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 during the preceding 12 months (or such shorter period that Pinnacle was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days. Yes [ x ] No [ ]
Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained hereof, and will not be contained, to will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 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 definitions of "large accelerated filer," "accelerated file" 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 ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [ x ]
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter. The market value of the registrant's voting $.001 par value common stock held by non-affiliates of the Registrant was approximately $502,500.
Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. The number of shares outstanding of the registrant's only class of common stock, as of January 31,2009 was 3,000,000 shares of its $.001 par value common stock.
No documents are incorporated into the text by reference.| ITEM 1. BUSINESS | 3 |
| ITEM 1A. RISK FACTORS | 4 |
| ITEM 1B. UNRESOLVED STAFF COMMENTS | 4 |
| ITEM 2. PROPERTIES | 4 |
| ITEM 3. LEGAL PROCEEDINGS | 4 |
| ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS | 4 |
| ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES | 27 |
| SIGNATURES | 28 |
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The Purchaser in this disposition of assets transaction, is related to Proguard Acquisition in that Proguard Acquisition's President and Director, Mr. Frank Bauer, is also a Vice President and Director of the Purchaser, CSII. In addition, Mr. Norman Becker is the President of CSII, a member of CSII's Board of Directors and is also a Vice President and Director of Proguard Acquisition. Neither Mr. Becker nor Mr. Bauer received any direct or indirect remuneration or compensation in Proguard Acquisition's disposition of its wholly-owned subsidiary, PPSI, through purchase and sale of all of its capital stock to CSII.
In addition to the cross-relationship of the officers and directors, Messrs. Becker and Bauer, to Proguard Acquisition and the Purchaser in this transaction, the Purchaser, CSII, has been a long-term loan creditor of the purchased subsidiary, holding, prior to the purchase and sale transaction, an interest-only loan obligation of PPSI in the unpaid principal amount of $100,000. At completion of the subsidiary purchase and sale transaction, the loan obligation of PPSI to the Purchaser, CSII, was current. Following closing of the transaction on October 4, 2006, the subsidiary's loan obligation to the Purchaser, CSII, was extinguished upon consolidation of CSII's financial accounting.
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In determining the purchase price of the subsidiary, PPSI, to be paid by CSII and to be received by Proguard Acquisition, their respective managements considered the original purchase price paid by Proguard Acquisition to acquire PPSI in July of 2004, $100; the book value of the subsidiary at the time of the transaction; the outstanding unpaid principal loan amount owed by the subsidiary to the Purchaser and the circumstance that that unpaid loan obligation would be extinguished with completion of the purchase and sale transaction. Following consideration of all of those factors, the parties agreed to disposition, sale and purchase of the subsidiary for a purchase price amounting to book value plus an additional sum of approximately $100,000. Proguard Acquisition was informed that the source of funds used by the Purchaser, CSII, to acquire Proguard Acquisition's subsidiary was the Purchaser's working capital. No part of the consideration used was borrowed from a bank or otherwise.
Employees
We presently have no full-time employees and no part-time employees.
Not applicable
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable
Our executive offices located at 3040 E. Commercial Boulevard, Fort Lauderdale, FL 33308 consist of 900 square feet and are orally leased from Financial Communications, Inc., an affiliated entity, at the rate of $1,750 per month on a month-to-month basis.
Proguard Acquisition management is aware of no pending or threatened litigation. During the fourth quarter of the fiscal year ended December 31, 2008, Proguard Acquisition was not a party to any legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
During the fourth quarter of the fiscal year ended December 31, 2008, no matters were submitted to a vote of Proguard Acquisition's security holders, through the solicitation of proxies.
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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
a) Market Information. Registrant's common shares are listed on the NASD bulletin board under the symbol PGRD. As of December 31, 2008, there was only a limited market for registrant's common shares.
