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 March 31, 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 (IRS Employer
incorporation or organization) Identification No.)
Bloomfield Business Park,
408 Bloomfield Drive, Unit 1,
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 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes 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 _____
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: 43,797,141 shares of common stock,
par value $0.001 were outstanding at April 23, 2008.
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GLOBAL RESOURCE CORPORATION
(A Development Stage Company)
Condensed Balance Sheet
March 31, 2008
(Unaudited)
ASSETS Period Ended
------ March 31, 2008
------------
CURRENT ASSETS
Cash $ 1,595,782
Cash - Restricted 5,069,872
Inventory 361,511
------------
TOTAL CURRENT ASSETS 7,027,165
------------
Fixed Assets, Net of depreciation 362,044
------------
OTHER ASSETS
Investments & Deposits on Investments 74,860
------------
TOTAL OTHER ASSETS 74,860
TOTAL ASSETS $ 7,464,069
============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 122,461
Current portion - loan payable - equipment 42,043
Loan Payable - to officer of company 150,000
Stock to be issued 5,069,872
------------
TOTAL CURRENT LIABILITIES 5,384,376
------------
LONG-TERM LIABILITIES
Loan payable - equipment, net of current portion 40,704
------------
Total liabilities 5,425,080
------------
STOCKHOLDERS' EQUITY
Preferred Stock A - $.001 par value 100,000,000 shares authorized,
35,236,188 issued and outstanding at March 31, 2008 35,236
Preferred Stock B - $.001 par value 1,000 shares authorized
and issued as March 31, 2008 1
Common stock, $.001 par value; 200,000,000 shares authorized,
33,197,056 issued and outstanding at March 31, 2008 33,292
Subscription receivable (130,518)
Additional paid-in capital 24,553,559
Deficit accumulated in the development stage (21,032,691)
------------
3,458,879
Treasury Stock (66,473)
Prepaid Services (1,162,667)
Deferred compensation (190,750)
------------
Total stockholders' equity 2,038,989
------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 7,464,069
============
The accompanying notes are an integral part of these financial statements.
1
GLOBAL RESOURCE CORPORATION
(A Development Stage Company)
Condensed Statement of Operations
(With Cumulative Totals Since Inception)
(Unaudited)
Three Months Ended
------------------ JULY 19, 2002
(INCEPTION)
March 31 MARCH 31 TO
2008 2007 MARCH 31, 2008
------------ ------------ ------------
REVENUES $ -- $ -- $ --
COST OF SALES -- --
------------ ------------ ------------
GROSS PROFIT -- -- --
------------ ------------ ------------
OPERATING EXPENSES
Consulting fees -- 8,239 1,422,258
Professional fees for Legal and Accounting 204,129 174,975 1,464,317
Investment Banking Fees and investor relations 2,599,802 60,000 8,492,060
Other general and administrative expenses 786,785 486,388 9,342,544
Depreciation expense 20,692 23,282 204,422
------------ ------------ ------------
TOTAL OPERATING EXPENSES 3,611,408 752,884 20,925,601
------------ ------------ ------------
LOSS BEFORE OTHER INCOME (EXPENSE) (3,611,408) (752,884) (20,925,601)
------------ ------------ ------------
OTHER INCOME (EXPENSE)
Loss on deposit / real estate - net -- -- (172,712)
Interest expense (6,073) (3,479) (44,564)
Interest income 3,787 14,499 110,186
------------ ------------ ------------
TOTAL OTHER INCOME (EXPENSE) (2,286) 11,020 (107,090)
------------ ------------ ------------
NET LOSS BEFORE PROVISION FOR INCOME TAXES (3,613,694) (741,864) (21,032,691)
PROVISION FOR INCOME TAXES -- -- --
------------ ------------ ------------
NET LOSS APPLICABLE TO COMMON SHARES $ (3,613,694) $ (741,864) $(21,032,691)
============ ============ ============
BASIC AND DILUTED LOSS
PER SHARE $ (0.12) $ (0.03) $ (0.68)
============ ============ ============
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES 30,743,131 25,180,668 30,743,131
============ ============ ============
The accompanying notes are an integral part of these financial statements.
