Registration No. 333-113241
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
(Amendment Number 5)
UNDER
THE SECURITIES ACT OF 1933
--------------------------
ATLANTIC SECURITY, INC.
(Name of Small Business Issuer in its Charter)
FLORIDA 3949 65-0963962
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(State of Other (Primary Standard (IRS Employer
Jurisdiction of Industrial Identification No.
Incorporation or Classification
Organization) Code No.)
Glyme House
St. John's Street,
Bicester,
Oxfordshire,
OX26 6SL
00 44 1869 242378
(Address and telephone number of principal executive offices and principal
place of business)
James G. Dodrill II, Esq.
5800 Hamilton Way
Boca Raton, FL 33496
561-862-0529
(Name, address and telephone number of agent for service)
Copies to:
James G. Dodrill II, Esq.
James G. Dodrill II, P.A.
5800 Hamilton Way
Boca Raton, FL 33496
561-862-0529
----------------------
Approximate date of proposed sale to the public:
As soon as practicable after the effective date of this
registration statement.
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If any of the securities being registered on this Form are
to be offered on a delayed or continuous basis pursuant to Rule
415 under the Securities Act of 1933, check the following box. (X)
If this Form is filed to register additional securities for
an offering pursuant to Rule 462 (b) under the Securities Act,
check the following box and list the Securities Act registration
statement number of earlier effective registration statement for
the same offering. ( )
If this Form is a post-effective amendment filed pursuant
to Rule 462 (c) under the Securities Act, check the following box
and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. ( ).
If delivery of the prospectus is expected to be made
pursuant to Rule 434, please check the following box. ( ).
CALCULATION OF REGISTRATION FEE
PROPOSED PROPOSED
TITLE OF EACH CLASS MAXIMUM MAXIMUM
OF AMOUNT TO OFFERING AGGREGATE AMOUNT OF
SHARES TO BE BE PRICE PER OFFERING REGISTRATION
REGISTERED REGISTERED SHARE <F1> PRICE FEE
- ------------------- ---------- --------- --------- ------------
Common Stock,
$.0001 par value to be
sold by selling
shareholders 5,514,500 $0.25 $1,378,625 $175.09
TOTAL 5,514,500 $1,378,625 $175.09
(1) Estimated solely for the purpose of calculating the
registration fee pursuant to Rule 457.
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The registrant hereby amends this registration statement on
such date or dates as may be necessary to delay its effective
date until the registrant shall file a further amendment which
specifically states that this registration statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
Information contained herein is subject to completion or
amendment. A registration statement relating to these
securities has been filed with the Securities and Exchange
Commission. We may not sell these securities until the
registration statement filed with the Securities and Exchange
Commission is effective. This prospectus is not an offer to
sell these securities and it is not soliciting an offer to buy
these securities in any state in which the offer or sale is
not permitted.
PROPECTUS
SUBJECT TO COMPLETION, DATED OCTOBER 7, 2004
5,514,500 Shares of Common Stock
ATLANTIC SECURITY, INC.
(A Florida Corporation)
This is our initial public offering. We are registering a total
of 5,514,500 shares of our common stock, all of which are being
offered by selling shareholders. The selling shareholders who are
affiliates will sell their shares at a price per share of $0.25 for
the duration of the offering and our other selling shareholders will
sell their shares at a price per share of $0.25 per share until our
shares are quoted on the Over The Counter Bulletin Board and
thereafter at prevailing market prices or in privately negotiated
transactions.
We will not receive any proceeds from the sale of any of the
shares by selling shareholders. There is no established public market
for our common stock and we have arbitrarily determined the offering
price. Although we hope to be quoted on the OTC Bulletin Board, our
Common Stock is not currently listed or quoted on any quotation
service. There can be no assurance that our common stock will ever be
quoted on any quotation service or that any market for our stock will
ever develop.
_________________________________
INVESTING IN OUR STOCK INVOLVES RISKS. YOU SHOULD CAREFULLY
CONSIDER THE RISK FACTORS BEGINNING ON PAGE 7 OF THIS PROSPECTUS.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities
or passed upon the adequacy or accuracy of this prospectus. Any
representation to the contrary is a criminal offense.
The information in this prospectus is not complete and may be
changed. None of these securities may be sold until a registration
statement filed with the Securities and Exchange Commission is
effective. The prospectus is not an offer to sell these securities
and it is not soliciting an offer to buy these securities in any state
where the offer or sale is not permitted.
The date of this Prospectus is October __, 2004
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TABLE OF CONTENTS
Page
Prospectus Summary 3
The Offering 5
Summary Financial Information 6
Risk Factors 7
Forward Looking Statements 13
Penny Stock Regulations 13
Use of Proceeds 14
Determination of Offering Price 15
Dividend Policy 15
Management's Plan of Operations 16
Business 22
Management 28
Principal Shareholders 31
Selling Shareholders 32
Description of Securities 34
Certain Relationships and Related Transactions 36
Indemnification 37
Plan of Distribution 38
Legal Matters 40
Experts 40
Where You Can Find More Information 41
Index to Financial Statements
2
PROSPECTUS SUMMARY
Because this is a summary, it does not contain all of the
information that may be important to you. You should read the entire
prospectus. You should consider the information set forth under "Risk
Factors" and our financial statements and accompanying notes that
appear elsewhere in this prospectus.
We are a Marketing and Sales company focused on acquiring or licensing
technologies or products from other companies and then selling such
licenses or technologies to other companies. Product development will be
done opportunistically with organizations that have established market
objectives that may be served by technology we acquire. We are a
development stage company and were incorporated in Florida on December
6, 1999, under the name Warrensburg Enterprises, Inc. and were formed
with the contemplated purpose to engage in mergers and acquisitions.
On May 15, 2003, we consummated an agreement with Atlantic Security
Limited, a United Kingdom corporation, pursuant to which Atlantic
Security Limited exchanged all of its then issued and outstanding
shares of common stock for approximately 80% of the common stock of
Atlantic Security, Inc.
Over the last 18 months we have been assisting Professor Gorbunov
by giving him marketing information that we feel will make the
technology he is building be more acceptable to the commercial world.
These products are currently under development by Professor Gorbunov,
and when completed will be able to detect and identify individual
molecules in the air and on contact, which we believe will assist in
identifying bio-terrorism threats, tracking many forms of illicit
cargoes, and have medical applications in detecting super bugs.
We have not invested any money in the development process of any
of the technologies mentioned in this prospectus. Additionally, we
have no written contracts or commitments with any of the companies
mentioned in this prospectus with the exception of an option agreement
with Professor Gorbunov which was signed under UK law and an
investment agreement with Citywide Management Services under UK law.
If our shares are approved for quotation on the Over the
Counter Bulletin Board Citywide Management Services will be obligated
to invest $5,500,000 into the Company: $500,000 over a five-month period at
$100,000 per month and then $5,000,000 over a five-month period at
$1,000,000 per month. These shares will be sold to Citywide at a price
equal to seventy percent (70%) of the average closing bid price for our
shares during the ten days preceding each sale. We will not be registering
the shares but instead intend to sell these shares pursuant to
Regulation S of the Securities Act. We anticipate that these sales will
result in substantial dilution to investors and in all likelihood will
effectively result in a change in control of the Company because if the
average price of Citywide's purchases is $0.25 per share, Citywide will
acquire 22,000,000 shares. If Citywide held all 22,000,000 shares it would
own approximately 48.8% of the Company
Beyond the option agreement with Professor Gorbunov, we currently
lack any legally definable rights to the technologies discussed
throughout this prospectus. Accordingly, we may not be able to
enforce any of the other agreements discussed herein.
We have identified three technology areas we would like to
pursue:
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(a) Intelligent tracking products:
Intelligent tracking products use satellite global positioning
and mobile cell technology to detect objects, people, vehicles
etc.
(b) Smart Wireless Surveillance:
Smart Wireless Surveillance is en emerging technology that
enables the viewing of real time events which can be captured and
transmitted to interested third parties.
(c) Bio and Molecular technology:
Bio and Molecular technology is based on nanotechnology.
Nanotechnology is an umbrella term that covers many areas of
research dealing with objects that are measured in nanometres. A
nanometre (nm) is a billionth of a meter, or a millionth of a
millimeter. The Bio and Molecular detection device is based upon
the detection of unique molecular properties examples of which
are bacteria and their spores and explosives, narcotics,
firearms, fissionable materials, human & animal cargo. It's the
selective measuring ultra-low concentrations of different
substances in a gas media based upon the selective condensation
of a working fluid onto the molecules of interest. The detector
is based upon a physical multiplication process enabling a small
amount of a compound to be enlarged up to readily detectable sub-
micron droplets.
Ideally we intend to own options or the rights to these
products and products like these at some point in the future when
the company is in a position with sufficient funds.
Our objective is not to go into the expense of developing
products ourselves unless we see a good business case for doing
so, but instead to sell the license to other larger companies.
Our objective is to be a clearing-house of technology where
we can encourage sales and if possible develop markets. We would
like to have a portfolio of technologies which can be exploited
in a sales and marketing term to benefit of both the shareholders
and the company.
We will not be a service company and we will not service
clients, we will only put marketing effort in to selling
technology or products that we have title to either by contract
or ownership.
We may not achieve this goal.
We have achieved no revenues to date and our loss from inception
to June 30, 2004 has been $390,558. Additionally, to date we
have relied on the issuance of common stock and on loans from
affiliates to fund our operations. Our principal executive and
administrative offices are located at Glyme House, St. John's
Street, Bicester, Oxfordshire, United Kingdom OX26 6SL
+441896242378 fax +441869322402.
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The Offering
Securities Offered 5,514,500 shares of
common stock, all of
which will be offered by
selling shareholders.
The selling shareholders
who are affiliates will
sell their shares at a
price per share of $0.25
for the duration of the
offering and our other
selling shareholders will
sell their shares at a
price per share of $0.25
per share until our
shares are quoted on the
Over The Counter Bulletin
Board and thereafter at
prevailing market prices
or in privately
negotiated transactions.
Common Stock Outstanding, before offering 23,058,000
Common Stock Outstanding, after offering 23,058,000
Use of Proceeds We will not receive any
proceeds from the sale of
common stock by our
selling shareholders.
Dividend Policy We do not intend to pay
dividends on our common
stock. We plan to retain
any earnings for use in
the operation of our
business and to fund
future growth.
5
Summary Financial Information
The following is a summary of our Financial Statements, which are
included elsewhere in this prospectus. You should read the following
data together with the "Management's Discussion and Analysis of
Financial Condition and Results of Operations" section of this
prospectus as well as with our Financial Statements and the notes
therewith.
Period Period
For the For the from from
Three Months Year September 6, September 6,
ended ended 2002 2002
June 30, March 31, (Inception) (Inception)
2004 2004 to March to June
(Unaudited) 31, 2003 30, 2004
------------ ------------ ------------- ------------
Statement of Operations Data:
Total Revenue $ 0 $ 0 $ 0 $ 0
Total Operating Expenses $ 95,811 $ 292,028 $ (2,915) $ 390,754
Net Loss $ (95,811) $(291,832) $ (2,915) $(390,558)
As of As of
June March
30, 2004 31, 2004
(unaudited) --------
-----------
Balance Sheet Data
Cash and cash equivalents $ 18,376 $ 23,283
Total current assets $ 18,376 $ 23,283
Total current liabilities $ 269,635 $ 178,512
Total stockholders' deficiency $(251,259) $(155,229)
Total liabilities and stockholders' deficiency $ 18,376 $ 23,283
6
RISK FACTORS
The securities offered are highly speculative. You should purchase
them only if you can afford to lose your entire investment in us. You
should carefully consider the following risk factors, as well as all
other information in this prospectus.
Investors should assume that if any of the following risks
actually materialize, our business, financial condition or results of
future operations could be materially and adversely affected. In that
case, the trading price of our common stock could decline, and you may
lose all or part of your investment.
Risks related to our business:
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Our financial statements expressed doubt about our ability to continue
as a going concern.
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Our independent auditor has expressed substantial doubt about our
ability to continue as a going concern. The notes to our financial
statements include an explanatory paragraph expressing substantial
doubt about our ability to continue as a going concern. Among the
reasons cited in the notes as raising substantial doubt as to our
ability to continue as a going concern are the following: we are a
development stage company with no revenues and have a negative cash
flow from operations from inception through June 30, 2004 of $96,033.
Our ability to continue as a going concern is dependent on our ability
to further implement our business plan, raise additional capital and
generate revenues. These conditions raise substantial doubt about our
ability continue as a going concern.
We have a history of operating losses, limited funds and may continue
to incur operating losses. If these continue we may ultimately be
required to seek protection from creditors under applicable bankruptcy
laws.
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We have a history of operating losses. We have incurred
operating losses since our inception and have an accumulated deficit of
$390,558 as of June 30, 2004. We incurred a net loss of $231,832 for
the year ended March 31, 2004 and a net loss of $95,811 for the three
months ended June 30, 2004. If our business plan is not fully executed
as planned, we may continue to experience losses as we continue to
invest in our core businesses. As of October 4, 2004 we had $31,134 in
cash available for use in executing our business plan, which is
insufficient for execution and expansion of our business plan. Our
ability to execute our business model will depend on our ability to
obtain additional financing and achieve a profitable level of
operations. We anticipate that unless we are able to raise net
proceeds of at least $500,000 within the next twelve months that we
will not be able to execute our business plan in a meaningful way.
Raising this amount will allow us to proceed with the basic elements
of our business plan. However, even if we are able to raise the full
$5,500,000 amount under our agreement with Citywide, there can be no
assurance that we will be successful in executing our plan or
achieving profitability. If we are unsuccessful at raising sufficient
funds, for whatever reason, to fund our operations, we may be forced
7
to seek a buyer for our business or another entity with which we could
create a joint venture. If all of these alternatives fail, we expect
that we will be required to seek protection from creditors under
applicable bankruptcy laws. We wish to confirm, however that we do
not have any plans, nor have we entered into any negotiations,
understandings or agreements to acquire or be acquired by another
company.