The folloying table sets forth the range of high and low bid quotations for the registrant's common stock for each quarter of the last two fiscal years. The quotations represent inter-dealer prices without retail markup, markdown or commission, and may not necessarily represent actual transactions.
| Quarter Ended | High Bid | Low Bid |
| 3/31/07 | n/a | n/a |
| 6/30/07 | .80 | .35 |
| 9/30/07 | .90 | .36 |
| 12/31/07 | .87 | .42 |
| 3/31/08 | .95 | .25 |
| 6/30/08 | .95 | .50 |
| 9/30/08 | .72 | .26 |
| 12/31/08 | .90 | .25 |
b) Holders. At December 31, 2008, there were 43 shareholders and 46 warrant holders.
c) Dividends. Holders of the registrant's common stock are entitled to receive such dividends as may be declared by its board of directors. No dividends on the registrant's common stock have ever been paid, and Proguard Acquisition does not anticipate that dividends will be paid on its common stock in the foreseeable future.
d) Securities authorized for issuance under equity compensation plans. No securities are authorized for issuance by the registrant under equity compensation plans.
e) Performance graph. Not applicable.
ITEM 6. SELECTED FINANCIAL DATA
Not Applicable
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Effective July 1, 2004, Proguard Protection became a wholly owned subsidiary of Proguard Acquisition. The outstanding shares of Proguard Protection, no par value common stock were canceled and Proguard Acquisition acquired 100 shares of the no par value common stock of Proguard Protection for $100 on July 1, 2004.
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On October 2, 2006, we entered into a Common Stock Purchase and Sale Agreement with Corrections Systems International, Inc., a privately held Florida corporation in which CSII agreed to purchase and Proguard Acquisition agreed to sell all of the issued and outstanding common stock of its wholly-owned subsidiary, Proguard Protection Services, Inc. The purchase and sale transaction was completed on October 4, 2006 with the sale, transfer and conveyance of all of the issued and outstanding PPSI capital stock to CSII in exchange for cash in the amount of $250,000. With completion of the purchase and sale transaction, Proguard Acquisition terminated its material operations in exchange for the cash purchase price.
Trends and Uncertainties. We are no longer conducting any material operations since the sale of our wholly owned subsidiary on October 4, 2006. We have not yet determined what operations, if any, we intend to pursue.
Financing Activities. For the year ended December 31, 2007, Proguard Acquisition received proceeds from sales of common stock of $5,461 and proceeds from the exercise of warrants of $19,513. In addition, Proguard Acquisition made advances to related parties of $120,474 including interest. As a result, Proguard Acquisition had net cash used in financing activities of $(88,026).
For the year ended December 31, 2008, Proguard Acquisition did not pursue any financing activities.
Investing Activities. For the year ended December 31, 2008 and 2007, Proguard Acquisition did not pursue any investing activities.
Results of Operations. For the years ended December 31, 2008 and 2007, we did not receive any revenues from continuing operations. We earned interest income of $13,141 for the year ended December 31, 2008 compared to $20,512 for the year ended December 31, 2007.
For the year ended December 31, 2008, we had a loss from continuing operations of $(85,284) compared to ($210,110) for the year ended December 31, 2007.
General and administrative expenses for the year ended December 31, 2008 were $98,425 compared to $230,622 for the prior year. These expenses principally consisted of professional and consulting fees and office expense. The decrease in general and administrative expenses was due to an increase in professional and consulting fees and office expense.
As a result, we incurred a net loss of ($85,284) for the year ended December 31, 2008 compared to net loss of $(210,110) for the year ended December 31, 2007.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
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PROGUARD ACQUISITION CORP.
INDEX TO FINANCIAL STATEMENTS
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| Report of Independent Registered Public Accounting Firm | 8 |
| Balance Sheets at December 31, 2008 and 2007 | 9 |
| Statements of Operations for the years ended December 31, 2008 and 2007 | 10 |
| Statement of Changes in Stockholders' Equity for the years ended December 31, 2008 and 2007 | 11 |
| Statements of Cash Flows for the years ended December 31, 2008 and 2007 | 12 |
| Notes to Financial Statements | 13 |
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To the Board of Directors and Shareholders
Proguard Acquisition Corp.
