SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
For the quarterly period ended September 30, 2009
For the transition period from ___________ to ___________
Commission file number 000-52822
SECURITY SOLUTIONS GROUP, INC.
(Formerly CORPORATE EQUITY INVESTMENTS, INC.)
(Exact name of small business issuer as specified in its charter)
(Issuers telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 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 þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes £ No £
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-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. (Check one):
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes þ No o
Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date.
SECURITY SOLUTIONS GROUP, INC.
(Formerly CORPORATE EQUITY INVESTMENT, INC.)
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Security Solutions Group, Inc.
(Formerly Corporate Equity Investments, Inc.)
(A Development Stage Company)
September 30, 2009
INDEX TO FINANCIAL STATEMENTS
See accompanying notes to financial statements
See accompanying notes to financial statements
See accompanying notes to financial statements
Security Solutions Group, Inc.
(Formerly known as Corporate Equity Investments, Inc.)
Notes to Condensed Financial Statements
September 30, 2009
Note 1 Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, stockholders equity or cash flows. It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation. The unaudited interim financial statements should be read in conjunction with the Companys Annual Report on Form 10-K, which contains the audited financial statements and notes thereto, together with the Managements Discussion and Analysis, for the year ended December 31, 2008.The interim results for the period ended September 30, 2009 are not necessarily indicative of the results for the full fiscal year.
Note 2 Nature of Operations and Summary of Significant Accounting Policies
Nature of operations
Security Solutions Group, Inc. (SSG) (formerly Corporate Equity Investments, Inc. (CEI)) was incorporated in Florida on December 22, 2006. CEI was formed to serve as a vehicle to effect an asset acquisition, merger, or business combination with a domestic or foreign business. On April 1, 2009, DMP Holdings, Inc., (DMP) a privately held Utah company, acquired from various shareholders 32,312,000 shares of common stock of CEI at varying prices from various shareholders, which resulted in a change of control. DMP beneficially and directly owns 32,312,000 shares of common stock which represents 98.75% of the outstanding shares of the common stock of the company based on 32,720,000 shares outstanding as of September 30, 2009.
On July 30, 2009, the Board of Directors and a majority of the shareholders approved the filing of Articles of Conversion with the Nevada Secretary of State which effectively changed the domicile of CEI from Florida to Nevada and changed the name of the company from Corporate Equity Investments, Inc. to Security Solutions Group, Inc. In conjunction with the incorporation in the State of Nevada, SSG increased its number of authorized shares of common stock from 100,000,000 to 500,000,000. On August 6, 2009, the Board of Directors of the Company approved an 8 to 1 forward common stock split stock to all shareholders of record on August 6, 2009. All stock transactions noted herein have been adjusted to account for the forward stock split unless otherwise noted.
Unless the context indicates otherwise, references herein to we, our, CEI or the Company during periods prior to April 1, 2009 refer solely to CEI, while references to we, our, SSG or the "Company" after April 1, 2009 refer to SSG.
The Companys financial statements are presented as those of a development stage enterprise. Activities during the development stage primarily include related party equity-based financing and development of the business plan, hiring of a legal firm, minor operational set up (i.e. office), costs for United States Security and Exchange Commission, transfer agent and State regulatory filings, additional auditor costs for business reviews, as well as minimum compensation paid to the President. At September 30, 2009 the Company had not yet commenced operations.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles 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 revenue and expenses during the reporting period. Actual results could differ from those estimates.
For purposes of the statement of cash flows, the Company considers all highly liquid instruments purchased with a maturity of three months or less and money market accounts to be cash equivalents. At September 30, 2009, the Company has no cash equivalents.
Net Loss per Share
Basic loss per share is computed by dividing net loss by weighted average number of shares of common stock outstanding during each period. Diluted income per share is computed by dividing net income by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. At September 30, 2009, the Company does not have any outstanding common stock equivalents; therefore, a separate computation of diluted loss per share is not presented.
Certain amounts in the year 2008 financial statements have been reclassified to conform to the year 2009 presentation. The results of these reclassifications did not materially affect the Companys financial position, results of operations or cash flows.
