SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[ X ] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 2008
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ___________ to ____________
Commission file number: 000-50944
Global Resource Corporation
(Exact name of registrant as specified in its charter)
Nevada 84-1565820
(State or other jurisdiction of incorporation (IRS Employer
or organization) Identification No.)
Bloomfield Business Park,
408 Bloomfield Drive, Unit 3,
West Berlin, New Jersey 08091
(Address of principal executive offices)
(856) 767-5661
(Issuer's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during the preceding
12months (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 [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a smaller reporting company. See the definitions of "large
accelerated filer", "accelerated filer" and "smaller reporting company" in Rule
12b-2 of the Exchange Act.
Large Accelerated Filer _____ Accelerated Filer _____
Non-accelerated filer _____ (do not check if a smaller reporting company)
Smaller reporting company __X__
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes ____ No ____
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: ___________ shares of common stock,
par value $0.001, were outstanding at ________, 2008.
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONDENSED BALANCE SHEET
SEPTEMBER 30, 2008
(UNAUDITED) (AUDITED)
ASSETS PERIOD ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
2008 2007
------------ ------------
(Restated)
CURRENT ASSETS
Cash and Cash equivalents $ 3,809,491 $ 780,425
Short-term Investments 287,933 --
Prepaid Services -- 1,808,042
Inventory -- --
------------ ------------
TOTAL CURRENT ASSETS 4,097,424 2,588,467
------------ ------------
Fixed Assets, Net of depreciation 1,119,785 373,135
------------ ------------
OTHER ASSETS
Deposits 73,639 74,860
Long-term Investments 2,672,100 --
------------ ------------
TOTAL OTHER ASSETS 2,745,739 74,860
TOTAL ASSETS $ 7,962,948 $ 3,036,462
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 66,154 $ 119,588
Current portion - loan payable - equipment 41,619 40,964
Current portion - lease - equipment 9,154 --
Loan Payable - to officer of company -- 150,000
Stock to be issued 747,976 --
------------ ------------
TOTAL CURRENT LIABILITIES 864,903 310,552
------------ ------------
LONG-TERM LIABILITIES
Lease - equipment, net of current portion 18,167 --
Loan payable - equipment, net of current portion 20,696 51,629
------------ ------------
TOTAL LIABILITIES 903,766 362,181
------------ ------------
STOCKHOLDERS' EQUITY
Preferred Stock A - $.001 par value 100,000,000 shares authorized,
5,000 issued issued and outstanding at September 30, 2008,
35,237,188 issued and outstanding at Dec. 31, 2007 5 35,236
Preferred Stock B - $.001 par value, no shares authorized and
issued as of September 30, 2008 and 1,000 shares authorized
and issued at Dec. 31, 2007 -- 1
Common stock, $.001 par value; 200,000,000 shares authorized,
67,523,189 shares issued and 60,828,228 outstanding at
September 30, 2008, 30,358,291 Shares issued and 30,263,330
outstanding at Dec. 31, 2007 67,523 30,358
Subscription receivable -- (185,693)
Additional paid-in capital 47,938,902 20,279,849
Accumulated other comprehensive income (961,327) --
Deficit accumulated in the development stage (38,269,448) (17,418,997)
------------ ------------
8,775,655 2,740,754
Treasury Stock (1,716,473) (66,473)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 7,059,182 2,674,281
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 7,962,948 $ 3,036,462
============ ============
The accompanying notes are an integral part of these financial statements.
2
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENT OF OPERATIONS
(WITH CUMULATIVE TOTALS SINCE INCEPTION)
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED (Restated)
----------------------------- ----------------------------- JULY 19, 2002
(Restated) (Restated) (INCEPTION)
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, TO
2008 2007 2008 2007 SEPT. 30, 2008
------------- ------------- ------------- ------------- -------------
REVENUES $ -- $ -- $ -- $ -- $ --
COST OF SALES -- -- -- -- --
------------- ------------- ------------- ------------- -------------
GROSS PROFIT -- -- -- -- --
------------- ------------- ------------- ------------- -------------
OPERATING EXPENSES
Professional fees -Consulting, legal, other 293,879 205,486 12,035,607 558,581 14,718,053
Investment Banking Fees and investor relations 3,097,901 170,683 5,657,678 298,437 11,549,936
Other general and administrative expenses 486,591 2,362,322 2,601,723 3,194,165 10,931,795
Research and Development 177,172 38,461 612,165 135,774 1,021,582
------------- ------------- ------------- ------------- -------------
TOTAL OPERATING EXPENSES 4,055,543 2,776,952 20,907,173 4,186,957 38,221,366
------------- ------------- ------------- ------------- -------------
LOSS BEFORE OTHER INCOME (EXPENSE) (4,055,543) (2,776,952) (20,907,173) (4,186,957) (38,221,366)
------------- ------------- ------------- ------------- -------------
OTHER INCOME (EXPENSE)
Loss on deposits, and other (100,000) (172,712)
Net realized gain / (loss) on investments (42,038) (43,232) (43,232)
Interest expense (5,031) (3,008) (14,424) (19,373) (52,915)
Interest income 70,302 7,262 114,378 31,776 220,777
------------- ------------- ------------- ------------- -------------
TOTAL OTHER INCOME (EXPENSE) 23,233 4,254 56,722 (87,597) (48,082)
------------- ------------- ------------- ------------- -------------
NET LOSS BEFORE PROVISION FOR INCOME TAXES (4,032,310) (2,772,698) (20,850,451) (4,274,554) (38,269,448)
PROVISION FOR INCOME TAXES -- -- -- -- --
------------- ------------- ------------- ------------- -------------
NET LOSS APPLICABLE TO COMMON SHARES $ (4,032,310) $ (2,772,698) $ (20,850,451) $ (4,274,554) $ (38,269,448)
============= ============= ============= ============= =============
BASIC AND DILUTED LOSS
PER SHARE $ (0.08) $ (0.11) $ (0.49) $ (0.17)
============= ============= ============= =============
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES 53,273,853 26,145,531 42,221,919 25,634,118
============= ============= ============= =============
The accompanying notes are an integral part of these financial statements.
3
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENT OF CASH FLOWS
(WITH CUMULATIVE TOTALS SINCE INCEPTION)
(UNAUDITED)
NINE MONTHS ENDED (Restated)
------------------------------ JULY 19, 2002
(Restated) (INCEPTION)
SEPTEMBER 30, SEPTEMBER 30, TO
2008 2007 SEPTEMBER 30, 2008
------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(20,850,451) $ (4,274,554) (38,269,448)
------------ ------------ ------------
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH (USED IN)
OPERATING ACTIVITIES:
Depreciation 70,104 72,222 234,904
Preferred stock issued for services 0 400,000 400,000
Common stock issued for services 15,487,123 26,000 22,417,833
Amortization of Prepaid common stock issued for services from 2007 1,808,042 1,797,522 2,581,500
Common stock Warrants issued for services 85,375 85,375
Amortization of deferred compensation 81,750 81,750 408,750
Allowance reserve for note payable -- 650,000
Loss on sale of fixed asset 2,141 11,775
Loss on real estate 212,935
Common stock issued as charitable contribution 50,000
Retained deficit from merger under common control (Mobilestream) 1,494,658
CHANGES IN ASSETS AND LIABILITIES
(Increase) in Inventory -- -- --
(Increase) decrease in deposits 1,221 70,140 1,221
(Increase) in notes receivable (650,000)
(Increase) in prepaid expenses -- (250,000) --
(Decrease) in accounts payable (53,434) 27,911 170,324
------------ ------------ ------------
TOTAL ADJUSTMENTS 17,480,181 2,227,686 28,069,275
------------ ------------ ------------
NET CASH USED IN OPERATING ACTIVITIES (3,370,270) (2,046,868) (10,200,173)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets - Equipment & machinery (38,504) (9,033) (473,666)
Purchase of fixed assets - Construction in progress protoype machine (745,818) (745,818)
Proceeds from sale of Fixed assets 27,000 34,200
Proceeds from sale of real estate -- 617,864
Purchase of Investment funds (4,586,333) -- (4,716,193)
Proceeds from sale of Investment funds 664,973 664,973
Cash acquired with merger under common control (Mobilestream) 1,678,362
Investment in real estate, net -- -- (80,800)
------------ ------------ ------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (4,705,682) 17,967 (3,021,078)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock for cash 12,137,256 163,461 17,829,601
Liability for stock to be issued 747,976 1,059,123
Proceeds from stock subscription receivable 1,060,000
(Increase) decrease in stock subscription receivable 55,175 445,000 (1,190,517)
Proceeds from Debenture financing activity
Proceeds from officer's loan 188,550
Repayment of officer's loan (150,000) -- (188,550)
Purchase of Treasury Stock (1,650,000) (66,473) (1,716,473)
Proceeds from loan payable - equipment (5,111) 96,205
Repayment of loan payable - vehicle (30,278) (27,575) (107,197)
------------ ------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 11,105,018 514,413 17,030,742
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3,029,066 (1,514,488) 3,809,491
CASH AND CASH EQUIVALENTS
- BEGINNING OF PERIOD 780,425 1,770,002 --
------------ ------------ ------------
CASH AND CASH EQUIVALENTS
- END OF PERIOD $ 3,809,491 $ 255,514 $ 3,809,491
============ ============ ============
SUPPLEMENTAL DISCLOSURES:
CASH ACTIVITIES:
INTEREST PAID $ 9,793 $ 11,661 $ 50,670.00
INCOME TAX PAID $ -- $ -- $ --
NON-CASH ACTIVITIES SEE FOOTNOTE 16
The accompanying notes are an integral part of these financial statements.
4
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
AT SEPTEMBER 30, 2008
(Restated) DEFICIT (Restated)
PREFERRED STOCK COMMON STOCK ADDITIONAL ACCUMULATED
---------------------------- ---------------------------
PREFERRED PAR VALUE $.001 COMMON PAR VALUE $.001 PAID-IN DURING THE DEFERRED
SHARES $ AMOUNT SHARES $ AMOUNT CAPITAL Development STAGE COMPENSATION
----------- ------------- ---------- ------------- ---------- --------------- ------------
BALANCE -
JULY 19, 2002
(INCEPTION) -- $ -- $ -- $ -- $ --
Issuance of
initial
founders'
shares,
September 9,
2002, net of
subsequent
cancellations 2,555,000 -- -- -- --
Common stock
issued for
services
rendered, in
September
2002, at
$0.472 per
share 1,000,000 -- 472,000 -- --
Common stock
issued for
cash,
November 2002
at $0.50 per
share 29,000 -- 14,500 -- --
Common stock
issued for
services
rendered, in
November and
December
2002, at
$0.50 per
share 13,600 -- 6,800 -- --
Net loss for
the period
July 19, 2002
(Inception)
through
December 31,
2002, as
originally
stated -- -- -- (2,008,508) --
Prior period
adjustment,
Note 17 -- -- -- -- -- 1,500,000 --
----------- ------------- ---------- ------------- --------- --------------- ------------
BALANCE AT
DECEMBER 31,
2002 -- -- 3,597,600 -- 493,300 (508,508) --
----------- ------------- ---------- ------------- --------- --------------- ------------
5
Re-issuance
of founders'
shares - July
2003 1,455,000 -- -- -- --
Common stock
issued for
cash, from
January to
December 2003
at $0.50 per
share 519,800 -- 259,900 -- --
Issuance of
subscription
receivable
from
shareholders -- -- -- -- --
Net loss for
the year
ended
December 31,
2003, as
originally
stated -- -- 0- (931,159) --
Prior period
adjustment,
Note 17 -- -- -- -- 0- 727,500 --
----------- ------------- ---------- ------------- --------- --------------- ------------
BALANCE AT
DECEMBER 31,
2003 -- -- 5,572,400 -- 753,200 (712,167) --
----------- ------------- ---------- ------------- --------- --------------- ------------
6
Common stock
issued for
cash, from
January to
December 2004
at $0.6027
per share 917,645 -- 553,105 -- --
Common stock
issued in
exchange for
real estate
in Aug. and
Sept. 2004 at
$1.00 per
share 650,000 -- 650,000 -- --
Common stock
issued for
compensation
on October
12, 2004 at
$1.00 per
share 545,000 -- 545,000 -- (545,000)
Common stock
issued as
charitable
contribution
on October
12, 2004 at
$1.00 per
share 50,000 -- 50,000 -- --
Initial
founders'
shares
cancelled on
October 28,
2004 (250,000) -- -- -- --
Issuance of
subscription
receivable
from
shareholders -- -- -- -- --
Net loss for
the year
ended
December 31,
2004 -- -- -- -- -- (672,219) --
----------- ------------- ---------- ------------- --------- --------------- ------------
BALANCE AT
DECEMBER 31,
2004 -- -- 7,485,045 -- 2,551,305 (1,384,386) (545,000)
----------- ------------- ---------- ------------- --------- --------------- -----------
7
Common stock
issued for
cash, from
January to
December 2005
at $1.2264
per share
average for
year 745,655 -- 914,507 -- --
Common stock
issued to
acquire
technology
with zero
value 37,500,000 -- -- -- --
Common stock
issued in
exchange for
real estate
on January
18, 2005 at
$1.00 per
share 80,800 -- 80,800 -- --
Common stock
issued for
services
rendered, in
Sept., Oct.