Even if we receive all funds anticipated from Citywide Management
Services upon our shares being quoted on the Over the Counter Bulletin
Board, we will need additional financing in the future and if we are
unable to raise such financing we may ultimately be required to seek
protection from creditors under applicable bankruptcy laws.
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Upon our shares being approved for quotation on the Over the
Counter Bulletin Board Citywide Management Services will be obligated
to invest $5,500,000 into the Company pursuant to a Financing Agreement
entered into on August 10, 2003 and amended most recently on June 2, 2004.
Even if we receive all such funds, we expect that we may seek
additional financing in the future.
This is because if we exercise the option agreement with
Professor Gorbunov to purchase his technology, in 2005 there is
considerable financial cost. The company will meet this cost by giving
half the agreed amount in shares, which we are entitled to do under
the agreement. We will pay Professor Gorbunov an initial payment of 1
million pounds sterling (approximately $1.8 million at the exchange
rate on August 6, 2004) and an equivalent value of shares or our
common stock, as payment for his 92% ownership of the technology and a
further 1 million pounds sterling (approximately $1.8 million at the
exchange rate on August 6, 2004) with an equivalent value of shares as
a bonus to Professor Gorbunov if he gets Middlesex University to sell
their 8% ownership., The university will receive 500,000 pounds
sterling (approximately $900,000 at the exchange rate onAugust 6,
2004) with an equivalent value of shares of our common stock. If
Professor Gorbunov fails to achieve his objective in getting the last
8% then he will not receive any bonus payment. And Middlesex
University will remain an 8% owner of the Intellectual Property Rights
("IPR").
When and if we achieve any sales of this technology then
Professor Gorbunov will receive bonus payments attached to each
technology. A separate payment for Bio and a separate payment for
Molecular, these payments will be paid out of the cost of the first
sale. We will pay him 1 million sterling (approximately $1.8 million
at the exchange rate on August 6, 2004) with an equivalent value of
shares or our common stock, this is true for both technologies.
Raising $5,500,000 allows us to proceed fully with our business
plan. Raising additional funds, however, would allow us to capitalize
on other opportunities that may arise. However, we may not be able to
obtain additional capital or generate sufficient revenues to fund our
operations. To assist us in our cash flow requirements we may
determine, depending upon the prevailing stock price of our shares, to
seek subscriptions from the sale of securities to private investors,
although there can be no assurance that we will be successful in
securing any investment from private investors at terms and conditions
satisfactory to us, if at all. If we are unsuccessful at raising
8
sufficient funds, for whatever reason, to fund our operations, we may
be forced to seek a buyer for our business or another entity with
which we could create a joint venture. We wish to confirm, however
that we do not have any plans, nor have we entered into any
negotiations, understandings or agreements to acquire or be acquired
by another company. If all of these alternatives fail, we expect that
we will be required to seek protection from creditors under applicable
bankruptcy laws.
We have not commenced full operations and we may not be able to
achieve or maintain profitability. If we do not achieve or maintain
profitability we may ultimately be required to seek protection from
creditors under applicable bankruptcy laws.
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We are a relatively young company and our proposed operations are
subject to all of the risks inherent in such a business enterprise.
The likelihood of our success must be considered in light of the
problems, expenses, difficulties, complications, and delays frequently
encountered in connection with the development of a business in a
competitive industry. As with an investment in any emerging growth
company, ownership of common shares may involve a high degree of risk,
and is not recommended if you cannot reasonably bear the risk of a
total loss of your investment.
Even if we successfully raise $5,500,000 we expect to continue to
incur operating losses in fiscal 2005, which ends March 31, 2005. If
we do not achieve revenue growth sufficient to absorb our planned
expenditures, we could experience additional losses in future periods.
These losses or fluctuations in our operating results could cause the
market value of our common stock to decline.
We do not currently hold the rights to any products or technology and
may never acquire or develop any. Accordingly, we do not currently
and may never have legally enforceable rights to market or sell any
product and may therefore never achieve revenue. If we are unable to
acquire the rights to products or technology and unable to achieve
revenue we may ultimately be required to seek protection from creditors
under applicable bankruptcy laws.
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Although we have held negotiations with the holders of several
technologies and have reached an option agreement to acquire certain
technology from Dr. Boris Gorbunov, our minimal funding has prevented
us from entering written agreements or acquiring any licenses or other
rights for other technologies.
We decided that our currently limited funds should be allocated
towards fulfilling the requirements necessary to receive the
$5,500,000 funding from Citywide. By doing so we assumed the risk
that when we open contractual discussions with Comnytell we will have
to renegotiate the contract and any licensing fee that may be required
over a period of time and any relationship that had existed before
would not benefit the company in any way. Also we may not be able to
9
consummate any agreement with Comnytell, SA Limited or the other
companies we have identified as having technology in which we are
interested. If we are unable to acquire either of these technologies
or find replacement technologies we will have no technologies or
products of value. In such a scenario it is likely that investors
would lose all of their investment.
Our officers and directors are not required to continue as
shareholders and may not maintain an equity interest in the company.
If our officers and directors are able to and do in fact sell their
equity interests in the company their financial interest will not be
as closely aligned with shareholders and accordingly they may make
decisions that diminish the value of your investment.
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There is no requirement that our current or any of our future
officers and/or directors retain any of their shares of our common
stock. Accordingly, there is no assurance that all or any of our
officers and/or directors will continue to maintain an equity interest
in the company. Any officer or director who ceases to maintain an
equity interest in the company may find that their interests do not
continue to mirror those of other shareholders. In this event such
officer or director may make different decisions than they might make
if they continued to maintain an equity interest in the company and
these decisions may prove to be less beneficial to the company or its
shareholders and accordingly the value of a shareholder's investment
may be diminished.
We have arbitrarily determined the offering price. Accordingly the
price you pay may not accurately reflect the value of our common stock
and you may not be able to sell the common stock for at least the
offering price or at any price at any time.
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We have arbitrarily determined the offering price of the common
stock because there is no market for any of our securities. There can
be no assurance that the offering price accurately reflects the value
of our common stock or that investors will be able to sell the common
stock for at least the offering price or at any price at any time.
We are dependent on the services of our President and the loss of
those services would have a material adverse effect on our business.
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We are highly dependent on the services of Terence
Sullivan, our Chairman of the Board and President. Mr. Sullivan
maintains responsibility for our overall corporate strategy. Mr.
Sullivan's business endeavors include substantial experience in the
management and growth of companies with a focus on telecommunications
and security. The loss of the services of Mr. Sullivan would have a
material adverse effect upon our business and prospects. Without Mr.
Sullivan's services we would likely not be able to execute our
business plan unless and until we found a replacement with similar
experience. There can be no assurance that we could find such a
replacement or that if we did that we could persuade such individual
to accept employment with us on acceptable terms, or at all. Please
be aware that we do not currently have "key man" insurance on Mr.
10
Sullivan and we do not anticipate being able to purchase such
insurance in the near future, if ever.
Our President has the voting power to control our affairs and may make
decisions that do not necessarily benefit all shareholders equally.
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As of the date of this prospectus, our President owns
approximately 41.63% of our outstanding Common Stock. Consequently,
Mr. Sullivan is in a position to substantially influence matters
submitted for shareholder votes, including the ability to elect a
majority of our Board of Directors and to exercise control over our
affairs, generally. Mr. Sullivan's decisions may not necessarily
reflect those of our other shareholders.
If we are unable to acquire any technology and the company fails you
may lose all of your investment.
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Our business plan depends on our ability to identify technology that
has or is been developed by other parties and to successfully license
or acquire such technology. If we are unable to successfully achieve
these objectives we will not have products to sell and accordingly will
not generate revenues. If such a scenario it is likely that investors
would lose all of their investment.
Future sales of our common stock may have a depressive effect upon its
price.
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All 23,058,000 of the currently outstanding shares of common
stock were issued at prices lower than the price of the shares of
common stock in this offering. With the exception of the shares of
common stock being registered in this Registration Statement for our
selling shareholders, these shares are "restricted securities" as that
term is defined by Rule 144 of the Securities Act, and in the future,
may be sold in compliance with Rule 144 or pursuant to an effective
registration statement. In the future, sales of presently restricted
securities may have an adverse effect on the market price of our
common stock should a public trading market develop for such shares.
11
Risks related to this offering:
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There has never been a market for our common stock and one may never
develop. If a market never develops it will be very difficult for investors
to sell their shares at any price.
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Prior to this offering, there has been no public trading market
for our common stock and there can be no assurances that a public
trading market for the common stock will develop or, if developed,
will be sustained. Although we hope to be accepted for quotations on
the Over the Counter Bulletin Board, there can be no assurance that a
regular trading market will develop for the common stock offered
through this prospectus, or, if developed, that it will be maintained.
If a market for our shares never develops it would be very difficult
for investors to sell their shares at any price. In that event
investors may lose their entire investment.
There is no assurance of future dividends being paid.
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At this time we do not anticipate paying dividends in the future,
but instead plan to retain any earnings for use in the operation of
our business and to fund future growth. We are under no legal or
contractual obligation to declare or to pay dividends, and the timing
and amount of any future cash dividends and distributions is at the
discretion of our Board of Directors and will depend, among other
things, on our future after-tax earnings, operations, capital
requirements, borrowing capacity, financial condition and general
business conditions.
12
FORWARD-LOOKING STATEMENTS
--------------------------
This prospectus includes forward-looking statements that involve risks
and uncertainties regarding management's plan and objectives for
future operations, including plans and objectives relating to our
planned marketing and future economic performance. These
forward-looking statements include statements under the captions
"Prospectus Summary," "Risk Factors," "Use of Proceeds," "Management's
Discussion and Analysis of Financial Condition and Results of
Operations," "Business" and elsewhere in this prospectus. You should
not rely on these forward-looking statements that apply only as of the
date of this prospectus. These statements refer to our future plans,
objectives, expectations and intentions. We use words such as
"believe," "anticipate," "expect," "intend," "estimate" and similar
expressions to identify forward-looking statements. This prospectus
also contains forward-looking statements attributed to third parties
relating to their estimates regarding the growth of certain markets.
You should not place undue reliance on these forward-looking
statements, which apply only as of the date of this prospectus. Our
actual results could differ materially from those discussed in these
forward-looking statements. Factors that could contribute to these
differences include those discussed in the preceding pages and
elsewhere in this prospectus.
Penny Stock Regulations
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We are not listed on any stock exchange at this time. We hope
to become a bulletin board traded company. Such shares are referred
to as "penny stocks" within the definition of that term contained in
Rules 15g-1 through 15g-9 promulgated under the Securities Exchange
Act of 1934, as amended. These rules impose sales practices and
disclosure requirements on certain broker-dealers who engage in
certain transactions involving penny stocks. These additional sales
practices and disclosure requirements could impede the sale of our
securities, including securities purchased herein, in the secondary
market. In general, penny stocks are low priced securities that do
not have a very high trading volume. Consequently, the price of the
stock is volatile and you may not be able to buy or sell the stock
when you want. Accordingly, the liquidity for our securities may be
adversely affected, with related adverse effects on the price of our
securities.
Under the penny stock regulations, a broker-dealer selling penny
stocks to anyone other than an established customer or "accredited
investor" (generally, an individual with a net worth in excess of
$1,000,000 or annual income exceeding $200,000 or $300,000 together
with his or her spouse) must make a special suitability determination
for the purchaser and must receive the purchaser's written consent to
the transaction prior to the sale, unless the broker-dealer is
otherwise exempt. In addition, unless the broker-dealer or the
transaction is otherwise exempt, the penny stock regulations require
the broker-dealer to deliver, prior to any transaction involving a
penny stock, a disclosure schedule prepared by the Securities and
Exchange Commission relating to the penny stock. A broker-dealer is
also required to disclose commissions payable to the broker-dealer and
the Registered Representative and current quotations for the
securities. A broker-dealer is additionally required to send monthly
statements disclosing recent price information with respect to the
penny stock held in a customer's account and information with respect
to the limited market in penny stocks.
13
USE OF PROCEEDS
---------------
We will not receive any proceeds from the sale of securities
being offered by our selling shareholders.
We expect to incur expenses of approximately $47,500 in
connection with the registration of the shares. Of this amount we
have already paid a total of $46,575.59.
14
DETERMINATION OF OFFERING PRICE
-------------------------------
Prior to this offering, there has been no market for our common
stock. The offering price of the shares was arbitrarily determined and
bears no relationship to assets, book value, net worth, earnings,
actual results of operations, or any other established investment
criteria. Among the factors considered in determining the price were
our historical share sales prices the background and capital
contributions of management, the degree of control which the current
shareholders desired to retain, current conditions of the securities
markets and other information.
DIVIDEND POLICY
---------------
It is our present policy not to pay cash dividends and to retain
future earnings for use in the operations of the business and to fund
future growth. Any payment of cash dividends in the future will be
dependent upon the amount of funds legally available, our earnings,
financial condition, capital requirements and other factors that the
Board of Directors may think are relevant.
15
MANAGEMENT'S PLAN OF OPERATIONS
-------------------------------
Results and Plan of Operations
- ------------------------------
For the period from inception through June 30, 2004 no revenue
was generated. On May 15, 2003, we consummated an agreement with
Atlantic Security Limited, a United Kingdom corporation, pursuant to
which Atlantic Security Limited exchanged all of its then issued and
outstanding shares of common stock for approximately 80% of our common
stock. As a result of the agreement, the transaction was treated for
accounting purposes as a recapitalization by the accounting acquirer
(Atlantic Security Limited).
Below we discuss our plan of operations using two separate
assumptions or scenarios. In the first, we assume that we not raise
funding or commence full operations. In the second, we assume that we
do commence full operations.
Can we satisfy our cash requirement over the next twelve months?
- -----------------------------------------------------------------
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, members of our management have agreed to
continue deferring receipt of all or a portion of their salaries or
converting such amounts into shares of our common stock. Our
principal executive and administrative offices are located in space
that is owned by our Chief Executive Officer.
Our COO has agreed to convert his outstanding salary into
restricted shares of our common stock at market share rate once the
company has been approved for quotation. Our CEO has agreed to
continue to abstain from receiving a salary for the time being and is
reviewing with the board this status every thirty days. Neither
officer has signed an agreement regarding these issues. Unless
formally waived in the future, we will owe our employees accrued wages
based on their employment agreements. The amount due to the employees
at June 30, 2004 is $261,750.