2
GLOBAL RESOURCE CORPORATION
(A Development Stage Company)
Condensed Statement of Stockholders' Equity
At March 31, 2008
PREFERRED STOCK COMMON STOCK DISCOUNT
----------------------------- ----------------------------- ADDITIONAL ON
PREFERRED PAR VALUE $.001 COMMON PAR VALUE $.001 PAID-IN COMMON
SHARES $ AMOUNT SHARES $ AMOUNT CAPITAL STOCK
------------ ------------ ------------ ------------ ------------ ------------
BALANCE - JULY 19, 2002 (INCEPTION) - $ - $ - $ -
Issuance of initial founders'
shares, September 2002, net
of subsequent cancellations 2,555,000 - - -
Shares issued for services,
September 2002 1,000,000 - 472,000 -
Shares issued for cash,
November 2002 29,000 - 14,500 -
Shares issued for services,
November and December 2002 13,600 - 6,800 -
Net loss for the period
July 19, 2002 (Inception)
through December 31, 2002,
as originally stated - - - -
Prior period adjustment,
Note 11 - - - - - -
------------ ------------ ------------ ------------ ------------ ------------
BALANCE AT DECEMBER 31, 2002 - - 3,597,600 - 493,300 -
------------ ------------ ------------ ------------ ------------ ------------
Re-issuance of founders'
shares - July 2003 1,455,000 - - -
Shares issued for cash 519,800 - 259,900 -
Issuance of subscription
receivable from shareholders - - - -
Net loss for the year ended
December 31, 2003, as
originally stated - - - -
Prior period adjustment,
Note 11 - - - - - -
------------ ------------ ------------ ------------ ------------ ------------
BALANCE AT DECEMBER 31, 2003 - - 5,572,400 - 753,200 -
------------ ------------ ------------ ------------ ------------ ------------
Shares issued for cash 917,645 - 553,105 -
Shares issued in exchange
for real estate 650,000 - 650,000 -
Shares issued for compensation 545,000 - 545,000 -
Shares issued as charitable
contribution 50,000 - 50,000 -
Initial founders' shares
cancelled (250,000) - - -
Issuance of subscription
receivable from shareholders - - - -
Net loss for the year
ended December 31, 2004 - - - - - -
------------ ------------ ------------ ------------ ------------ ------------
BALANCE AT DECEMBER 31, 2004 - - 7,485,045 - 2,551,305 -
------------ ------------ ------------ ------------ ------------ ------------
(CONTINUED ON NEXT PAGE)
3
GLOBAL RESOURCE CORPORATION
(A Development Stage Company)
Condensed Statement of Stockholders' Equity
At March 31, 2008
(CONTINUED FROM PREVIOUS PAGE)
DEFICIT
ACCUMULATED CONTRA
DURING THE DEFERRED PREPAID FOR SUBSCRIPTION TREASURY
DEVELOPMENT STAGE COMPENSATION SERVICES RECEIVABLE STOCK TOTAL
------------ ------------ ------------ ------------ ------------ ------------
BALANCE - JULY 19, 2002 (INCEPTION) $ - $ - $ - $ -
Issuance of initial founders'
shares, September 2002, net
of subsequent cancellations - - - -
Shares issued for services,
September 2002 - - - 472,000
Shares issued for cash,
November 2002 - - - 14,500
Shares issued for services,
November and December 2002 - - - 6,800
Net loss for the period
July 19, 2002 (Inception)
through December 31, 2002,
as originally stated (2,008,508) - - (2,008,508)
Prior period adjustment,
Note 11 1,500,000 - - 1,500,000
------------ ------------ ------------ ------------ ------------ ------------
BALANCE AT DECEMBER 31, 2002 (508,508) - - - (15,208)
------------ ------------ ------------ ------------ ------------ ------------
Re-issuance of founders'
shares - July 2003 - - - -
Shares issued for cash - - - 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) - - (931,159)
Prior period adjustment,
Note 11 727,500 - 727,500
------------ ------------ ------------ ------------ ------------ ------------
BALANCE AT DECEMBER 31, 2003 (712,167) - - (14,340) 26,693
------------ ------------ ------------ ------------ ------------ ------------
Shares issued for cash - - - 553,105
Shares issued in exchange
for real estate - - - 650,000
Shares issued for compensation - (545,000) - -
Shares issued as charitable
contribution - - - 50,000
Initial founders' shares
cancelled - - - -
Issuance of subscription
receivable from shareholders - - (74,240) (74,240)
Net loss for the year
ended December 31, 2004 (672,219) - - (672,219)
------------ ------------ ------------ ------------ ------------ ------------
BALANCE AT DECEMBER 31, 2004 (1,384,386) (545,000) - (88,580) 533,339
------------ ------------ ------------ ------------ ------------ ------------
4
GLOBAL RESOURCE CORPORATION
(A Development Stage Company)
Condensed Statement of Stockholders' Equity
At March 31, 2008
PREFERRED STOCK COMMON STOCK DISCOUNT
----------------------------- ----------------------------- ADDITIONAL ON
PREFERRED PAR VALUE $.001 COMMON PAR VALUE $.001 PAID-IN COMMON
SHARES $ AMOUNT SHARES $ AMOUNT CAPITAL STOCK
------------ ------------ ------------ ------------ ------------ ------------
Shares issued for cash 745,655 - 914,507 -
Shares issued to acquire
technology 37,500,000 - 37,500,000 (37,500,000)
Remaining shares issued in
exchange for real estate 80,800 - 80,800 -
Shares issued for services 53,500 - 53,500 -
Accounts payable converted
to equity 1,087 - 1,087 -
Stock subscriptions received,
net - - - -
Amortization of deferred
compensation - - - -
Net loss for the year
ended December 31, 2005 - - - - - -
------------ ------------ ------------ ------------ ------------ ------------
BALANCE AT DECEMBER 31, 2005 - - 45,866,087 - 41,101,199 (37,500,000)
------------ ------------ ------------ ------------ ------------ ------------
Shares issued for cash 2,786,286 - 2,810,877 -
Stock subscriptions received,
net - - - -
Amortization of deferred
compensation - - - -
Shares issued for services 14,123 - 14,746 -
Shares issued for investment
in land 22,500 - 45,000 -
Effect of reverse merger 72,241 48,761 (37,669,444) 37,500,000
Shares issued for conversion