and November
2005, at
$1.00 per
share 53,500 -- 53,500 -- --
Common stock
issued for
payment of
debts on
March 11, 2005
at $1.00 per
share 1,087 -- 1,087 -- --
Stock
subscriptions
received, net -- -- -- -- --
Amortization
of deferred
compensation -- -- -- -- 109,000
Net loss for
the year
ended
December 31,
2005 -- -- -- -- -- (1,291,169) --
----------- ------------- ---------- ------------- --------- --------------- ------------
BALANCE AT
DECEMBER 31,
2005 -- -- 45,866,087 -- 3,601,199 (2,675,555) (436,000)
----------- ------------- ---------- ------------- --------- --------------- -----------
8
Common stock
issued for
cash, from
January to
December 2006
at $1.0088
per share
average for
year 2,786,286 -- 2,810,877 -- --
Stock
subscriptions
received, net -- -- -- -- --
Reclass
deferred
compensation
due adoption
SFAS 123R (436,000) 436,000
Amortization
of deferred
compensation -- -- 109,000 --
Common stock
issued for
services
rendered, on
September 22,
2006, at
$1.044 per
share 14,123 -- 14,746 -- --
Common stock
issued in
exchange for
investment in
real estate
in September
2006 at $2.00
per share 22,500 -- 45,000 -- --
Effect of
reverse
merger
September 23,
2006 72,241 48,761 (169,444) -- --
Common stock
issued for
conversion of
debt on
September 23,
2005 at
$0.045 per
share 2,681,837 2,682 118,000 -- --
Common stock
issued for
services
rendered, on
September 23,
2006, at
$2.00 per
share 25,000 25 49,975 -- --
Common stock
issued for
merger with
Mobilestream Oil,
Inc. on
December 31,
2006, at
$0.255 per
share 11,145,255 11,145 2,842,136 (10,498)
Cancellation
of shares for
merger with
Mobilestream Oil,
Inc. (37,500,000) (37,500) 37,500
Preferred
convertible
stock issued
for merger
with
Mobilestream.
2 for 1
convertible
into common,
on December
31, 2006 35,236,188 $ 435,236 468,138
Net loss for
the year
ended
December 31,
2006 -- -- -- -- -- (4,246,058) --
----------- ------------- --------- ------------ --------- ------------- -----------
BALANCE AT
DECEMBER 31,
2006 35,236,188 $ 35,236 25,113,329 $ 25,113 $9,491,127 $ (6,932,111) $ --
========== ============= ========== =========== ========== ============== ============
9
Common stock
shares issued
for cash:
Common stock
issued for
cash in March
2007, at
$0.30 per
share 17,500 17 5,233
Common stock
issued for
cash from
April to June
30, 2007, at
$0.32 per
share,
Regulation S
offering 499,564 500 157,711
Common stock
issued for
cash on
October 25,
2007, at
$2.00 per
share 2,500 3 4,997
Common stock
issued for
cash on
December 20,
2007, at
$1.00 per
share 1,000,000 1,000 999,000
Common stock
issued for
Stock to be
issued
(liability)
on March 7,
2007, at
$1.0777 per
share 186,822 187 201,156
Stock
subscriptions
received, net -- -- -- -- --
Amortization
of deferred
compensation 109,000
Common Stock
Shares issued
for services
rendered:
Common stock
issued for
services
rendered, on
March 19,
2007, at
$1.00 per
share 5,000 5 4,995
Common stock
issued for
services
rendered, on
March 19,
2007, at
$0.50 per
share 20,000 20 9,980
Common stock
issued for
services
rendered, on
March 20,
2007, at
$0.50 per
share 11,000 11 10,989
Common stock
issued for
services
rendered, on
April 20,
2007, at
$1.38 per
share 250,000 250 344,750
Common stock
issued for
services
rendered, on
May 30, 2007,
at $1.05 per
share 3,417 3 3,301
Common stock
issued for
services
rendered, on
June 1, 2007,
at $1.36 per
share 194,500 195 264,325
Common stock
issued for
services
rendered, on
July 9, 2007,
at $1.00 per
share 4,700 5 4,695
Common stock
issued for
services
rendered, on
July 18,
2007, at
$0.80 per
share 37,500 37 29,963
Common stock
issued for
services
rendered, on
August 1,
2007, at
$4.43 per
share 100,000 100 442,900
Common stock
issued for
services
rendered, on
August 19,
2007, at
$4.50 per
share 250,000 250 1,124,750
Common stock
issued for
services
rendered, on
August 30,
2007, at
$2.27 per
share 3,745 4 8,496
Common stock
issued for
services
rendered, on
August 30,
2007, at
$0.69 per
share 30,041 30 20,698
Common stock
issued for
services
rendered, on
August 31,
2007, at
$3.41 per
share 1,000 1 3,409
Common stock
issued for
services
rendered, on
August 31,
2007, at
$3.41 per
share 10,000 10 34,090
Common stock
issued for
services
rendered, on
October 1,
2007, at
$2.60 per
share 300,000 300 779,700
Common stock
issued for
services
rendered, on
October 9,
2007, at
$2.69 per
share 47,579 48 127,702
Common stock
issued for
services
rendered, on
October 22
2007, at
$1.86 per
share 50,000 50 92,950
Common stock
issued for
services
rendered, on
October 29
2007, at
$2.25 per
share 150,000 150 337,350
Common stock
issued for
services
rendered, on
November 9,
2007, at
$3.23 per
share 130,000 130 419,770
Common stock
issued for
services
rendered, on
November 19,
2007, at
$3.50 per
share 50,000 50 174,950
Common stock
issued for
services
rendered, on
November 26,
2007, at
$3.01 per
share 30,000 30 90,270
Common stock
issued for
services
rendered, on
December 3,
2007, at
$2.00 per
share 45,094 45 89,955
Common stock
issued for
services
rendered, on
December 4,
2007, at
$3.15 per
share 50,000 50 157,450
Common stock
issued for
services
rendered, on
December 11,
2007, at
$2.50 per
share 200,000 200 499,800
Common stock
issued for
services
rendered, on
December 17,
2007, at
$1.446 per
share 400,000 400 578,051
Common stock
issued for
services
rendered, on
December 17,
2007, at
$2.50 per
share 100,000 100 249,900
Common stock
issued for
services
rendered, on
December 18,
2007, at
$3.02 per
share 50,000 50 150,950
Common stock
issued for
services
rendered, on
December 21,
2007, at
$3.00 per
share 40,000 40 119,960
Common stock
issued for
services
rendered, on
December 27,
2007, at
$3.10 per
share 50,000 50 154,950
Common stock
issued for
services
rendered, on
March 19,
2007, at
$0.50 per
share
Common stock
issued for
services
rendered, on
March 19,
2007, at
$0.50 per
share
Common stock Shares
issued for services
rendered classified as
Prepaid:
Common stock
issued for
services
rendered, on
August 31,
2007, at
$3.41 per
share
recorded as
prepaid 350,000 350 1,193,150
Common stock
issued for
services
rendered, on
September 14,
2007, at
$2.29 per
share
recorded as
prepaid 150,000 150 343,350
Common stock
issued for
services
rendered, on
October 02,
2007, at
$2.47 per
share
recorded as
prepaid 350,000 350 864,150
Common stock
issued for
services
rendered, on
October 02,
2007, at
$2.40 per
share
recorded as
prepaid 75,000 75 179,926
Treasury
Stock (94,961)
Perferred
Shares issued
for
settlement of
services 1,000 1 399,999
Net loss for
the period
ended
December 31,
2007 -- -- -- -- -- (10,486,886) --
----------- ------------- --------- ----------- --------- --------------- ------------
BALANCE AT
DECEMBER 31,
2007 35,237,188 $ 35,237 30,263,330 $ 30,358 $20,279,849 $ (17,418,997) $ --
=========== ============= ========== =========== ========== =============== ============
10
Common stock
shares issued
for cash:
Common stock
issued for
cash on
February 19,
2008, at
$2.00 per
share 17,000 17 33,983
Common stock
issued for
cash on March
5, 2008, at
$1.61 per
share 31,057 31 49,969
Common stock
issued for
cash on March
18, 2008, at
$1.00 per
share, non-US
citizens
investment
group 850,669 851 849,818
Common stock
issued for
cash on March
26, 2008, at
$1.00 per
share, non-US
citizens
investment
group 1,138,500 1,138 1,137,362
Common stock
issued for
cash on March
26, 2008, at
$1.18 per
share 9,000 9 10,611
Common Stock
subscriptions received,
net Jan. to March 2008
Amortization
of deferred
compensation 27,250
Common stock
shares issued
for services
rendered:
Common stock
issued for
services
rendered, on
February 1,
2008, at
$2.95 per
share 100,000 100 294,900
Common stock
issued for
services
rendered, on
February 6,
2008, at
$2.63 per
share 150,000 150 394,350
Common stock
issued for
services
rendered, on
February 13,
2008, at
$2.39 per
share 12,500 13 29,862
Common stock
issued for
services
rendered, on
February 15,
2008, at
$2.42 per
share 20,000 20 48,380
Common stock
issued for
services
rendered, on
February 28,
2008, at
$2.15 per
share 25,000 25 53,725
Common stock
issued for
services
rendered, on
February 29,
2008, at
$2.19 per
share 175,000 175 383,075
Common stock
issued for
services
rendered, on
March 14,
2008, at
$2.10 per
share 5,000 5 10,495
Common stock
issued for
services
rendered, on
March 18,
2008, at
$1.60 per
share 30,000 30 47,970
Common stock
issued for
services
rendered, on
March 19,
2008, at
$1.60 per
share 20,000 20 31,980
Common stock
issued for
services
rendered, on
March 31,
2008, at
$1.90 per
share 350,000 350 664,650
Common Stock
Warrants
issued for
services
(BOD) on
February 7,
2008, at
$2.429 14,580
Net loss for
the period
ended March
31, 2008 -- - - -- -- -- (3,613,694) --
----------- ------------- --------- ----------- --------- ------------- ------------
BALANCE AT
MARCH 31, 2008 35,237,188 $ 35,237 33,197,056 $ 33,292 $24,362,809 $ (21,032,691) $ --
=========== ============= ========== =========== ========== ============== ============
11
Common stock
shares issued
for cash:
Common stock
issued for
cash on April
1, 2008, at
$1.00 per
share, non-US
citizens
investment
group 3,387,980 3,388 3,384,593
