U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2004
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from
Commission File No.
Atlantic Securities, Inc.
(Name of Small Business Issuer in its Charter)
Florida 65-0963962
(State of Incorporation) (I.R.S. Employer Identification No.)
Glyme House
St. John's Street,
Bicester,
Oxfordshire,
OX2 6SL
(Address of Principal Executive Offices)
00 44 1869 242378
(Registrant's telephone number. including area code)
(Former name, address and fiscal year, if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past
90 days. Yes ____ No___.
The number of shares of the registrant's common stock, par value $0.0001 per
share, outstanding as of November 9, 2004 was 23,158,000.
ATLANTIC SECURITY, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
INDEX
Part I-- FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Item 2. Management's Discussion and Analysis or Plan of Operations
Item 3. Controls and Procedures
Part II-- OTHER INFORMATION
Item 2. Changes in Securities
Item 6. Exhibits and Reports on Form 8-K
ATLANTIC SECURITY, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
PART I - FINANACIAL INFORMATION
ITEM 1 FINANCIAL INFORMATION
ATLANTIC SECURITY, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
PAGE 1 CONDENSED CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER
30, 2004 (UNAUDITED)
PAGE 2 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE
AND SIX MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
AND FOR THE PERIOD FROM SEPTEMBER 6, 2002
(INCEPTION) TO SEPTEMBER 30, 2004 (UNAUDITED)
PAGE 3-4 CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS'
DEFICIENCY FOR THE PERIOD FROM SEPTEMBER 6, 2002
(INCEPTION) TO SEPTEMBER 30, 2004 (UNAUDITED)
PAGE 5 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE
SIX MONTHS ENDED SEPTEMBER 30, 2004 AND 2003 AND FOR THE
PERIOD FROM SEPTEMBER 6, 2002 (INCEPTION) TO
SEPTEMBER 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
SEPTEMBER 30, 2004
-----------------
(UNAUDITED)
ASSETS
- ------
CURRENT ASSETS
Cash $ 31,454
---------
TOTAL CURRENT ASSETS $ 31,454
- -------------------- =========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
- ----------------------------------------
CURRENT LIABILITIES
Accounts payable $ 17,389
Accrued officers' salary 349,000
Stockholder loans 3,360
---------
TOTAL CURRENT LIABILITIES 369,749
COMMITMENTS AND CONTINGENCIES -
STOCKHOLDERS' DEFICIENCY
Common stock, $0.001 par value, 100,000,000 shares
authorized, 23,058,000 shares issued and outstanding 23,158
Additional paid in capital 140,575
Accumulated deficit during development stage (502,262)
Accumulated other comprehensive gain 234
---------
Total Stockholders' Deficiency (338,295)
---------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 31,454
=========
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 For the Six For the Six September 6, 2002
Months Ended Months Ended Months Ended Months Ended (Inception) To
September 30, September 30 September 30, September 30, September 30, 2004
2004 2003 2004 2003
OPERATING EXPENSES
Stock issued for services $ - $ - $ - $ 25,000 $ 25,000
Officers salary 87,250 - 174,500 - 349,000
Professional fees 17,389 - 25,311 - 96,900
Other general and administrative 7,201 3,598 7,840 9,376 31,694
---------- ---------- --------- ---------- ------------
Total Operating Expenses 111,840 3,598 207,651 34,376 502,594
---------- ---------- --------- ---------- ------------
LOSS FROM OPERATIONS (111,840) (3,598) (207,651) (34,376) (502,594)
OTHER INCOME
Interest income 136 6 136 6 332
---------- ---------- --------- ---------- ------------
Total Other Income 136 6 136 6 332
Net Loss Before Taxes (111,704) (3,592) (207,515) (34,370) (502,262)
Provision for Income Taxes - - - - -
---------- ---------- --------- ---------- ------------
NET LOSS (111,704) (3,592) (207,515) (34,370) (502,262)
OTHER COMPREHENSIVE INCOME
Foreign currency translation gain (582) (109) (1,015) (225) 234
---------- ---------- --------- ---------- ------------
COMPREHENSIVE LOSS $ (112,286) $ (3,701) $(208,530) $ (34,595) $ (502,028)
- ------------------ ============ =========== ========== ========== ============
Net loss per share - basic and diluted $ (0.01) $ (0.00) $ (0.01) (0.01) (0.03)
============ =========== ========== ========== ============
Weighted average number of shares
outstanding during the period - basic
and diluted 23,127,565 4,997,196 23,092,973 4,742,992 20,086,467
=========== ========== ========== ========= ==========
See accompanying notes to condensed consolidated financial statements
2
ATLANTIC SECURITY, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY
FOR THE PERIOD FROM SEPTEMBER 6, 2002 (INCEPTION) TO SEPTEMBER 30, 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 30, 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)
In-kind contribution of office space - - 250 - - - 250
Stock issued for cash (0.25 per share) 100,000 100 24,900 - - - 25,000
Other comprehensive income - - - - (582) - (582)
Net loss for the three
months ended September 30, 2004 - - - (111,704) - - (111,704)
---------
Comprehensive loss - - - - - - (112,286)
---------- --------- ------------ ----------- --------- ---------- =========
BALANCE, SEPTEMBER 30, 2004 23,158,000 $ 23,158 $ 140,575 $(502,262) $ 234 $ - $(338,295)
=========================== ========== ========= ============ =========== ========= ========== =========
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 Six For the Six September 6, 2002
Months Ended Months Ended (Inception) to
September 30, September 30, September 30,
2004 2004 2004
------------- ----------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (207,515) $ (34,370) $ (502,262)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Stock issued for services - 25,000 25,000
