U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2003
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from
Commission File No.
Atlantic Securities, Inc.
(Name of Small Business Issuer in its Charter)
Florida 65-0963962
(State of Incorporation) (I.R.S. Employer Identification No.)
Glyme House
St. John's Street,
Bicester,
Oxfordshire,
OX2 6SL
(Address of Principal Executive Offices)
00 44 1869 242378
(Registrant's telephone number. including area code)
(Former name, address and fiscal year, if changed since last report)
ATLANTIC SECURITY, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
INDEX
Part I-- FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Part II-- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
ATLANTIC SECURITY, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
PART I - FINANACIAL INFORMATION
ITEM 1 FINANCIAL INFORMATION
ATLANTIC SECURITY, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
PAGE 1 CONDENSED CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER
30, 2003 (UNAUDITED)
PAGE 2 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR
THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2003
AND FOR THE PERIOD FROM SEPTEMBER 6, 2002
(INCEPTION) TO SEPTEMBER 30, 2002 AND FOR THE PERIOD
FROM SEPTEMBER 6, 2002 (INCEPTION) TO SEPTEMBER 30,
2003 (UNAUDITED)
PAGE 3 CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS'
DEFICIENCY FOR THE PERIOD FROM SEPTEMBER 6, 2002
(INCEPTION) TO SEPTEMBER 30, 2003 (UNAUDITED)
PAGE 4 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
THE SIX MONTHS ENDED SEPTEMBER 30, 2003 AND FOR THE
PERIOD FROM SEPTEMBER 6, 2002 (INCEPTION) TO
SEPTEMBER 30, 2002 AND FOR THE PERIOD FROM SEPTEMBER
6, 2002 (INCEPTION) TO SEPTEMBER 30, 2003 (UNAUDITED)
PAGES 5 - 7 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
ATLANTIC SECURITY, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2003
------------------
(UNAUDITED)
ASSETS
- ------
CURRENT ASSETS
Cash $ 4,228
Prepaid expenses 1,500
---------
TOTAL ASSETS
- ------------ $ 5,728
---------
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
- ----------------------------------------
CURRENT LIABILITIES
Accounts payable $ 7,412
Stockholder loans $ 6,603
---------
TOTAL CURRENT LIABILITIES 14,015
COMMITMENTS AND CONTINGENCIES -
STOCKHOLDERS' DEFICIENCY
Common stock, $0.001 par value, 10,000,000 shares
authorized, 6,114,500 shares issued and outstanding 6,115
Additional paid in capital 108,118
Accumulated deficit during development stage (112,285)
Accumulated other comprehensive loss (208)
Subscription receivable (10,027)
---------
Total Stockholders' Deficiency (8,287)
---------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 5,728
=========
See accompanying notes to condensed consolidated financial statements
1
ATLANTIC SECURITY, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
For The For the
Period From Period From
For The Three September 6, 2002 For the Six September 6, 2002
Months Ended (Inception) To Months Ended (Inception) To
September 30, September 30, September 30, September 30,
2003 2002 2003 2003
OPERATING EXPENSES
Professional fees $ 73,896 $ - $ 103,896 $ 103,896
Other general and administrative 4,702 $ 1,591 5,480 8,395
---------- ---------- --------- ---------
Total Operating Expenses 78,598 1,591 109,376 112,291
---------- ---------- --------- ---------
LOSS FROM OPERATIONS (78,598) (1,591) (109,376) (112,291)
OTHER INCOME
Interest income 6 - 6 6
---------- ---------- --------- ---------
Total Other income 6 - 6 6
---------- ---------- --------- ---------
Loss before income taxes (78,592) (1,591) (109,370) (112,285)
Provision for Income Taxes - - - -
---------- ---------- --------- ---------
NET LOSS (78,592) (1,591) (109,370) (112,285)
OTHER COMPREHENSIVE LOSS
Foreign currency translation loss (109) - (225) (208)
---------- ---------- --------- ---------
COMPREHENSIVE LOSS $ (78,701) $ (1,591) $(109,595) $(112,493)
- ------------------ =========== ========== ========= =========
Net loss per share - basic and diluted $ (0.02) $ - $ (0.02) $ (0.03)
=========== ========== ========= =========
Weighted average number of shares
outstanding during the period - basic
and diluted 4,997,196 3,980,500 4,742,992 4,339,204
=========== ========== ========= =========
See accompanying notes to condensed consolidated financial statements
2
ATLANTIC SECURITY, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY
FOR THE PERIOD FROM SEPTEMBER 6, 2002 (INCEPTION) TO SEPTEMBER 30, 2003
(UNAUDITED)
Accumulated
Common Stock Deficit Other
------------------- Additional Development Comprehensive Subscription
Shares Amount Paid-In Capital Stage Income (Loss) Receivable Total