Ft. Lauderdale, Florida
We have audited the balance sheets of Proguard Acquisition Corp. as of December 31, 2008 and 2007, and the accompanying related statements of operations, changes in stockholders' equity and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Proguard Acquisition Corp. as of December 31, 2008 and 2007 and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has an accumulated deficit as of December 31, 2008 and no source of revenue, which raises substantial doubt about its ability to continue as a going concern. Management's plans concerning these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
| February 9, 2009 Boca Raton, Florida | /s/ Sherb & Co., LLP Certified Public Accountants |
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| December 31, 2008 | December 31, 2007 | |
| Current Assets: | | |
| Cash | $ 124,156 | $ 208,406 |
| Due from affiliates | 120,540 | 120,474 |
| Total current assets | $ 244,696 ======== | $ 328,880 ======== |
| Accounts Payable | $ 3,350 | $ 2,250 |
| Stockholders' equity: | ||
| Preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued or outstanding | - - | - - |
| Common stock, $0.001 par value, 50,000,000 shares authorized, 3,000,000 shares issued and outstanding | 3,000 | 3,000 |
| Additional paid-in capital | 701,647 | 701,647 |
| Accumulated deficit | (463,301) | (378,017) |
| 241,346 | 326,630 | |
| Total liabilities and stockholders' equity | $ 244,696 ======= | $ 328,880 ======= |
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| 2008 | 2007 | |
| Interest Income | $ 13,141 | $ 20,512 |
| General and administrative expenses | (98,425) | (230,622) |
| NET (LOSS) | $ (85,284) ======== | $(210,110) ======== |
| Net (loss) per common share: | ||
| Basic and diluted (loss) per common share | $ (.03) | $ (.07) |
| Weighted average number of common share and common equivalent shares | ||
| Basic | 3,000,000 | 2,877,695 |
| Diluted | 3,000,000 | 2,877,695 |
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Shares | Common Stock Amounts | Additional Paid-In Capital | Accumulated Deficit | Total | |
| Balance, December 31, 2006 | 2,770,400 | $2,770 | $616,829 | $(167,907) | $451,692 |
| Exercise of common stock Warrants | 11,150 | 11 | 19,502 | - - | 19,513 |
| Common shares issued for cash | 218,450 | 219 | 5,242 | - | 5,461 |
| Stock compensation | - | - | 60,074 | - | 60,074 |
| Net (Loss) | - | - - | - - | (210,110) | (210,110) |
| Balance, December 31, 2007 | 3,000,000 | 3,000 | 701,647 | (378,017) | 326,630 |
| Net (Loss) | - - | - - | - - | (85,284) | (85,284) |
| Balance, December 31, 2008 | 3,000,000 ======= | $3,000 ===== | $701,647 ======= | $(463,301) ======== | $241,346 ======= |
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| 2008 | 2007 | |
| Cash flows from operating activities: | ||
| Net loss | $ (85,284) | $(210,110) |
| Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | ||
| Stock based compensation | - | 60,074 |
| Accrued interest due from affiliates | (8,066) | (7,474) |
| Increase in accounts payable | 1,100 | - |
| Total adjustments to net (loss) | (6,966) | 52,600 |
| Net cash (used in) operating activities | (92,250) | (157,510) |
| Cash flows from investing activities | - | - |
| Cash flows from financing activities: | ||
| Proceeds from sale of common stock, net | - | 5,461 |
| Proceeds from exercise of warrants | - | 19,513 |
| Advances to affiliates | (4,000) | (115,000) |
| Repaid by affiliates | 12,000 | 2,000 |
| Net cash provided by (used in) financing activities | 8,000 | (88,026) |
| Net decrease in cash | (84,250) | (245,536) |
| Cash, beginning of year | 208,406 | 453,942 |
| Cash, end of year | $ 124,156 ======= | $ 208,406 ======= |
| Supplemental cash flow information | ||
| Cash paid for interest | - | - - |
| Cash paid for income taxes | - | - - |
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NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Nature of Operations.
The accompanying financial statements present the accounts of Proguard Acquisition Corp. (the Company), formed in Florida in June 2004.
Cash and Cash Equivalents.
The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.
Net Income (Loss) Per Common Share.
The Company calculates net income (loss) per share as required by Statement of Financial Accounting Standards (SFAS) 128, "Earnings per Share." Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. During periods in which the Company incurs losses, common stock equivalents, if any, are not considered, as their effect would be anti-dilutive.
For the net-loss period ended December 31, 2008, we excluded any effect of the 289,250 warrants as their effect would be anti-dilutive.
Income Taxes.
The Company follows SFAS 109 "Accounting for Income Taxes" for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax bases of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change.
Concentrations.
The Company maintains cash in financial institutions insured by the Federal Deposit Insurance Corporation ("FDIC") up to $250,000.
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Use of Estimates.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Stock-Based Compensation Expense.