In-kind contribution of office space 500 - 3,500
Changes in operating assets
and liabilities
Increase in prepaid expense - (1,500) -
Increase in accounts payable 16,737 7,757 17,389
Increase in accrued officers salary 174,500 - 349,000
---------- ----------- ----------
Net Cash Used In Operating Activities (15,778) (3,113) (107,373)
---------- ----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES - - -
---------- ----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 25,000 4,206 135,233
Proceeds from stockholder loans, net - 3,360 3,360
---------- ----------- ----------
Net Cash Provided By Operating Activities 25,000 7,566 138,593
---------- ----------- ----------
EFFECT OF EXCHANGE RATE ON CASH (1,051) (225) 234
---------- ----------- ----------
NET INCREASE (DECREASE) IN CASH 8,171 4,228 31,454
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 23,283 - -
---------- ----------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 31,454 $ 4,228 $ 31,454
========== =========== ==========
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 SEPTEMBER 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 September 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 SEPTEMBER 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.
During the three months ended September 30, 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 for 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.
(B) Stock Issued for Services
During the six 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 and has a negative cash flow from
operations from inception of $107,373. 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 SEPTEMBER 30, 2004
-----------------------
(UNAUDITED)
NOTE 7 SUBSEQUENT EVENT
During October 2004, the Company issued 40,000 shares of common
stock for cash of $10,000 ($0.25 per share).
ITEM 2. MANAGEMENT'S PLAN OF OPERATIONS
-------------------------------
Results and Plan of Operations
- ------------------------------
For the period from inception through September 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 September 30, 2004 is $349,000.
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 estimated expenses 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
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. Citywide has agreed to limit the amount of shares
it holds to no more than 4.9% of our outstanding shares at any point.
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.
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.
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.
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, we then hope to conduct market research to
determine a list of all potential partners. At that time we
intend to shortlist and begin communications with a range of potential
partners. Within 60 days of exercising the option, 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.
ITEM 3. Controls and Procedures
-----------------------
(a) Evaluation of disclosure controls and procedures.
-------------------------------------------------
Our Chief Executive Officer and Chief Financial Officer (the
"Certifying Officer") maintain a system of disclosure controls and procedures
that is designed to provide reasonable assurance that information, which is
required to be disclosed, is accumulated and communicated to management timely.
Under the supervision and with the participation of management, the
Certifying Officers evaluated the effectiveness of the design and operation of
our disclosure controls and procedures (as defined in Rule [13a-14(c)/
15d-14(c)] under the Exchange Act) within 90 days prior to the filing date
of this report.
Based upon that evaluation, the Certifying Officer concluded that our
disclosure controls and procedures are effective in timely alerting them to
material information relative to our company required to be disclosed in our
periodic filings with the SEC.
(b) Changes in internal controls.
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Our Certifying Officer has indicated that there were no significant
changes in our internal controls or other factors that could significantly
affect such controls subsequent to the date of his evaluation, and there were
no such control actions with regard to significant deficiencies and material
weaknesses.
PART II - OTHER INFORMATION
There were no reportable items for Item 1.
Item 2. Changes in Securities.
(a) During the quarter ending September 30, 2004 the company sold 100,000
restricted shares of its common stock at $0.25 per share. During the quarter
the company received a cash payment of $25,000 relating to this sale.
Items 3 through 5.
There were no reportable items for Items 3 through 5.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
(31.1) Certification of Chief Executive Officer pursuant to Rule
13a-14 or 15d-14 of the Securities Exchange Act of 1934, as adopted
pursuant to section 302 of the Sarbanes-Oxley act of 2002.
(31.2) Certification of Chief Financial Officer pursuant to Rule
13a-14 or 15d-14 of the Securities Exchange Act of 1934, as adopted
pursuant to section 302 of the Sarbanes-Oxley act of 2002.
(32.1) Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002.
(32.2) Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002.
(b) Reports on Form 8-K
None.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
November 9, 2004
ATLANTIC SECURITY, INC.
/s/ Terence Sullivan
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Terence Sullivan
Principal Executive Officer
/s/ Gregory Chan
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Gregory Chan
Principal Financial Officer