See accompanying notes to financial statements
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Security Solutions Group, Inc.
(A Development Stage Company)
Notes to Financial Statements
March 31, 2010
(Unaudited)
Note 1 – Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information. Accordi ngly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, stockholders’ deficit or cash flows. It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation. The unaudited interim financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K, which contains the audited financial statements and notes thereto, together with the Management’s Discussion and Analysis, for the year ended December 31, 2009.The interim results for the period ended March 31, 2010 are not necessarily indicative of the results for the full fiscal year.
Note 2 – Nature of Operations and Summary of Significant Accounting Policies
Nature of operations
Security Solutions Group, Inc. (“SSG”) was incorporated in Florida on December 22, 2006. SSG was formed to serve as a vehicle to effect an asset acquisition, merger, or business combination with a domestic or foreign business
Reclassifications
Certain amounts in the year 2009 financial statements have been reclassified to conform to the year 2010 presentation. The results of these reclassifications did not materially affect the Company’s financial position, results of operations or cash flows.
Note 3 – Going Concern
The accompanying financial statements have been prepared assuming the Comp any will continue as a going concern. As shown in the accompanying financial statements, the Company has incurred a net operating loss of $9,458 for the three months ended March 31, 2010; a deficit accumulated during the development stage of $127,351 and a stockholders’ deficit of $78,895 as of March 31, 2010. In addition, the Company is in the development stage and has not yet generated any revenues. The ability of the Company to continue as a going concern is dependent on management’s plans, which include potential asset acquisitions, mergers or business combinations with other entities, further implementation of its business plan and continuing to raise funds through debt or equity raises. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.
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Note 4 – Related Party Transactions
On April 1, 2009, DMP Holdings, Inc., (“DMP”) a privately held Utah company, acquired from various shareholders 32,312,000 shares of common stock of SSG at varying prices, which resulted in a change of control. DMP beneficially and directly owns 32,312,000 shares of common stock which represents 98.75% of the outstanding shares of the common stock of the Company based on 32,720,000 shares outstanding as of March 31, 2010.
Operations since the change in control on April 1, 2009 have been funded solely by a company also owned by DMP. As of March 31, 2010, $42,918 was owed to this related party, for which interest is not being charged and is payable on demand.
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
The information presented in Item 2 contains forward-looking statements. You should understand that forward-looking statements are only predictions reflecting our current beliefs and are based on information currently available to us. Although we believe that the assumptions reflected in our forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.
You can identify a forward-looking statement by our use of a word such as “may”, “will”, “should”, “could”, “anticipate”, “believe”, “estimate”, “expect”, “intend”, “plan”, “predict”, “project”, “propose”, “potential” “continue” and similar terms and e xpressions, or the negative of these words or other variations on these words or comparable terminology.
In evaluating a forward-looking statement, you should understand that a forward looking statement involves known and unknown risks, uncertainties, contingencies, and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statement. Known risks related to an investment in our Company, risks related to our business, and risks related to our securities are identified in our Annual Report on Form 10-K for the year ended December 31, 2009 and are incorporated herein by reference. You should also understand that we have no obligation and do not undertake to update or revise forward-looking statements made in this Report to reflect events or circumstances occurring after t he date of this Report.
Background
Corporate Equity Investments, Inc. (“CEI”) was incorporated under the laws of the State of Florida on December 22, 2006. On July 30, 2009, the Board of Directors and a majority of the shareholders approved the filing of Articles of Conversion with the Nevada Secretary of State which effectively changed the domicile of CEI from Florida to Nevada and changed the name of the Company from Corporate Equity Investments, Inc. to Security Solutions Group, Inc. (the "Company", ”SSG”, "our", "us" or "we") In conjunction with the incorporation in the State of Nevada, SSG increased its number of authorized shares of common stock from 100,000,000 to 500,000,000. On August 6, 2009, the Board of Directors of the Company approved an 8 to 1 forward common stock split to all shareholders of record on A ugust 6, 2009. All stock transactions noted herein have been adjusted to account for the forward stock split unless otherwise noted. We have been in the developmental stage since inception and have conducted virtually no business operations, other than organizational and administrative activities. We own no real estate or personal property. Our business purpose is to seek the acquisition of, or merger with, an existing company. On April 1, 2009, DMP Holdings, Inc., (“DMP”) acquired 32,312,000 shares of common stock of the Company resulting in DMP owning 99.48% of the outstanding shares of the Company’s common stock and effected a change of control. The Company filed a Current Report on Form 8-K with the United States Securities and Exchange Commission (“SEC”) on April 7, 2009.