of debt 2,681,837 2,682 118,000 -
Shares issued for consulting 25,000 25 49,975 -
Shares issued for merger
with Mobilestream Inc 11,145,255 11,145 2,842,136
Cancellation of shares for
merger with Mobilestream Inc (37,500,000) (37,500) 37,500
Preferred convertible stock
issued for merger with
Mobilestream 2 for 1 conversion
into common 35,236,188 $ 35,236 468,138
Net loss for the year
ended December 31, 2006 - - - - - -
------------ ------------ ------------ ------------ ------------ ------------
BALANCE AT DECEMBER 31, 2006 35,236,188 $ 35,236 25,113,329 $ 25,113 $ 9,818,127 $ -
============ ============ ============ ============ ============ ============
Shares issued for cash 1,519,564 1,520 1,166,941
Shares issued for Stock
to be issued (liability) 186,822 187 201,156
Stock subscriptions received,
net - - - -
Amortization of deferred
compensation
Shares issued for services 2,613,576 2,613 6,331,050
Shares issued for services
& Prepaid in Equity 925,000 925 2,580,576
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 - - - - - -
------------ ------------ ------------ ------------ ------------ ------------
BALANCE AT DECEMBER 31, 2007 35,237,188 $ 35,237 30,263,330 $ 30,358 $ 20,497,849 $ -
============ ============ ============ ============ ============ ============
(CONTINUED ON NEXT PAGE)
5
GLOBAL RESOURCE CORPORATION
(A Development Stage Company)
Condensed Statement of Stockholders' Equity
At March 31, 2008
(CONTINUED FROM PREVIOUS PAGE)
DEFICIT
ACCUMULATED CONTRA
DURING THE DEFERRED PREPAID FOR SUBSCRIPTION TREASURY
DEVELOPMENT STAGE COMPENSATION SERVICES RECEIVABLE STOCK TOTAL
------------ ------------ ------------ ------------ ------------ ------------
Shares issued for cash - - - 914,507
Shares issued to acquire
technology - - - -
Remaining shares issued in
exchange for real estate - - - 80,800
Shares issued for services - - - 53,500
Accounts payable converted
to equity - - - 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) - - (1,291,169)
------------ ------------ ------------ ------------ ------------ ------------
BALANCE AT DECEMBER 31, 2005 (2,675,555) (436,000) - (78,182) 411,462
------------ ------------ ------------ ------------ ------------ ------------
Shares issued for cash - - - 2,810,877
Stock subscriptions received,
net - - (582,511) (582,511)
Amortization of deferred
compensation - 109,000 - 109,000
Shares issued for services - - - 14,746
Shares issued for investment
in land - - - 45,000
Effect of reverse merger - - - (120,683)
Shares issued for conversion
of debt - - - 120,682
Shares issued for consulting - - - 50,000
Shares issued for merger
with Mobilestream Inc (10,498) 2,842,783
Cancellation of shares for
merger with Mobilestream Inc -
Preferred convertible stock
issued for merger with
Mobilestream 2 for 1 conversion
into common 503,374
Net loss for the year
ended December 31, 2006 (4,246,058) - - - (4,246,058)
------------ ------------ ------------ ------------ ------------ ------------
BALANCE AT DECEMBER 31, 2006 $ (6,932,111) $ (327,000) $ - $ (660,693) $ - $ 1,958,672
============ ============ ============ ============ ============ ============
Shares issued for cash 1,168,461
Shares issued for Stock
to be issued (liability) 201,343
Stock subscriptions received,
net - - 475,000 475,000
Amortization of deferred
compensation 109,000 109,000
Shares issued for services 6,333,663
Shares issued for services
& Prepaid in Equity (1,808,042) 773,459
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) - - - - (10,486,886)
------------ ------------ ------------ ------------ ------------ ------------
BALANCE AT DECEMBER 31, 2007 $(17,418,997) $ (218,000) $ (1,808,042) $ (185,693) $ (66,473) $ 866,239
============ ============ ============ ============ ============ ============
(CONTINUED ON NEXT PAGE)
6
GLOBAL RESOURCE CORPORATION
(A Development Stage Company)
Condensed Statement of Stockholders' Equity
At March 31, 2008
(CONTINUED FROM PREVIOUS PAGE)
PREFERRED STOCK COMMON STOCK DISCOUNT
----------------------------- ----------------------------- ADDITIONAL ON
PREFERRED PAR VALUE $.001 COMMON PAR VALUE $.001 PAID-IN COMMON
SHARES $ AMOUNT SHARES $ AMOUNT CAPITAL STOCK
------------ ------------ ------------ ------------ ------------ ------------
Shares issued for cash 2,046,226 2,046 2,081,743
Stock subscriptions received, net
Amortization of deferred compensation
Shares issued for services 887,500 888 1,959,387
Shares issued for services
& Prepaid in Equity
Treasury Stock
Warrants issued for services 14,580
Net loss for the period ended
March 31, 2008 - - - - - -
------------ ------------ ------------ ------------ ------------ ------------
BALANCE AT MARCH 31, 2008 35,237,188 $ 35,237 33,197,056 $ 33,292 $24,553,559 $ -
============ ============ ============ ============ ============ ============
DEFICIT
ACCUMULATED CONTRA
DURING THE DEFERRED PREPAID FOR SUBSCRIPTION TREASURY
DEVELOPMENT STAGE COMPENSATION SERVICES RECEIVABLE STOCK TOTAL
------------ ------------ ------------ ------------ ------------ ------------
Shares issued for cash 2,083,789
-
Stock subscriptions received, net 55,175 55,175
Amortization of deferred compensation 27,250 27,250
-
Shares issued for services 1,960,275
Shares issued for services
& Prepaid in Equity 645,375 645,375
Treasury Stock -
Warrants issued for services 14,580
-
Net loss for the period ended
March 31, 2008 (3,613,694) - - - - (3,613,694)
------------ ------------ ------------ ------------ ------------ ------------
BALANCE AT MARCH 31, 2008 $(21,032,691) $ (190,750) $(1,162,667) $ (130,518) $ (66,473) $ 2,038,989
============ ============ ============ ============ ============ ============
The accompanying notes are an integral part of these financial statements.