Common stock
issued for
cash on April
11, 2008, at
$1.11 per
share, non-US
citizens
investment
group 1,929,775 1,930 2,148,662
Common stock
issued for
cash on April
25, 2008, at
$1.19 per
share, non-US
citizens
investment
group 1,487,139 1,487 1,771,366
Common stock
issued for
cash on May
15, 2008, at
$1.10 per
share 39,100 39 42,891
Common stock
issued for
cash on June
12, 2008, at
$1.00 per
share, non-US
citizens
investment
group 236,909 237 236,672
Common stock
issued for
cash on June
23, 2008, at
$1.00 per
share 250,000 250 249,750
Preferred
stock B -
converted to
common stock
on April
8, 2008 (1,000) (1) 206,559 207 (206)
Preferred
stock A -
converted to
common stock
on June
25, 2008 (1,791,064) (1,791) 895,532 895 896
Amortization
of deferred
compensation 27,250
Common stock
shares issued
for services
rendered:
Common stock
issued for
services
rendered, on
April 1,
2008, at
$1.95 per
share 70,000 70 136,430
Common stock
issued for
services
rendered, on
April 2,
2008, at
$1.84 per
share 108,478 108 199,492
Common stock
issued for
services
rendered, on
April 4,
2008, at
$1.90 per
share 20,000 20 37,980
Common stock
issued for
services
rendered, on
April 4,
2008, at
$1.90 per
share 1,066,666 1,067 2,025,598
Common stock
issued for
services
rendered, on
April 14,
2008, at
$3.05 per
share 150,000 150 457,350
Common stock
issued for
services
rendered, on
April 29,
2008, at
$3.07 per
share 883,333 883 2,710,949
Common stock
issued for
services
rendered, on
May 7, 2008,
at $2.55 per
share 1,000,000 1,000 2,549,000
Common stock
issued for
services
rendered, on
May 12, 2008,
at $2.65 per
share 20,000 20 52,980
Common stock
issued for
services
rendered, on
May 13, 2008,
at $2.79 per
share 50,000 50 139,450
Common stock
issued for
services
rendered, on
May 23, 2008,
at $2.67 per
share 102,000 102 272,238
Common stock
issued for
services
rendered, on
May 30, 2008,
at $2.20 per
share 66,011 66 145,158
Common stock
issued for
services
rendered, on
June 3, 2008,
at $2.10 per
share 150,000 150 314,850
Common stock
issued for
services
rendered, on
June 11,
2008, at
$2.25 per
share 88,750 89 199,599
Common stock
issued for
services
rendered, on
June 13,
2008, at
$2.25 per
share 125,000 125 281,125
Common stock
issued for
services
rendered, on
June 26,
2008, at
$2.08 per
share 242,000 242 503,118
Common stock
issued for
services
rendered, on
June 30,
2008, at
$2.09 per
share,
"PROOF"
trigger event 650,000 650 1,357,850
Common Stock
Warrants
issued for
services
(BOD) on May
21, 2008, at
$2.465 14,795
Other
comprehensive
income - net
unrealized
gain / (loss)
Net loss for
the period
ended June
30, 2008 -- -- -- -- -- (13,204,447) --
----------- ------------- --------- ----------- --------- ------------- -----------
BALANCE AT
JUNE 30, 2008 33,445,124 $ 33,445 46,422,288 $ 46,517 $43,622,645 $ (34,237,138) $ --
=========== ============= ========== =========== ========== ============== ============
12
Common stock
shares issued
for cash:
Common stock
issued for
cash on July
1, 2008, at
$1.00 per
share, non-US
citizens
investment
group 391,730 392 391,338
Common stock
issued for
cash on July
21, 2008, at
$1.00 per
share, non-US
citizens
investment
group 73,480 73 73,407
Common stock
issued for
cash on
August 21,
2008, at $.88
per share 10,000 10 8,740
Common stock
issued for
cash on
September 9,
2008, at
$1.104 per
share 13,867 14 14,384
Common stock
issued for
cash on
August 29,
2008, at
$1.00 per
share, non-US
citizens
investment
group 1,723,844 1,724 1,722,120
Preferred
stock A -
converted to
common stock
on August
13,2008 (33,440,124) (33,440) 16,720,062 16,720 16,720
Purchase
Treasury
stock on
August 13,
2008 for $.25
a share (6,600,000)
Amortization
of deferred
compensation 27,250
Common stock
shares issued
for services
rendered:
Common stock
issued for
services
rendered, on
July 14,
2008, at
$1.66 per
share 200,000 200 331,800
Common stock
issued for
services
rendered, on
July 25,
2008, at
$1.40 per
share 75,000 75 104,925
Common stock
issued for
services
rendered, on
August 8,
2008, at
$1.03 per
share 75,000 75 77,175
Common stock
issued for
services
rendered, on
August 25,
2008, at
$1.25 per
share 6,000 6 7,494
Common stock
issued for
services
rendered, on
September 8,
2008, at $.96
per share 1,500,000 1,500 1,438,500
Cancel
employee
stock issue
in prior
quarter
September, 2008 (109,000) (109) (285,611)
Common Stock
Warrants
issued for
services
(BOD) on Sept. 23,
2008, at $2.25 56,000
Common Stock
Warrants
exercised
Cashless on
July 3, 2008,
at $1.42 325,957 326 462,533
Subscription
receivable -
cancel
balance (130,518)
Other
comprehensive
income - net
unrealized
gain / (loss)
Net loss for
the period
ended
September 30,
2008 -- -- -- -- -- (4,032,310) --
----------- ------------- --------- ----------- --------- ------------- -----------
BALANCE AT
SEPTEMBER 30,
2008 5,000 $ 5 60,828,228 $ 67,523 $47,938,902 $ (38,269,448) $ --
=========== ============= ========== =========== ========== ============== ============
13
[TABLE CONTINUED]
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
AT SEPTEMBER 30, 20078
(Restated) ACCUMULATED (Restated)
OTHER
DEFERRED SUBSCRIPTION TREASURY COMPREHENSIVE
COMPENSATION RECEIVABLE STOCK Income (LOSS) TOTAL
------------ ----------- ----------- ------------- -----------
BALANCE -
JULY 19, 2002
(INCEPTION) $ -- $ -- $ --
Issuance of
initial
founders'
shares,
September 9,
2002, net of
subsequent
cancellations -- -- --
Common stock
issued for
services
rendered, in
September
2002, at
$0.472 per
share -- -- 472,000
Common stock
issued for
cash,
November 2002
at $0.50 per
share -- -- 14,500
Common stock
issued for
services
rendered, in
November and
December
2002, at
$0.50 per
share -- -- 6,800
Net loss for
the period
July 19, 2002
(Inception)
through
December 31,
2002, as
originally
stated -- -- (2,008,508)
Prior period
adjustment,
Note 17 -- -- 1,500,000
------------ ----------- ----------- ------------- -----------
BALANCE AT
DECEMBER 31,
2002 -- -- (15,208)
------------ ----------- ----------- ------------- -----------
14
Re-issuance
of founders'
shares - July
2003 -- -- --
Common stock
issued for
cash, from
January to
December 2003
at $0.50 per
share -- -- 259,900
Issuance of
subscription
receivable
from
shareholders -- (14,340) (14,340)
Net loss for
the year
ended
December 31,
2003, as
originally
stated -- -- (931,159)
Prior period
adjustment,
Note 17 -- 727,500
------------ ----------- ----------- ------------- -----------
BALANCE AT
DECEMBER 31,
2003 -- (14,340) 26,693
------------ ----------- ----------- ------------- -----------
15
Common stock
issued for
cash, from
January to
December 2004
at $0.6027
per share -- -- 553,105
Common stock
issued in
exchange for
real estate
in Aug. and
Sept. 2004 at
$1.00 per
share -- -- 650,000
Common stock
issued for
compensation
on October
12, 2004 at
$1.00 per
share (545,000) -- --
Common stock
issued as
charitable
contribution
on October
12, 2004 at
$1.00 per
share -- -- 50,000
Initial
founders'
shares
cancelled on
October 28,
2004 -- -- --
Issuance of
subscription
receivable
from
shareholders -- (74,240) (74,240)
Net loss for
the year
ended
December 31,
2004 -- -- (672,219)
------------ ----------- ----------- ------------- -----------
BALANCE AT
DECEMBER 31,
2004 (545,000) (88,580) 533,339
----------- ----------- ----------- ------------- -----------
16
Common stock
issued for
cash, from
January to
December 2005
at $1.2264
per share
average for
year -- -- 914,507
Common stock
issued to
acquire
technology
with zero
value -- -- --
Common stock
issued in
exchange for
real estate
on January
18, 2005 at
$1.00 per
share -- -- 80,800
Common stock
issued for
services
rendered, in
Sept., Oct.
and November
2005, at
$1.00 per
share -- -- 53,500
Common stock
issued for
payment of
debts on
March 11, 2005
at $1.00 per
share -- -- 1,087
Stock
subscriptions
received, net -- 10,398 10,398
Amortization
of deferred
compensation 109,000 -- 109,000
Net loss for
the year
ended
December 31,
2005 -- -- (1,291,169)
------------ ----------- ----------- ------------- -----------
BALANCE AT
DECEMBER 31,
2005 (436,000) (78,182) 411,462
----------- ----------- ----------- ------------- -----------
17
Common stock
issued for
cash, from
January to
December 2006
at $1.0088
per share
average for
year -- -- 2,810,877
Stock
subscriptions
received, net -- (582,511) (582,511)
Reclass
deferred
compensation
due adoption
SFAS 123R 436,000
Amortization
of deferred
compensation -- 109,000
Common stock
issued for
services
rendered, on
September 22,
2006, at
$1.044 per
share -- -- 14,746
Common stock
issued in
exchange for
investment in
real estate
in September
2006 at $2.00
per share -- -- 45,000
Effect of
reverse
merger
September 23,
2006 -- -- (120,683)
Common stock
issued for
conversion of
debt on
September 23,
2005 at
$0.045 per
share -- -- 120,682
Common stock
issued for
services
rendered, on
September 23,
2006, at
$2.00 per
share -- -- 50,000
Common stock
issued for
merger with
Mobilestream Oil,
Inc. on
December 31,
2006, at
$0.255 per
share 2,842,783
Cancellation
of shares for
merger with
Mobilestream Oil,
Inc. --
Preferred
convertible
stock issued
for merger
with
Mobilestream.