Recently Issued Accounting Pronouncements
On September 30, 2009, the Company adopted changes issued by the Financial Accounting Standards Board (FASB) to the authoritative hierarchy of GAAP. These changes establish the FASB Accounting Standards CodificationTM (Codification) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The FASB will no longer issue new standards in the form of Statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts; instead the FASB will issue Accounting Standards Updates. Accounting Standards Updates will not be authoritative in their own right as they will only serve to update the Codification. These changes and the Codification itself do not change GAAP. Other than the manner in which new accounting guidance is referenced, the adoption of these changes had no impact on the Financial Statements.
The Company adopted changes issued by the FASB regarding accounting for business combinations. These changes apply to all assets acquired and liabilities assumed in a business combination that arise from certain contingencies and requires (i) an acquirer to recognize at fair value, at the acquisition date,
an asset acquired or liability assumed in a business combination that arises from a contingency if the acquisition-date fair value of that asset or liability can be determined during the measurement period otherwise the asset or liability should be recognized at the acquisition date if certain defined criteria are met; (ii) contingent consideration arrangements of an acquiree assumed by the acquirer in a business combination be recognized initially at fair value; (iii) subsequent measurements of assets and liabilities arising from contingencies be based on a systematic and rational method depending on their nature and contingent consideration arrangements be measured subsequently; and (iv) disclosures of the amounts and measurement basis of such assets and liabilities and the nature of the contingencies. These guidelines are effective for business combinations completed on or after the first annual reporting period beginning on or after December 15, 2008. The Company adopted these guidelines on April 1, 2009. The adoption of these guidelines had no material impact to the Companys financial position, results of operations or cash flows.
In March 2008, the FASB issued new disclosure requirements regarding derivative instruments and hedging activities. Entities must now provide enhanced disclosures on an interim and annual basis regarding how and why the entity uses derivatives; how derivatives and related hedged items are accounted for, and how derivatives and related hedged items affect the entitys financial position, financial results and cash flow. Pursuant to the transition provisions, the Company adopted these new requirements on January 1, 2009. The adoption of this standard did not have a material effect on our consolidated financial statements.
In May 2009, the FASB issued guidelines on subsequent event accounting which sets forth: 1) the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements; 2) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements; and 3) the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. This disclosure should alert all users of financial statements that an entity has not evaluated subsequent events after that date in the set of financial statements being presented. The adoption of this guidance did not have an impact on this companys financial statements.
Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the financial statement upon adoption.
Note 3 Going Concern
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As shown in the accompanying financial statements, the Company has incurred a net operating loss of $45,303 for the nine months ended September 30, 2009; a deficit accumulated during the development stage of $43,572 and a stockholders deficit of $34,393 as of September 30, 2009. In addition, the Company is in the development stage and has not yet generated any revenues. The ability of the Company to continue as a going concern is dependent on Managements plans, which include potential asset acquisitions, mergers or business combinations with other entities, further implementation of its business plan and continuing to raise funds through debt or equity raises. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.
Note 4 Due to Related Parties
Operations since the change in control on April 1, 2009 have been funded solely by a company related to DMP. As of September 30, 2009, $37,393 was owed to this related party, for which interest is not being charged.
Note 5 Forgiveness of Debt
Prior to the change in control on April 1, 2009, CEI had a $33,022 note payable to a related party, accounts payable of $6,425 and cash of $170. In conjunction with the acquisition of the Company, the note payable, along with the accounts payable less the cash, were forgiven resulting in a forgiveness of debt totaling $39,277 for the nine months ended September 30, 2009.
Note 6 Stockholders Equity
Common Stock Issuance for Cash
Year ended December 31, 2006
On December 22, 2006, CEI issued 16,000,000 shares of common stock, par value $.001 per share, to its founding shareholders in exchange for $2,000 in cash.
Year ended December 31, 2007
On July 31, 2007, CEI issued 16,000,000 shares of common stock, par value $.001 per share, to an individual in exchange for $2,000 in cash.