As of October 4, 2004 we had $31,134 in cash on deposit in the
bank. We have assumed that if we do not commence our anticipated
operations and that our officers continue to abstain from receiving a
salary, we will need approximately $1,500 per month to remain
operational.
Assuming we do not commence our anticipated operations, our
currently anticipated future cash requirements are for funding the
preparation and filing of quarterly reports with the Securities and
Exchange Commission. Based on our historical data this is around
$2,300.00 per quarter or for a full twelve month period $9,200.00.
This figure is included in the $1,500.00 per month figure to remain
operational. Our outgoings for a full twelve months would be
$13,200.00 and the company has budgeted for a year the sum of
$18,000.00
Two shareholders advanced $3,360.00 on demand loans to Atlantic
Security Ltd before the share exchange with us. These loans were for
start up costs associated with setting up the company. Both
shareholders have expressed a desire not to redeem these within the
16
next twelve months. However, there are no contracts or agreements with
either of these shareholders. If we had to repay these loans in the
next twelve months it would not reduce our ability to run the company
for twelve months and would not materially impact our liquidity or
plan of operations. These loans are non-interest bearing and
unsecured.
Will the company have to raise further funding over the next twelve months?
- ---------------------------------------------------------------------------
If we do not commence our anticipated operations we will not need
to raise any extra funds to survive the next twelve months.
Management believes that, though our auditor has 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 or receive the $5,500,000 from Citywide Management Services
we will be able to satisfy our cash requirements for at least the next
twelve months.
We would not invest any funds in any development project or in
any marketing efforts over the next twelve months under the conditions
mentioned above although we would offer advice. We have no plant or
equipment, so write off costs, depreciation, etc. do not apply.
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 for internet access, homepage maintenance, consumables, mobile
communications and necessary travel. These expenses have been included
in the $1,500.00 monthly budget
Are we expecting significant changes in the number of employees over
the next twelve months?
- --------------------------------------------------------------------
Under the conditions mentioned above there would be no changes in
employees over the next twelve months.
Plan of Operations
- ------------------
Please be aware that our independent auditor has expressed
substantial doubt about our ability to continue as a going concern and
believes that our ability to continue as such is dependent on our
ability to implement our business plan, raise capital and generate
revenues. We have executed a contract with Citywide Management
Services that provides that Citywide will invest $5,500,000 into the
company over approximately a ten-month period commencing upon the
approval of our shares for quotation on the Over the Counter Bulletin
Board and the assignment of a trading symbol. Citywide will purchase
shares at a price equal to seventy percent (70%) of the average of the
closing bid price of our common stock for the ten days preceding the
closing for such purchase. We will not be registering the shares but
instead intend to sell these shares pursuant to Regulation S of the
Securities Act. We anticipate that these sales will result in substantial
dilution to investors and in all likelihood will effectively result in
a change in control of the Company because if the average price of
Citywide's purchases is $0.25 per share, Citywide will acquire 22,000,000
shares. If Citywide held all 22,000,000 shares it would own approximately
48.8% of the Company.
17
This company's board of directors and its predecessors has had no
connection nor are they in any way affiliated to Citywide Management,
its directors or any person working for Citywide Management.
The following discussion assumes that we start operations and
receive funding from Citywide Management Services. Below we have
included a time line to facilitate your understanding of our
historical operations. We have also included a road map to show our
anticipated operations and plan for achieving revenue.
Following our receipt of funding, our operations will initially
focus on solidifying our operational infrastructure. We anticipate
that the number of employees would be increased from its present
number through the addition of:
1) Professor Gorbunov: Technology Development Officer. He will
work as a paid consultant with the company using 60% of his time
with the rest of his time devoted to the university. He has
indicated to us that if we exercise our option to acquire
technology he has developed then he will become a full time
employee.
2) Sales Staff: Commission-paid sales personnel will be engaged
to represent our company and to sell licensed products to a
distributor versus direct marketing channel. It is our intent to
incur sales expense only when sales are secured. A sale is
defined as a signed agreement with a distributor to receive
payment for product delivered to the distributor. A sales
commission will be paid when the delivery is made.
3) Administrative Staff: Initially, there will be one
administrative staff person based in the UK assisting the CEO,
who is also based in the UK. As our business develops, a small
number of secretarial and administrative personnel will be hired.
We currently operate from space owned by Mr. Sullivan. In the
USA Mr. Smith works from his home. As the company develops,
appropriate commercial office space may be leased. Efforts will be
made to secure office space in the United States as a part of an
alliance contract.
Historical Time-line.
- ---------------------
Atlantic Security Limited was formed in September 2002 to attempt
to commercialize certain technology being developed by Professor Boris
Gorbunov of Middlesex University. From inception through December
2002 Atlantic Security Limited negotiated an option agreement with
Professor Gorbunov that was executed in January 2003 and which
now provides us with an option to acquire his technology.
Because Atlantic Security Limited believed that Professor
Gorbunov's technology would take significant time and funding to bring
to market management contemporaneously began searching for other
technology to acquire or license that could be more easily brought to
market. Management identified several technology areas that it
believed offer substantial growth prospects and during this search
process identified and met with several entities, including Comnytell
Ltd and SA Ltd. Among the ways in which Atlantic Security Limited
searched for opportunities was by attending the Information Security
Exhibition in London in September 2002.
18
We executed a distributor agreement with Comnytell on December 9,
2002. The agreement required that we pay a license fee equal to
20,000 pounds sterling (approximately $36,000 at the exchange rate
on August 6, 2004). We were unable to raise funding for the
required payment and Comnytell terminated the agreement in March 2003.
Having contracted with Professor Gorbunov and identified other
promising technologies Atlantic Security Limited began searching for
potential investors to fund the company's business plan. This search
resulted in Citywide Management Services informing the company that if
it became a publicly trading company in the United States that it
would be willing to provide funding for execution of the business
plan.
In an effort to become publicly trading in the United States
Atlantic Security Limited consummated a share exchange agreement with
us in May 2003. In August 2003 we entered into a written agreement
with Citywide through which they agreed to invest $500,000 into our
company. Since that time our efforts have been primarily focused on
achieving such publicly trading status.
In February 2004 Professor Gorbunov agreed to extend the exercise
date under the option agreement to February 24, 2005. On June 2,
2004 Citywide agreed to increase its investment to $5,500,000.
Assuming that we are approved for quotation on the Over the
Counter Bulletin Board we will receive the investment from Citywide
Management Services. This will allow us to implement our full business
plan by:
1) Running seminars to introduce the company to organizations that
potentially could develop products in which we might be interested.
2) Negotiating a license agreement with Comnytell to acquire their
technology.
3) Attending exhibitions like InfoSec and have an exhibition stand
presence.
4) Attempting to negotiate a satisfactory contract for the purchase of
SA Limited's technology.
5) Revisiting the companies that have expressed interest over the last
two years and update them on our progress.
6) Initiating marketing and sales efforts, including approaching
corporations we see as potential customers and conducting
demonstrations of the tracking product in the hope of generating early
sales.
7) Executing Professor Gorbunov's option agreement.
8) Identifying a number of partners capable and willing to develop the
Bio and Nano Technology and other technologies that we acquire or
license.
19
In the first year the costs will be taken up by salaries, travel
(including hotels and associate expenses), accountant fees, legal
fees, office expenses and the other general expenses associated with
establishing a new company as well as building a company
infrastructure. These costs would be covered by funds received
pursuant to our contract with Citywide.
The company does not know when it will have revenue generation
but can only guess at dates it would like to see revenue. There can
be no guarantee that we will ever achieve revenue.
Detailed Milestones to revenue
- ------------------------------
Introduction
- ------------
The following milestones are merely assumptions put forward by
the Company and the Company does not guarantee that any of these
milestones may ever happen or will ever be achieved. Furthermore, the
milestone dates provided, while representing management's best
estimate are purely for illustration purposes only and the company
does not guarantee or provide any warranty that any of these milestone
dates will be or are achievable. The company's view is that we cannot
expect any revenues before the end of 2006 beginning 2007 and for the
Nano technology not before the end of 2007 beginning 2008. We have
assumed that all the activity mentioned below should be completed in
parallel. The milestones assume that the company is trading on the OTC
Bulletin Board by the dates mentioned below and is in receipt of
Citywide's funding of $5.500,000.
First year starting end of October 2004 (this is not the
financial year but the expected start of trading) if this date changes
then our expected revenue dates change accordingly.
Asset Tracking technology
- -------------------------
In the year starting October 2004 the company will conduct market
research to determine a list of all potential partners and initially
engage a range of potential partners. Subsequently we shall shortlist,
(by shortlist we mean that we will make a list of all the potential
partners in this technology and reduce these to a list of three or
four and from this pick the most desirable partner) and meet potential
suitors and conduct various meeting over the next six months and in
the end we may involve more than one potential partner company. Once
we have signed off all agreements and completed all relevant payments
we intend to have secured our first 'Asset Tracking' customer and by
October 2006 produce revenue.
Smart camera technology
- -----------------------
In the year starting October 2004 the Company will conduct market
research to determine a list of all potential partners and initially
engage a range of potential partners. Subsequently we shall shortlist
and meet potential suitors for unspecified number of times. By March
2005 we hope to draft and begin negotiating contractual agreements.
This may involve more than one potential partner company. By May 2005
we hope to sign-off all agreements and by October 2005 complete all
relevant payments. By March 2006 we hope to secure our first 'Smart
Camera customer and by October 2006 grow the revenue base.
20
Dr Gorbunov's Technologies
- --------------------------
Molecular/Bio
- -------------
Assuming that the company has exercised the option and paid the
initial payments and Profressor Gorbunov is on board working for the
company, then by October 2004 we hope to conduct market research to
determine a list of all potential partners. By October 2004 we
intend to shortlist and begin communications with a range of potential
partners. By December 2004 we intend to meet potential suitors for
unspecific number times. By March 2005 we hope to draft and begin
negotiating contractual agreements. This may involve more than one
potential partner company. By May 2005 we hope to sign-off all
agreements and by October 2005 sign-off all agreements March 2007
secure first customer and by October 2007 expand the revenue base.
Operational cost over the three years, represent management's best
estimates given our current information.
The company expects the cost of running offices in the Europe and
the US in the first year to be $60,000 per month plus any payments
arising out of any contracts executed. The second year costs are
expected to rise to $100,000 per month with the third year figure
being between $100,000 and $200,000 per month.
Contracts expected to be executed in the first year include, the
option agreement with Professor Gorbunov for $1.800,000 initial
payment, and there could be a further payments later in the year of
$1.800,000 and $900,000.
21
BUSINESS
--------
GENERAL AND COMPANY HISTORY
- ---------------------------
We are a Marketing and Sales company focused on acquiring or licensing
technologies or products from other companies and then selling such licenses
or technologies to other companies. Product development will be done
opportunistically with organizations that have established market
objectives that may be served by technology we acquire.
Atlantic Security, Inc. (previously named Warrensburg
Enterprises, Inc.) was incorporated in the state of Florida on
December 6, 1999. We were founded by Ms. Shelley Goldstein as a blank
check company with the contemplated purpose to engage in mergers and
acquisitions. Ms. Goldstein originally held approximately 90% of
our outstanding common stock. From inception through May 15, 2003 we
did not engage in any active trade or business. On May 15, 2003, we
consummated an agreement with Atlantic Security Limited, a United
Kingdom corporation, pursuant to which Atlantic Security Limited paid
$30,000 to Shelly Goldstein, who was then our majority shareholder and
exchanged all of its then issued and outstanding shares of common
stock for 15,922,000 shares of our common stock, representing
approximately 80% of our outstanding common stock. As of the date of
this prospectus we have not generated any revenues.
Atlantic Security Limited ("ASL") was formed in September 2002 by
Mr. Terence Sullivan to find commercial opportunities for technology
developed by Professor Gorbunov of Middlesex University. In February
2003 ASL signed an agreement with Professor Gorbunov giving ASL an
option to acquire the technology. In late 2002 and early 2003 ASL
also began identifying other technology that it seeks to acquire or
license.
ASL began attempting to raise funding to commence operations and
ultimately signed an agreement with Citywide Management Services,
which has agreed to invest $5,500,000 into the company's
operations subsequent to the company being approved for quotation on
the OTC Bulletin Board. The investment will be made over approximately
a ten month period: $500,000 over a five-month period at $100,000 per
month and then $5,000,000 over a five month perirod at $1,000,000 per
month. These shares will be sold to Citywide at a price equal to seventy
percent (70%) of the average closing bid price for our shares during the
ten days preceding each sale. In pursuit of this objective, ASL consummated
the above mentioned share exchange with us on May 15, 2003.
We are not involved with any development cost of any of the
products mentioned in this prospectus. To date we have only promoted
these products. Even these efforts have been stopped at this time so
that we may concentrate on fulfilling the conditions required for us
to receive funding pursuant to our written financing agreement with
Citywide Management Services.
22
TECHNOLOGY DEVELOPMENT
- -----------------------
We intend to create an organization that values and explores new
ideas and looks for technological ideas in unconventional settings.
We intend to refine these ideas and work with outside firms to create
prototypes, masters and the necessary tooling. As of the date of this
prospectus we have not entered into any definitive discussions,
negotiations, contracts or other arrangements with any third party.
We intend to market and sell technologies and products either
from internally generated ideas or by acquiring or licensing patented
technology from outside inventors. During the evaluation phase of
these product developments, we will evaluate the viability of the
product and whether the product can be developed and manufactured in
acceptable quantities and at an acceptable cost, and whether it can be
sold at a price that satisfies our profitability goals.
Once we determine that a product may satisfy our criteria, we
will further assess its potential by continuing to research the
product and its probable market. If the results are positive and we
do not own the product, we will then attempt to acquire the product
outright or obtain rights to the product through a licensing
arrangement. If we develop the product internally, or if we acquire or
license the rights to the product, we will then proceed to develop and
test market the product.