2 for 1
convertible
into common,
on December
31, 2006 503,374
Net loss for
the year
ended
December 31,
2006 -- -- -- -- (4,246,058)
----------- ----------- ----------- ------------- -----------
BALANCE AT
DECEMBER 31,
2006 $ -- $ (660,693) $ -- $ -- $ 1,958,672
============ =========== =========== ============= ===========
18
Common stock
shares issued
for cash: --
Common stock
issued for
cash in March
2007, at
$0.30 per
share 5,250
Common stock
issued for
cash from
April to June
30, 2007, at
$0.32 per
share,
Regulation S
offering 158,211
Common stock
issued for
cash on
October 25,
2007, at
$2.00 per
share 5,000
Common stock
issued for
cash on
December 20,
2007, at
$1.00 per
share 1,000,000
--
Common stock
issued for
Stock to be
issued
(liability)
on March 7,
2007, at
$1.0777 per
share 201,343
Stock
subscriptions
received, net -- 475,000 475,000
Amortization
of deferred
compensation 109,000
--
Common Stock
Shares issued
for services
rendered:
Common stock
issued for
services
rendered, on
March 19,
2007, at
$1.00 per
share 5,000
Common stock
issued for
services
rendered, on
March 19,
2007, at
$0.50 per
share 10,000
Common stock
issued for
services
rendered, on
March 20,
2007, at
$0.50 per
share 11,000
Common stock
issued for
services
rendered, on
April 20,
2007, at
$1.38 per
share 345,000
Common stock
issued for
services
rendered, on
May 30, 2007,
at $1.05 per
share 3,304
Common stock
issued for
services
rendered, on
June 1, 2007,
at $1.36 per
share 264,520
Common stock
issued for
services
rendered, on
July 9, 2007,
at $1.00 per
share 4,700
Common stock
issued for
services
rendered, on
July 18,
2007, at
$0.80 per
share 30,000
Common stock
issued for
services
rendered, on
August 1,
2007, at
$4.43 per
share 443,000
Common stock
issued for
services
rendered, on
August 19,
2007, at
$4.50 per
share 1,125,000
Common stock
issued for
services
rendered, on
August 30,
2007, at
$2.27 per
share 8,500
Common stock
issued for
services
rendered, on
August 30,
2007, at
$0.69 per
share 20,728
Common stock
issued for
services
rendered, on
August 31,
2007, at
$3.41 per
share 3,410
Common stock
issued for
services
rendered, on
August 31,
2007, at
$3.41 per
share 34,100
Common stock
issued for
services
rendered, on
October 1,
2007, at
$2.60 per
share 780,000
Common stock
issued for
services
rendered, on
October 9,
2007, at
$2.69 per
share 127,750
Common stock
issued for
services
rendered, on
October 22
2007, at
$1.86 per
share 93,000
Common stock
issued for
services
rendered, on
October 29
2007, at
$2.25 per
share 337,500
Common stock
issued for
services
rendered, on
November 9,
2007, at
$3.23 per
share 419,900
Common stock
issued for
services
rendered, on
November 19,
2007, at
$3.50 per
share 175,000
Common stock
issued for
services
rendered, on
November 26,
2007, at
$3.01 per
share 90,300
Common stock
issued for
services
rendered, on
December 3,
2007, at
$2.00 per
share 90,000
Common stock
issued for
services
rendered, on
December 4,
2007, at
$3.15 per
share 157,500
Common stock
issued for
services
rendered, on
December 11,
2007, at
$2.50 per
share 500,000
Common stock
issued for
services
rendered, on
December 17,
2007, at
$1.446 per
share 578,451
Common stock
issued for
services
rendered, on
December 17,
2007, at
$2.50 per
share 250,000
Common stock
issued for
services
rendered, on
December 18,
2007, at
$3.02 per
share 151,000
Common stock
issued for
services
rendered, on
December 21,
2007, at
$3.00 per
share 120,000
Common stock
issued for
services
rendered, on
December 27,
2007, at
$3.10 per
share 155,000
Common stock
issued for
services
rendered, on
March 19,
2007, at
$0.50 per
share --
Common stock
issued for
services
rendered, on
March 19,
2007, at
$0.50 per
share
Common stock
issued for services
rendered classified
Prepaid:
Common stock
issued for
services
rendered, on
August 31,
2007, at
$3.41 per
share
recorded as
prepaid 1,193,500
Common stock
issued for
services
rendered, on
September 14,
2007, at
$2.29 per
share
recorded as
prepaid 343,500
Common stock
issued for
services
rendered, on
October 02,
2007, at
$2.47 per
share
recorded as
prepaid 864,500
Common stock
issued for
services
rendered, on
October 02,
2007, at
$2.40 per
share
recorded as
prepaid 180,001
--
--
Treasury
Stock (66,473) (66,473)
Perferred
Shares issued
for
settlement of
services 400,000
--
Net loss for
the period
ended
December 31,
2007 -- -- -- -- (10,486,886)
------------ ----------- ----------- ------------- ------------
BALANCE AT
DECEMBER 31,
2007 $ -- $ (185,693) $ (66,473) $ -- $ 2,674,281
============ ============ ============ ============= ============
19
Common stock
shares issued
for cash:
Common stock
issued for
cash on
February 19,
2008, at
$2.00 per
share 34,000
Common stock
issued for
cash on March
5, 2008, at
$1.61 per
share 50,000
Common stock
issued for
cash on March
18, 2008, at
$1.00 per
share, non-US
citizens
investment
group 850,669
Common stock
issued for
cash on March
26, 2008, at
$1.00 per
share, non-US
citizens
investment
group 1,138,500
Common stock
issued for
cash on March
26, 2008, at
$1.18 per
share 10,620
Common Stock
subscriptions
net Jan. to Mar 55,175 55,175
Amortization
of deferred
compensation 27,250
--
Common stock
shares issued
for services
rendered: --
Common stock
issued for
services
rendered, on
February 1,
2008, at
$2.95 per
share 295,000
Common stock
issued for
services
rendered, on
February 6,
2008, at
$2.63 per
share 394,500
Common stock
issued for
services
rendered, on
February 13,
2008, at
$2.39 per
share 29,875
Common stock
issued for
services
rendered, on
February 15,
2008, at
$2.42 per
share 48,400
Common stock
issued for
services
rendered, on
February 28,
2008, at
$2.15 per
share 53,750
Common stock
issued for
services
rendered, on
February 29,
2008, at
$2.19 per
share 383,250
Common stock
issued for
services
rendered, on
March 14,
2008, at
$2.10 per
share 10,500
Common stock
issued for
services
rendered, on
March 18,
2008, at
$1.60 per
share 48,000
Common stock
issued for
services
rendered, on
March 19,
2008, at
$1.60 per
share 32,000
Common stock
issued for
services
rendered, on
March 31,
2008, at
$1.90 per
share 665,000
--
--
Common Stock
Warrants
issued for
services
(BOD) on
February 7,
2008, at
$2.429 14,580
-=
Net loss for
the period
ended March
31, 2008 -- -- -- -- (3,613,694)
------------ ----------- ----------- ------------- -----------
BALANCE AT
MARCH 31, 2008 $ -- $ (130,518) $ (66,473) $ -- $ 3,201,656
============ ============ =========== ============= ============
20
Common stock
shares issued
for cash: --
Common stock
issued for
cash on April
1, 2008, at
$1.00 per
share, non-US
citizens
investment
group 3,387,981
Common stock
issued for
cash on April
11, 2008, at
$1.11 per
share, non-US
citizens
investment
group 2,150,592
Common stock
issued for
cash on April
25, 2008, at
$1.19 per
share, non-US
citizens
investment
group 1,772,853
Common stock
issued for
cash on May
15, 2008, at
$1.10 per
share 42,930
Common stock
issued for
cash on June
12, 2008, at
$1.00 per
share, non-US
citizens
investment
group 236,909
Common stock
issued for
cash on June
23, 2008, at
$1.00 per
share 250,000
--
Preferred
stock B -
converted to
common stock
on April
8,2008 (0)
Preferred
stock A -
converted to
common stock
on June
25, 2008 --
--
Amortization
of deferred
compensation 27,250
--
Common stock
shares issued
for services
rendered: --
Common stock
issued for
services
rendered, on
April 1,
2008, at
$1.95 per
share 136,500
Common stock
issued for
services
rendered, on
April 2,
2008, at
$1.84 per
share 199,600
Common stock
issued for
services
rendered, on
April 4,
2008, at
$1.90 per
share 38,000
Common stock
issued for
services
rendered, on
April 4,
2008, at
$1.90 per
share 2,026,665
Common stock
issued for
services
rendered, on
April 14,
2008, at
$3.05 per
share 457,500
Common stock
issued for
services
rendered, on
April 29,
2008, at
$3.07 per
share 2,711,832
Common stock
issued for
services
rendered, on
May 7, 2008,
at $2.55 per
share 2,550,000
Common stock
issued for
services
rendered, on
May 12, 2008,
at $2.65 per
share 53,000
Common stock
issued for
services
rendered, on
May 13, 2008,
at $2.79 per
share 139,500
Common stock
issued for
services
rendered, on
May 23, 2008,
at $2.67 per
share 272,340
Common stock
issued for
services
rendered, on
May 30, 2008,
at $2.20 per
share 145,224
Common stock
issued for
services
rendered, on
June 3, 2008,
at $2.10 per
share 315,000
Common stock
issued for
services
rendered, on
June 11,
2008, at
$2.25 per
share 199,688
Common stock
issued for
services
rendered, on
June 13,
2008, at
$2.25 per
share 281,250
Common stock
issued for
services
rendered, on
June 26,
2008, at
$2.08 per
share 503,360
Common stock
issued for
services
rendered, on
June 30,
2008, at
$2.09 per
share,
"PROOF"
trigger event 1,358,500
--
Common Stock
Warrants
issued for
services
(BOD) on May
21, 2008, at
$2.465 14,795
--
Other
comprehensive
income - net
unrealized
gain / (loss) (142,312) (142,312)
--
Net loss for
the period
ended June
30, 2008 -- -- -- -- (13,204,447
----------- ----------- ----------- ------------ -----------
BALANCE AT
JUNE 30, 2008 $ -- $ (130,518) $ (66,473) $ (142,312) $ 9,126,166
============ ============ ============ ============= ============
21
Common stock
shares issued
for cash: --
Common stock
issued for
cash on July
1, 2008, at
$1.00 per
share, non-US
citizens
investment
group 391,730
Common stock
issued for
cash on July
21, 2008, at
$1.00 per
share, non-US
citizens
investment
group 73,480
Common stock
issued for
cash on
August 21,
2008, at $.88
per share 8,750
Common stock
issued for
cash on
September 9,
2008, at
$1.104 per
share 14,398
Common stock
issued for
cash on
August 29,
2008, at
$1.00 per
share, non-US
citizens
investment
group 1,723,844
Preferred
stock A -
converted to
common stock
on August
13,2008 --
--
Purchase
Treasury
stock on
August 13,
2008 for $.25
a share (1,650,000) (1,650,000)
Amortization
of deferred
compensation 27,250
Common stock
shares issued
for services
rendered: --
Common stock
issued for
services
rendered, on
July 14,
2008, at
$1.66 per
share 332,000
Common stock
issued for
services
rendered, on
July 25,
2008, at
$1.40 per
share 105,000
Common stock
issued for
services
rendered, on
August 8,
2008, at
$1.03 per
share 77,250
Common stock
issued for
services
rendered, on
August 25,
2008, at
$1.25 per
share 7,500
Common stock
issued for
services
rendered, on
September 8,
2008, at $.96
per share 1,440,000
Cancel
employee
stock issue
in prior
quarter
September 2008 (285,720)
Common Stock
Warrants
issued for
services
(BOD) in Sept.
2008, at $2.25 56,000
--
Common Stock
Warrants
exercised
Cashless on
July 3, 2008,
at $1.42 462,859
Subscription
receivable -
cancel
balance 130,518 --
Other
comprehensive
income - net
unrealized
gain / (loss) (819,015) (819,015)
--
Net loss for
the period
ended
September 30,
2008 -- -- -- -- (4,032,310)
----------- ----------- ----------- ------------ -----------
BALANCE AT
SEPTEMBER 30,
2008 $ -- $ -- $ (1,716,473) $ (961,327) $ 7,059,182
============ ============ ============ ============= ============
The accompanying notes are an integral part of these financial statements.
22
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
NOTE 1 - BASIS OF PRESENTATION AND NATURE OF BUSINESS AND ORGANIZATION
-------------------------------------------------------------
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial reporting and should be read in conjunction with the
consolidated financial statements of Global Resources Corporation included
in form 10-K for the year ending December 31, 2007. Accordingly, they do
not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the nine months ended September 30, 2008 are not
necessarily indicative of the results that may be expected for the year
ended December 31, 2008.
Global Resource Corporation (the Company") was formed on July 19, 2002 in
the State of New Jersey under the name Carbon Recovery Corporation as a
development stage company. The Company's business plan is to research and
develop and market the business of decomposing petroleum-based materials by
subjecting them to variable frequency microwave radiation at specifically
selected frequencies for a time sufficient to at least partially decompose
the materials, converting the materials into industrial products and
chemicals for the petroleum chemical industry, and easily disposable waste
material.
The Company's business goals are as follows:
1) The construction of plants to exploit certain technology for decomposing
petroleum-based materials by subjecting them to variable frequency
microwave radiation at specifically selected frequencies for a time
sufficient to at least partially decompose the materials;
2) The design, manufacture and sale of machinery and equipment units,
embodying the technology; and
3) The sub-licensing of third parties to exploit
that technology.
At the present time, the process is in a laboratory mode. There will need
to be a transition from the "one batch at a time" operation, used in the
laboratory to a prototype "Proof of concept continuous feed" line in order
to commercialize the process. A prototype "Proof of concept continuous
feed" line machine is scheduled for delivery in the fourth quarter 2008.
23
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
NOTE 1 - BASIS OF PRESENTATION AND NATURE OF BUSINESS AND ORGANIZATION
-------------------------------------------------------------
(CONTINUED)
-----------
The Company is currently offering three models for tire decomposition: one
which disposes of five tons per hour, one which disposes of ten tons per
hour and one which disposes of fifteen tons per hour. The Company is
soliciting orders and has issued various proposals to prospective
customers.
There are other potential applications for the microwave technology covered
by the license, in addition to the application for decomposing waste tires
and fluff. These include:
1. Stimulation of production of mature oil and gas wells ("stripper"
wells);
2. Reduction of hydrocarbons in oil field drilling cuttings to
permit on-site disposal;
3. Volatilization of heavy or slurry oil;
4. Recovery of oil from oil shale and oil sands; and
5. Medical applications.
To date, the Company has allocated a substantial portion of its time and
investment in bring its product to the market and the raising of capital.
The Company has not commenced any commercial operations as of September 30,
2008.