Prior to January 1, 2006, the Company accounted for share-based awards to employees using the intrinsic value method in accordance with Accounting Principle Board Opinion No. 25, "Accounting for Stock issued to Employees" and related interpretations and provided the pro forma disclosure requirements of Statement of Financial Accounting Standards No. 123, "Accounting For Stock-Based Compensation."
Effective January 1, 2006, the Company adopted Statement of Financial Accounting Standards No. 123 (revised 2004), Share Based Payment ("SFAS No. 123R"). SFAS No. 123R establishes the financial accounting and reporting standards for stock-based compensation plans. The Company adopted SFAS No. 123R using the modified prospective method, and, therefore, prior periods were not restated. Under the modified prospective method, companies are required to record compensation expense for (1) the unvested portion of previously issued awards that remain outstanding at the initial date of adoption, which we did not have, and (2) for any awards issued, modified or settled after the effective date of the statement which we also did not have. The Company recognizes stock compensation expenses over the requisite service period of the award, normally the vesting term of the options which are generally immediately fully vested and exercisable. As required by SFAS No. 123R, the Company has recognized the cost resulting from all stock-based payment transactions including shares issued under its stock option plans in the financial statements.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The amounts of assets and liabilities in the financial statements do not purport to represent realizable or settlement values. However, the Company has incurred an operating loss. Such loss may impair its ability to obtain additional financing.
This factor raises substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company has met its historical working capital requirements from sale of capital shares. However, there can be no assurance that such financial support shall be ongoing or available on terms or conditions acceptable to the Company.
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NOTE 2. ACQUISITION AND SALE OF PROGUARD PROTECTION SERVICES, INC.
On July 1, 2004, the shareholders of Proguard Protection Services, Inc. (Protection) exchanged their 1,000,000 shares of outstanding Protection no par value common stock and received 395,000 shares of the Company's restricted $0.001 par value common stock. Effective July 1, 2004, Protection became a wholly owned subsidiary of the Company.
This acquisition of Protection, the accounting acquirer, by the Company a non-operating entity, is considered in substance a capital transaction by the issuance of 200,000 shares of common stock by Protection for the net assets of the Company which consisted of cash of $9,889 and accounts payable of $900 and was accounted for as a reverse acquisition. No goodwill or other intangible assets were recorded. On this basis, the historical financial statements, except share capital, as of and prior to the acquisition date represent the operations of Protection.
On October 2, 2006, Proguard Acquisition entered into a Common Stock Purchase and Sale Agreement with Corrections Systems International, Inc., a privately held Florida corporation in which CSII agreed to purchase and Proguard Acquisition agreed to sell all of the issued and outstanding common stock of its wholly-owned subsidiary, Proguard Protection Services, Inc. The purchase and sale transaction was completed on October 4, 2006 with the sale, transfer and conveyance of all of the issued and outstanding Proguard Protection capital stock to CSII in exchange for cash in the amount of $250,000. With completion of the purchase and sale transaction, Proguard Acquisition terminated its material operations in exchange for the cash purchase price.
Accordingly, all the assets, liabilities and operations of the subsidiary were reclassified as discontinued operations.
CSII, in this disposition of assets transaction, is related to Proguard Acquisition in that Proguard Acquisition's President and Director, Mr. Frank Bauer, is also a Vice President and Director of the Purchaser, CSII. In addition, Mr. Norman Becker is the president of CSII, a member of CSII's board of directors and is also a vice president and director of Proguard Acquisition. Neither Mr. Becker nor Mr. Bauer received any direct or indirect remuneration or compensation in the disposition of its wholly-owned subsidiary, Protection, through purchase and sale of all of its capital stock to CSII.
In addition to the cross-relationship of the officers and directors, Messrs. Becker and Bauer, to Proguard Acquisition and CSII in this transaction, CSII has been a long-term loan creditor of Proguard Protection, holding, prior to the purchase and sale transaction, aninterest-only loan obligation of Proguard Protection in the unpaid principal amount of $100,000. At completion of the subsidiary purchase, and sale transaction, the loan obligation of Proguard Protection to the Purchaser, CSII, was current. Following closing of the transaction on October 4, 2006, the subsidiary's loan obligation to the Purchaser, CSII, was extinguished upon consolidation of CSII's financial accounting.