RESEARCH AND DEVELOPMENT
- ------------------------
We gather information by attending seminars, reading relevant
journals, talking to contacts and acquaintances, surfing the internet
and reading government published information. We are keeping cost to a
minimum by not commissioning any specific studies and attending
seminars like InfoSec that are free to industry participants. We also
are using our board of director's contacts to facilitate information
gathering.
The company has spent none of its own money on research and
development of any of the technology mentioned in this prospectus or
otherwise, but has devoted substantial time and effort on inputting
marketing information into the research and development projects. We
wish to use this as a model for all future development where we supply
the expertise in the marketing and selling of any technology that
meets our criteria.
An example of this strategy is the Bio and Molecular development.
All of the research and development done on the Bio and Molecular
devices has been carried out by Middlesex University and Professor
Gorbunov. The University and Professor Gorbunov received a grant
from the European Union of 6 million Euros to carry out this work in
1999.
We have been involved in focusing the developers on the market
needs as we see them and making sure that feedback from organizations
that we have spoken to are reflected in the work carried out. Over
the last two years we have tried to make sure the development
reflected the changes in the market as we see them. All other research
and development has been conducted by the owners of the products
or technologies. We have acted as unpaid consultants to these
companies regarding the needs we see in the hope that these will be
incorporated in the different versions of the product. Thus we fill
the gap between academia and the commercial market place.
23
TECHNOLOGIES WE HOPE TO ACQUIRE OR LICENSE
- ------------------------------------------
Initially we wish to market and sell certain technology being
developed by Professor Gorbunov that uses molecular and bio methods to
detect substances by "sniffing" vaporized molecules in the air and on
contact.
Background on the technology
- ----------------------------
On December 19, 2001 Professor Boris Gorbunov at the Middlesex
University used laboratory equipment to successfully detect a narcotic
substance by sampling the air. The original equipment used is no way
a product or pre product and was only assembled to demonstrate that
vaporized ionized particles could be detected by sampling the air.
Present at this concept demonstration was Professor Gorbunov, various
university staff and Mr. Keith Hellawell QPM the UK Anti-Drugs
coordinator for the British Government, this was the result of ten
year's research work by Professor Gorbunov.
Since this time Professor Gorbunov has been working to build a
very early stage unit (which we call alpha stage), which is a stand-
alone unit that can be used to further improve the detection system.
Professor Gorbunov completed this in February 2003 and since then has
been working to make a demonstrable model that can be taken out of the
laboratory and will still function.
We have had no detailed discussions with Middlesex University
except our initial discussion about the option agreement at which it
was agreed that Professor Gorbunov as the controller of the IPR would
be the contact and that all talks go through him and his lawyers.
We have executed an agreement under which we may pay Professor
Gorbunov an initial payment of 1 million pounds sterling
(approximately $1.8 million at the exchange rate on August 6, 2004)
and an equivalent value of shares or our common stock, as payment for
his 92% ownership of the technology and a further 1 million pounds
sterling (approximately $1.8 million at the exchange rate on August
6, 2004) with an equivalent value of shares as a bonus to Professor
Gorbunov if he gets Middlesex University to sell their 8% ownership.
The university will receive 500,000 pounds sterling (approximately
$900,000 at the exchange rate on August 6, 2004) with an equivalent
value of shares of our common stock. If Professor Gorbunov fails to
achieve his objective in getting the last 8% then he will not receive
any bonus payment. And Middlesex University will remain an 8% owner of
the Intellectual Property Rights ("IPR").
When and if we achieve any sales of this technology then
Professor Gorbunov will receive bonus payments attached to each
technology. A separate payment for Bio and a separate payment for
Molecular, these payments will be paid out of the cost of the first
sale. We will pay him 1 million sterling sterling (approximately $1.8
million at the exchange rate on August 6, 2004) with an equivalent
value of shares or our common stock. This is true for both
technologies. Following our receipt of funding from Citywide we intend
to exercise our option to acquire this technology.
The company also has a desire to be in the asset tracking
industry, which the company sees as a growth area for the future.
Although we have no written agreements with any company in this area,
we will actively search for a technological partner who has such
technology
24
The company believe that surveillance is a growth area both in
Europe and the US and that technology which accomplishes "Smart
Surveillance" would be highly desirable. Although we have no written
agreements with any company in this area, we will actively search for
a technological partner who has such technology
Our objective over the next 24 months is find and work with
these types of technologies helping to turn them into products using
as yet unidentified partners. We anticipate needing between 24 and 36
months before any of these technologies would produce any revenue if
they ever do.
Simultaneously we will look to acquire or license other
technology that compliments these technologies. We have not yet found
any that are complimentary with what we are trying to achieve. By
"complimentary" we mean technology that can be added to existing
technology to give added benefits. An example would be an "air
conditioning management control system using a bio detector to sense
what is in the air" both are separate technologies which can be bolted
to together to produce a third technology or product
PATENTS AND TRADEMARKS
- ----------------------
Where appropriate, we will seek patent or trademark protection
for the products or technologies we develop or introduce. However,
there can be no assurance that patents or trademarks will issue from
any of our future applications. As of the date of this prospectus, we
have not filed for any trademarks or patents and do not own any
trademarks or patents.
SUPPLIERS/PARTNERS
- ------------------
We intend to bring to market any technology that we have the
rights to by entering into license agreements or joint development
ventures. We refer to the entities with which we enter these agreement
our partners. Through license agreements we intend to acquire the
intellectual property rights for a product or technology or allow a
partner to use such rights. Joint development ventures will be used
for example when we additionally provide separate marketing advice to
a partner. We anticipate that at least some of this technology will be
manufactured in the United States, Europe or Asia. We are in the
process of identifying potential partners for license agreements or
joint development ventures that we will be able to approach regarding
manufacturing our future products. We would ideally like a company
that could both manufacture and distribute any products we eventually
have but as yet have not had any discussion on this front. We have
only approached one company regarding manufacture of any future
products. This company is based in mainland China. Our discussions
were preliminary and no written or verbal agreements were reached. We
will keep looking for partners and expect to have many preliminary
meetings before we find the right partners. The definition of supplier
would be companies that supplied either normal office equipment or
stationary, or a company that supplies us with technology.
25
MARKETING
- ---------
We intend to market any technology that we have the rights to by
license agreements or joint marketing partners. A joint marketing
partner would be an organization that would share the costs of bring a
technology to market and in return benefit by sharing in the revenue
stream that might come out of such a partnership.
COMPETITION
- -----------
The markets in which we plan to do business will be highly
competitive, and are already served by two well-established and well-
financed companies, Lockheed Martin which already supplies Biological
detection products to the US market and Smiths Industries which
already supplies Biological detection products to the UK and Europe.
These competitors have significantly greater financial and marketing
resources than we have. This will give them and their products an
advantage in the marketplace.
We believe that the future principal factors affecting the market
place are product innovation and accuracy.
LEGAL PROCEEDINGS
- -----------------
We are not party to any legal proceedings as of the date of this
prospectus.
EMPLOYEES
- ---------
As of the date of this prospectus we have four employees. Of
these employees, two serve in management positions as full time
employees, one serves in a management position on an unpaid and as
needed basis and one serves in administration on a part time basis.
* COO and CFO work from their homes in the US and UK respectively
* CEO works from premises owned by the CEO in the UK.
* The admin staff works form the same premises as the CEO in the
UK. Definition of admin would be someone who did the filing,
answered the phone, and kept the office supplied with the
supplies needed to keep it running, i.e. paper, pens etc as well
as being the secretary and personal assistant to management.
DESCRIPTION OF PROPERTY
- -----------------------
Our principal office facility is presently located in space owned
by our President. We are not presently incurring any rent expenses
associated with this space. Our President has orally agreed to supply
this space until we receive funding sufficient to support rent of
other space. We anticipate relocating to other office space within 60
days of receipt of funding. If we require additional time to locate
offices our president will continue to supply this space until such
time arises that we can find office space at the low cost.
26
At the premises owned by the president, he has allocated
office space that comprises 200 square feet of space with two computer
systems, two printers, high speed Internet access, two fax machines,
two telephones lines, power, lighting etc. If need be the President
would supply space for as long as the company needs it, to achieve its
objectives.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND/FINANCIAL DISCLOSURE.
- -----------------------------------------------------------
We have had no disagreements with our accountants on accounting
and financial disclosure.
27
MANAGEMENT
----------
Directors and Executive Officers
Our directors and executive officers are:
- -----------------------------------------
Name Age Position Director Since
- -----------------------------------------------------------------------------
Terence Sullivan 54 President, principal 2003
executive officer
and Chairman
James Christopher Holmes 56 Director 2003
Henry Howard Smith 62 Chief Operating Officer 2003
and Director
Gregory Chan 48 Principal Financial Officer
Terence Sullivan has served as our President, principal executive
officer and Chairman since June 2003. Mr. Sullivan has approximately
twenty-seven years of experience in the management and growth of
companies with a focus on telecommunications and security. From
September 2002 through June 2003 he served as the CEO of Atlantic
Security Limited, which consummated a share exchange with us on May
15, 2003. After retiring from December 2000 through May 2001, Mr.
Sullivan joined Open-Mobile Ltd, a mobile phone application and design
company. From May 2001 until August 2001 as its CEO. From December
1999 until December 2000, he was employed by CyberSafe, Inc., which
sold security software to Deutsch Bank UBS/WDR, CS and
Daimler/Chrysler. He retired from CyberSafe as the Chairman of its
European Division. From December 1998 until December 1999 he ran his
own corporation, Wits Ltd, which was a sales and marketing support
company selling security software.
James Christopher Holmes has served as a director since the take over
May 15 2003. Mr. Holmes has 35 years of experience in the area of
(information Technology). From 2002-present day Chris started his own
company, Syzygies Ltd which is a consulting company and he uses this
company to advise and consultant to the UK organization for local
government, and individual local government organizations. Here he
advises on the use of technology in delivering services to the
community and government. The organizations that take his advice
include civil defense, law enforcement and social services. 1999-2002
Chris was Deputy Director of IT for the British Government Cabinet
Office where he advised the Prime minister and ministers on the use of
technology in government and government departments. These departments
included ministry of defence looking after defence of the realm and
Government Cipher Head Quarters of the UK (GCHQ) and the joint UK/US
listening station and counter intelligence organization where he
oversaw procurement. Chris retired from this position mid 2002. 1974
to 1999 Chris has spent over twenty-five years working in British
Telecomm Plc. He started as a manager and the last five years he was
head of Procurement at British Telecommunications and looked after a
budget of over 2.5 billion pounds. Chris Holmes is an experienced
government consultant who has worked for several Central government
departments, agencies, local authorities and the IT services industry.
28
His management experience inside BT over the twenty five-Years
includes:
* Building Sales, Service and Marketing initiatives across the four
BT Regions
* UK, Europe, Americas, Asia. Marketing of Visual Services,
Messaging, EDI, Network Management Services
* Broadband and networked Groupware services to BTs Global
Customers.
* Managed the Marketing R&D Budgets.
* Represented Global Customers interests in the management of BTs
Intellectual Property Rights and managed the global portfolio of
trademarks and names.
* Marketing input to the development of electronic trading
interfaces with BTs customers.
Established the BT Network and Systems Architecture and is a Member of
the Society of Manufacturing Engineers (US).
Henry Howard Smith has served as our Chief Operating Officer since
October 2003. Mr. Smith has over 35 years of experience in
information technology. From June 2001 through October 2003 he served
as President of HMS, LLC, a business and technology consulting entity
at which he developed consulting engagements designed to increase
product value, solve productivity issues and assess merger and
acquisition candidates. Between February 2001 and May 2001 he served
as the Vice President of Marketing and Business Development for Flag
Telecom Holdings, Ltd., a global fiber optic cable company that
constructs broadband services for telecommunications carriers and
business enterprises. Between June 1993 and October 2000 he served
British Telecommunications PLC as a Vice President and General Manager
- - Global Outsourcing Solutions. While at British Telecommunications,
his responsibility was to plan and implement a company to outsource
the information technology infrastructure of multinational
corporations.
Gregory Chan, has served on an unpaid, as needed basis as our Chief
Financial Officer since May 2003. Mr. Chan brings with him 20 years
experience in diverse managerial roles in multi-national corporations
in the telecom and IT industry. He is currently employed with MCI
WorldCom EMEA where he has been serving as a Global Account Manager
since April 2001. From October 2000 through January 2001 he served
in Cidera, Inc., a media content distribution network provider, as
the Vice President of International Commercial Operations. From
January 2000 through October 2000 he served as the Director of
International Business Development for Teligent Inc. a wireless local
access network provider. From July 1999 through January 2000 he was
the CEO of Europe for Compose System Limited, a printing systems
developer. For approximately ten years prior to that he was with
Cable & Wireless PLC in various managerial positions including Senior
Manager, Business Development, Manager Mergers & Acquisitions and
Manager Corporate Management Accounting, Mr. Chan is a qualified
Chartered Accountant and he holds a B.Sc. degree in Business
Economics
29
Directors' Remuneration
- -----------------------
Our directors are presently not compensated for serving on the
board of directors.
Executive Compensation
- ----------------------
Employment Agreements
We have entered into an executive service agreement with Terence
Sullivan, our Chairman, President and CEO on October 1, 2003 and which
expires on Mr. Sullivan's 75th birthday on April 8, 2024 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
provides that Mr. Sullivan will receive a salary of 150,000 pounds per
year (approximately $270,000 at the exchange rate effective on August
6, 2004) as well as a car allowance equal to 12% of his salary. The
agreement also calls for a bonus of 10% of our net income if we reach
certain sales targets and provides for Mr. Sullivan at his option to
receive a portion of his compensation in the form of shares of our
common stock at a 30% discount.
We have entered into an employment agreement with Henry Howard
Smith to become the COO effective October 6, 2003 at an annual salary
of $100,000. The agreement expires on Mr. Smith's 70th birthday, on
September 21, 2011 or with thirty days notice by either party.
Summary Compensation Table
The following table sets forth the total compensation paid to or
accrued for the year ended March 31, 2004 and for the period from
September 6, 2002 (Inception) through March 31, 2003 to our President and to
our COO for the year ended March 31, 2004.