7
GLOBAL RESOURCE CORPORATION
(A Development Stage Company)
Condensed Statement of Cash Flows
(With Cumulative Totals Since Inception)
(Unaudited)
THREE MONTHS ENDED July 19, 2002
------------------ (INCEPTION)
MARCH 31, MARCH 31, TO
2008 2007 MARCH 31, 2008
------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (3,613,694) $ (741,864) $(21,032,691)
------------ ------------ ------------
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH (USED IN)
OPERATING ACTIVITIES:
Depreciation 20,692 23,282 203,734
Preferred stock issued for services -- -- 400,000
Common stock issued for services 1,960,275 26,000 9,599,575
Common stock Warrants issued for services 14,580 -- 14,580
Amortization of deferred compensation 27,250 27,250 354,500
Allowance reserve for note payable -- -- 650,000
Loss on sale of fixed asset -- -- 11,775
Loss on real estate -- -- 87,035
Common stock issued as charitable contribution -- -- 50,000
CHANGES IN ASSETS AND LIABILITIES -- -- --
(Increase) in Inventory (361,511) -- (361,511)
(Increase) decrease in deposits -- -- 70,140
(Increase) in notes receivable -- -- (650,000)
(Decrease) in accounts receivable -- -- --
(Decrease) in accounts payable 2,872 (24,536) (215,805)
------------ ------------ ------------
TOTAL ADJUSTMENTS 1,664,158 51,996 10,214,023
------------ ------------ ------------
NET CASH USED IN OPERATING ACTIVITIES (1,949,536) (689,868) (10,818,668)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (9,601) -- (611,753)
Proceeds from sale of Fixed assets 34,200
Proceeds from sale of real estate -- -- 617,864
Investment -- -- (145,000)
Investment in real estate, net -- -- (80,800)
------------ ------------ ------------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIE (9,601) -- (185,489)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock for cash 2,083,789 5,250 6,977,634
Issuance of equity securities and paid-in
capital for merger and other 645,375 201,342 6,619,788
Liability for stock to be issued 5,069,872 (201,342) 5,068,897
(Increase) decrease in stock subscription receivable 55,175 -- (1,162,782)
Proceeds from officer's loan -- -- 188,550
Repayment of officer's loan -- -- (38,550)
Purchase of Treasury Stock -- -- (66,473)
Proceeds from loan payable - equipment -- -- 100,133
Repayment of loan payable - vehicle (9,845) (8,878) (41,782)
Proceeds from loan payable - equipment -- -- 75,000
Repayment of loan payable - equipment -- -- (50,603)
------------ ------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 7,844,366 (3,628) 17,669,811
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 5,885,229 (693,496) 6,665,654
CASH AND CASH EQUIVALENTS
- BEGINNING OF PERIOD 780,425 1,770,002 --
------------ ------------ ------------
CASH AND CASH EQUIVALENTS
- END OF PERIOD $ 6,665,654 $ 1,076,506 $ 6,665,654
============ ============ ============
SUPPLEMENTAL DISCLOSURES OF
NON-CASH ACTIVITIES:
Common stock issued for services $ 1,960,275 $ 26,000 $ 8,826,117
============ ============ ============
Common stock issued for services net of prepaid
contra equity account $ 645,375 -- $ 1,418,833
============ ============ ============
Common stock issued for land investment -- -- $ 125,800
============ ============ ============
Common stock issued as charitable contribution -- -- $ 50,000
============ ============ ============
Common stock Warrants issued for services $ 14,580 -- $ 14,580
============ ============ ============
The accompanying notes are an integral part of these financial statements.
8
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
MARCH 31, 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 three months ended March 31, 2008 are not
necessarily indicative of the results that maybe 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.
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;
3) The sub-licensing of third parties to exploit that technology.
At the present time, the process is in a laboratory mode. There will have
to be a transition from the "one batch at a time" operation, used in the
laboratory to a "continuous feed" line in order to commercialize the
process. A prototype one ton "continuous feed" line machine is scheduled
for delivery in the second quarter 2008.
The Company believes that the design of the machinery and equipment for the
decomposition of waste tires fully protects the environment from the
release of components during the decomposition process.