--------- -------- --------------- ----------- ------------- ------------ ---------
Stock issued to founders
($0.0002 per share) 3,980,500 $ 3,980 $ (3,192) $ - $ - $ (788) $ -
Other comprehensive income - - - - 17 - 17
Net loss for the period from
September 6, 2002
(inception) to March 31, 2003 - - - (2,915) - - (2,915)
Comprehensive loss - - - - - - (2,898)
---------- --------- ------------ ----------- --------- ---------- ---------
Balance, March 31, 2003 3,980,500 3,980 (3,192) (2,915) 17 (788) (2,898)
Stock issued in reverse merger 1,000,000 1,000 (955) - - - 45
Proceeds from subscription
receivable - - - - - 788 788
Stock issued for cash
($0.10 per share) 134,000 135 13,265 - - (10,027) 3,373
Stock issued for services
($0.10 per share) 1,000,000 1,000 99,000 - - - 100,000
Other comprehensive loss - - - - (225) - (225)
Net loss for the six month
period ended September 30, 2003 - - - (109,370) - - (109,370)
Comprehensive loss - - - - - - (109,595)
---------- --------- ------------ ----------- --------- ---------- ---------
BALANCE, SEPTEMBER 30, 2003 6,114,500 $ 6,115 $ 108,118 $(112,285) $ (208) $ (10,027) $ (8,287)
=========================== ========== ========= ============ =========== ========= ========== =========
See accompanying notes to condensed consolidated financial statements
3
ATLANTIC SECURITY, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For The For The
Period From Period From
For The Six September 6, 2002 September 6, 2002
Months Ended (Inception) To (Inception) to
September 30, September 30, September 30,
2003 2002 2003
------------- ----------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (109,370) $ (1,591) $ (112,285)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Stock issued for services 100,000 - 100,000
Changes in operating assets
and liabilities
Increase in prepaid expense (1,500) - (1,500)
Increase in accounts payable 7,412 - 7,412
---------- ----------- ----------
Net Cash Used In Operating Activities (3,458) (1,591) (6,373)
---------- ----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES - - -
---------- ----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 4,206 - 4,206
Proceeds from stockholder loans 3,705 1,591 6,603
---------- ----------- ----------
Net Cash Provided By Operating Activities 7,911 1,591 10,809
---------- ----------- ----------
EFFECT OF EXCHANGE RATE ON CASH (225) - (208)
---------- ----------- ----------
NET INCREASE IN CASH 4,228 - 4,228
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD - - -
---------- ----------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 4,228 $ - $ 4,228
========== =========== ==========
See accompanying notes to condensed consolidated financial statements
4
ATLANTIC SECURITY, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2003
------------------------
(UNAUDITED)
NOTE 1 BASIS OF PRESENTATION
- ------ ---------------------
The accompanying unaudited condensed consolidated 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 Securities and Exchange
Commission for interim financial information. Accordingly,
they do not include all the information necessary for a
comprehensive presentation of financial position and results
of operations.
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 statements
presentation. The results for the interim period are not
necessarily indicative of the results to be expected for the
year.
NOTE 2 REVERSE MERGER
- ------ --------------
On May 15, 2003, Atlantic Security, Inc. consummated an
agreement with Atlantic Security Limited, a United Kingdom
corporation, pursuant to which Atlantic Security Limited
exchanged all of its 39,805 then issued and outstanding
shares of common stock for 3,980,500 shares or approximately
80% of the common stock of Atlantic Security, Inc. As a
result of the agreement, the transaction was treated for
accounting purposes as a reorganization by the accounting
acquirer (Atlantic Security Limited) and as an
recapitalization by the accounting acquiree (Atlantic
Security, Inc.).
Accordingly, the financial statements include the following:
(1) The balance sheet consists of the net assets of the
acquirer at historical cost and the net assets of the
acquiree at historical cost.
(2) The statement of operations include the operations of the
acquirer for the periods presented and the operations of
the acquiree from the date of the merger.
NOTE 3 LOAN PAYABLE - STOCKHOLDERS
- ------ ---------------------------
During the three months ended September 30, 2003, a
stockholder of the Company paid $2,818 of operating expenses
on behalf of the Company. The total loan of $6,603 is
payable on demand, non-interest bearing and unsecured (See
Note 5).