Annual Compensation
Other Restricted Securities All
Name and Annual Stock Underlying LTIP Other
Principal Position Year Salary Bonus Compensation Awards Options Payouts Compensation
- ------------------ ---- ------ ----- ------------ ---------- ---------- ------- ------------
Terence Sullivan, 2004 $124,500(1) 0 0 0 0 0 0
President 2003 $0(1) 0 0 0 0 0 0
Henry Howard Smith, 2004 $50,000(2) 0 0 0 0 0 0
COO
(1) Mr. Sullivan agreed to abstain from accepting any of the accrued
compensation under his employment agreement until the Company has
adequate funds available for operations. From inception through June
30, 2004, in total we have accrued officers' salaries of $261,750, of
which $186,750 has been accrued for Mr. Sullivan.
(2) Mr. Howard agreed to abstain from accepting any of the accrued
compensation under his employment agreement until the Company has
adequate funds available for operations. From inception
through June 30, 2004, in total we have accrued $75,000 for Mr. Howard.
Stock Option Grants in the past fiscal year
We have not issued any grants of stock options in the past fiscal
year.
30
PRINCIPAL SHAREHOLDERS
----------------------
The following table sets forth information regarding beneficial
ownership of our common stock as of the date of this prospectus and as
adjusted to reflect the sale of all shares which may potentially be
sold in connection with this registration statement, by (i) those
shareholders known to be the beneficial owners of more than five
percent of the voting power of our outstanding capital stock, (ii)
each director, and (iii) all executive officers and directors as a
group:
Number of Percent Number of
Shares Owned Owned Shares Owned Percent
Name and Address of Before Before After After
Beneficial Owner(1) Offering Offering Offering Offering (2)
- -------------------- ------------- ----------- ----------- ------------
Terence Sullivan 9,600,000 41.63% 7,200,000 31.23%
Chris Holmes 400,000 1.73% 300,000 1.30%
Howard Smith 400,000 1.73% 300,000 1.30%
Gregory Chan 12,000 * 9,000 *
Teddy Plaisted Elett, Trustee 1,600,000 6.94% 1,200,000 5.20%
Under Agreement dated August 7,
1992 FBO Teddy Plaisted Elett (3)
PO Box 771240
Naples, FL 34107
E-N Corp(4) 1,400,000 6.07% 1,050,000 4.99%
PO Box 146
Stevenage Herts
SG1 1FT
United Kingdom
Niall Duggan 1,945,000(5) 8.44% 1,708,750(5) 7.41%
Kinloch
Old Leighlin Road
Cloydagh
Carlow
Southern Ireland
All Directors and Officers as
a Group (4 persons) 10,412,000 45.16% 7,809,000 33.87%
- ----------------------------
* Indicates less than 1%
(1) Unless otherwise indicated, the
address of the beneficial owner should be considered the same as
the company's principal business address.
(2) Assumes the sale of all shares
offered hereunder by the selling shareholders.
(3) The Trust is controlled by Teddy
Plaisted Elett, an accredited investor, who has deposited the
acquired shares into such Trust.
(4) The controlling shareholder of E-N
Corp. is Ranjit Sodhi. Mr. Ranjit Sodhi also owns 4,000 shares
directly, which are not included in the amounts shown above.
(5) Includes 1,000,000 shares of our
common stock that we are contractually obligated to issue but
have not issued as of the date of this prospectus.
31
SELLING SHAREHOLDERS
--------------------
The following table sets forth certain information with respect to the
ownership of our common stock by selling shareholders as of August 10,
2004. Unless otherwise indicated, none of the selling shareholders
has or had a position, office or other material relationship with us
within the past three years.
Ownership of Ownership of
Common Stock Number of Common Stock
Prior to Offering Shares offered After Offering
Selling Shareholder Shares Percent Hereby Shares (1) Percent(1)
- ------------------------------------------------------------------------------------------------------------
Terence Sullivan(2) 9,600,000 41.63% 2,400,000 7,200,000 31.23%
Teddy Plaisted Elett, Trustee 1,600,000 6.94% 400,000 1,200,000 5.20%
E-N Corp(3) 1,400,000 6.07% 350,000 1,050,000 4.99%
William Duncan Swartz 1,000,000 4.34% 250,000 750,000 3.25%
George Beyts 945,000 4.09% 236,250 708,750 3.07%
Niall Duggan 1,945,000 8.44% 236,250 1,708,750 7.41%
Peter Goldstein 945,000 4.09% 236,250 708,750 3.07%
Mark Palestine 945,000 4.09% 236,250 708,750 3.07%
Oliver Cassell 400,000 1.73% 100,000 300,000 1.30%
Alan Coe 400,000 1.73% 100,000 300,000 1.30%
Dravrar 400,000 1.73% 100,000 300,000 1.30%
Judy Fishman and
Michael Fishman JTTEN 400,000 1.73% 100,000 300,000 1.30%
Alan Gibson 400,000 1.73% 100,000 300,000 1.30%
James Christopher Holmes(4) 400,000 1.73% 100,000 300,000 1.30%
Daniela Lapuste 400,000 1.73% 100,000 300,000 1.30%
Kwan Lam Ng 400,000 1.73% 100,000 300,000 1.30%
Howard Smith (5) 400,000 1.73% 100,000 300,000 1.30%
Thomas Harrison 340,000 1.47% 85,000 255,000 1.11%
Watson Dave International 300,000 1.30% 75,000 225,000 *
Thomas Gryzmala 60,000 * 15,000 45,000 *
Jeffrey Klein 60,000 * 15,000 45,000 *
Greg Chan (6) 12,000 * 3,000 9,000 *
Ulfat Kiani 8,000 * 2,000 6,000 *
Bob Anderson 4,000 * 1,000 3,000 *
Pamela Anderson 4,000 * 1,000 3,000 *
Jacky Barker 4,000 * 1,000 3,000 *
Kevin Barker 4,000 * 1,000 3,000 *
Erika Bleiberg 4,000 * 1,000 3,000 *
Dan Caggiani 4,000 * 1,000 3,000 *
Brian Callanan 4,000 * 1,000 3,000 *
Lenny Cerbini 4,000 * 1,000 3,000 *
George Chaliss 4,000 * 1,000 3,000 *
Margaret Chan(7) 4,000 * 1,000 3,000 *
Lisa Cohen 4,000 * 1,000 3,000 *
Elizabeth Cooper 4,000 * 1,000 3,000 *
Dorothy Cornwell 4,000 * 1,000 3,000 *
John H. Cornwell Jr. 4,000 * 1,000 3,000 *
John H. Cornwell III 4,000 * 1,000 3,000 *
Sarah Cornwell 4,000 * 1,000 3,000 *
Stephen Echols 4,000 * 1,000 3,000 *
Jon Evans 4,000 * 1,000 3,000 *
Robert Field 4,000 * 1,000 3,000 *
Francis Giles 4,000 * 1,000 3,000 *
Alvin Goldstein 4,000 * 1,000 3,000 *
Inge Goldstein 4,000 * 1,000 3,000 *
Robert Gordon 4,000 * 1,000 3,000 *
Kenneth Greenberg 4,000 * 1,000 3,000 *
Charlotte Guiberson 4,000 * 1,000 3,000 *
Yanna Hache 4,000 * 1,000 3,000 *
Daniel Kallan 4,000 * 1,000 3,000 *
32
Josh Kallan 4,000 * 1,000 3,000 *
Dr. Michael Kaufman 4,000 * 1,000 3,000 *
Glenda Kelley 4,000 * 1,000 3,000 *
Sean King 4,000 * 1,000 3,000 *
Alex Lichtman 4,000 * 1,000 3,000 *
Debbie Lieberman 4,000 * 1,000 3,000 *
Mo Lan Lo 4,000 * 1,000 3,000 *
Ian Macpherson 4,000 * 1,000 3,000 *
Sarah Macpherson 4,000 * 1,000 3,000 *
Scott Mallet 4,000 * 1,000 3,000 *
James Charles Meghrian 4,000 * 1,000 3,000 *
Amelia Miller 4,000 * 1,000 3,000 *
Harris Millman 4,000 * 1,000 3,000 *
Baldeep Namas 4,000 * 1,000 3,000 *
Mandeep Namas 4,000 * 1,000 3,000 *
Perminder Namas 4,000 * 1,000 3,000 *
Ravi Namas 4,000 * 1,000 3,000 *
Chau Lam Ng 4,000 * 1,000 3,000 *
Lam Fai Ng 4,000 * 1,000 3,000 *
Oi Ling Lee Ng 4,000 * 1,000 3,000 *
Sau Chun Ng 4,000 * 1,000 3,000 *
William Porter 4,000 * 1,000 3,000 *
Nancy Reynolds 4,000 * 1,000 3,000 *
Scott Rhodes 4,000 * 1,000 3,000 *
Adam Ryan 4,000 * 1,000 3,000 *
Shirley Ryan 4,000 * 1,000 3,000 *
Gurpreet Sahota 4,000 * 1,000 3,000 *
Rani K. Sahota 4,000 * 1,000 3,000 *
Surinder Sahota 4,000 * 1,000 3,000 *
Martha Schiff 4,000 * 1,000 3,000 *
Charles Simmons 4,000 * 1,000 3,000 *
Charles E. Simmons 4,000 * 1,000 3,000 *
Tom Sit 4,000 * 1,000 3,000 *
Hardev Kaur Sodhi 4,000 * 1,000 3,000 *
Helen Sodhi 4,000 * 1,000 3,000 *
Rajvir Singh Sodhi 4,000 * 1,000 3,000 *
Ranjit Sodhi 4,000 * 1,000 3,000 *
Katie Somers 4,000 * 1,000 3,000 *
Gary Spielfogel 4,000 * 1,000 3,000 *
Roberto Suarez 4,000 * 1,000 3,000 *
Mark Sullivan(8) 4,000 * 1,000 3,000 *
Hon Wae Wong 4,000 * 1,000 3,000 *
Pui Chun wong 4,000 * 1,000 3,000 *
Allison Woodford 4,000 * 1,000 3,000 *
Kong Yau 4,000 * 1,000 3,000 *
Teresa Yau 4,000 * 1,000 3,000 *
Tung Mei Yau 4,000 * 1,000 3,000 *
Janet Ann Sulivan(9) 1,200 * 300 900 *
Sarah Janet Holmes(10) 800 * 200 600 *
TOTAL 23,058,000 100% 5,514,500 16,543,500
1) Assumes that all shares are sold pursuant to this offering and that
no other shares of common stock are acquired or disposed of by the
selling shareholders prior to the termination of this offering.
Because the selling shareholders may sell all, some or none of their
shares or may acquire or dispose of other shares of common stock, no
reliable estimate can be made of the aggregate number of shares that
will be sold pursuant to this offering or the number or percentage
of shares of common stock that each shareholder will own upon
completion of this offering.
2) Mr. Sullivan is our President, principal executive officer and
Chairman.
3) Mr. Holmes is a director.
4) Mr. Ranjit Sodhi owns 4000 shares in his name and no other shares
held in the name of any other shareholder are in any way attributed
to him.
5) Mr. Smith is our Chief Operating Officer and a director.
6) Mr. Chan is our Principal Financial Officer.
7) Ms. Chan is the sister of Mr. Greg Chan, our Principal Financial
Officer.
8) Mr. Sullivan is the son of Mr. Terence Sullivan, our President,
principal executive officer and Chairman.
9) Mrs. Sullivan is the wife of Terence Sullivan, our President,
principal executive officer and Chairman.
10) Ms. Holmes is the wife of Mr. James Christopher Holmes, a
director.
33
DESCRIPTION OF SECURITIES
-------------------------
General
- -------
Our authorized capital stock consists of 100,000,000 shares of
common stock, par value $0.001 per share, and 10,000,000 shares of
preferred stock, par value $.001 per share. In December 2003 we
consummated a 4 for 1 stock split. As of the date of this prospectus,
23,058,000 shares of common stock and no shares of preferred stock
were outstanding. Corporate Stock Transfer of Denver, Colorado serves
as our transfer agent.
Common Stock
- ------------
We are authorized to issue 100,000,000 shares of our common
stock, $0.001 par value, of which 23,058,000 shares are issued and
outstanding as of the date of this prospectus. Except as provided by
law or our certificate of incorporation with respect to voting by
class or series, holders of common stock are entitled to one vote on
each matter submitted to a vote at a meeting of shareholders and the
shareholders do not have cumulative voting rights.
Subject to any prior rights to receive dividends to which the
holders of shares of any series of the preferred stock may be
entitled, the holders of shares of common stock will be entitled to
receive dividends, if and when declared payable from time to time by
the board of directors, from funds legally available for payment of
dividends. Upon our liquidation or dissolution, holders of shares of
common stock will be entitled to share proportionally in all assets
available for distribution to such holders. None of our common stock
holders have any preemptive rights.
Preferred Stock
- ---------------
The board of directors has the authority, without further action
by our shareholders, to issue up to 10,000,000 shares of preferred
stock, par value $.001 per share, in one or more series and to fix the
rights, preferences, privileges and restrictions thereof, including
dividend rights, conversion rights, voting rights, terms of
redemption, liquidation preferences and the number of shares
constituting any series or the designation of such series. No shares
of preferred stock are currently issued and outstanding. The issuance
of preferred stock could adversely affect the voting power of holders
of common stock and could have the effect of delaying, deferring or
preventing a change of our control.
Market for Common Equity and Related Stockholder Matters
- --------------------------------------------------------
There is no established public market for our common stock and we
have arbitrarily determined the offering price. Although we hope to
be quoted on the OTC Bulletin Board, our common stock is not currently
listed or quoted on any quotation service. There can be no assurance
that our common stock will ever be quoted on any quotation service or
that any market for our stock will ever develop or, if developed, will
be sustained.
34
As of September 30, 2004, there were 98 shareholders of record of our
common stock and a total of 23,058,000 shares outstanding. Of the
23,058,000 shares of common stock outstanding, 10,412,000 shares of
common stock are beneficially held by "affiliates" of the company.
All shares of common stock registered pursuant to this Registration
Statement will be freely transferable without restriction or
registration under the Securities Act, except to the extent purchased
or owned by our "affiliates" as defined for purposes of the Securities
Act.
There are currently no outstanding options or warrants to
purchase or any securities that are convertible into our common stock.