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NOTE 3. RELATED PARTY TRANSACTIONS
During the year ended December 31, 2008 and 2007, the Company paid an affiliated entity $21,000 and $21,000, respectively, in rent, administration and taxes.
NOTE 4. DUE FROM AFFILIATE
Due from affiliates consists of $100,000 due from a former subsidiary, $20,540 due from affiliates, including accrued interest of $15,540. The notes bear interest at 8% per annum and are due on demand.
NOTE 5. INCOME TAXES
The Company accounts for income taxes under SFAS 109, which requires use of the liability method. SFAS 109 provides that deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, referred to as temporary differences.
Deferred tax assets and liabilities at the end of each period are determined using the currently enacted tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities are expected to be settled or realized.
The income tax expense (benefit) differs from the amount computed by applying the U.S. federal income tax rate to net income (loss) before income taxes for the years ended December 31, 2008 and 2007, as shown:
| 2008 | 2007 | |
| Tax expense (benefit) at the federal statutory rate | (29,750) | (73,500) |
| State taxes, net of federal benefit | (3,250) | (7,500) |
| Increase (decrease) in valuation allowance | 33,000 | 81,000 |
| Tax expense (benefit) | $ - | $ - |
| 2008 | 2007 | |
| Deferred tax asset: | $ 178,000 | $ 145,000 |
| Federal net operating loss carry forwards | - | - |
| State net operating loss carry forwards | (178,000) | (145,000) |
| Valuation allowance | $ - | $ - |
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As of December 31, 2008, the Company has a net operating loss carryforward of approximately $463,000. This loss will be available to offset future taxable income. If not used, this carryforward will expire through 2027 subject to IRS Code Section 382 limits.
NOTE 6. COMMON STOCK
In April 2005, the Company filed a Form SB-2 registration statement offering 800,000 units at $1 per unit. Each unit consists of one common share and one warrant to purchase one common share at $1.75 per share. The warrants are exercisable for 36 months and may be called at $.01 per warrant after 24 months from the date of the prospectus. As of December 31, 2006, the Company has sold 360,400 units for a total of $360,400. Warrants to purchase 60,000 common shares for a total consideration of $105,000 were exercised during the year ended December 31, 2006.
During the quarter ended March 31, 2007, 11,150 warrants were exercised at a price of $1.75 per warrant and converted into 11,150 shares of common stock for a total price of $19,513.
No warrants were exercised during the year ended December 31,2008. At December 31, 2008, there were 289,250 warrants outstanding.
Stock Based Compensation Expenses 2007: In conjunction with the stock purchases during the three months ended September 30, 2007, pursuant to accounting rules and principles applicable to stock sales in related party transactions, the Company recorded a $60,074 non-cash increase in its "additional paid in capital" account and recorded non-cash transaction expense for the same amount. The accounting rules require that in related party transactions, a non-cash expense be recorded for the difference between "fair value" (as defined in the rules) and the selling price. Further, the transaction with the related party cannot be considered to represent "fair value" and cannot be viewed as an "arms-length transaction" for purposes of the application of the rule and for the related computation.
In the first quarter of 2007, the Company acted as an agent between a potential buyer and its shareholders on a sale of stock. The potential buyer did not execute in a timely manner, so the funds received were forfeited and distributed to the shareholders.
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ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Our bylaws provide that the number of directors who shall constitute the whole board shall be such number as the board of directors shall at the time have designated. We confirm that the number of authorized directors has been set at three pursuant to our bylaws. Each director shall be selected for a term of one year and until his successor is elected and qualified. Vacancies are filled by a majority vote of the remaining directors then in office with the successor elected for the unexpired term and until the successor is elected and qualified.
The directors and executive officers are as follows:
| Name | Position | Term |
| Allerton Towne, age 67 | Chief Executive Officer/ Director | August 7, 2007 to present |
| Frank R. Bauer, age 64 | President/ Director | Inception to present |
| Norman H. Becker, age 71 | Treasurer/ CFO/ Controller/ Director | Inception to present |
| Ricardo A. Rivera, age 38 | Vice President/ Secretary/ Director | Inception to present |
BUSINESS EXPERIENCE OF OFFICERS AND DIRECTORS
Allerton Towne. From 1963 to 1975, Mr. Towne held various management positions with Ford Motor Company. They included distribution, sales planning and analysis, business management, and regional management. In 1975, Mr. Towne founded Drexel Leasing Corp. in Philadelphia, PA. He also established several retail ice cream shops in the tri-state area. Mr. Towne sold both businesses in 1981 and moved to Florida joining Conti-Commodity. A fully registered broker since 1983, Mr. Towne worked as a broker for Source Capital from 2000 to October 2006 specializing in IPOs, mergers and acquisitions and private placements. Mr. Towne earned a Bachelor of Science degree in business administration from Suffolk University in 1963.