In a similar decomposition process, the Company has designed machinery and
equipment which will decompose "fluff", which is the non-metallic portions
of scrap motor vehicles, primarily, the interiors. It appears that although
scrap vehicles are specifically taken without the tires due to
environmental rules, they are often removed but then placed ("hidden") in
the trunk of the vehicle and crushed into it, thus "disposing" of the
tires. The Company's machinery will, of course, permit any tires to be
decomposed together with the other materials.
9
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2008
NOTE 1 - BASIS OF PRESENTATION AND NATURE OF BUSINESS AND ORGANIZATION
---------------------------------------------------------------
(CONTINUED)
-----------
The Company is currently offering three models: 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.
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 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. Medicinal applications.
To date, the Company has allocated a substantial portion of their time and
investment in bring their product to the market and the raising of capital.
The Company has not commenced any commercial operations as of March 31,
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 (see "Subsequent
Events" note 14 below "liquidation trust"); c) the issuance of 27,205,867
common stock purchase warrants on the basis of 1 warrant for each 3 shares
of either common stock or preferred stock (the 2006 Series), exercisable at
$4.75 per share for a period ending on December 31, 2008. A stockholder of
Mobilestream owned 37,500,000 shares of the Company's stock which were
cancelled. The total cost of the acquisition of Mobilestream has been
allocated to the assets acquired and the liabilities assumed based on their
fair values in accordance with SFAS 141, BUSINESS COMBINATIONS. The net
asset and liabilities of Mobilestream equal approximately $2.4 million. The
assets consisted of cash approximately $1,678,000, and fixed assets of
$149,000 offset by liabilities of approximately $91,000.
On September 22, 2006, the 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 of a convertible debenture and
accrued interest in the amount of $120,682 by Carbon Recovery Corporation.
Subsequent to the acquisition 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. Prior to the Agreement, Carbon Recovery Corporation
had warrants
10
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2008
NOTE 1 - BASIS OF PRESENTATION AND NATURE OF BUSINESS AND ORGANIZATION
--------------------------------------------------------------
(CONTINUED)
-----------
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. All of the warrants were
originally scheduled to expire on September 21, 2007, but the Board of
Directors of the Company has extended the expiration date to December 31,
2008 for Class B warrants, Class D warrants and for Class E warrants.
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 adapted 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 of
2006 Series of Convertible Preferred Stock which may be converted 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) Limiting the liability of the Company's
directors and officers to the Company, Company 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 their time and investment in
bringing their product to the market, and the raising of capital.
11
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2008
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 March 31, 2008, the Company maintained cash and cash equivalent balances
at two financial institutions that are insured by the Federal Deposit
Insurance Corporation up to $100,000. At March 31, 2008 the Company's
uninsured cash balances total $6,424,200.
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. Temporary
differences are the differences between the reported amounts of assets and
liabilities and their tax bases. Deferred tax assets are reduced by a
valuation allowance when, in the opinion of management, it is more likely
than not that some portion or all of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are adjusted for the effects
of changes in tax laws and rates on the date of enactment.
BUSINESS COMBINATIONS
---------------------
Effective December 31, 2006 the Company acquired all the assets and assumed
all of the liabilites 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 fair values in accordance with SFAS
141, BUSINESS COMBINATIONS. 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.
12
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2008
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
------------------------------------------------------
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. Share-based
payment transactions within the scope of SFAS 123R include stock options,
restricted stock plans, performance-based awards, stock appreciation
rights, and employee share purchase plans. The Company has not issued any
options during the reporting periods and as such, the effect of SFAS 123R
has no impact on the results of operations for the three months ended March
31, 2008 and 2007.
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
antidilutive.
EARNINGS (LOSS) PER SHARE OF COMMON STOCK
-----------------------------------------
The following is a reconciliation of the computation for basic
and diluted earnings per share:
Three Months Ended
March 31,
--------------------------
2008 2007
------------ -----------
Net loss ($3,613,694) ($741,864)
------------ -----------
Weighted-average common shares
Outstanding (Basic) 30,743,131 25,180,668
------------ -----------
Weighted-average common shares
Outstanding (Diluted) 30,743,131 25,180,668
============ ===========
Weighted-average common stock equivalents for preferred stock convertible
to 1/2 for 1 of common are 17,618,094 and warrants common stock equivalents
are 13,026,076. There are also common stock purchase options equivalents
totaling 200,000, these warrants and options are not part of the
weighted-average outstanding common stock calculation because inclusion
would have been anti-dilutive as of March 31, 2008 and 2007.
13
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2008
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
------------------------------------------------------
INVENTORIES
-----------
Inventory is stated at the lower of cost or market. Cost is determined
using actual job costs per machine. Currently inventories consist of only
work in process.
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 March 31, 2008 and 2007.
RECENT ACCOUNTING PRONOUNCEMENTS
--------------------------------
In December 2007, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 141 (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, 2008 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, 2008 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.
In February 2007, the FASB issued SFAS No. 159, THE FAIR VALUE OPTION FOR
FINANCIAL ASSETS AND FINANCIAL LIABILITIES. SFAS No. 159 gives us the
irrevocable option to carry many financial assets and liabilities at fair
values, with changes in fair value recognized in earnings. SFAS No. 159 is
effective for us beginning January 1, 2008, although early adoption is
permitted. We are currently assessing the potential impact that electing
fair value measurement would have on our financial statements and have not
determined what election we will make.