On December 31, 2006, Global Resource Corporation acquired all the assets
and assumed all of the liabilities of Mobilestream Oil, Inc. in exchange
for; a) 11,145,255 shares of the Company's Common Stock; b) the issuance by
the Company for the benefit of the holders of the 2006 series of
convertible preferred stock of Mobilestream of 35,236,188 shares of the
Company's own "2006 Series" in the process of designation (the "2006
Series"; c) the issuance of 27,205,867 common stock purchase warrants on
the basis of 1 warrant for each 3 shares of either Mobilestream common
stock or preferred stock, exercisable at $4.75 per share for a period
ending on December 31, 2008. The total cost of the acquisition of
Mobilestream has been allocated to the assets acquired and the liabilities
assumed based on their historical cost in accordance with SFAS 141,
BUSINESS COMBINATION,(PARAGRAPHS D11 -D18), entities under common control.
The net asset and liabilities of Mobilestream equal approximately $2.0
million. The assets consisted of primarily cash of approximately $1,678,000
and fixed assets of $149,000 offset by liabilities of approximately
$91,000. Mobilestream owned 37,500,000 shares of Carbon Recovery
Corporation which was acquired by the Company (see paragraph below), these
shares were cancelled upon the acquisition of Mobilestream by the Company.
On September 22, 2006, Carbon Recovery Corporation entered into a Plan
and Agreement of Reorganization ("Agreement") with Global Resource
Corporation. Pursuant to the Agreement, Global Resource Corporation
acquired all of the assets and assumed all of the liabilities and related
development stage business of Carbon Recovery Corporation in exchange for
48,688,996 common shares and the assumption by Carbon Recovery Corporation
of a convertible debenture and accrued interest in the amount of $120,682,
subsequent the convertible debenture was eliminated by issuing 2,681,837 of
the Company's common stock. The holders of Global Resource Corporation's
capital stock before the Agreement retained 72,241 shares of common stock.
24
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
NOTE 1 - BASIS OF PRESENTATION AND NATURE OF BUSINESS AND ORGANIZATION
-------------------------------------------------------------
(CONTINUED)
-----------
Prior to the Agreement, Carbon Recovery Corporation had warrants
outstanding. Pursuant to the Agreement, those outstanding warrants were
exchanged for outstanding warrants of Global Resource Corporation.
Specifically, Global Resource Corporation issued 3,908,340 Class B
warrants, 1,397,600 Class D warrants and 1,397,600 Class E warrants. The
Class B and Class D warrants have an exercise price of $2.75 and the Class
E warrants have an exercise price of $4.00. These warrants expire on
December 31, 2008.
The above transaction has been accounted for as a reverse merger
(recapitalization) with Carbon Recovery Corporation being deemed the
accounting acquirer and Global Resource Corporation being deemed the legal
acquirer. Accordingly, the historical financial information presented in
the financial statements is that of Carbon Recovery Corporation as adjusted
to give effect to any difference in the par value of the issuer's and the
accounting acquirer's stock with an offset to additional paid in capital.
The basis of the assets and liabilities of Carbon Recovery Corporation, the
accounting acquirer, have been carried over in the recapitalization.
Concurrent with the merger, Carbon Recovery Corporation changed its name to
Global Resource Corporation.
On December 11, 2007 the company adopted the following Amendments to the
Articles of Incorporation: 1) Reduce the authorized number of shares of
common stock which the Company may issue from 2,000,000,000 to 200,000,000
shares. 2) Increase the authorized number of preferred shares which the
Company may issue from 50,000,000 to 100,000,000. 3) Reduce the number
common shares into which share of 2006 Series of Convertible preferred
stock which is convertible into common stock, from 2 shares of common stock
to 1/2 of 1 share of common stock for each share of 2006 Convertible
Preferred stock. 4) Indemnify the Company's directors and officers to the
maximum extent permitted under the laws of the State of Nevada. 5) Limit
the liability of the Company's directors and officers to the Company, our
stockholders and creditors to the maximum extent provided under the Private
Corporations Law of the State of Nevada (the "Nevada PCL"). 6) Permit the
board of directors to declare reverse stock splits of our issued and
outstanding shares without approval of the stockholders under section
78-2055 of the Nevada PCL.
The Company is considered to be in the development stage as defined in
Statement of Financial Accounting Standards (SFAS) No. 7, "ACCOUNTING AND
REPORTING BY DEVELOPMENT STAGE ENTERPRISES." The Company has devoted
substantially all of its efforts to business planning and development, as
well as allocating a substantial portion of its time and investment in
bringing its product to the market, and the raising of capital.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
USE OF ESTIMATES
----------------
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
CASH AND CASH EQUIVALENTS
-------------------------
The Company considers all highly liquid debt instruments and other
short-term investments with an initial maturity of three months or less to
be cash or cash equivalents.
At September 30, 2008, the Company maintained cash and cash equivalent
balances at four financial institutions, each of which is insured by the
Federal Deposit Insurance Corporation up to $250,000. At September 30, 2008
the Company's uninsured cash balances total $3,118,700.
25
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
------------------------------------------------------
SHORT-TERM INVESTMENTS
----------------------
Cash in excess of operating requirements is invested in certificates of
deposits with an original maturity of greater than three months. (See note
#15 for detail valuation)
INVESTMENTS IN MARKETABLE SECURITIES
------------------------------------
Investments in marketable equity securities, all of which are classified as
available for sale, are carried at their market value. Investments with a
maturity date greater than three months but less than twelve months are
included in short-term investments. Investments in equity stocks and bonds
with a maturity date greater than twelve months are considered also
available for sale and are carried at their market value in Long-term
Investments on the balance sheet. The unrealized gains or losses of these
investments are recorded directly to stockholders' equity and any realized
gains or losses are recognized in income. (See note #15 for detail
valuation)
START-UP COSTS
--------------
In accordance with the American Institute of Certified Public Accountants
Statement of Position 98-5, "REPORTING ON THE COSTS OF START-UP
ACTIVITIES", the Company expenses all costs incurred in connection with the
start-up and organization of the Company.
INCOME TAXES
------------
Deferred income taxes are reported using the liability method. Deferred tax
assets are recognized for deductible temporary differences and deferred tax
liabilities are recognized for taxable temporary differences. (see note #7
for detail)
BUSINESS COMBINATIONS
---------------------
Effective December 31, 2006 the Company acquired all the assets and assumed
all of the liabilities of Mobilestream Oil, Inc. and due to the transfer of
assets between entities under common control, the total cost of the
acquisition of Mobilesstream has been allocated to the assets acquired and
the liabilities assumed based on their historical costs in accordance with
SFAS 141, BUSINESS COMBINATIONS, PARAGRAPHS D11 - D18, entities under
common control. All account amounts and shares amounts have been updated
and presented to reflect the change.
Effective July 31, 2006 the Company completed a reverse split of its common
stock. All share amounts have been updated and presented to reflect the
change.
STOCK-BASED COMPENSATION
------------------------
Effective January 1, 2006, the Company adopted the provisions of Financial
Accounting Standards Board ("FASB") published Statement of Financial
Accounting Standards No. 123 (Revised 2004), "SHARE-BASED PAYMENT" ("SFAS
123R"). SFAS 123R requires that compensation cost related to share-based
payment transactions be recognized in the financial statements. The Company
accounts for stock grants and stock options issued as compensation to
employees for their services under fair value method. The Company
determined the fair market value of the options/warrants under the
Black-Sholes pricing model. Stock grants to employees are valued at the
fair market value on the date of issuance. The Company has issued 8,700,000
stock options to key executives, 3,500,000 of these options are awaiting
shareholder approval (see notes 12 & 13 below for more details).
For non-employees, stock grants are valued at the value of service or fair
market value of the company's stock on the date of stock issuance whichever
is more readily determinable.
26
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
------------------------------------------------------
EARNINGS (LOSS) PER SHARE OF COMMON STOCK
-----------------------------------------
Historical net loss per common share is computed using the weighted average
number of common shares outstanding. Diluted earnings per share (EPS)
include additional dilution from common stock equivalents, such as stock
issuable pursuant to the exercise of stock options and warrants. Common
stock equivalents were not included in the computation of diluted earnings
per share when the Company reported a loss because to do so would be
anti-dilutive.
RECLASSIFICATIONS
-----------------
Certain amounts for the quarter ended September 30, 2007 have been
reclassified in the comparative financial statements to be comparable to
the presentation for the quarter ended September 30, 2008. These
reclassifications had no effect on net loss.
EARNINGS (LOSS) PER SHARE OF COMMON STOCK
-----------------------------------------
The following is a reconciliation of the computation for basic and diluted
earnings per share:
Nine Months Ended
September 30,
-----------------------------------
2008 2007
----------------- -----------------
Net loss ($20,850,451) ($4,274,554)
----------------- -----------------
Weighted-average common shares
Outstanding (Basic) 42,221,919 25,634,118
----------------- -----------------
Weighted-average common shares
Outstanding (Diluted) 42,221,919 25,634,118
================= =================
Weighted-average common stock Equivalents for preferred stock convertible
to 1/2 for 1 of common are 2,500 and warrants common stock equivalents are
21,891,749. There are also common stock purchase options; 5,200,000
approved and 3,500,000 awaiting shareholder approval, these warrants and
options are not part of the weighted-average outstanding common stock
calculation because inclusion would have been anti-dilutive as of September
30, 2008 and 2007. (see note#12 below for detail on warrants & options)
INVENTORIES
-----------
Inventory is stated at the lower of cost or market. Cost is determined
using actual job costs per machine. Currently the Company has no value
stated for inventories. Prior quarter reported inventory has been
reclassified to Construction in progress (see note # 6 below)
ADVERTISING COSTS
-----------------
The Company will expense the costs associated with advertising as they are
incurred. The Company did not incur any advertising costs for the years
ended September 30, 2008 and 2007.
RESEARCH AND DEVELOPMENT COSTS
------------------------------
Research and development costs consist of all activities associated with
the development and enhancement of products using the Company's microwave
technology. R & D costs consist primarily of contract engineer labor and
salaries of our in-house engineers, labs supplies used in testing and
equipment expenses use to test and develop our technology. Research and
development costs are charged to R & D when incurred. The amounts charged
as of September 30, 2008 and 2007 were $612,165 and $135,774 respectively.
27
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
------------------------------------------------------
RECENT ACCOUNTING PRONOUNCEMENTS
--------------------------------
In December 2007, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 141R (revised
2007), BUSINESS COMBINATIONS, which replaces SFAS No 141. The statement
retains the purchase method of accounting for acquisitions, but requires a
number of changes, including changes in the way assets and liabilities are
recognized in the purchase accounting. It also changes the recognition of
assets acquired and liabilities assumed arising from contingencies,
requires the capitalization of in-process research and development at fair
value, and requires the expensing of acquisition-related costs as incurred.
SFAS No. 141R is effective for us beginning January 1, 2009 and will apply
prospectively to business combinations completed on or after that date.
In December 2007, the FASB issued SFAS No. 160, NONCONTROLLING INTERESTS IN
CONSOLIDATED FINANCIAL STATEMENTS, AN AMENDMENT OF ARB 51, which changes
the accounting and reporting for minority interests. Minority interests
will be recharacterized as noncontrolling interests and will be reported as
a component of equity separate from the parent's equity, and purchases or
sales of equity interests that do not result in a change in control will be
accounted for as equity transactions. In addition, net income attributable
to the noncontrolling interest will be included in consolidated net income
on the face of the income statement and, upon a loss of control, the
interest sold, as well as any interest retained, will be recorded at fair
value with any gain or loss recognized in earnings. SFAS No. 160 is
effective for us beginning January 1, 2009 and will apply prospectively,
except for the presentation and disclosure requirements, which will apply
retrospectively. We are currently assessing the potential impact that
adoption of SFAS No. 160 would have on our financial statements.
On January 1, 2007, the Company adopted the provisions of FASB issued SFAS
No. 156, "Accounting for Servicing of Financial Assets, an amendment of
FASB Statement No. 140." SFAS No. 156 requires an entity to recognize a
servicing asset or liability each time it undertakes an obligation to
service a financial asset by entering into a servicing contract under a
transfer of the servicer's financial assets that meets the requirements for
sale accounting, a transfer of the servicer's financial assets to a
qualified special-purpose entity in a guaranteed mortgage securitization in
which the transferor retains all of the resulting securities and classifies
them as either available-for-sale or trading securities in accordance with
SFAS No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" and an acquisition or assumption of an obligation to service a
financial asset that does not relate to financial assets of the servicer or
its consolidated affiliates. Additionally, SFAS No. 156 requires all
separately recognized servicing assets and servicing liabilities to be
initially measured at fair value, permits an entity to choose either the
use of an amortization or fair value method for subsequent measurements,
permits at initial adoption a one-time reclassification of
available-for-sale securities to trading securities by entities with
recognized servicing rights and requires separate presentation of servicing
assets and liabilities subsequently measured at fair value and additional
disclosures for all separately recognized servicing assets and liabilities.