Under certain circumstances, restricted shares may be sold
without registration, pursuant to the provisions of rule 144. In
general, under rule 144, a person (or persons whose shares are
aggregated) who has satisfied a one-year holding period may, under
certain circumstances, sell within any three-month period a number of
restricted securities which does not exceed the greater of one percent
of the shares outstanding or the average weekly trading volume during
the four calendar weeks preceding the notice of sale required by rule
144. In addition, rule 144 permits, under certain circumstances, the
sale of restricted securities without any quantity limitations by a
person who is not an affiliate of ours and has satisfied a two-year
holding period. Any sales of shares by shareholders pursuant to rule
144 may have a depressive effect on the price of our common stock.
There are 17,488,500 shares of our common stock that are not being
offered by this registration statement that could in the future be
sold pursuant to rule 144.
35
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
We were founded by Ms. Shelly Goldstein in December 1999. Ms.
Goldstein originally held approximately 90% of our outstanding common
stock. On May 15, 2003, we consummated an agreement with Atlantic
Security Limited, a United Kingdom corporation, pursuant to which
Atlantic Security Limited paid $30,000 to Shelly Goldstein, who was
then our majority shareholder and exchanged all of its then issued and
outstanding shares of common stock for 15,922,000 shares of our common
stock, representing approximately 80% of our outstanding common stock.
Ms. Goldstein is no longer affiliated with us in any way.
Mrs. J A Sullivan is married to Mr. Terence Sullivan who is the
President and CEO.
Mrs. S J Holmes is married to Mr. James Christopher Holmes who is
a Non Executive Director.
Margaret Chan is the sister of Mr. Greg Chan the Company
Secretary and CFO.
Mark Sullivan is the Son of Mr. Tererence Sullivan who is the
President and CEO.
Ranjit Sodhi is related to Rajvir Singh Sodhi who is his mother,
Hardev Kaur Sodhi who is his uncle and Helen Sodhi who is his
Sister none of the shares held by theses parties are attributed
to Ranjit Sodhi
Our officers have agreed to defer their salaries and through June
30, 2004 we have accrued a total of $261,750 for officer salaries.
Two shareholders have advanced loans to us totaling $3,360. The
loans are non-interest bearing, unsecured and are payable on demand.
On May 15, 2003 we issued 9,600,000 shares of our common stock to
Mr. Terry Sullivan in exchange for shares he held in Atlantic Security
Limited. On the same date we issued 400,000 shares to each of Mr.
Howard Smith and Mr. James Christopher Holmes and 12,000 shares to Mr.
Greg Chan. All of these shares were also issued in exchange for
shares the individual held in Atlantic Security Limited.
36
DISCLOSURE OF SEC POSITION
ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
-------------------------------------------------
Our Articles of Incorporation, as well as our By-Laws provide for
the indemnification of directors, officers, employees and agents of the
corporation to the fullest extent provided by the Corporate Law of the
State of Florida, as well as is described in the Articles of
Incorporation and the By-Laws. These sections generally provide that
the Company may indemnify any person who was or is a party to any
threatened, pending or completed action, suit or proceeding whether
civil, criminal, administrative or investigative except for an action by
or in right of the corporation by reason of the fact that he or she is
or was a director, officer, employee or agent of the corporation.
Generally, no indemnification may be made where the person has been
determined to be negligent or guilty of misconduct in the performance of
his or her duties to the Company.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to our directors, officers or
controlling persons, pursuant to the foregoing provisions, or
otherwise, we have been advised that, in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy
as expressed in the Securities Act of 1933, and is, therefore,
unenforceable.
37
PLAN OF DISTRIBUTION
--------------------
Our selling shareholders who are affiliates (officers and
directors) will sell their shares at a price per share of $0.25 for
the duration of this offering. Other selling shareholders will sell
their shares at a price per share of $0.25 per share until and if our
shares are quoted on the Over The Counter Bulletin Board and
thereafter at prevailing market prices or in privately negotiated
transactions. The selling shareholders may sell or distribute their
common stock from time to time themselves, or by donees or transferees
of, or other successors in interests to, the selling shareholders,
directly to one or more purchasers or through brokers, dealers or
underwriters who may act solely as agents or may acquire such common
stock as principals, at market prices prevailing at the time of sale,
at prices related to such prevailing market prices, at negotiated
prices, or at fixed prices, which may be changed. These sales by
Selling Shareholders may occur contemporaneously with sales by us.
The selling shareholders offering will terminate on the earlier of the
sale of all of the shares or 360 days after the date of the
prospectus. The sale of the common stock offered by the selling
shareholders through this prospectus may be affected in one or more of
the following:
* Ordinary brokers' transactions;
* Transactions involving cross or block trades or otherwise
* Purchases by brokers, dealers or underwriters as principal and
resale by such purchasers for their own accounts pursuant to this
prospectus;
* "at the market" to or through market makers or into any market for
the common stock which may develop;
* in other ways not involving market makers or established trading
markets, including direct sales to purchasers or sales effected
through agents;
* in privately negotiated transactions; or
* any combination of the foregoing.
Brokers, dealers, underwriters or agents participating in the
distribution of the shares as agents may receive compensation in the
form of commissions, discounts or concessions from the selling
shareholders and/or purchasers of the common stock for whom such
broker-dealers may act as agent, or to whom they may sell as
principal, or both. The compensation paid to a particular
broker-dealer may be less than or in excess of customary commissions.
Neither we nor any selling shareholder can presently estimate the
amount of compensation that any agent will receive. We know of no
existing arrangements between any selling shareholder, any other
shareholder, broker, dealer, underwriter or agent relating to the sale
or distribution of the shares.
In the event that the selling shareholders enter into an
agreement, after the date of this prospectus, with any broker dealer
or underwriter for such broker, dealer or underwriter to act as
principal and such entity is acting as an underwriter, we will file a
post-effective amendment to this prospectus identifying such entity,
providing the required information in this plan of distribution and
revising the disclosures in this prospectus and the related
registration statement. Additionally, in such event we will file any
such agreement as an exhibit to the registration statement.
38
We will pay all of the expenses incident to the registration,
offering and sale of the shares to the public, but will not pay
commissions and discounts, if any, of underwriters, broker-dealers or
agents, or counsel fees or other expenses of the selling shareholders.
To date we have paid a total of $46,575. We anticipate incurring
approximately $925 in additional expenses for a total of $47,500.
We have advised the selling shareholders that while they are
engaged in a distribution of the shares included in this prospectus
they are required to comply with Regulation M promulgated under the
Securities Exchange Act of 1934, as amended. With certain exceptions,
Regulation M precludes the selling shareholders, any affiliated
purchasers, and any broker-dealer or other person who participates in
such distribution from bidding for or purchasing, or attempting to
induce any person to bid for or purchase any security which is the
subject of the distribution until the entire distribution is complete.
Regulation M also prohibits any bids or purchases make in order to
stabilize the price of a security in connection with the distribution
of that security. All of the foregoing may affect the marketability
of the shares offered hereby in this prospectus.
39
LEGAL MATTERS
-------------
The Law Office of James G. Dodrill II, PA, of Boca Raton, Florida
will give an opinion for us regarding the validity of the common stock
offered in this prospectus.
EXPERTS
-------
The financial statements as of March 31, 2004 and for the year
ended March 31, 2004 and for the period from September 6, 2002
(inception) to March 31, 2003 and for the period from September 6,
2002 (inception) to March 31, 2004 included in this prospectus have
been so included in reliance on the report of Webb & Company, P.A.,
independent certified public accountants, given on the authority of
said firm as experts in auditing and accounting.
40
WHERE YOU CAN FIND MORE INFORMATION
-----------------------------------
We have filed a registration statement under the Securities Act
with respect to the securities offered hereby with the Commission, 450
Fifth Street, N.W., Washington, D.C. 20549. This prospectus, which
is a part of the registration statement, does not contain all of the
information contained in the registration statement and the exhibits
and schedules thereto, certain items of which are omitted in
accordance with the rules and regulations of the Commission. For
further information with respect to Atlantic Security, Inc. and the
securities offered hereby, reference is made to the registration
statement, including all exhibits and schedules thereto, which may be
inspected and copied at the public reference facilities maintained by
the Commission at 450 Fifth Street, N. W., Room 1024, Washington, D.
C. 20549 at prescribed rates during regular business hours. You may
obtain information on the operation of the public reference facilities
by calling the Commission at 1-800-SEC-0330. Also, the SEC maintains
an Internet site that contains reports, proxy and information
statements, and other information regarding issuers that file
electronically with the Commission at http://www.sec.gov. Statements
contained in this prospectus as to the contents of any contract or
other document are not necessarily complete, and in each instance
reference is made to the copy of such contract or document filed as an
exhibit to the registration statement, each such statement being
qualified in its entirety by such reference. Any requests for
information should be directed to us at Atlantic Security, Inc., Glyme
House, St. John's Street, Bicester, Oxfordshire, OX26 6SL Attention:
Terence Sullivan, President.
Following the effectiveness of this registration statement, we
will file reports and other information with the Commission. All of
such reports and other information may be inspected and copied at the
Commission's public reference facilities described above. The
Commission maintains a web site that contains reports, proxy and
information statements and other information regarding issuers that
file electronically with the Commission. The address of such site is
http://www.sec.gov. In addition, we intend to make available to our
shareholders annual reports, including audited financial statements,
unaudited quarterly reports and such other reports as we may determine.
We will send a copy of any such report to any shareholder specifically
requesting such report.
41
ATLANTIC SECURITY, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2004
ATLANTIC SECURITY, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
--------
PAGE 1 INDEPENDENT AUDITORS' REPORT
PAGE 2 CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2004
PAGE 3 STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS FOR
THE YEAR ENDED MARCH 31, 2004 (CONSOLIDATED) AND FOR
THE PERIOD FROM SEPTEMBER 6, 2002 (INCEPTION) TO
MARCH 31, 2003 AND FOR THE PERIOD FROM SEPTEMBER 6,
2002 (INCEPTION) TO MARCH 31, 2004 (CONSOLIDATED)
PAGE 4 STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCY FOR
THE PERIOD FROM SEPTEMBER 6, 2002 (INCEPTION) TO
MARCH 31, 2004 (CONSOLIDATED)
PAGE 5 STATEMENT OF CASH FLOWS FOR THE YEAR ENDED MARCH 31,
2004 (CONSOLIDATED) AND FOR THE PERIOD FROM SEPTEMBER
6, 2002 (INCEPTION) TO MARCH 31, 2003 AND FOR THE
PERIOD FROM SEPTEMBER 6, 2002 (INCEPTION) TO MARCH
31, 2004 (CONSOLIDATED)
PAGES 6 - 12 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Board of Directors of:
Atlantic Security, Inc. and Subsidiary
(A Development Stage Company)
We have audited the accompanying consolidated balance sheet of
Atlantic Security, Inc. and subsidiary (a development stage
company) as of March 31, 2004, and the related statements of
operations and comprehensive loss, changes in stockholders'
deficiency and cash flows for the year ended March 31, 2004
(consolidated) and for the period from September 6, 2002
(inception) to March 31, 2003 and for the period from September
6, 2002 (inception) to March 31, 2004 (consolidated). 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 audit.
We conducted our audit 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 audit
provides 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 Atlantic Security, Inc. and subsidiary (a development stage
company) as of March 31, 2004 (consolidated) and the results of
its operations and its cash flows for the year ended March 31,
2004 (consolidated) and for the period from September 6, 2002
(inception) to March 31, 2003 and for the period from September
6, 2002 (inception) to March 31, 2004 (consolidated) 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 6
to the financial statements, the Company is in the development stage
with no operations, has a negative cash flow from operations of
$88,218, and a working capital and stockholders' deficiency of
$155,229. These factors raise substantial doubt about its ability to
continue as a going concern. Management's plans concerning this
matter are also described in Note 6. The accompanying financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.
WEBB & COMPANY, P.A.
/s/ Webb & Company, P.A.
- ------------------------
Boynton Beach, Florida
June 2, 2004
ATLANTIC SECURITY LIMITED
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
MARCH 31, 2004
-----------------
ASSETS
Cash $ 23,283
-----------
TOTAL ASSETS $ 23,283
===========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Accounts payable $ 652
Stockholder loan payable 3,360
Accrued officers salaries 174,500
-----------
TOTAL LIABILITIES 178,512
-----------
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 115,175
Accumulated deficit during development stage (294,747)
Accumulated other comprehensive gain 1,285
-----------
Total Stockholders' Deficiency (155,229)
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 23,283
===========
See accompanying notes to the consolidated financial statements.
ATLANTIC SECURITY LIMITED
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS
For The Period
For The For The Period From
Year Ended From September 6, 2002
March 31, September 6, 2002 (Inception) To
2004 (Inception) To March 31, 2004
(Consolidated) March 31, 2003 (Consolidated)
-------------- --------------- --------------
OPERATING EXPENSES
Officer compensation $ 174,500 $ - $ 174,500
Consulting and professional fees 96,589 - 96,589
General and administrative 20,939 2,915 23,854
-------------- --------------- --------------
Total Operating Expenses 292,028 2,915 294,943
LOSS FROM OPERATIONS (292,028) (2,915) (294,943)
OTHER INCOME
Interest income 196 - 196
-------------- --------------- --------------
Provision for Income Taxes - - -
-------------- --------------- --------------
NET LOSS (291,832) (2,915) (294,747)
OTHER COMPREHENSIVE INCOME
Foreign currency translation gain 1,268 17 1,285
-------------- --------------- --------------
COMPREHENSIVE LOSS $ (290,564) $ (2,898) $ (293,462)
- ------------------ ============== =============== ==============
Net loss per share - basic and diluted $ (0.01) $ - $ (0.01)
============== =============== ==============
Weighted average number of
shares outstanding during the
period - basic and diluted 20,815,370 15,922,000 19,044,517
============== =============== ==============
See accompanying notes to the consolidated financial statements.