ATLANTIC SECURITY, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2003
------------------------
(UNAUDITED)
NOTE 4 STOCKHOLDERS' EQUITY
- ------ --------------------
During the three months ended June 30, 2003, the Company
issued 1,000,000 shares of common stock for cash of $45 in a
reverse merger transaction (See Note 2).
During the three months ended June 30, 2003, the Company
received cash proceeds of $788 on subscription receivables.
During the three months ended September 30, 2003, the Company
issued 1,000,000 shares of common stock with a fair value of
$100,000 to a consultant for services.
During the three months ended September 30, 2003, the Company
issued 134,000 shares of common stock for cash and
subscriptions receivable of $3,373 and $10,027, respectively.
NOTE 5 RELATED PARTY TRANSACTIONS
- ------ --------------------------
A stockholder of the Company paid $6,603 of operating
expenses on behalf of the Company from inception (See Note 3).
NOTE 6 GOING CONCERN
- ------ -------------
As reflected in the accompanying condensed consolidated
financial statements, the Company is a development stage
company with no revenues, has a negative cash flow from
operations from inception of $6,373, and a working capital
and stockholders' deficiency of $8,287. These factors raise
substantial doubt about its ability to continue as a going
concern. The ability of the Company to continue as a going
concern is dependent on the Company's ability to further
implement its business plan, raise capital and generate
revenues. The financial statements do not include any
adjustments that might be necessary if the Company is unable
to continue as a going concern.
The Company is negotiating with capital funding sources and
service providers to implement its business plan. Management
believes that actions presently being taken to raise capital
and implement its business plan provides the opportunity for
the Company to continue as a going concern.
ATLANTIC SECURITY, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2003
------------------------
(UNAUDITED)
NOTE 7 SUBSEQUENT EVENTS
- ------ -----------------
The Company entered into an employment agreement with a
stockholder to become the CEO and Chairman of the Company
effective October 1, 2003 at an annual salary of $235,500.
The agreement expires on the stockholders 75th birthday or
with six months notice by the Company unless there is a
change in control, which requires the Company to provide
one-year notice. The agreement also calls for a bonus of
10% of the net income of the Company if the Company reaches
certain sales targets, a 12% car allowance and provides for
the stockholder at his option to receive a portion of his
compensation in the form of stock at a 30% discount.
The Company entered into an employment agreement with an
individual to become the COO and President of the North
American Division effective October 6, 2003 at an annual
salary of $100,000. The agreement expires on the
individuals 70th birthday or with thirty days notice by
either party.
ITEM 2. Management's Discussion and Analysis or Plan of Operation Results
------------------------------------------------------------------
For the period from inception through September 30, 2003 no revenue was
generated, this was due to the fact that we had not secured the marketing /
development rights for any product nor had we secured a source of finance.
We have now acquired an operating subsidiary, Atlantic Security Limited,
based in the United Kingdom, and with that comes the marketing rights for a
number of products which we deem to be valuable.
Our existing employees have agreed to defer receipt of all salaries until
we raise a minimum of $100,000. Our principal executive and administrative
offices are located in space that is owned by our Chief Executive Officer.
Management believes that, though we have expressed substantial doubt about
our ability to continue as a going concern, due to our minimal cash
requirements and the cooperation of our employees in deferring salary and
advancing loans to the company to cover operational expenses, assuming that we
do not commence our anticipated operations, we will be able to satisfy our cash
requirements for at least the next twelve months.
We anticipate that as our new business develops, there will be significant
changes in the number of employees over the next twelve months.
Liquidity and Capital Resources
- -------------------------------
While at this time we do not have any significant current liabilities, our
current liabilities exceed our current assets and may continue to do so in the
future. Our business expansion will require significant capital resources that
may be funded through the issuance of shares or notes payable or other debt
arrangements that may affect our debt structure.
To date, we have managed to keep our monthly cash requirements low for two
reasons. In the first instance, our employees have agreed not to draw a salary
until a minimum of $100,000 in funding is obtained. Secondly, we have been able
to keep our operating expenses to a minimum by operating in space owned by our
Chief Executive Officer and are only paying the direct expenses associated with
our business operations.
Given our low monthly cash flow requirement, management believes that,
even though we have expressed doubt about our ability to continue as a going
concern, and assuming that we do not commence our anticipated operations it
has sufficient financial resources to meet its obligations for at least the
next twelve months.
To this end, the company has already signed a letter of intent for an
investment of US $500,000 which we anticipate will be consummated by the end
of the year.
Plan of Operations
- ------------------
Recent international terrorism events have created a major focus on
emerging technologies that support physical security opportunities. There are
financial and social implications and the current security industry lacks the
advanced technology to respond convincingly to terrorism. Atlantic Security,
Inc. is developing both applications and technology that are technically
superior to existing products, from surveillance & bio-molecular detection to
vehicle tracking.