The adoption of SFAS No. 156 did not have a material impact on the
Company's financial position, results of operations, or cash flows.
NOTE 3 - FIXED ASSETS
------------
Fixed assets as of September 30, 2008 were as follows:
Estimated Useful
Lives (Years) Amount
---------------- ------------
Testing Equipment 5 - 7 $ 454,013
Vehicles 5 34,425
Office & Computer Equip. 5 41,997
Leasehold improvements 3 17,820
Phone Equipment - leased 3 32,432
Construction in Progress 3 745,818
------------
Total $ 1,326,506
============
Less accumulated Depreciation & amortization 206,721
------------
NET FIXED ASSETS $ 1,119,785
============
28
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
NOTE 3 - FIXED ASSETS (CONTINUED)
------------------------
There was $70,107 and $72,222 charged to operations for depreciation
expense for the nine months ended September 30, 2008 and 2007,
respectively.
NOTE 4 - LOAN PAYABLE - OFFICER OF THE COMPANY
-------------------------------------
On November 28, 2007 the Chief Financial Officer, Jeffery J. Andrews,
loaned the Company $150,000 at a interest rate of prime plus 2%. In April
2008 the Company repaid $120,000. The remaining balance of $30,000 was
paid in full in August 2008. Interest expense was accrued and expensed
monthly.
NOTE 5 - LOAN PAYABLE - EQUIPMENT
------------------------
In January 2006 the Company entered into a five year loan related to the
purchase of new equipment. The principal amount of the loan is $75,000 at
an interest rate of 13.43% annually. Monthly payments on the loan are
approximately $1,723. In October 2006 the Company entered into a three
year loan related to lab equipment. The principal amount of the loan is
$73,817 at an interest rate of 8.71% annually. Monthly payments on the
loan are approximately $2,396.
2008
-----------
Total Loans Payable $ 62,232
Less current maturities (41,536)
-----------
Long-Term payable $ 20,696
===========
The amount of principal maturities of the loans payable by years is as
follows:
2008 10,265
2009 35,416
2010 16,213
-----------
$ 62,232
===========
NOTE 6 - CONSTRUCTION IN PROGRESS
------------------------
Construction in progress consists of a "Proof of Concept" machine
currently in the work in process stage. Modifications to the original
design have been made to improve efficiencies. It was determined that
these modifications made some parts obsolete, so a charge of $303,449 was
charged to R & D expense and Construction in progress, WIP inventory
classified in Q2 was reduced in the second quarter 2008. Once this "Proof
of Concept" machine is completed it will be used to demonstrate the
capabilities of the technology for future years and is not planned to be
sold.
NOTE 7 - PROVISION FOR INCOME TAXES
--------------------------
Deferred income taxes will be determined using the liability method for
the temporary differences between the financial reporting basis and
income tax basis of the Company's assets and liabilities. Deferred income
taxes will be measured based on the tax rates expected to be in effect
when the temporary differences are included in the Company's tax return.
Deferred tax assets and liabilities are recognized based on anticipated
future tax consequences attributable to differences between financial
statement carrying amounts of assets and liabilities and their respective
tax bases.
At September 30, 2008 the deferred tax assets consist of the following:
2008
-------------
Deferred taxes due to net operating $ 11,480,000
carryforwards
Less: Valuation Allowance (11,480,000)
-------------
Net Deferred Tax asset $ --
-------------
29
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
NOTE 7 - PROVISION FOR INCOME TAXES (CONTINUED)
--------------------------------------
At September 30, 2008, the Company had deficits accumulated during the
development stage in the approximate amount of $38,269,448 available to
offset future taxable income through 2027. The Company established
valuation allowances equal to the full amount of the deferred tax assets
due to the uncertainty of the utilization of the operating losses in
future periods.
NOTE 8 - CAPITAL LEASES
--------------
In June 2006 the Company entered into a three year capital lease related
to the purchase of new phone equipment. The monthly lease payments are
$1,293 per month. As of June 30, 2008 the minimum lease payments under
the capital lease are as follows:
For the periods Ending Sept. 30 Amount
---------------
2008 $ 3,880
2009 $ 15,516
2010 $ 15,516
2011 $ 7,758
---------------
$ 42,700
===============
NOTE 9 - OPERATING LEASES
----------------
The Company leases office space under a lease agreement that commenced
June 1, 2006, the monthly lease payments are $5,000 per month and the
leases expires on May 31, 2009. The Company is required to pay property
taxes, utilities, insurance and other costs relating to the leased
facilities.
Minimum lease payments under the operating lease are as follows:
For the periods Ending Sept. 30 Amount
----------------
2008 $ 15,000
2009 21,700
---------------
$ 36,700
===============
NOTE 10 - ALLEVIATION OF GOING CONCERN
----------------------------
At December 31, 2007, the Company reported that it had incurred
substantial net losses for the years ended December 31, 2007 and 2006 and
the Company had not commenced operations to have a revenue stream to
support itself. These factors raised substantial doubt about the
Company's ability to continue as a going concern at that time.
During the nine months ended September 30, 2008, the Company has raised
over $11 million dollars in cash through private placements of common
stock. With this additional capital and projected cash flow expenditures
over the next twelve months, Company's management considers the facts and
circumstances which raised substantial doubt about the Company's ability
to continue as going concern to be alleviated.
The Company currently has $4.1 million in cash & cash equivalents and
short-term investments. $2.7 million in debt securities in long-term
investments (see note #15). If the Company did not raise any additional
cash as of September 30, 2008 it would still have funds available to meet
its cash operating expenses and inventory & capital expenditures
requirements. Total cash expenditure are projected to be $5 million for
the twelve month period following the date of financial statements being
reported; Cash operating expenses are projected to be $1 million a
quarter, or $4 million total for the twelve month period. Inventory and
other capital expenditures for twelve month period is projected to be $1
million
The Company also expects to successfully demonstrate its "Proof Concept"
microwave reactor system by end of the fourth quarter 2008. In 2009, the
Company also expects to generate significant positive cash flow from
projected sales.
30
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
NOTE 11 - RELATED PARTY TRANSACTION
-------------------------
On May 17, 2007, the Company purchased 94,961 shares of common stock of
the Company from Lois Pringle, wife of the Company's then Chief Executive
officer for $66,471 in cash.
On August 13, 2008, the Company purchased 6,600,000 shares of common
stock of the Company from Frank Pringle, the Company's Chairman, for
$1,650,000 in cash.
NOTE 12 - STOCKHOLDERS' EQUITY
--------------------
COMMON STOCK
------------
The following details the stock transactions for the three months
ended September 30, 2008:
The Company issued 1,747,711 shares of stock for $1,746,992 cash.
The Company issued 1,856,000 shares of common stock in exchange for
services rendered, valued at $1,961,750.
PREFERRED STOCK
---------------
The following details the stock transactions for the three months ended
September 30, 2008:
On August 13, 2008 Frank Pringle, Chairman converted all of his
33,440,000 shares of Preferred stock A into 16,720,062 shares of common
stock. Preferred stock A has rights to convert 2 shares of preferred into
one share of the Company's common stock, and has the right to vote
together with the common stock as a single class on all issues presented
to Company stockholders.
TREASURY STOCK
--------------
The following details the stock transactions for the three months ended
September 30, 2008:
On August 13, 2008 the Company purchased 6,600,000 shares of the
Company's Common Stock from Frank Pringle, Chairman for $1,650,000 in
cash. (see note 11 above).
WARRANTS
--------
The Company issued an additional 10,574,802 warrants, which have a
weighted average exercise price of $1.96 and expire December 2009, in a
private placement sale in 2008. In addition the Company issued 37,000
warrants with a average warrant price of $2.41 for services performed in
first three quarters, theses warrant will expire in 5 years.
A summary of the status of the Company's outstanding stock warrants as
of September 30, 2008 is as follows:
Weighted Average
Shares Exercise Price
----------------- ----------------
Outstanding at December 31, 2007 11,941,947 $ 3.38
Granted 10,577,802 $ 1.96
Exercised 625,000 1.50
Forfeited / expired $ -
----------------- ----------------
Outstanding at September 30, 2008 21,894,749 $ 2.75
----------------- ----------------
Exercisable at September 30, 2008 21,894,749 $ 2.75
----------------- ----------------
These warrants are not part of the weighted-average outstanding common
stock calculation because inclusion would have been anti-dilutive as of
September 30, 2008 and 2007 because of our deficient income.
31
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
NOTE 12 - STOCKHOLDERS' EQUITY (CONTINUED)
--------------------------------
OPTIONS
-------
In March 2005 the Company issued 200,000 common stock purchase options
(under Carbon Recovery Corporation) to the CFO. They have an exercise
price of $1.00 per share and were vested as of 9/23/2008. In September
2008 as part of employment contracts, the Company authorized 8,500,000
stock options to key executives, with 5,000,000 approved (new CEO Eric
Swain) and 3,500,000 options subject to shareholder approval (see note
13 commitments for details). These options have an exercise price of
$1.18. 1,000,000 of Mr. Swain's options vested immediately and upon
approval by shareholders (expected in 2009), another 700,000 options
(together with the initial 1,000,000, 1,700,000 or 20% of the total)
vest immediately. The remaining 6,700,000 options will vest in equal
annual installments of 1,700,000 options on September 23, 2009 and on
each anniversary thereafter for the next three years, provided that the
executives are employed by the Company at each such vesting date.
As of September 24, 2009 1,700,000 options are vested and no options
have been exercised. The weighted average exercise price is $1.18.
These options are not part of the weighted-average outstanding common
stock calculation because inclusion would have been anti-dilutive as of
September 30, 2008 and 2007
NOTE 13 - COMMITMENTS AND CONTINGENCIES
-----------------------------
On May 21, 2008 the Board of Directors approved a consulting agreement
with 888 Corporation, a corporation controlled by then President and
CEO, Frank G. Pringle. Under the consulting agreement the Company has
agreed to pay Mr. Pringle a consulting fee for the life of the pending
patents, estimated to be 12 years. This consulting agreement replaces
prior employment agreement and is effective as of January 1, 2008.
Under this consulting agreement Mr. Pringle is entitled to an annual
fee of $378,000 for years 2008 and 2009, $448,000 in years 2010 and
2011, $538,000 in years 2012 and 2013 and to a maximum of $668,000
beginning in 2014 and beyond and is payable in equal monthly
installments during the term of the Consulting Agreement. If the
Consulting Agreement terminates, then the Company is obligated to pay
Mr. Pringle a royalty in the same amounts for the same time periods
payable in the same manner. Under the Consulting Agreement, the Company
pledged its pending patents as collateral security for the payments to
Mr. Pringle. The Company also executed a conditional assignment of the
pending patents to the corporation Mr. Pringle controls, such that Mr.
Pringle can file the assignment with the U.S. Patent and Trademark
Office ("PTO") if the Company were to default under the Consulting
Agreement and the default were not cured. In order to make the filing
with the PTO, Mr. Pringle must obtain a certification of the Company's
Chief Executive Officer or Chief Financial Officer that a default has
occurred and has not been cured. Defaults under the Consulting
Agreement are defined as the Company missing two consecutive payments
or failing to make three payments in any one calendar year. If the
Company defaults under the Consulting Agreement, then ownership of its
pending patents may revert to the Mr. Pringle. In such event, the
Company would be unable to continue its business without entering into
a license agreement or similar agreement with the Mr. Pringle. For
complete details of the contract see the Company's current report on
Form 8-K filed with the SEC on May 21, 2008, exhibit 10.16.
In 2005 in addition to his base salary the Company granted Mr. Pringle
540,000 shares of restricted common stock valued at $545,000. This
common stock vests to Mr. Pringle over a five-year period and is
expensed in the financial statements at a rate of $27,250 a quarter
until December 31, 2009. On August 13, 2008 Mr. Pringle resigned as CEO
of the Company but will continue to serve as Chairman.