Frank R. Bauer has been president and director of Proguard Acquisition since inception. From 1988 to April 2004, he was vice president and director of Ram Ventures Holdings Corp., a management, consulting services and financial advisory services company until it was purchased by American Apparel and Accessories, Inc., an apparel company. Mr. Bauer has been vice president and director of Corrections Systems International, Inc., a dormant company without any current operations, since February 1988. Mr. Bauer was also president and chief executive officer of Specialty Device Installers, Inc., a privately held Florida corporation engaged in outside plant utility and construction contracting. In September of 1996, Specialty Device Installers, Inc. was acquired by Guardian International, Inc. Since 2000, Mr. Bauer has been employed as president of Proguard Protection Services, Inc., a home security corporation and a former wholly owned subsidiary of Proguard Acquisition. Mr. Bauer received a Bachelor of Business Administration Degree from Stetson University in Deland, Florida in 1967.
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Norman H. Becker has been treasurer and director of Proguard Acquisition since inception. Mr. Becker was a director of Ram Ventures Holdings Corp from 1987 to the change of control in March 2004. On January 15, 1993, Mr. Becker was appointed Ram Ventures president. Norman H. Becker has been president and director of Corrections Systems International, Inc., a dormant company without any current operations, since February 1988. Since January 1985, Mr. Becker has also been self-employed in the practice of public accounting in Hollywood, Florida. Mr. Becker is a 1959 graduate of City College of New York (Bernard Baruch School of Business) and is a member of a number of professional accounting associations including the American Institute of Certified Public Accountants, the Florida Institute of Certified Public Accountants and the Dade Chapter of the Florida Institute of Certified Public Accountants.
Ricardo A. Rivera has been vice president, secretary and a director of Proguard Acquisition since inception. Mr. Rivera has served as vice president for Professional Programmers, Inc., d/b/a/ Corrections Services, Inc. since January 1999. Once a public company called Corrections Services, Inc., Professional Programmers is now a private Florida corporation headquartered in Ft. Lauderdale, Florida. CSI has been involved in the manufacturing, marketing, implementation and support of electronic monitoring systems since November 1984. CSI has installed and implemented electronic monitoring programs for private and government agencies involved in work release, probation, parole, pre-trial, and juvenile offenders. Mr. Rivera has over 14 years experience in the electronic monitoring industry. Mr. Rivera began as a technician in 1989, repairing electronic monitoring equipment.
Non-Qualified and Incentive Stock Option Plans
The registrant does not currently have any stock option plans.
Section 16(a). Beneficial Ownership Reporting Compliance
To the registrant's knowledge, no director, officer or beneficial owner of more than ten percent of any class of equity securities of the registrant failed to file on a timely basis reports required by Section 16(a) of the Exchange Act during the year ended December 31, 2008.
Code of Ethics Policy
We have not yet adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions.
Corporate Governance
There have been no changes in any state law or other procedures by which security holders may recommend nominees to our board of directors. In addition to having no nominating committee for this purpose, we currently have no specific audit committee financial expert. Based on the fact that our current business affairs are simple, any such committees are exclusive and beyond the scope of our business and needs.
