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 December 31, 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)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 ____ No___.
The number of shares of the registrant's common stock, par value $0.0001 per
share, outstanding as of February 9, 2004 was 23,058,000.
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 DECEMBER
31, 2003 (UNAUDITED)
PAGE 2 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR
THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2003
AND FOR THE THREE MONTHS ENDED DECEMBER 31, 2002
AND FOR THE PERIOD FROM SEPTEMBER 6, 2002
(INCEPTION) TO DECEMBER 31, 2002 AND FOR THE PERIOD
FROM SEPTEMBER 6, 2002 (INCEPTION) TO DECEMBER 31,
2003 (UNAUDITED)
PAGE 3 CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS'
DEFICIENCY FOR THE PERIOD FROM SEPTEMBER 6, 2002
(INCEPTION) TO DECEMBER 31, 2003 (UNAUDITED)
PAGE 4 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
THE NINE MONTHS ENDED DECEMBER 31, 2003 AND FOR THE
PERIOD FROM SEPTEMBER 6, 2002 (INCEPTION) TO
DECEMBER 31 2002 AND FOR THE PERIOD FROM SEPTEMBER
6, 2002 (INCEPTION) TO DECEMBER 31, 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
DECEMBER 31, 2003
-----------------
(UNAUDITED)
ASSETS
- ------
CURRENT ASSETS
Cash $ 82,030
Prepaid expenses 1,500
---------
TOTAL CURRENT ASSETS $ 83,530
- -------------------- ---------
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
- ----------------------------------------
CURRENT LIABILITIES
Accrued officers' salary $ 87,250
Stockholder loans $ 2,444
---------
TOTAL CURRENT LIABILITIES 89,694
COMMITMENTS AND CONTINGENCIES -
STOCKHOLDERS' DEFICIENCY
Common stock, $0.001 par value, 100,000,000 shares
authorized, 23,058,000 shares issued and outstanding 23,058
Additional paid in capital 187,175
Accumulated deficit during development stage (234,261)
Accumulated other comprehensive gain 17,864
---------
Total Stockholders' Deficiency (6,164)
---------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 83,530
=========
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
Period From From September
For The Three For the Three For the Nine September 6, 2002 6, 2002
Months Ended Months Ended Months Ended (Inception) To (Inception) To
December 31, December 31, December 31, December 31, December 31,
2003 2002 2003 2002 2003
OPERATING EXPENSES
Stock issued for services $ - $ - $ 100,000 $ - $ 100,000
Officers salary 87,250 - 87,250 - 87,250
Professional fees 34,210 - 38,106 - 38,106
Other general and administrative 531 663 6,011 2,254 8,925
---------- ---------- --------- --------- -------------
Total Operating Expenses 121,991 663 231,367 2,254 234,281
---------- ---------- --------- --------- -------------
LOSS FROM OPERATIONS (121,991) (663) (231,367) (2,254) (234,281)
OTHER INCOME
Interest income 14 - 20 - 20
---------- ---------- --------- --------- -------------
Net Loss Before Taxes (121,976) (663) (231,347) (2,254) (234,261)
Provision for Income Taxes - - - - -
---------- ---------- --------- --------- -------------
NET LOSS (121,976) (663) (231,347) (2,254) (234,261)
OTHER COMPREHENSIVE INCOME
Foreign currency translation gain 17,656 - 17,847 - 17,864
---------- ---------- --------- --------- -------------
COMPREHENSIVE LOSS $ (104,320) $ (663) $(213,499) $ (2,254) $ (216,397)
- ------------------ ============ =========== ========== ========== =============
Net loss per share - basic and diluted $ - $ - $ (0.01) $ - $ (0.01)
============ =========== ========== ========== =============
Weighted average number of shares
outstanding during the period - basic
and diluted 21,701,478 15,922,000 20,055,409 15,922,000 18,179,497
=========== ========== ========== ========== ==========
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 DECEMBER 31, 2003
(UNAUDITED)
Accumulated
Common Stock Deficit Other
------------------- Additional Development Comprehensive Subscription
Shares Amount Paid-In Capital Stage Income Receivable Total
--------- -------- --------------- ----------- ------------- ------------ ---------
Stock issued to founders
($0.0001 per share) 15,922,000 $ 15,922 $ (15,134) $ - $ - $ (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 15,922,000 15,922 (15,134) (2,915) 17 (788) (2,898)
Stock issued for cash 4,000,000 4,000 (3,955) - - - 45
($0.0001 per share)
Proceeds from subscription
receivable - - - - - 788 788
Stock issued for cash
($0.025 per share) 536,000 536 12,864 - - (10,027) 3,373
Stock issued for services
($0.10 per share) 1,000,000 1,000 99,000 - - - 100,000
Stock issued for cash
($0.06 per share) 1,600,000 1,600 94,400 - - - 96,000
Proceeds from subscription receivable - - - - - 10,027 10,027
Other comprehensive Income - - - - 17,847 - 17,847
Net loss for the nine month
period ended December 31, 2003 - - - (231,346) - - (231,346)
Comprehensive loss - - - - - - (213,499)
---------- --------- ------------ ----------- --------- ---------- ---------
BALANCE, DECEMBER 31, 2003 23,058,000 $ 23,058 $ 187,175 $(234,261) $ 17,864 $ - $ (6,164)
=========================== ========== ========= ============ =========== ========= ========== =========
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 Nine September 6, 2002 September 6, 2002
Months Ended (Inception) To (Inception) to
December 31, December 31, December 31,
2003 2002 2003
------------- ----------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (231,346) $ (2,254) $ (234,261)