In June 2007 the Company entered into purchase agreement with Ingersoll
Production Systems of Rockford, Illinois to build one 1-ton microwave
reactor system. The total purchase commitment is approximately
$900,000, the microwave reactor system is expected to be completed in
fourth quarter 2008. The Company has currently paid approximately
$800,000 as of September 30, 2008, this amount is reflected in the
balance sheet as part of the fixed assets as Construction in progress
and in the income statement as R & D expense. In addition to Ingersoll
Production Systems there are various other suppliers with which the
Company has purchase commitments with, these purchase commitment are
approximately $300,000 and the Company has paid approximately $250,000
as of September 30, 2008, these amounts are also reflected in the
financial statements in the construction in progress account.
32
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
NOTE 13 - COMMITMENTS AND CONTINGENCIES (CONTINUED)
-----------------------------------------
On December 21, 2007 the Company entered into a certain Securities
Purchase agreement with Professional Offshore Opportunity Fund, Ltd.
("PROOF") pursuant to which PROOF agreed to purchase 1,250,000 shares
of the Company's common stock together with warrants for an additional
625,000 shares at an exercise price of $1.50 per share. The Company
received $1,000,000 from PROOF with the balance of $250,000 being held
in escrow, together with the 250,000 common stock shares being
purchased pending certain future events. In addition, the Company
issued to the Escrow an additional 650,000 shares to be delivered to
PROOF or returned to the Company, depending upon those certain future
events (the "Trigger Event"). The Trigger Event occurred because the
Company did not get an effective registration statement for the Shares,
Warrants and Warrant Shares by June 30, 2008. In June PROOF exercised
its option to purchase from the escrow the 250,000 shares for $250,000.
The Company also had to issue 650,000 shares from the escrow account to
PROOF which was expensed in June 2008.
On July 14, 2008 the Company cancelled the previously reported Amended
Letter of Intent which it had entered into with Warwick Communications,
Inc. on December 17, 2007 and which had been amended on March 25, 2008.
No definitive agreement had been entered into and no license, as
contemplated in the Letter of Intent, was issued.
On September 23, 2008, the Board of Directors of the Company approved
employment letter agreements with (i) the President of the Company,
Jeffrey Kimberly, (ii) the Chief Operating Officer of the Company,
Wayne Koehl and (iii) the Chief Financial Officer of the Company,
Jeffrey Andrews. These letter agreements amended and restated the terms
and conditions of employment of each of these executives of the
Company.
Mr. Kimberly's employment letter provides for a term of five years at
an annual salary for January 1, 2009 of $300,000, with an increase to
$375,000 if the Company reaches certain sales goals. Any other increase
in annual salary is subject to approval of the Chief Executive Officer
of the Company and the Board. Subject to approval by the shareholders
of the Company, Mr. Kimberly will be granted an option to purchase one
million five hundred thousand (1,500,000) shares of Common Stock. The
exercise price for these options was set at the market closing bid
quotation on September 15, 2008, $1.18. The options will be exercisable
from and after their respective vesting date, and for a period of ten
(10) years thereafter. Options for three hundred thousand (300,000)
shares of Common Stock vest immediately on September 23, 2008 and
options for three hundred thousand (300,000) additional shares of
Common Stock shall vest on September 23 of each successive year between
2010 and 2013 inclusive, provided that Mr. Kimberly is still employed
on the relevant vesting date. Mr. Kimberly will be entitled to receive
bonuses of between 0.75% of 1.00% of the Company's gross profits on
sales of equipment after the Company reaches certain sales milestones.
The Company shall pay the monthly loan payments on Mr. Kimberly's car
for two years and then pay off all of the remaining loan balance on
this automobile.
33
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
NOTE 13 - COMMITMENTS AND CONTINGENCIES (CONTINUED)
-----------------------------------------
Mr. Andrews' employment letter provides for a term of five years at an
annual salary for 2009 of $180,000, with an increase to $225,000 if the
Company reaches certain sales goals. Any other increase in annual
salary is subject to approval of the Chief Executive Officer of the
Company and the Board. Subject to approval by the shareholders of the
Company, Mr. Andrews will be granted an option to purchase one million
(1,000,000) shares of Common Stock. The exercise price for these
options was set at the market closing bid quotation on September 15,
2008, $1.18. The options will be exercisable from and after their
respective vesting date, and for a period of ten (10) years thereafter.
Options for two hundred thousand (200,000) shares of Common Stock shall
vest immediately on September 23, 2008 and options for two hundred
thousand (200,000) additional shares of Common Stock shall vest on
September 23 of each successive year between 2010 and 2013 inclusive,
provided that Mr. Andrews is still employed on the relevant vesting
date. Mr. Andrews will be entitled to receive bonuses of between 0.75%
of 1.00% of the Company's gross profits on sales of equipment after the
Company reaches certain sales milestones.
Mr. Koehl's employment letter provides for a term of five years at an
annual salary for 2009 of $225,000, with an increase to $250,000 if the
Company reaches certain sales goals. Any other increase in annual
salary is subject to approval of the Chief Executive Officer of the
Company and the Board. Subject by approval of the shareholders of the
Company, Mr. Koehl will be granted an option to purchase one million
(1,000,000) shares of common stock of the Company. The exercise price
for these options was set at the market closing bid quotation on
September 15, 2008, $1.18. The options will be exercisable from and
after their respective vesting date, and for a period of ten (10) years
thereafter. Options for two hundred thousand (200,000) shares of Common
Stock vested immediately on September 23, 2008, and options for two
hundred thousand (200,000) additional shares of Common Stock shall vest
on September 23 of each successive year between 2010 and 2013
inclusive, provided that Mr. Koehl is still employed on the relevant
vesting date. Mr. Koehl will be entitled to receive bonuses of between
0.75% of 1.00% of the Company's gross profits on sales of equipment
after the Company reaches certain sales milestones. Mr. Koehl shall
also receive a monthly automobile allowance of five hundred dollars
($500).
On September 24, 2008, the Company's Board of Directors approved the
appointment of Eric Swain as Chief Executive Officer of the Company. In
connection with the appointment of Mr. Swain, the Board approved a
summary of terms of a proposed employment agreement to be entered into
between the Company and Mr. Swain. Mr. Swain's summary of terms
provides for an employment term of five years at an annual salary of
$450,000 from the date of the execution of the employment agreement
through December 31, 2009, with an increase to $525,000 on January 1,
2010 if the Company reaches at least one sales goal as defined in the
summary of terms. Any other increase in annual salary is to be
determined as provided in the employment contract. Mr. Swain shall be
entitled to eighteen (18) months of severance payments equal to his
current salary if the Company terminates his employment without cause
or if he terminates his employment with good reason.
Mr. Swain will be granted an option to purchase five million
(5,000,000) shares of Common Stock. The exercise price for these
options was set at the market closing bid quotation on September 15,
2008, $1.18. The options will be exercisable from and after their
respective vesting date, and for a period of fifteen (15) years
thereafter. Options for one million (1,000,000) shares of Common Stock
vested immediately on September 24, 2008 and options for one million
(1,000,000) additional shares of Common Stock shall vest on September
24 of each successive year between 2010 and 2013 inclusive, provided
that Mr. Swain is still employed on the relevant vesting date. Mr.
Swain will be entitled to receive bonuses, payable in the form of
Common Stock or options to purchase Common Stock equal to 0.75% of the
Company's gross profits on each sale of equipment over twenty-five
million dollars ($25,000,000). Mr. Swain shall also receive a monthly
automobile allowance of nine hundred dollars ($900). The Company has
agreed that, if Mr. Swain should incur costs (including legal expenses)
arising from the termination of his previous employment, the Company
would reimburse Mr. Swain for any such costs. The Company has also
agreed to appoint Mr. Swain to the Board.
34
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
NOTE 14 - DEPOSITS
--------
The June 30, 2008 balance of Deposits, totaling $73,639, consists of a
$45,000 investment in land which occurred in 2006, $29,860 deposit made in
August of 2007 on a future lease for additional equipment and the balance
of $1,365 lease deposit for offices. The lease deposit for equipment is
expected to be returned to the Company in 2008.
NOTE 15 - INVESTMENTS -SHORT-TERM AND LONG-TERM
-------------------------------------
Cash in excess of operating requirements is invested in notes, bonds and
equity securities.
The following table summarizes the Company's marketable securities
investments as of September 30, 2008:
Unrealized gain/
Cost Fair Market Value (Loss)
------------------- --------------------- --------------------
SHORT-TERM INVESTMENTS
Certificates of Deposits 288,000 287,933 (67)
=================== ===================== ====================
LONG-TERM INVESTMENTS
Fixed-rate capital securities 125,000 112,354 (12,646)
Corporate Bonds 1,826,949 1,644,856 (182,094)
Preferred Stocks 1,681,410 914,890 (766,520)
------------------- --------------------- --------------------
TOTAL LONG-TERM INV. 3,633,359 2,672,100 (961,260)
=================== ===================== ====================
The unrealized gains or losses of these investments total $961,327, they
are recorded directly to stockholders' equity and any realized gains or
losses are recognized in income.
NOTE 16 - PATENTS
-------
The Company currently has three utility patent applications pending in
the United States Patent and Trademark Office ("PTO") and approximately
ten corresponding utility patent applications pending in international
patent offices in commercially relevant countries. Additional
provisional patent applications have been filed and/or are currently
being prepared for filing in the PTO. The Company's patent applications
cover its proprietary microwave technology for recovering hydrocarbons
and fossil fuels from sources such as tires, oil shale, capped wells,
shale deposits, and waste oil streams. Currently Patent costs are
expensed and are value at zero on the balance sheet, once approved they
will be valued at their fair market value. The Company has pledged
pending patents rights as collateral for payments to a corporation
controlled by Mr. Pringle, Chairman (see note#13 consultant agreement).
NOTE 17- SUPPLEMENTAL DISCLOSURE NON-CASH ACTIVITY FROM CASH FLOW STATEMENT
------------------------------------------------------------------
---------------------------------------------- ----------------- ------------------- ---------------------------
July 19, 2002 (Inception)
09/30/2008 09/30/2007 to 09/30/2008
---------------------------------------------- ----------------- ------------------- ---------------------------
Common stock issued for services $ 15,487,123 $ 26,000 $ 22,417,833
---------------------------------------------- ----------------- ------------------- ---------------------------
Common stock issued for services prior year $ 1,808,042 $ 1,797,522 $ 2,581,500
included in prepaid
---------------------------------------------- ----------------- ------------------- ---------------------------
Sub-total of Common stock issued for $ 17,295,165 $ 1,823,522 $ 24,999,333
services including prepaid
---------------------------------------------- ----------------- ------------------- ---------------------------
Common stock issued for land 0 $ 125,800
---------------------------------------------- ----------------- ------------------- ---------------------------
Common stock issued as chartable contribution $ 50,000
---------------------------------------------- ----------------- ------------------- ---------------------------
Common stock issued to covert accounts $ 1,807
payable to equity
---------------------------------------------- ----------------- ------------------- ---------------------------
Preferred stock issued for services $ 400,000 $ 400,000
---------------------------------------------- ----------------- ------------------- ---------------------------
Common stock Warrants issued for services $ 29,375 $ 85,375
---------------------------------------------- ----------------- ------------------- ---------------------------
Capital Lease - phone equipment $ 32,432 $ 32,432
---------------------------------------------- ----------------- ------------------- ---------------------------
35
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
NOTE 18 - SUBSEQUENT EVENTS
-----------------
Subsequent to the balance sheet date of September 30, 2008 the
following transactions occurred:
The company issued 747,976 shares of common stock for $747,976 in cash
in the month of October, $747,976 of this cash was included as cash and
stock to be issued in the September 30 balance sheet.
NOTE 19- RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS FOR THE YEARS
-------------------------------------------------------------------
ENDED DECEMBER 31, 2003 AND 2002
--------------------------------
The Company has restated its previously issued financial statements for
the period July 19, 2002 (inception) through December 31, 2002 on its
report dated May 29, 2003. The Company has also restated its financial
statements for the year ended December 31, 2003. The Company has
restated its financial statements to reverse the effect of a
transaction during the period ended December 31, 2002. The transaction
reflected the issuance of preferred stock shares in exchange for an
intangible asset and the subsequent impairment of the asset acquired.