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ITEM 11. EXECUTIVE COMPENSATION
Executive Compensation
The following shows the annual salaries, bonuses and stock options for our executive officers:
SUMMARY COMPENSATION TABLE
| | Annual Compensation | Long-Term Compensation |
| Awards | Payouts | |||||||
| Name and Principal Position | Year | Salary | Bonus (2) | Other Annual Compensation | Restricted Stock Awards | SARS | Options/ LTIP Payouts | All Other Compensation |
| Allerton Towne CEO | 2008 2007 2006 | -- - -- n/a | -- - -- n/a | -- - -- n/a | -- - -- n/a | -- - -- n/a | -- - -- n/a | -- - -- n/a |
| Frank R. Bauer Former CEO | 2008 2007 2006 | -- - -- $78,708 | -- - -- - -- | -- - -- - -- | -- - -- - -- | -- - -- - -- | -- - -- - -- | -- - -- - -- |
| Norman H. Becker CFO (1) | 2008 2007 2006 | -- - -- - -- | -- - -- - -- | -- - -- - -- | -- - -- - -- | -- - -- - -- | -- - -- - -- | -- - -- - -- |
| Ricardo A. Rivera VP | 2008 2007 2006 | -- - -- - -- | -- - -- - -- | -- - -- - -- | -- - -- - -- | -- - -- - -- | -- - -- - -- | -- - -- - -- |
| All Executive Officers As a Group 4 Persons | 2008 2007 2006 | - -- - -- $78,708 | - -- - -- | - -- - -- | - -- - -- | - -- - -- | - -- - -- | - -- - -- |
(1) Norman H. Becker P.A., an entity controlled by Mr. Becker, an officer and director, was paid $14,100 for various accounting services during the year ending December 31, 2008.
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Option/SAR Grants in Last Fiscal Year
Name | Number of Securities Underlying Options/ SARs Granted | % of Total Options/ SARs Granted to Employees in Fiscal Year | Exercise or Base Price ($/Sh) | Expiration Date |
| Frank R. Bauer | -- | -- | -- | -- |
| Norman Becker | -- | -- | -- | -- |
| Allerton Towne | -- | -- | -- | -- |
| Ricardo A. Rivera | -- | -- | -- | -- |
Name | Shares Acquired on Exercised (#) | Value Realized ($) | Number of Securities Underlying Unexercised Options/ SARs FY-End (#) Exercisable/ Unexercisable | Value of Unexercised In-the-Money Options/ SARs at FY-End ($) Exercisable/ Unexercisable |
| Frank R. Bauer | -- | -- | -- | -- |
| Norman Becker | -- | -- | -- | -- |
| Allerton Towne | -- | -- | -- | -- |
| Ricardo A. Rivera | -- | -- | -- | -- |
We do not have any standard arrangements by which directors are compensated for any services provided as a director. No cash has been paid to the directors in their capacity as such.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following tabulates holdings of shares of Proguard Acquisition by each person or entity who, subject to the above, as of December 31, 2007, holds of record or is known by management to own beneficially more than 5.0% of the common shares and, in addition, by all directors and officers of Proguard Acquisition, individually and as a group. Each named beneficial owner has sole voting and investment power with respect to the shares set forth opposite his name.
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Name of Beneficial Owners | Common Stock Beneficially Owned | Percentage Owned |
| Allerton Towne 1960 NE 30th Court Lighthouse Point, FL 33064 | 600,000 indirectly | 20.00% |
| Frank R. Bauer 710 Cactus Flats Road Carbondale, Colorado 91623 | 565,000 | 18.83% |
| Norman H. Becker 1909 Tyler Street, #603 Hollywood, FL 33020 | 160,500 | 5.35% |
| Ricardo A. Rivera 1422 North Royal Cove Circle Davie, FL 33325 | 70,000 | 2.33% |
| Directors and Officers, as a group | 795,500 directly 600,000 indirectly | 26.52% 20.00% |
| Total Directors and Officers as a group | 1,395,000 | 46.52% |
| Other 5% holder | ||
| Plymouth Capital, Inc. (1) 17551 Weeping Willow Trail Boca Raton, FL 33487 | 600,000 | 20.00% |
1. Plymouth Capital, Inc. is controlled by Allerton Towne, an officer and director of Proguard Acquisition.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, Proguard Acquisition has duly caused this Report to be signed on its behalf by the undersigned duly authorized person.
Date: March 17, 2009
Proguard Acquisition Corp.
/s/Allerton Towne
- ------------------------------
By: Allerton Towne/CEO
In accordance with the requirements of the Securities Exchange Act of 1934, as amendment, this report has been signed by the following persons in the capacities and on the dates stated.
Proguard Acquisition Corp.
(Registrant)
| By: /s/ Frank R. Bauer Director | Dated: March 17, 2009 |
| By: /s/ Norman Becker Controller, Chief Financial Officer Director | Dated: March 17, 2009 |
| By: /s/ Ricardo A. Rivera Director | Dated: March 17, 2009 |
| By: /s/ Allerton Town Director | Dated: March 17, 2009 |
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