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Description of Business
Our discussion of the proposed business under this caption and throughout this Form 10-Q is purposefully general and is not meant to restrict our virtually unlimited discretion to search for and enter into potential business opportunities.
Based on our business activities, we are a "blank check" company. The U.S. Securities and Exchange Commission (the "SEC") defines such companies as "any development stage company that is issuing a penny stock, within the meaning of Section 3 (a)(51) of the Securities Exchange Act of 1934, as amended, (the "Exchange Act") and that has no specific business plan or purpose, or has indicated that its business plan is to merge with an unidentified company or companies." Under SEC Rule 12b-2 under the Securities Act of 1933, as amended (the "Securities Act"), we also qualify as a "shell company," because we have no or nominal assets (other than cash) and no or nominal operations. Many states have enacted statutes, rules and regulations limiting the sale of securities of "blank check" companies in their respective jurisdictions. No trading market currently exists for our securities, and Management does not intend to undertake any efforts to cause a market to develop in our securities, either debt or equity, or to register any securities under the Securities Act or state blue sky laws or the regulations there under until we have successfully concluded a business combination. We intend to comply with the periodic reporting requirements of the Exchange Act for so long as we are subject to those requirements.
We were organized as a vehicle to investigate and , if such investigation warrants, acquire a target company or business seeking the perceived advantages of being a publicly held corporation. Our principal business objective for the next 12 months and beyond such time will be to achieve long-term growth potential through a combination with a business rather than immediate, short-term earnings. We will not restrict our potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire any type of business.
We have conducted no business operations to date and expect to conduct none in the future, other than our efforts to effectuate a business combination. We therefore, can be characterized as a "shell" corporation. As a "shell" corporation, we face risks inherent in the investigation, acquisition, or involvement in a new business opportunity. Further, as a "development stage" or "start-up" company, we face all of the u nforeseen costs, expenses, problems, and difficulties related to such companies, including whether we will continue to be a going concern entity for the foreseeable future.
We may consider a business which has recently commenced operations, is a developing company in need of additional funds for expansion into new products or markets, is seeking to develop a new product or service, or is an established business which may be experiencing financial or operating difficulties and is in need of additional capital. In the alternative, a business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital, but which desires to establish a public trading market for its shares, while avoiding, among other things, the time delays, significant expense, and loss of voting control which may occur in a public offering.
We do not currently engage in any business activities that provide cash flow. The costs of investigating and analyzing business combinations for the next 12 months and beyond such time will be paid with money in our treasury, if any, with additional money contributed by our stockholders, via borrowings from a related entity, or another source.
During the next 12 months, we anticipate incurring costs related to filing of Exchange Act reports and costs relating to consummating an acquisition. We believe we will be able to meet these costs through use of funds in our treasury and additional amounts, as necessary, to be loaned to or invested in us by our stockholders, management or other investors.
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There are no acquisitions, business combinations, or mergers pending or which have occurred involving the Company. Presently, we have no plans, proposals, agreements, understandings or arrangements of any kind or nature whatsoever to acquire or merge with any specific business or company, and we have not identified any specific business or company for investigation and evaluation.
Our management anticipates that it will likely be able to effect only one business combination, due primarily to our limited financing, and the dilution of interest for present and prospective stockholders, which is likely to occur as a result of our management's plan to offer a controlling interest to a target business in order to achieve a tax-free reorganization. This lack of diversification should be co nsidered a substantial risk in investing in us, because it will not permit us to offset potential losses from one venture against gains from another.
We anticipate that the selection of a business combination will be complex and extremely risky. Because of general economic conditions, rapid technological advances being made in some industries and shortages of available capital, our management believes that there are numerous firms seeking even the limited additional capital that we will have and/or the perceived benefits of becoming a publicly traded corporation. Such perceived benefits of becoming a publicly traded corporation include, among other things, facilitating or improving the terms on which additional equity financing may be obtained, providing liquidity for the principals of and investors in a business, creating a means for providing incentive stock options or similar benefits to key employees, and offering greater flexibility in structuring acquisitions, joint ventures and the like through the issuance of stock. Potentially available business combinations may occur in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex.
The Company may consider a business which has recently commenced operations, is a developing company in need of additional funds for expansion into new products or markets, is seeking to develop a new product or service, or is an established business which may be experiencing financial or operating difficulties and is in need of additional capital. In the alternative, a business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital, but which desires to establish a public trading market for its shares, while avoiding, among other th ings, the time delays, significant expense, and loss of voting control which may occur in a public offering.