The financial statements have been restated as the transaction was
subsequently rescinded, as the preferred stock shares were not formally
issued. For the year ended December 31, 2003 the Company had initially
reflected the issuance of 1,455,000 shares of common stock to two of
its founders as being issued for services provided. The Company has
restated its financial statements to reflect the common stock as
re-issuance of founders shares. These transactions resulted in a
decrease in net loss applicable to common shares of $727,500 and
$1,500,000 for the year ended December 31, 2003 and period July 19,
2002 (inception) through December 31, 2002 to a net loss of $203,659
and $508,508 as restated, and a decrease in the deficits accumulated
during the development stage to $712,617 and $508,508, respectively.
36
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
GENERAL - PLAN AND RESULTS OF OPERATIONS
We have had no revenues from operations since the closing of the asset
acquisitions of Carbon Recovery Corporation in September 2006 and Mobilestream
Oil, Inc. in December 2006. There was no change in this situation during the
quarter, as we had no revenue from operations in the three months ended
September 30, 2008. All revenues we received from operations prior to September
2006 were derived from lines of business unrelated to our current activities,
and in which we no longer have any ownership interest or other participation.
We have financed our operations principally through private sales of
equity securities. In 2007 we raised net proceeds of $1,168,461 through the sale
of 1,519,564 shares of our common stock. During the three months ended September
30, 2008, we raised $1,746,922 from the sale of 1,747,711 shares of our common
stock in private placements, in addition to the $9,915,716 raised from the sale
of common stock in private placements during the six months ended on June 30,
2008. We expect to continue to raise funds through the private sale of equity or
convertible debt in our Company during the remainder of 2008, but as yet no
terms have been established for the sale of such debt and equity and there can
be no assurance we will be successful in raising required capital.
We have begun our marketing efforts in various industry sectors. We
have hired dedicated sales and marketing personnel including the addition during
the second quarter of Executive Vice President Wayne Koehl. We have submitted to
prospective customers several proposals to build one or more forms of microwave
reactor ASR processing machines with varying processing speeds.
We have entered into exclusive distributorship and sales representative
agreements with several companies. Under each agreement, a distributor or other
representative is paid only from the proceeds we receive from an actual sale or
lease transaction. We have seen activity during the quarter by these companies
and are hopeful that it will result in sales or leases of equipment.
We also intend to consider the development of additional machines and
equipment using our core technology in areas outside of the tire recycling
industry, but we will require additional funds beyond our existing sources of
capital.
LIQUIDITY AND WORKING CAPITAL
As of September 30, 2008 the Company had $4,097,424 in cash and
investments. Of this amount, $3,809,491 was in cash and cash equivalents,
$287,933 in short-term investments and $2,745,739 in marketable securities
characterized as long term investments. The Company's cash and investments as of
September 30, 2008 is considered adequate to cover anticipated working capital
requirements for approximately twenty-four (24) months. The Company is
continuously engaged in reviewing, discussing, analyzing and negotiating various
financing, sales and license opportunities, both in the United States and in
Europe.
During the three months ended September 30, 2008, we raised $1,746,922
from the sale of 1,747,711 shares of our common stock in private placements, in
addition to the $9,915,716 raised from the sale of common stock in private
placements during the six months ended on June 30, 2008. We expect to continue
to raise funds through the private sale of convertible equity or debt in our
Company during the remainder of 2008, but as yet no terms have been established
for the sale of such debt and equity and there can be no assurance we will be
successful in raising required capital.
37
We estimate that we can satisfy our current operational cash
requirements and will not have to raise additional funds during the next
twenty-four (24) months. Our assessment of our cash needs, however, is based on
assumptions concerning the rate of our cash expenses, the technological and
engineering challenges in the development of our products, the projected
development times, the equipment construction and testing trials required along
with their projected timetable, the demand for our product and the costs of
product sales, and the receipt of orders for our products. Our actual operations
may be affected by increases in our operating expenses, increases in our payroll
and staff related matters, technological or engineering difficulties, deviation
from the timetables for experimentation and testing trials, unexpected
regulatory problems, delays in receipt and acceptance of orders for our
machines, low demand for our products or the effects of competition.
We also intend to consider the development of additional machines and
equipment using our core technology in areas outside of the tire recycling
industry, but we will require the assistance of outside capital equity
investments on a large scale, or we will need to align ourselves with joint
venture or strategic alliance partners in order to have the funds available to
exploit these other potential applications.
CAPITAL RESOURCES
We have made commitments of approximately $150,000 for future purchases
of equipment. In June 2007, we entered into a purchase agreement with a
manufacturing facility in the Midwest for the manufacture of our first GRFR
model 1 ton microwave reactor automotive shredded residual (ASR) processing
machine, which we expect to be completed by December 31, 2008. This machine is
designed to apply our microwave technology to the decomposition of tires as
waste and to retrieve usable and saleable components therefrom in the form of
carbon, electricity, and gas. We have paid $800,000 of the $900,000 due
under this agreement. We have also entered into similar agreements with other
suppliers. We have paid approximately all of the $300,000 due under all of
these agreements as of September 30, 2008.
ITEM 4. CONTROLS AND PROCEDURES.
The Company maintains disclosure controls and procedures designed to
ensure at a reasonable level of assurance that information required to be
disclosed in reports filed under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), is recorded, processed, summarized, and reported within
the time periods specified in the SEC's rules and forms.
The Company's management, with the participation of its Chief Executive
Officer and its Chief Financial Officer, evaluated the effectiveness of the
Company's disclosure controls and procedures (as defined in Rules 13a-15(e)) and
15d-15(e) of the Exchange Act) as of December 31, 2007 and updated the
evaluation as of the end of the period covered by this report (the "Evaluation
Date"). Based on that evaluation, and due to the weakness in our internal
controls over financial reporting (as described below and in Item 8A of the
Company's annual report on Form 10-KSB for the year ended December 31, 2007)_the
Company's Chief Executive Officer and Chief Financial Officer concluded that, as
of that date, the Company's disclosure controls and procedures were not
effective at the reasonable assurance level.
As discussed in the Company's annual report on Form 10-KSB
for the year ended December 31, 2007 management's assessment identified a
material weakness relating to lack of adequate segregation of duties.
The Public Company Accounting Oversight Board has defined material
weakness as a "significant deficiency or combination of significant deficiencies
that results in more than a reasonable possibility that a material misstatement
of the annual or interim financial statements will not be prevented or
detected".
38
There were no changes in our internal control over financial reporting
during the quarter ended September 30, 2008 that have materially affected, or
are reasonably likely to materially affect, our internal control over financial
reporting except for the previously mentioned continuing lack of segregation of
duties, in that we only had one person performing all accounting-related on-site
duties. Because of the thin staffing levels of relevant personnel, however,
certain deficiencies which could be cured by separation of duties cannot be
cured, but only monitored as a weakness. In 2008, the Company added three new
independent members to the Board of Directors. During the third quarter, the
Board organized an audit committee which is expected to help to enhance and
strengthen controls. The committee meets quarterly.
Notwithstanding the existence of material weakness in our disclosure
controls and procedures occasioned by the material weakness in our internal
controls over financial reporting, our management, including our Chief Executive
Officer and Chief Financial Officer, believe that the consolidated financial
statements included in this report fairly present in all material respects our
financial condition, results of operations and cash flows for the periods
presented.
ITEM 4(T) CONTROLS AND PROCEDURES.
The management of the Company is responsible for establishing and maintaining
adequate internal control over financial reporting for the Company. The
Company's internal control over financial reporting is designed to provide
reasonable assurance as to the reliability of the Company's financial reporting
and the preparation of financial statements in accordance with generally
accepted accounting principles.
All internal control systems, no matter how well designed, have inherent
limitations. Therefore, even those systems determined to be effective can
provide only reasonable assurance with respect to financial statement
preparation and presentation.
Management conducted an evaluation of the effectiveness of the Company's
internal control over financial reporting as of December 31, 2007 and at the end
of the period covered by this report. In making this assessment, it used the
criteria set forth in INTERNAL CONTROL--INTEGRATED FRAMEWORK issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based
on the material weakness described below, management has concluded that the
Company's internal control over financial reporting is not effective.
We identified the following material weakness in our internal control over
financial reporting- we did not have adequately segregation of duties, in that
we only had one person performing all accounting-related on-site duties. Because
of the "barebones" level of relevant personnel, however, certain deficiencies
which are cured by separation of duties cannot be cured, but only monitored as a
weakness.
There were no changes in our internal control over financial reporting
during the quarter ended September 30, 2008 that have materially affected, or
are reasonably likely to materially affect, our internal control over financial
reporting except during the third quarter, the Board
organized an audit committee which is expected to help to enhance and strengthen
controls. The committee meets quarterly.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
On July 1, 2008, the Company issued 391,730 shares of common stock of the
Company to an investor for cash consideration of $391,730. The issuance of the
shares was considered exempt pursuant to Section 4(2) of the Securities Act of
1933 as amended.
On July 3, 2008, the Company issued 325,957 shares of common stock of the
Company to an equity fund after exercising 625,000 warrants owned by the equity
fund. The issuance of the shares was considered exempt pursuant to Section 4(2)
of the Securities Act of 1933 as amended.
On July 14, 2008, the Company issued 200,000 shares of common stock of the
Company to consultants for services rendered to the Company valued at $332,000.
The issuance of the shares was considered exempt pursuant to Section 4(2) of the
Securities Act of 1933 as amended.
On July 21, 2008, the Company issued 73,480 shares of common stock of the
Company to investors for cash consideration of $73,480. The issuance of the
shares was considered exempt pursuant to Section 4(2) of the Securities Act of
1933 as amended.
On July 25, 2008, the Company issued 75,000 shares of common stock of the
Company to a consultant for services rendered to the Company valued at $105,000.
The issuance of the shares was considered exempt pursuant to Section 4(2) of the
Securities Act of 1933 as amended.
39
On August 8, 2008, the Company issued 75,000 shares of common stock of the
Company to a consultant for services rendered to the Company valued at $77,250.
The issuance of the shares was considered exempt pursuant to Section 4(2) of the
Securities Act of 1933 as amended.
On August 21, 2008, the Company issued 10,000 shares of common stock of the
Company to an investor for cash consideration of $10,000. The issuance of the
shares was considered exempt pursuant to Section 4(2) of the Securities Act of
1933 as amended.
On August 25, 2008, the Company issued 6,000 shares of common stock of the
Company to a consultant for services rendered to the Company valued at $7,500.
The issuance of the shares was considered exempt pursuant to Section 4(2) of the
Securities Act of 1933 as amended.
On September 3, 2008, the Company issued 76,000 warrants to purchase common
stock of the Company to a consultant for services rendered to the Company valued
at $70,000. The issuance of the warrants was considered exempt pursuant to
Section 4(2) of the Securities Act of 1933 as amended.
On September 23, 2008, the Company issued 25,000 warrants to purchase common
stock of the Company to its board members for services rendered to the Company
valued at $56,000. The issuance of the warrants was considered exempt pursuant
to Section 4(2) of the Securities Act of 1933 as amended.
All other information with respect to sales of all equity securities of the
Company during the third quarter that were not registered under the Securities
Act of 1933 has been previously filed on Forms 8-K.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 6. EXHIBITS.
3.2 Amended and Restated Bylaws of the Company incorporated by reference to
the Form S-1/A filed on October 22, 2008.
10.1 Investor Relations Agreement with Paul Sweeney dated September 8, 2008
incorporated by reference to the Form S-1/A filed on October 22, 2008
10.2 Form Confidentiality Agreements with Directors of the Company and
entered into during this quarterly period.
10.3 Form Confidentiality Agreements with Officers of the Company, Eric
Swain, Jeffrey Kimberly, Wayne Koehl, and Jeffrey Kimberly and entered
into during this quarterly period.
10.4 Stock Redemption Agreement with Frank G. Pringle incorporated by
reference to the Form 8-K filed on August 18, 2008.
40
10.5 Consulting Agreement with LP (Origination) Limited dated October 1,
2008
10.6 Option Agreement with Eric Swain dated October 14, 2008
10.7 Rescission Agreement with Wayne Koehl dated as of September 30, 2008
31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial Officer 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
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SIGNATURES
In accordance with 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.
GLOBAL RESOURCE CORPORATION
By /s/Eric Swain
---------------------
Eric Swain, Chief Executive Officer
Date: November 12, 2008
42