14
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2008
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
------------------------------------------------------
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 March 31, 2008 were as follows:
Estimated Useful
Lives (Years) Amount
----------------- ----------
Testing Equipment 5 - 7 $ 454,013
Vehicles 5 34,425
Office & Computer Equip. 5 18,719
Leasehold improvements 3 12,195
----------
Total $ 519,352
==========
Less accumulated Depreciation & amortization 157,308
----------
NET FIXED ASSETS $ 362,044
==========
There was $20,692 and $23,282 charged to operations for depreciation
expense for the three months ended March 31, 2008 and 2007, respectively.
15
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2008
NOTE 4 - LOAN PAYABLE - OFFICE OF COMPANY
--------------------------------
On November 28, 2007 the Chief Financial Officer, Jeff Andrews, lent the
Company $150,000. This loan has no stated principal payment due date,
interest agreement is prime plus 2%. An expense was recorded for three
months based on terms stated above, interest expense will be accrued and
expense monthly in the amount of $1,187 until the Company pays off the
loan (see "Subsequent Events" note 14 on payment below).
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 $ 82,747
Less current maturities (42,043)
----------
Long-Term payable $ 40,704
==========
The amount of principal maturities of the
loans payable by years is as follows:
2008 31,118
2009 35,416
2010 16,213
----------
$ 82,747
==========
NOTE 6 - INVENTORY
---------
Inventory consists of a one ton machine currently in the work in
process stage.
March 31, 2008 March 31, 2007
-------------- --------------
Work in Process $ 361,511 $ 0
16
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2008
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 March 31, 2008 the deferred tax assets consist of the following:
2008
--------------
Deferred taxes due to net operating $ 6,310,000
carryforwards
Less: Valuation Allowance (6,310,000)
--------------
Net Deferred Tax asset $ --
--------------
At March 31, 2008, the Company had deficits accumulated during the
development stage in the approximate amount of $21,033,691 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 - 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 March 31 Amount
2008 $ 45,000
2009 21,700
---------------
$ 67,700
===============
17
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2008
NOTE 9 - 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 three months ended March 31, 2008, the Company raised over
$7.1 million dollars in cash through a private placement of common stock.
(The Company also raised another $2 million in a private placement of
common stock subsequent to the balance sheet date as described in Note
13). 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 also expects to successfully demonstrate its one ton per hour
microwave reactor system by end of this second quarter 2008 and deliver
the machine in the third quarter of 2008. The Company projects to have
significant sales revenue and positive cash flow in the 2008 fourth
quarter. In 2009, the Company also expects to continue generating
positive cash flow from projected sales.
NOTE 10 - RELATED PARTY TRANSACTION
-------------------------
On May 17, 2007, the Company authorized the purchase of the Company stock
from Lois Pringle, officer and wife of the Company's Chief Executive
officer. The Company purchased 94,961 shares for $66,471 in cash.
NOTE 11 - STOCKHOLDERS' EQUITY
--------------------
COMMON STOCK
------------
The following details the stock transactions for the three months ended
March 31, 2008:
The Company issued 2,046,226 shares of stock for $2,083,789 cash.
The Company issued 887,500 shares of common stock in exchange for
services rendered, valued at $1,960,275.
18
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2008
NOTE 11 - STOCKHOLDERS' EQUITY (CONTINUED)
--------------------------------
PREFERRED STOCK
---------------
There was no activity for the three months ended March 31, 2008 (see
subsequent note 14 on conversion).
WARRANTS
--------
The Company issued an additional 1,989,169 warrants, which have an
exercise price of $2.00 and expire September 2009, in a private
placement sale in the first quarter 2008. In addition the Company
issued 6,000 warrants with a warrant price of $2.63 for services
performed in first quarter, theses warrant will expire in 5 years.
A summary of the status of the Company's outstanding stock warrants as
of March 31, 2008 is as follows:
Weighted Average
Shares Exercise Price
------------- -----------------
Outstanding at December 31, 2007 11,036,907 $ 3.51
Granted 1,995,169 $ 2.00
Exercised - -
Forfeited / expired $ -
------------- -----------------
Outstanding at March 31, 2008 13,032,076 $ 3.28
------------- -----------------
Exercisable at March 31, 2008 13,032,076 $ 3.28
------------- -----------------
In March 2005 the Company issued 200,000 of common stock purchase
options (under Carbon Recovery Corporation) to the CFO, they have an
exercise price of $1.00 per share and will be 100% vested on
12/31/2008. As of 03/31/2008 none were exercised.
19
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2008
NOTE 12 - COMMITMENTS AND CONTINGENCIES
-----------------------------
Effective January 1, 2005 the Company entered into an employment
agreement with its President. Under the agreement the President shall
be entitled to an annual base salary of $250,000 in 2005 escalating to
$366,025 in 2009. In 2005, $156,000 of the salary shall be paid ratably
during the course of the year and the remaining $94,000 will be paid in
accordance with the terms of the agreement. The initial term of the
agreement is for a period of five years. The President has the option
to renew this agreement for a second five-year term. In addition to the
base salary the Company has granted the President 545,000 shares of
restricted common stock as deferred compensation. The common stock
vests to the President over a five-year period commencing January 1,
2005.