Year ended December 31, 2008
On February 22, 2008, CEI issued 480,000 shares of common stock, par value $.001 per share, in exchange for $1,500 in cash.
Nine months ended September 30, 2009
On July 15, 2009, SSG issued 240,000 shares of common stock, par value $.001 per share, in exchange for $3,000 in cash.
Contributed Capital Related Party
Year ended December 31, 2006
A related party of CEIs President paid $70 for certain general and administrative expenses on behalf of CEI
Year ended December 31, 2007
A related party of CEIs President contributed professional services to CEI aggregating $400. The value of services was based upon the fair value of the services provided.
A related party of the CEIs President paid $210 for certain general and administrative expenses on behalf of CEI.
Note 7 Subsequent Events
Management evaluated all activity of the Company through October 27, 2009 (the available for issuance date of the Financial Statements) and concluded that no subsequent events have occurred that would require recognition in the Financial Statements or disclosure in the Notes to the Financial Statements.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
The information presented in Item 2 contains forward-looking statements. You should understand that forward-looking statements are only predictions reflecting our current beliefs and are based on information currently available to us. Although we believe that the assumptions reflected in our forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.
You can identify a forward-looking statement by our use of a word such as may, will, should, could, anticipate, believe, estimate, expect, intend, plan, predict, project, propose, potential continue and similar terms and expressions, or the negative of these words or other variations on these words or comparable terminology.
In evaluating a forward-looking statement, you should understand that a forward looking statement involves known and unknown risks, uncertainties, contingencies, and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statement. Known risks related to an investment in our Company, risks related to our business, and risks related to our securities are identified in our Form 10-SB12G as amended and are incorporated herein by reference. You should also understand that we have no obligation and do not undertake to update or revise forward-looking statements made in this Report to reflect events or circumstances occurring after the date of this Report.
Corporate Equity Investments, Inc. (CEI) was incorporated under the laws of the State of Florida on December 22, 2006. On July 30, 2009, the Board of Directors and a majority of the shareholders approved the filing of Articles of Conversion with the Nevada Secretary of State which effectively changed the domicile of CEI from Florida to Nevada and changed the name of the Company from Corporate Equity Investments, Inc. to Security Solutions Group, Inc. (the "Company", SSG, "our", "us" or "we") In conjunction with the incorporation in the State of Nevada, SSG increased its number of authorized shares of common stock from 100,000,000 to 500,000,000. On August 6, 2009, the Board of Directors of the Company approved an 8 to 1 forward common stock split stock to all shareholders of record on August 6, 2009. All stock transactions noted herein have been adjusted to account for the forward stock split unless otherwise noted. We have been in the developmental stage since inception and have conducted virtually no business operations, other than organizational and administrative activities. We have retained one employee to initiate the development of the Company. We own no real estate or personal property. Our business purpose is to seek the acquisition of, or merger with, an existing company. On April 1, 2009, DMP Holdings, Inc., (DMP) acquired 32,312,000 shares of common stock of the Company resulting in DMP owning 99.48% of the outstanding shares of the Companys common stock and effected a change of control. The Company filed a Current Report on Form 8-K with the United States Securities and Exchange Commission (SEC) on April 7, 2009.
Our discussion of the proposed business under this caption and throughout this Form 10-Q is purposefully general and is not meant to restrict our virtually unlimited discretion to search for and enter into potential business opportunities.
Description of Business
Based on our business activities, we are a "blank check" company. The U.S. Securities and Exchange Commission (the "SEC") defines such companies as "any development stage company that is issuing a penny stock, within the meaning of Section 3 (a)(51) of the Securities Exchange Act of 1934, as amended, (the "Exchange Act") and that has no specific business plan or purpose, or has indicated that its business plan is to merge with an unidentified company or companies." Under SEC Rule 12b-2 under the Securities Act of 1933, as amended (the "Securities Act"), we also qualify as a "shell company," because we have no or nominal assets (other than cash) and no or nominal operations. Many states have enacted statutes, rules and regulations limiting the sale of securities of "blank check" companies in their respective jurisdictions. No trading market currently exists for our securities, and Management does not intend to undertake any efforts to cause a market to develop in our securities, either debt or equity, or to register any securities under the Securities Act or state blue sky laws or the regulations there under until we have successfully concluded a business combination. We intend to comply with the periodic reporting requirements of the Exchange Act for so long as we are subject to those requirements.