Furthermore, the company's business plan will attempt to deliver
technologies and applications that significantly enhance macro physical
security environments.
ASI exclusively owns the global rights to exploit the Intellectual
Property Rights ("IPR") for several unique technologies. Our objective over
the next 24 months is to develop these technologies into world-class products.
Some of these technologies are already in the "pre-production" stage and could
be ready to deploy into the market place within the next 12 months, provided
we can successfully attract suitable investment and develop trading
partnerships.
ASI's current market opportunities reside within:-
- Bio-terrorism detection systems
- Molecular detection systems
- Asset tracking solutions (including those used by the military)
- Wireless surveillance control systems
Forward Looking Statements
Certain statements in this report are forward-looking statements within
the meaning of the federal securities laws. Although the Company believes that
the expectations reflected in its forward-looking statements are based on
reasonable assumptions, there are risks and uncertainties that may cause
actual results to differ materially from expectations. These risks and
uncertainties include, but are not limited to, competitive pricing pressures
at both the wholesale and retail levels, changes in market demand, changing
interest rates, adverse weather conditions that reduce sales at distributors,
the risk of assembly and manufacturing plant shutdowns due to storms or other
factors, and the impact of marketing and cost-management programs.
ITEM 3. Controls and Procedures
-----------------------
(a) Evaluation of disclosure controls and procedures.
-------------------------------------------------
Our Chief Executive Officer and Chief Financial Officer (the
"Certifying Officer") maintain a system of disclosure controls and procedures
that is designed to provide reasonable assurance that information, which is
required to be disclosed, is accumulated and communicated to management timely.
Under the supervision and with the participation of management, the
Certifying Officer evaluated the effectiveness of the design and operation of
our disclosure controls and procedures (as defined in Rule
[13a-14(c)/15d- 14(c)] under the Exchange Act) within 90 days prior to the
filing date of this report.
Based upon that evaluation, the Certifying Officer concluded that our
disclosure controls and procedures are effective in timely alerting them to
material information relative to our company required to be disclosed in our
periodic filings with the SEC.
(b) Changes in internal controls.
-----------------------------
Our Certifying Officer has indicated that there were no significant
changes in our internal controls or other factors that could significantly
affect such controls subsequent to the date of his evaluation, and there were
no such control actions with regard to significant deficiencies and material
weaknesses.
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds.
(c) During the quarter ending September 30, 2003 the company sold 134,000
restricted shares of its common stock at $0.10 per share. During the quarter
the company received cash payments of $3,373 relating to these sales and
as of the date of this report has outstanding subscription receivables
of $10,027 relating to these sales.
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.
November 10, 2003
ATLANTIC SECURITY, INC.
/s/ Terence Sullivan
--------------------------
Terence Sullivan
Principal Executive Officer,
Principal Financial Officer
CERTIFICATION
OF PRINCIPAL EXECUTIVE OFFICER
AND PRINCIPAL FINANCIAL OFFICER PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
I, Terence Sullivan, certify that:
1 I have reviewed this quarterly report on Form 10-QSB of ATLANTIC
SECURITIES, INC.
2 Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3 Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4 I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and have:
(a) designed such disclosure controls and procedures to ensure that material
information relating to the a registrant is made known to me by others within
those entities, particularly during the period in which this quarterly report
is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report my conclusions about effectiveness of
the disclosure controls and procedures based on my evaluation as of the
Evaluation Date;
5 I have disclosed, based on my most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors (or persons
performing the equivalent functions):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weakness in internal controls; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6 I have indicated in this quarterly report whether there were significant
changes in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of my most recent evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.
Dated: November 10, 2003
/s/ Terence Sullivan
--------------------------
Terence Sullivan
Principal Executive Officer,
Principal Financial Officer
EX-99.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
In connection with the accompanying Quarterly Report on Form 10-QSB
of Atlantic Security, Inc. for the quarter ended September 30, 2003,
I, Terence Sullivan Principal Executive Officer and Principal Financial
Officer of Atlantic Security, Inc. hereby certify pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, to the best of my knowledge and belief, that:
(1) such Quarterly Report on Form 10-QSB for the quarter ended September
30, 2003, fully complies with the requirements of section 13(a)
or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in such Quarterly Report on Form 10-QSB
for the quarter ended September 30, 2003, fairly presents, in all
material respects, the financial condition and results of
operations of Atlantic Security, Inc.
November 10, 2003
/s/ Terence Sullivan
--------------------------
Terence Sullivan
Principal Executive Officer,
Principal Financial Officer