Liquidity and Capital Resources
As of March 31, 2010, the Company had $3,000 cash resulting from the sale of 240,000 shares of common stock during July 2009. The Company’s current liabilities as of March 31, 2010 totaled approximately $82,000, comprised of accounts payable and amounts payable to a related party. This compares to the Company’s current liabilities as of December 31, 2009 of approximately $72,000 which comprised of accounts payable and related party payables.
The Company can provide no assurance that it can continue to satisfy its cash requirements for at least the next twelve months.
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The following is a summary of the Company's cash flows provided by (used in) operating, investing, and financing activities:
| | | | | | | | | | | | |
| | | | | Period From December 22, 2006 (Inception) to March 31, 2010 | |
| | Three Months Ended March 31, | | | |
| | 2010 | | | 2009 | | | |
| | | | | | | | | |
Net cash used in operating activities | | | $ (5,193) | | | | $ (4,500) | | | | $ (81,439) | |
Net cash used in investing activities | | | - | | | | - | | | | - | |
Net cash provided by financing activities | | | 5,193 | | | | 4,500 | | | | 84,439 | |
Net effect on cash | | | $ - | | | | $ - | | | | $ 3,000 | |
The Company has generated no revenues since inception. The Company is also dependent upon the receipt of capital investments or other financing to fund its ongoing operations and to execute its business plan of seeking a combina tion with a private operating company. Recurring expenses, which include accounting, auditing, legal, and administrative expenses, have averaged $3,300 per month since inception in December 22, 2006, and are expected to continue until such time as we execute our business plan to acquire or merge with a private operating company. In addition, the Company is dependent upon its largest shareholders and new investors to provide continued funding and capital resources. If continued funding and capital resources are unavailable at reasonable terms, the Company may not be able to implement its plan of operations.
Results of Operations
The Company has not conducted any active operations since inception, except for its efforts to locate suitable acquisition candidates. No revenue has been generated by the Company from December 22, 2006 (Incept ion) to March 31, 2010. It is unlikely the Company will have any revenues unless it is able to effect an acquisition or merger with an operating company, of which there can be no assurance. It is management's assertion that these circumstances may hinder the Company's ability to continue as a going concern. The Company’s plan of operation for the next twelve months shall be to continue its efforts to locate suitable acquisition candidates.
For the three months ending March 31, 2010 and 2009, the Company had a net loss from operations of approximately $9,000 and $8,000, respectively, consisting of legal, accounting, audit and other professional service fees incurred in relation to the filing of its Annual Reports on Form 10-K for fiscal year 2009 and 2008, as well as certain costs necessary to run a public company.
For the period from December 22 , 2006 (Inception) to March 31, 2010, the Company had a net loss from operations of approximately $127,000, comprised mostly of legal, accounting, audit and other professional service fees incurred in relation to various annual and quarterly filings of the Company’s with the SEC in addition to those costs noted above.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
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Contractual Obligations
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
Item 4. Controls and Procedures.
The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Management, including our Chief Executive Officer/Principal Financial Officer, has reviewed the effectiveness of the Company’s disclosure controls and procedures and have concluded that the disclosure controls and procedures, as of March 31, 2010, are effective in timely alerting management to material information relating to the Company that is required to be included in its periodic filings with the Commission.
In connection with its evaluation during the quarterly period ended March 31, 2010, the Company has made no change in the Company’s internal controls over financial reporting that has materially a ffected or is reasonably likely to materially affect the Company’s internal controls over financial reporting. There also were no significant deficiencies or material weaknesses identified for which corrective action needed to be taken.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Unregistered Sales of E quity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. [REMOVED AND RESERVED]
Item 5. Other Information
None.
Item 6. Exhibits
Copies of the following documents are included as exhibits to this report pursuant to Item 601 of Regulation S-B.
| |
SEC Ref. No. | Title of Document |
31.1 | Certification of the Principal Executive |
| Officer/ Principal Financial Officer pursuant |
| to Section 302 of the Sarbanes-Oxley Act of 2002* |
| |
32.1 | Certification of the Principal Executive Officer/ |
| Principal Financial Officer pur suant to U.S.C. |
| Section 1350 as adopted pursuant to Section 906 |
| of the Sarbanes-Oxley Act of 2002*
* Filed herewith. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