We were organized as a vehicle to investigate and, if such investigation warrants, acquire a target company or business seeking the perceived advantages of being a publicly held corporation. Our principal business objective for the next 12 months and beyond such time will be to achieve long-term growth potential through a combination with a business rather than immediate, short-term earnings. We will not restrict our potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire any type of business.
Other than our efforts to effectuate a business combination, we have conducted no business operations to date. We therefore, can be characterized as a "shell" corporation. As a "shell" corporation, we face risks inherent in the investigation, acquisition, or involvement in a new business opportunity. Further, as a "development stage" or "start-up" company, we face all of the unforeseen costs, expenses, problems, and difficulties related to such companies, including whether we will continue to be a going concern entity for the foreseeable future.
We may consider a business which has recently commenced operations, is a developing company in need of additional funds for expansion into new products or markets, is seeking to develop a new product or service, or is an established business which may be experiencing financial or operating difficulties and is in need of additional capital. In the alternative, a business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital, but which desires to establish a public trading market for its shares, while avoiding, among other things, the time delays, significant expense, and loss of voting control which may occur in a public offering.
We do not currently engage in any business activities that provide cash flow. The costs of investigating and analyzing business combinations for the next 12 months and beyond such time will be paid with money in our treasury, if any, or with additional money contributed by our stockholders, or another source.
During the next 12 months, we anticipate incurring costs related to filing of Exchange Act reports and costs relating to consummating an acquisition. We believe we will be able to meet these costs through use of funds in our treasury and additional amounts, as necessary, to be loaned to or invested in us by our stockholders, management or other investors.
Since the effective date of our registration statement on Form 10-SB12G, as amended, we have had preliminary contact or discussions with representatives of several entities regarding a possible business combination with us. To date, we have not entered into a term sheet with any entity. Any target business that is selected may be a financially unstable company or an entity in its early stages of development or growth, including entities without established records of sales or earnings. In that event, we will be subject to numerous risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies. In addition, we may effect a business combination with an entity in an industry characterized by a high level of risk, and, although our management will endeavor to evaluate the risks inherent in a particular target business, there can be no assurance that we will properly ascertain or assess all significant risks.
Our management anticipates that it will likely be able to effect only one business combination, due primarily to our limited financing, and the dilution of interest for present and prospective stockholders, which is likely to occur as a result of our management's plan to offer a controlling interest to a target business in order to achieve a tax-free reorganization. This lack of diversification should be considered a substantial risk in investing in us, because it will not permit us to offset potential losses from one venture against gains from another.
We anticipate that the selection of a business combination will be complex and extremely risky. Because of general economic conditions, rapid technological advances being made in some industries and shortages of available capital, our management believes that there are numerous firms seeking even the limited additional capital that we will have and/or the perceived benefits of becoming a publicly traded corporation. Such perceived benefits of becoming a publicly traded corporation include, among other things, facilitating or improving the terms on which additional equity financing may be obtained, providing liquidity for the principals of and investors in a business, creating a means for providing incentive stock options or similar benefits to key employees, and offering greater flexibility in structuring acquisitions, joint ventures and the like through the issuance of stock. Potentially available business combinations may occur in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex.
The Company may consider a business which has recently commenced operations, is a developing company in need of additional funds for expansion into new products or markets, is seeking to develop a new product or service, or is an established business which may be experiencing financial or operating difficulties and is in need of additional capital. In the alternative, a business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital, but which desires to establish a public trading market for its shares, while avoiding, among other things, the time delays, significant expense, and loss of voting control which may occur in a public offering.