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 $400,000
and the microwave reactor system is expected to be delivered by end of
second quarter 2008. The Company has currently paid $350,000 as of
March 31, 2008, this amount is reflected in the balance sheet as part
of the Inventory - WIP.
In October, 2007 the Company revived an Agreement which had previously
expired for the sale of shares of its Common Stock to Mercatus &
Partners, Limited ("Mercatus"), a private limited company organized and
existing under the laws of the United Kingdom, having an address of Via
S. Roberto Bellarmino #4, 00142 Roma, Italy. The proposed transaction
was for the placement of shares of its Common Stock to a value of
$2,000,000. The original agreement had expired on March 31, 2007.
Following protracted discussions, on October 16, 2007 the Company
agreed to revive the Agreement, with certain modifications, and the
parties executed an Addendum to the original Agreement. Under the
revived Agreement and Addendum, Mercatus was to have purchased shares
to the total of $2,000,000 on or before November 30, 2007. The Company
had deposited 2,665,666 shares of its Common Stock in escrow, with any
unpurchased balance of such shares as of November 30th to be returned
for cancellation. Mercatus failed to make any of the installment
payments as promised and did not complete any of the purchase by
November 30, 2007. The Company no longer has any confidence in
Mercatus, has advised Mercatus that the Agreement has expired and will
not be extended or further revived, and has demanded a return of the
2,665,666 shares which were escrowed. These shares have not been
included in the outstanding shares and weighted average number of
common stock share calculation.
On March 25, 2008 the parties amended the Letter of Intent which had
been entered into on December 17, 2007 between the Company and Warwick
Communications, Inc. ("Warwick"), previously reported. The Letter of
Intent remains non-binding and subject to final mutually agreeable
documents including the License Agreement. The major change is that
Warwick is to order a 5 ton per hour machine by May 30, 2008, subject
still to the waivable condition precedent of a successful demonstration
of the pilot plant, anticipated to be held on April 23, 2008. The total
net purchase price will be $3,572,100. Payment is divided into 4
payments: (1) an initial deposit of $1,178,793 divided into a $10,000
refundable deposit to accompany the order and the balance of $1,168,793
due within 30 business days; (2) a second payment of $1,178,793 due
within 3
20
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2008
NOTE 12 - COMMITMENTS AND CONTINGENCIES (CONTINUED)
-----------------------------------------
months of the first payment; (3) $857,304 due upon delivery and
successful testing; and (4) a final payment of $357,210 due upon
successful installation. Subject to Warwick's meeting of the first
year's order requirement, Warwick will earn the right of first refusal
for the territories of Mexico, Cuba, Venezuela, Brazil, Morocco, Panama
and Trinidad & Tobago. Payment for the license continues to be by
issuance of 2,000,000 shares of Warwick's Common Stock, together with 2
warrants; one to purchase 1,000,000 additional shares of Warwick's
Common Stock at a price of US$.50 per share and the other to purchase
750,000 shares of Warwick's Common Stock at a price of US$1.00 per
share; however, now the issuance by Warwick of its 2,000,000 shares of
Common Stock in payment for the license will be subject to a one year
hold and a mutual sign off by the Company, Warwick and Warwick's lessee
to the effect that the machine has operated successfully for at least
90 days and that the lessee will continue its lease of such machine.
Under the license, when and if issued, Warwick will be obligated to
purchase one operational plant per year for the first five years with
orders aggregating US$25,000,000 at the end of the 5 years.
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 additional
625,000 shares at an exercise price of $1.50 per share. The Company
received $1,000,000 of the purchase price 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 has issued to the Escrow agent an additional
625,000 shares to be delivered to PROOF or returned to the Company,
depending upon those certain future events (the "Trigger Event"). The
Trigger Event will occur if (i) the Company does not file and have an
effective registration statement for the Shares, Warrants and Warrant
Shares by June 30, 2008 or (ii) in the event that during the period of
six months from the date of Closing, the market price of the Company's
Common Stock has a closing price of less than $1.00. In case of either
Trigger Event, the Escrow is authorized to transfer to PROOF the
625,000 escrowed shares. In addition, PROOF may, at its option,
instruct the Escrow to (i) pay over (to PROOF) the escrowed $250,000 of
proceeds and (ii) return to the Company the 250,000 escrowed shares. As
of March 31, 2008 shares have not been register.
Effectively February 11, 2008, the Company entered into employment
agreement with Mr. Jeff T. Kimberly as the Company's Chief Operating
officer. Mr. Kimberly received a $100,000 signing bonus, his base
salary will be $200,000 per year which will increase to $225,000 on
August 11, 2008, his sixth month anniversary with the company. In
addition to his base salary, Mr. Kimberly is eligible to receive a
yearly performance bonus to be paid in the Company's common stock
issued under the GRC 2008 Employee compensation plan, as well as a
relocation compensation package and Company medical benefits.
21
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2008
NOTE 13 - IVESTMENTS AND DEPOSITS ON INVESTMENTS
--------------------------------------
The March 31, 2008 balance of investments and deposits, totaling
$74,860, consists of a $45,000 investment in land which occurred in
2006 and a $29,860 deposit made in August of 2007 on a future lease for
additional equipment. The lease deposit for equipment is expected to be
returned to the Company in 2008.