ATLANTIC SECURITY, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' DEFICIENCY
FOR THE PERIOD FROM SEPTEMBER 6, 2002 (INCEPTION) TO MARCH 31, 2004
Accumulated
Common Stock Deficit During Other
------------------- Additional Development Comprehensive Subscription
Shares Amount Paid-In Capital Stage Income Receivable Total
--------- -------- --------------- ----------- ------------- ------------ ---------
Stock issued to founders
($0.00005 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)
Proceeds from subscription
receivable - - - - - 788 788
Stock issued in reverse merger 4,000,000 4,000 (3,955) - - - 45
Stock issued for cash
($0.025 per share) 536,000 536 12,864 - - - 13,400
Stock issued for services
($0.025 per share) 1,000,000 1,000 24,000 - - - 25,000
Stock issued for cash
($0.06 per share) 1,600,000 1,600 94,400 - - - 96,000
Other comprehensive gain - - - - 1,268 - 1,268
In-kind contribution of property - - 3,000 - - - 3,000
Net loss for year ended March 31, 2004 - - - (291,832) - - (291,832)
---------
Comprehensive loss - - - - - - (290,564)
---------- --------- ------------ ----------- --------- ---------- =========
BALANCE, MARCH 31, 2004
(CONSOLIDATED) 23,058,000 $ 23,058 $ 115,175 $(294,747) $ 1,285 $ - $(155,229)
=========================== =========== ========= ============ =========== ========= ========== =========
See accompanying notes to consolidated financial statements
ATLANTIC SECURITY, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For The For The
For The Year Period From Period From
Ended September 6, 2002 September 6, 2002
March 31, 2004 (Inception) To (Inception) to
(Consolidated) March 31, 2003 March 31, 2004
(Consolidated)
------------- ----------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (291,832) $ (2,915) $ (294,747)
Adjustments to reconcile net loss to
net cash used in operating activities:
Stock issued to consultants for services 25,000 - 25,000
In-kind contribution of property 3,000 - 3,000
Changes in operating assets and liabilities:
Accounts payable 652 - 652
Accrued expenses 174,500 - 174,500
------------- ----------------- -----------------
Net Cash Used In Operating Activities (88,680) (2,915) (91,595)
------------- ----------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES - - -
------------- ----------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock 110,233 - 110,233
Proceeds from stockholder loans 462 2,898 3,360
------------- ----------------- -----------------
Net Cash Provided By Financing
Activities 110,695 2,898 113,593
------------- ----------------- -----------------
EFFECT OF EXCHANGE RATE ON CASH 1,268 17 1,285
------------- ----------------- -----------------
NET INCREASE IN CASH 23,283 - 23,283
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD - - -
------------- ----------------- -----------------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $ 23,283 $ - $ 23,283
============= ================= =================
See accompanying notes to consolidated financial statements
ATLANTIC SECURITY, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2004
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
- ------ -----------------------------------------------------------
(A) Organization and Basis of Presentation
- ------------------------------------------
Atlantic Security, Inc., f/k/a Warrensburg Enterprises, Inc. (a
development stage company) is a Florida corporation incorporated
on December 6, 1999.
Atlantic Security Limited (a development stage company) was
incorporated in the United Kingdom on September 6, 2002. The
Company plans to market security products and asset tracking
software.
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 recapitalization by the accounting acquirer (Atlantic Security
Limited).
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.
Activities during the development stage include developing the
business plan and raising capital.
Atlantic Security, Inc. and its wholly owned subsidiary Atlantic
Security Limited are hereafter referred to as (the "Company").
(B) 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.
ATLANTIC SECURITY, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2004
(C) Cash and Cash Equivalents
- -----------------------------
For purposes of the cash flow statements, the Company considers
all highly liquid investments with original maturities of three
months or less at the time of purchase to be cash equivalents.
(D) Foreign Currency Translation
- --------------------------------
The functional currency of the Company is the British Pound. The
financial statements of the Company are translated to United
States dollars using year-end exchange rates as to assets and
liabilities and average exchange rates as to revenues and
expenses. Capital accounts are translated at their historical
exchange rates when the capital transaction occurred. Net gains
and losses resulting from foreign exchange translations are
included in the statements of operations ands stockholders'
equity as other comprehensive income (loss).
(E) Comprehensive Income (Loss)
- -------------------------------
The foreign currency translation gain or loss resulting from the
translation of the financial statements expressed in British
Pounds to United States dollars is reported as other
comprehensive income (loss) in the statement of operations and
stockholders' deficiency.
(F) Income Taxes
- ----------------
The Company accounts for income taxes under the Statement of
Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("Statement 109"). Under Statement 109, deferred tax
assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. Under Statement 109, the
effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the
enactment date. The Company is organized in England and no tax
benefit is expected from the tax credits in the future.
(G) Fair Value of Financial Instruments
- ---------------------------------------
The carrying amounts of the Company's financial instruments
including accounts payable approximate fair value due to the
relatively short period to maturity for this instrument.
ATLANTIC SECURITY, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2004
(H) 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 March 31, 2004 and 2003, there were no common stock
equivalents.
(I) Business Segments
- ---------------------
The Company operates in one segment and therefore segment
information is not presented.
(J) New Accounting Pronouncements
- ---------------------------------
In April 2003, the FASB issued SFAS No. 149, "Amendment of
Statement 133 on Derivative Instruments and Hedging Activities".
SFAS 149 amends and clarifies financial accounting and reporting
for derivative instruments, including certain derivative
instruments embedded in other contracts (collectively referred to
as derivatives) and for hedging activities under SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities".
The changes in SFAS No. 149 improve financial reporting by
requiring that contracts with comparable characteristics be
accounted for similarly. This statement is effective for
contacts entered into or modified after June 30, 2003 and all of
its provisions should be applied prospectively.
In January 2003, the FASB issued FIN No. 46, "Consolidation of
Variable Interest Entities, and Interpretation of ARB 51". FIN
No. 46 provides guidance on the identification of entities of
which control is achieved through means other than voting rights
("variable interest entities" or "VIE's") and how to determine
when and which business enterprise should consolidate the VIE
(the "Primary Beneficiary"). In addition, FIN No. 46 required
that both the Primary Beneficiary and all other enterprises with
a significant variable interest in a VIE make additional
disclosures. The transitional disclosure requirements of FIN No.
46 are required in all financial statements initially issued
after January 31, 2003, if certain conditions are met.
ATLANTIC SECURITY, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2004
In May 2003, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No.
150, "Accounting For Certain Financial Instruments with
Characteristics of both Liabilities and Equity". SFAS No. 150
changes the accounting for certain financial instruments with
characteristics of both liabilities and equity that, under
previous pronouncements, issuers could account for as equity.
The new accounting guidance contained in SFAS No. 150 requires
that those instruments be classified as liabilities in the
balance sheet.
SFAS No. 150 affects the issuer's accounting for three types of
freestanding financial instruments. One type is mandatorily
redeemable shares, which the issuing company is obligated to buy
back in exchange for cash or other assets. A second type
includes put options and forward purchase contracts, which
involves instruments that do or may require the issuer to buy
back some of its shares in exchange for cash or other assets.
The third type of instruments that are liabilities under this
Statement is obligations that can be settled with shares, the
monetary value of which is fixed, tied solely or predominantly to
a variable such as a market index, or varies inversely with the
value of the issuer's shares. SFAS No. 150 does not apply to
features embedded in a financial instrument that is not a
derivative in its entirety.
Most of the provisions of SFAS No. 150 are consistent with the
existing definition of liabilities of FASB Concepts Statement No.
6, "Elements of Financial Statements". The remaining provisions
of this statement are consistent with the FASB's proposal to
revise that definition to encompass certain obligations that a
reporting entity can or must settle by issuing its own shares.
This statement is effective for financial instruments entered
into or modified after May 31, 2003 and otherwise shall be
effective at the beginning of the first interim period beginning
after June 15, 2003.
The adoption of these pronouncements did not have a material
effect on the Company's financial position or results of
operations.
NOTE 2 STOCKHOLDER LOAN
- ------------------------
During 2004 and 2003, a stockholder of the Company paid $3,360
for operating expenses on behalf of the Company. The total loan
of $3,360 is payable on demand, non-interest bearing and
unsecured (See Note 5).
NOTE 3 COMMITMENTS AND CONTINGENCIES
- -------------------------------------
(A) License Agreement
- ---------------------
During January 2003, the Company signed an agreement under which
it has a ten-month option to acquire 92% of the outstanding
shares of two companies that hold intellectual property rights to
the Biological Substance Detector and Molecular Detector. During
February 2004, the Company entered into an option to extend the
agreement to March 2005. The agreement calls for the Company to
ATLANTIC SECURITY, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2004
make an initial payment of approximately $3,149,000 and bonus and
milestone payments of approximately $4,724,000 to exercise its
option. In addition, the agreement calls for the Company to pay
approximately $3,149,000 in bonus payments for each of the first
two sales of products using the intellectual property. As of
June 2, 2004, the Company has not executed its option.
(B) Employment Agreements
- -------------------------
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 (in April
2024) 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. As of March 31, 2004, the Company
has accrued $124,500 under the employment agreement.
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
(in September 2011) or with thirty days notice by either party.
As of March 31, 2004, the Company has accrued $50,000 under the
employment agreement.
NOTE 4 STOCKHOLDERS' DEFICIENCY
- --------------------------------
(A) Issuance of Common Stock to Founders
- ----------------------------------------
During the period ended March 31, 2003, the Company issued
15,922,000 shares of common stock for cash of $788 ($0.00005 per
share).
(B) Stock Issued for Cash
- -------------------------
During 2004, the Company issued 536,000 shares of common stock
for cash of $13,400 ($0.025 per share).
During 2004, the Company issued 1,600,000 shares of common stock
for cash of $96,000 ($0.06 per share).
ATLANTIC SECURITY, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2004
(C) Stock Issued for Services
- -----------------------------
During 2004, the Company issued 1,000,000 shares of common stock
for services valued for financial accounting purposes at $25,000
($0.025 per share) based upon recent cash offering prices.
(D) 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 1).
(E) 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 consolidated financial
statements and related notes to reflect this split.
(F) In-Kind Contribution
- ------------------------
During 2004, the Company recorded $3,000 for the fair value of
office space provided to the Company by its Chief Executive
Officer.
NOTE 5 RELATED PARTY TRANSACTIONS
- ----------------------------------
Stockholders of the Company have paid $6,360 of operating
expenses on behalf of the Company from inception.
NOTE 6 GOING CONCERN
- ---------------------
As reflected in the accompanying financial statements, the
Company is a development stage company with no revenues, has a
negative cash flow from operations of $88,218, and a working
capital and stockholders' deficiency of $155,229. 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 CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2004
NOTE 7 SUBSEQUENT EVENT
- ------------------------
The Company has received $5,500,000 in financing commitments from
an investor subject to certain conditions being met by the
Company. Pursuant to the terms of the financing agreement, the
investor has agreed to purchase shares of common stock of the
Company at 70% of the ten-day average closing bid price in
minimum investments of $1,000,000. The shares are to be issued
under Regulation S registration exemption.
As of June 2, 2004, the Company has not received any proceeds
under this commitment.
ATLANTIC SECURITY, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
PAGE 1 CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE
30, 2004 (UNAUDITED)
PAGE 2 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR
THE THREE MONTHS ENDED JUNE 30, 2004 AND 2003
AND FOR THE PERIOD FROM SEPTEMBER 6, 2002
(INCEPTION) TO JUNE 30,2004 (UNAUDITED)
PAGE 3-4 CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS'
DEFICIENCY FOR THE PERIOD FROM SEPTEMBER 6, 2002
(INCEPTION) TO JUNE 30, 2004 (UNAUDITED)
PAGE 5 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
THE THREE MONTHS ENDED JUNE 30, 2004 AND 2003 AND FOR THE
PERIOD FROM SEPTEMBER 6, 2002 (INCEPTION) TO
JUNE 30, 2004 (UNAUDITED)
PAGES 6 - 8 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
ATLANTIC SECURITY, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 2004
-----------------
(UNAUDITED)
ASSETS
- ------
CURRENT ASSETS
Cash $ 18,376
---------
TOTAL CURRENT ASSETS $ 18,376
- -------------------- =========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
- ----------------------------------------
CURRENT LIABILITIES
Accounts payable $ 4,525
Accrued officers' salary 261,750
Stockholder loans 3,360
---------
TOTAL CURRENT LIABILITIES 269,635
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 115,425
Accumulated deficit during development stage (390,558)
Accumulated other comprehensive gain 816
---------
Total Stockholders' Deficiency (251,259)
---------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 18,376
=========
See accompanying notes to condensed consolidated financial statements
ATLANTIC SECURITY, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
For the
Period From
For The Three For the Three September 6, 2002
Months Ended Months Ended (Inception) To
June 30, 2004 June 30, 2003 June 30, 2004
OPERATING EXPENSES
Stock issued for services $ - $ - $ 25,000
Officers salary 87,250 - 261,750
Professional fees 7,922 25,000 79,511
Other general and administrative 639 5,778 24,493
---------- ---------- ---------
Total Operating Expenses 95,811 30,778 390,754
---------- ---------- ---------
LOSS FROM OPERATIONS (95,811) (30,778) (390,754)
OTHER INCOME
Interest income - - 196
---------- ---------- ---------
Net Loss Before Taxes (95,811) (30,778) (390,558)
Provision for Income Taxes - - -
---------- ---------- ---------
NET LOSS (95,811) (30,778) (390,558)
OTHER COMPREHENSIVE INCOME
Foreign currency translation gain (469) (116) 816
---------- ---------- ---------
COMPREHENSIVE LOSS $ (96,280) $ (30,894) $(389,742)
- ------------------ ============ =========== ==========
Net loss per share - basic and diluted $ - $ - $ (0.02)
============ =========== ==========
Weighted average number of shares
outstanding during the period - basic
and diluted 23,058,000 17,943,978 19,595,388
=========== ========== ==========
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 JUNE 30, 2004
(UNAUDITED)
Accumulated
Deficit
Common Stock During 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 shares held 4,000,000 4,000 (3,955) - - - 45
by shareholders of Atlantic
Security, Inc.