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 accrued officers salary 87,250 - 87,250
---------- ----------- ----------
Net Cash Used In Operating Activities (45,596) (2,254) (48,511)
---------- ----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES - - -
---------- ----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 110,233 - 110,233
Proceeds (payments) from stockholder loans (454) 2,254 2,444
---------- ----------- ----------
Net Cash Provided By Operating Activities 109,779 2,254 112,677
---------- ----------- ----------
EFFECT OF EXCHANGE RATE ON CASH 17,847 - 17,864
---------- ----------- ----------
NET INCREASE IN CASH 82,030 - 82,030
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD - - -
---------- ----------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 82,030 $ - $ 82,030
========== =========== ==========
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 DECEMBER 31, 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 USE OF ESTIMATES
In preparing financial statements in conformity with
generally accepted accounting principles, management is
required to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the
financial statements and revenues and expenses during the
reported period. Actual results could differ from those
estimates.
NOTE 3 LOSS PER SHARE
Basic and diluted net loss per common share is computed based
upon the weighted average common shares outstanding as
defined by Financial Accounting Standards No. 128, "Earnings
Per Share." As of December 31, 2003 and 2002, there were no
common share equivalents outstanding.
NOTE 4 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 (15,922,000 post split)
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 a
recapitalization by the accounting acquiree (Atlantic
Security, Inc.) (See Note 6(C)).
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 includes the operations of the
acquirer for the periods presented and the operations of
the acquiree from the date of the merger.
NOTE 5 LOAN PAYABLE - STOCKHOLDERS
During the three months ended December 31, 2003, a
stockholder of the Company paid $2,444 for operating expenses
on behalf of the Company. The total loan of $2,444 is
payable on demand, non-interest bearing and unsecured (See
Note 7).
NOTE 6 STOCKHOLDERS' EQUITY
(A) Stock Issued for Cash
During the three months ended June 30, 2003, the Company
issued 1,000,000 (4,000,000 post split) shares of common
stock for cash of $45.
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 536,000 (2,144,000 post split) shares of common stock
for cash and subscriptions receivable of $3,373 and $10,027,
respectively.
During the three months ended December 31, 2003, the Company
issued 1,600,000 shares of common stock for cash of $96,000.
During the three months ended December 31, 2003, the Company
received cash proceeds of $10,027 on subscriptions
receivable.
(B) Stock Issued for Services
During the three months ended September 30, 2003, the Company
issued 1,000,000 shares of common stock for services with a
fair value of $100,000.
(C) Stock Issued in Reverse Merger
On May 15, 2003, Atlantic Security, Inc. exchanged 3,980,500
(15,922,000 post split) shares of common stock for all the
outstanding shares of Atlantic Security Limited (See Note 4).
(D) Common Stock Split
On December 9, 2003, the Company declared a 4 for 1 common
stock split. Per share and weighted average share amounts
have been retroactively restated in the accompanying
financial statements and related notes to reflect this split.
NOTE 7 RELATED PARTY TRANSACTIONS
Stockholders of the Company paid $6,405 of operating expenses
on behalf of the Company from inception (See Note 5).
NOTE 8 COMMITMENTS AND CONTINGENCIES
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 $235,000.
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.
NOTE 9 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 $48,511. 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 additional 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
additional capital and implement its business plan provides
the opportunity for the Company to continue as a going
concern.
ITEM 2. Management's Discussion and Analysis or Plan of Operation Results
------------------------------------------------------------------
For the period from inception through December 31, 2003 no revenue was
generated.
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 previously agreed to defer receipt of all salaries
until we raised a minimum of $100,000. Although we have now raised such
amount, our management has agreed to continue defering receipt of their
salaries. 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 management has agreed to continue
deferring their salaries even though we have raised $100,000 in funding.
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 fourth quarter.
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 December 31, 2003 the company sold 1,600,000
restricted shares of its common stock at $0.06 per share. During the quarter
the company received a cash payment of $96,000 relating to this sale
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.
February 10, 2004
ATLANTIC SECURITY, INC.
/s/ Terence Sullivan
--------------------------
Terence Sullivan
Principal Executive Officer,
Principal Financial Officer