NOTE 14 - SUBSEQUENT EVENTS
-----------------
Subsequent to the balance sheet date of March 31, the following
transactions occurred:
The company issued 5,538,573 shares of common stock for $5,538,573 in
cash in the month of April, $5,069,872 of this cash was included as
restricted cash and stock to be issued in the 3/31/2008 balance sheet.
Also one warrant was issued for each share of common stock shares. The
warrants have a $2.00 exercise price and expire 18 months from date of
issuance. The Company has also received an additional $1.8 million in
cash for shares of common stock and warrants stock to be issued in
April.
In April the Company paid $120,000 to the CFO, as partial payment for
the loan payable from officer of Company, with the remaining balance of
$30,000 is expected to be paid by year end 2008.
In April 2008 all of the Class B Preferred Stock 1,000 shares was
converted into 206,559 shares of common stock.
22
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS..
General - Plan of Operations
On September 22, 2006 the Company acquired the assets and development stage
business of Carbon Recovery Corporation. Since then the Company has continued
the plan of operations developed by Carbon Recovery Corporation and in effect at
the time of that acquisition. Essentially, this involves finding commercial
applications for the various uses and applications of the variable microwave
technology to recover hydrocarbons either from waste products (E.G., waste tires
and non-metallic components of junked and wrecked vehicles) or from sources such
as oil shale, oil drilling cuttings, capped wells with appropriate geological
characteristics, etc. As of the date of this Form 10-Q, the Company remains a
development stage company and has not yet had revenues from the application of
its technology or the sale of units embodying that technology.
The Company recognizes that it faces substantial competition from companies with
alternative technologies in the various areas where it seeks to exploit its own
microwave technology and that the transfer of the microwave technology from the
laboratory to the field will involve a variety of problems. The Company also
recognizes that its microwave technology requires certain equipment and
machinery components which are not commercially available and which must be
built to the Company's order and which may, accordingly, require a substantial
manufacturing or fabricating time.
Liquidity and Working Capital
As of March 31, 2008 the Company had $1,595,782 in cash on hand and another
$5,069,872 pending release from escrow upon the issuance of securities being
subscribed for. Subsequent to March 31, 2008 the securities were issued and the
cash was released to the Company from escrow. The cash on hand as of March 31,
2008 including the subsequently released cash is considered adequate to cover
anticipated working capital requirements for approximately thirty-three (33)
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 quarter ending March 31, 2008 the Company incurred inventory cost of
$361,511 for its one ton machine which was not complete as of March 31, 2008.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company does not have market risk sensitive instruments, whether instruments
entered into for trading purposes or instruments entered into for other than
trading purposes.
23
ITEM 4. CONTROLS AND PROCEDURES.
The Company maintains disclosure controls and procedures designed to ensure that
information required to be disclosed in reports filed under the Securities and
Exchange Act of 1934, as amended, is recorded, processed, summarized, and
reported within the specified time periods.
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 the Securities Exchange Act of
1934 Rules 13a-15(e)) as of March 31, 2008. Based on that evaluation, the
Company's Chief Executive Officer and Chief Financial Officer concluded that, as
of that date, the Company's disclosure controls and procedures required by
paragraph (b) of Exchange Act Rules 13a-15 or 15d-15, were effective at the
reasonable assurance level.
As discussed in the Company's prior year 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".
There were no changes in our internal control over financial reporting during
the quarter ended March 31, 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 "barebones" level of relevant personnel, however, certain
deficiencies which are cured by separation of duties cannot be cured, but only
monitored as a weakness. In 2007 the Company added three new independent members
to the Board of Directors, and in 2008 the Board will form an audit committee
and a compensation committee in order to enhance and strengthen controls.
Notwithstanding the existence of 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 Global Resources Corporation is responsible for establishing
and maintaining adequate internal control over financial reporting. 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.
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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. 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).
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.
Our independent registered public accounting firm, Bagell, Josephs, Levine &
Company, LLC, has reviewed our management's assessment of our internal controls
over the financial reporting and will issue their report in 2008 per SEC rules
for non-accelerated filers.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 1A. RISK FACTORS.
There have been no material changes from the risk factors in
the Company's Annual Report on Form 10-KSB for the year ended
December 31, 2007.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Information with respect to all equity securities of the
Company sold during the first 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 5. OTHER INFORMATION.
On April 24, 2008 (as of April 17, 2008) the Company and
Warwick Communications, Inc. further amended the non-binding
Letter of Intent of December 17, 2007 by extending the date on
which the second portion of the initial deposit, $1,168,793,
which was to have been paid on or before April 25, 2008, will
now be due and payable by no later than August 30, 2008. The
making of the second portion of the deposit is dependent upon
a successful demonstration of the pilot plant "to be held on
May 23 or by or before July 15, 2008. Upon waiving the
condition of the demonstration on or before July 15, 2008 or
by no later than July 30 the $10,000 deposit will be advanced
as non-refundable money and within thirty business days, the
balance of the initial deposit of $1,168,793 will be advanced
by Warwick into GRC's account, ..." The balance of the
payments will be due as previously reported.
ITEM 6. EXHIBITS.
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 Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
GLOBAL RESOURCE CORPORATION
By /s/ Frank G. Pringle
---------------------
Frank G. Pringle, Pres/CEO
Date: May 9, 2008
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