($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
($0.25 per share) 1,000,000 1,000 24,000 - - - 25,000
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
In-kind contribution of office space - - 3,000 - - - 3,000
Other comprehensive Income - - - - 1,268 - 1,268
Net loss for the year
ended March 31, 2004 - - - (291,832) - - (291,832)
Comprehensive loss - - - - - - (290,564)
---------- --------- ------------ ----------- --------- ---------- ---------
BALANCE, MARCH 31, 2004 23,058,000 $ 23,058 $ 115,175 $(294,747) $ 1,285 $ - $(155,229)
In-kind contribution of office space - - 250 - - - 250
Other comprehensive Income - - - - (469) - (469)
Net loss for the three
months ended June 31, 2004 - - - (95,811) - - (95,811)
Comprehensive loss - - - - - - (96,280)
---------- --------- ------------ ----------- --------- ---------- ---------
BALANCE, JUNE 30, 2004 23,058,000 $ 23,058 $ 115,425 $(390,558) $ 816 $ - $(251,259)
=========================== ========== ========= ============ =========== ========= ========== =========
See accompanying notes to condensed consolidated financial statements
ATLANTIC SECURITY, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For The
Period From
For The Three For the Three September 6, 2002
Months Ended Months Ended (Inception) to
June 30, 2004 June 30, 2003 June 30, 2004
------------- ----------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (95,811) $ (30,778) $ (390,558)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Stock issued for services - - 25,000
In-kind contribution of office space 250 - 3,250
Changes in operating assets
and liabilities
Increase in accounts payable 3,873 25,000 4,525
Increase in accrued officers salary 87,250 - 261,750
---------- ----------- ----------
Net Cash Used In Operating Activities (4,438) (5,778) (96,033)
---------- ----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES - - -
---------- ----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock - 833 110,233
Proceeds from stockholder loans - 5,887 3,360
---------- ----------- ----------
Net Cash Provided By Operating Activities - 6,720 113,593
---------- ----------- ----------
EFFECT OF EXCHANGE RATE ON CASH (469) (116) 816
---------- ----------- ----------
NET INCREASE (DECREASE) IN CASH (4,907) 826 18,376
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 23,283 - -
---------- ----------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 18,376 $ 826 $ 18,376
========== =========== ==========
See accompanying notes to condensed consolidated financial statements
ATLANTIC SECURITY, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2004
-----------------------
(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 June 30, 2004 and 2003, there were no common share
equivalents outstanding.
NOTE 4 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 subscriptions receivable.
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 ($0.025 per share).
ATLANTIC SECURITY, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2004
-----------------------
(UNAUDITED)
During the three months ended December 31, 2003, the Company
issued 1,600,000 shares of common stock for cash of $96,000
($0.06 per share).
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 $25,000 ($0.025 per share).
(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.
(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 5 RELATED PARTY TRANSACTIONS
Stockholders of the Company paid $6,360 of operating expenses on
behalf of the Company from inception.
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 $96,033. 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.
ATLANTIC SECURITY, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2004
-----------------------
(UNAUDITED)
NOTE 7 SUBSEQUENT EVENT
During July 2004, the Company issued 100,000 shares of common
stock and a warrant to purchase 300,000 shares of common stock
at a price of $0.25 exercisable after a period of one year for
cash of $25,000 ($0.25 per share). The shares were exempt from
registration under section 4(2) of the Securities Act.
No dealer, salesman or other
person is authorized to give any
information or to make any
representations not contained in
this prospectus in connection with
the offer made hereby, and, if
given or made, such information or
representations must not be relied
upon as having been authorized by
Atlantic Security, Inc. This
prospectus does not constitute an
offer to sell or a solicitation to
an offer to buy the securities
offered hereby to any person in any
state or other jurisdiction in
which such offer or solicitation
would be unlawful. Neither the
delivery of this prospectus nor any
sale made hereunder shall, under
any circumstances, create any
implication that the information
contained herein is correct as of
any time subsequent to the date
hereof.
Until _________ __, 2004 (90 days
after the date of this prospectus)
all dealers that effect
transactions in these securities,
whether or not participating in
this offering, may be required to
deliver a prospectus. This is in
addition to the dealer's obligation
to deliver a prospectus when acting
as underwriters and with respect to
their unsold allotments or
subscriptions.
TABLE OF CONTENTS
Page
Prospectus Summary 3 Atlantic Security, Inc.
The Offering 5
Summary Financial Data 6
Risk Factors 7
Forward Looking Statements 13
Penny Stock Regulations 13
Use of Proceeds 14
Determination of Offering Price 15
Dividend Policy 15
Management's Plan of Operation 16 5,514,500 Shares
Business 22
Management 28
Principal Shareholders 31
Selling Shareholders 32
Description of Securities 34
Certain Transactions 36
Indemnification 37 PROSPECTUS
Plan of Distribution 38
Legal Matters 40
Experts 40
Where You Can Find More
Information 41
Financial Statements
October 7, 2004
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Articles of Incorporation, as well as our By-Laws provide
for the indemnification of directors, officers, employees and
agents of the corporation to the fullest extent provided by the
Corporate Law of the State of Florida, as well as is described in
the Articles of Incorporation and the By-Laws. These sections
generally provide that the Company may indemnify any person who
was or is a party to any threatened, pending or completed action,
suit or proceeding whether civil, criminal, administrative or
investigative except for an action by or in right of the
corporation by reason of the fact that he or she is or was a
director, officer, employee or agent of the corporation.
Generally, no indemnification may be made where the person has
been determined to be negligent or guilty of misconduct in the
performance of his or her duties to the Company.
Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to our directors, officers or
controlling persons, pursuant to the foregoing provisions, or
otherwise, we have been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act of 1933,
and is, therefore, unenforceable.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
We estimate that expenses in connection with this
registration statement will be as follows:
SEC registration fee $175
Accounting fees and expenses $5,000
Legal $37,500
Edgarizing fees* $4,825
--------
Total $47,500
* estimates
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
The following information is furnished with regard to all
securities sold by us within the past three years that were not
registered under the Securities Act. The issuances described
hereunder were made in reliance upon the exemptions from
registration set forth in Section 4(2) of the Securities Act.
None of the foregoing transactions involved a distribution or
public offering. The company has only sold to a total of five
investors in the United States and all five are accredited investors.
Other than shares issued to founders or pursuant to the share
exchange agreement with Atlantic Security Limited, all shares
were sold to friends and family of our officers to raise
operating capital. Officers individually contacted friends and
family to discuss the Company's business plans. Although not all
of the purchasers were considered sophisticated investors, all
investors were given access to corporate books and records as
well as the ability to ask questions of the company's management.
No general solicitation or advertising was used in approaching
the investors. All shares issued have been and will remain
restricted and may not be transferred unless and until the
effectiveness of this registration statement or pursuant to
another applicable exemption.
Date Name # of Shares(1) Total Price
- ----------------------------------------------------------------------
May 15, 2003 Terence Sullivan 9,600,000 $*
December 9, 2003 Teddy Plaisted Elett
Trustee, Under Agreement
dated August 7, 1992 1,600,000 $96,000
May 15, 2003 E-N Corp 1,400,000 $*
May 15, 2003 William Duncan Swartz 1,000,000 $*
September 26, 2003 Oliver Cassell 400,000 $10,000
May 15, 2003 Alan Coe 400,000 $*
May 15, 2003 Dravrar 400,000 $*
May 15, 2003 Judy Fishman and
Michael Fishman JTTEN 400,000 $*
May 15, 2003 Alan Gibson 400,000 $*
May 15, 2003 James Christopher Holmes 400,000 $*
May 15, 2003 Daniela. Lapuste 400,000 $*
May 15, 2003 Kwan Lam Ng 400,000 $*
May 15, 2003 Howard Smith 400,000 $*
May 15, 2003 Thomas Harrison 340,000 $*
May 15, 2003 Watson Dave International 300,000 $*
May 15, 2003 Thomas Gryzmala 60,000 $*
May 15, 2003 Greg Chan 12,000 $*
May 15, 2003 Ulfat Kiani 8,000 $*
August 17, 2003 Jacky Barker 4,000 $100
August 17, 2003 Kevin Barker 4,000 $100
August 17, 2003 George Chaliss 4,000 $100
August 17, 2003 Margaret Chan 4,000 $100
August 17, 2003 Dorothy Cornwell 4,000 $100
August 17, 2003 John H. Cornwell Jr. 4,000 $100
August 17, 2003 John H. Cornwell III 4,000 $100
August 17, 2003 Sarah Cornwell 4,000 $100
August 17, 2003 Jon Evans 4,000 $100
August 17, 2003 Mo Lan Lo 4,000 $100
August 17, 2003 Ian Macpherson 4,000 $100
August 17, 2003 Sarah Macpherson 4,000 $100
August 17, 2003 Baldeep Namas 4,000 $100
August 17, 2003 Mandeep Namas 4,000 $100
August 17, 2003 Perminder Namas 4,000 $100
II-2
August 17, 2003 Ravi Namas 4,000 $100
August 17, 2003 Chau Lam Ng 4,000 $100
August 17, 2003 Lam Fai Ng 4,000 $100
August 17, 2003 Oi Ling Lee Ng 4,000 $100
August 17, 2003 Sau Chun Ng 4,000 $100
August 17, 2003 Gurpreet Sahota 4,000 $100
August 17, 2003 Rani K. Sahota 4,000 $100
August 17, 2003 Surinder Sahota 4,000 $100
August 17, 2003 Tom Sit 4,000 $100
August 17, 2003 Hardev Kaur Sodhi 4,000 $100
August 17, 2003 Helen Sodhi 4,000 $100
August 17, 2003 Rajvir Singh Sodhi 4,000 $100
August 17, 2003 Ranjit Sodhi 4,000 $100
August 17, 2003 Mark Sullivan 4,000 $100
August 17, 2003 Hon Wae Wong 4,000 $100
August 17, 2003 Pui Chun wong 4,000 $100
August 17, 2003 Kong Yau 4,000 $100
August 17, 2003 Teresa Yau 4,000 $100
August 17, 2003 Tung Mei Yau 4,000 $100
May 15, 2003 Janet Ann Sullivan 1,200 $*
May 15, 2003 Sarah Janet Holmes 800 $*
* issued in exchange for shares in Atlantic Security Limited.
ASL shareholders received 400 shares of our common stock for each
share of ASL previously held.
(1) The number of shares referenced above for each shareholder
are subsequent to a 4 for 1 stock split.
Additionally, pursuant to a consulting agreement entered into on
September 29, 2002, the company has the contractual obligation to
issue to Mr. Niall Duggan a total of 1,000,000 shares of its
common stock. Mr. Duggan consulted the company in the areas of
business development, investor introduction and products.
The Company has received $5,500,000 in financing commitments from an
investor subject to certain conditions being met by the Company.
Pursuantto the terms of the financing agreement, the investor has
agreed to purchase shares of common stock of the Company at 70% of the
ten-day average closing bid price in minimum investments of $1,000,000.
The shares are to be issued under Regulation S registration exemption.
The Company has not received any proceeds under this commitment.
ITEM 27. EXHIBITS
Exhibit Number Description
- -------------- -----------
3.1 Articles of Incorporation of Atlantic
Security, Inc.
3.2 Bylaws of Atlantic Security, Inc.*
3.3 Specimen certificate of the Common Stock of
Atlantic Security, Inc.*
5.1 Opinion of Law Office of James G. Dodrill
II, PA as to legality of securities being
registered*
10.1 Financing Agreement with Citywide
Management Services, Inc.
10.2 Employment contract with Terence Sullivan
10.3 Employment contract with Howard Smith
10.4 Amendment to Financing Agreement with
Citywide Management Services, Inc.
10.5 Option Agreement with Professor Gorbunov.
10.6 Agreement with Nial Duggan
10.7 Extension of Option Agreement with Professor Gorbunov.
23.1 Consent of Webb & Company, PA
23.2 Consent of James G. Dodrill II, PA
(included in Exhibit 5.1)
* to be filed by amendment
ITEM 28. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors,
officers and controlling persons of the Company pursuant to the
foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy and as expressed in
the Act and is, therefore, unenforceable.
The Company hereby undertakes to:
(1) File, during any period in which it offers or sells
securities, a post-effective amendment to this registration
statement to:
i. Include any prospectus required by Section
10(a)(3) of the Securities Act;
ii. Reflect in the prospectus any facts or events
which, individually or together, represent a
fundamental change in the information in the
registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of
securities offered would not exceed that which
was registered) and any deviation from the low or
high end of the estimated maximum offering range
may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price
represent more than a 20 percent change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective registration statement.
iii. Include any additional or changed material
information on the plan of distribution.
(2) For determining liability under the Securities Act,
treat each post-effective amendment as a new registration
statement of the securities offered, and the offering of
the securities at that time to be the initial bona fide
offering.
(3) File a post-effective amendment to remove from
registration any of the securities that remain unsold at
the end of the offering.
(4) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 (the "Act") may be
permitted to our directors, officers and controlling
persons pursuant to the foregoing provisions, or otherwise,
we have been advised by the Securities and Exchange
Commission that such indemnification is against public
policy as expressed in the Act and is, therefore,
unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by us of expenses incurred or
paid by one of our directors, officers or controlling persons in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, we will, unless
in the opinion of our counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by us is
against public policy as expressed in the Securities Act and will
be governed by the final adjudication of such issue.
II-5
Signatures
In accordance with the requirements of the Securities Act of
1933, the registrant certifies that it has reasonable ground to
believe that it meets all of the requirements for filing on Form
SB-2/A and authorized this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the
city of Bicester, Oxfordshire, United Kingdom, on October 7, 2004.
ATLANTIC SECURITY, INC.
By: /s/ Terence Sullivan
-----------------------
Terence Sullivan
Principal Executive Officer,
President and Chairman
In accordance with the requirements of the Securities Act of
1933, this registration statement has been signed by the following
person in the capacities indicated on October 7, 2004.
/s/ Terence Sullivan Principal Executive Officer,
- ------------------------- President and Chairman
Terence Sullivan
/s/ Gregory Chan Principal Financial Officer and
- ------------------------- Principal Accounting Officer
Gregory Chan
/s/ Christopher Holmes Director
- -------------------------
Christopher Holmes
/s/ Howard Smith Director
- -------------------------
Howard Smith