Liquidity and Capital Resources
As of September 30, 2009, the Company had $3,000 cash resulting from the sale of 240,000 shares of common stock during July 2009, as compared with assets of $170, comprised exclusively of cash and cash equivalents, as of December 31, 2008. The Companys current liabilities as of September 30, 2009 totaled $37,393, comprised of amounts payable to a related party. This compares to the Companys current liabilities as of December 31, 2008 of $31,537 which comprised of accounts payable and related party payables. In conjunction with the change of control, a note payable to a related party along with the outstanding accounts payable less the cash, were forgiven resulting in a forgiveness of debt totaling $39,277 for the nine months ended September 30, 2009.
The Company can provide no assurance that it can continue to satisfy its cash requirements for at least the next twelve months.
The following is a summary of the Company's cash flows provided by (used in) operating, investing, and financing activities:
The Company has generated no revenues since inception. The Company is also dependent upon the receipt of capital investments or other financing to fund its ongoing operations and to execute its business plan of seeking a combination with a private operating company. Recurring expenses, which include accounting, auditing, legal, and administrative expenses, have averaged $2,200 per month since December 22, 2006, are expected to continue until such time as we execute our business plan to acquire or merge with a private operating company. In addition, the Company is dependent upon its largest shareholders and new investors to provide continued funding and capital resources. If continued funding and capital resources are unavailable at reasonable terms, the Company may not be able to implement its plan of operations.
Results of Operations
The Company has not conducted any active operations since inception, except for its efforts to locate suitable acquisition candidates. No revenue has been generated by the Company from December 22, 2006 (Inception) to September 30, 2009. It is unlikely the Company will have any revenues unless it is able to effect an acquisition or merger with an operating company, of which there can be no assurance. It is management's assertion that these circumstances may hinder the Company's ability to continue as a going concern. The Companys plan of operation for the next twelve months shall be to continue its efforts to locate suitable acquisition candidates.
For the three and nine months ending September 30, 2009, the Company had a net loss from operations of approximately $33,000 and $45,000, respectively, consisting of legal, accounting, audit and other professional service fees incurred in relation to the filing of its quarterly reports on form 10-Q and various other filings with the United States Securities and Exchange Commission (the SEC), the sale of the majority of the Companys outstanding common stock to DMP as well as certain costs necessary to run a public company. Activities include development of the business plan, hiring of a legal firm, minimal operational set up (i.e. office), costs for SEC, transfer agent and State regulatory filings, additional auditor costs for business reviews, as well as minimum compensation paid to the President. This compares with a net loss from operations of approximately $3,000 and $18,000 for the three and nine months ending September 30, 2008, respectively comprised mostly of legal, accounting, audit and other professional service fees incurred in relation to the filing of the Companys registration statement on Form 10-SB12G filed in September 2008, its one amendment and its quarterly reports filed on form 10-Q.
For the period from December 22, 2006 (Inception) to September 30, 2009, the Company had a net loss from operations of approximately $83,000, comprised mostly of legal, accounting, audit and other professional service fees incurred in relation to various annual and quarterly filings of the Companys with the SEC in addition to those costs noted above.
Prior to a change in control, CEI had a $33,022 note payable to a related party, accounts payable of $6,425 and cash of $170. In conjunction with the acquisition of the Company, the note payable, along with the accounts payable less the cash, were forgiven resulting in a forgiveness of debt totaling $39,277 for the nine months ended September 30, 2009.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Companys financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
As a smaller reporting company as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
As a smaller reporting company as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
Item 4. Controls and Procedures.
The Companys disclosure controls and procedures are designed to ensure that information required to be disclosed in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Our sole officer and director has reviewed the effectiveness of the Companys disclosure controls and procedures and have concluded that the disclosure controls and procedures, as of September 30, 2009, are effective in timely alerting her to material information relating to the Company that is required to be included in its periodic filings with the Commission.
In connection with its evaluation during the quarterly period ended September 30, 2009, the Company has made no change in the Companys internal controls over financial reporting that has materially affected or is reasonably likely to materially affect the Companys internal controls over financial reporting. There also were no significant deficiencies or material weaknesses identified for which corrective action needed to be taken.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
During July 2009, SSG sold 240,000 shares of common stock valued at $3,000.
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
ITEM 6. Exhibits
Copies of the following documents are included as exhibits to this report pursuant to Item 601 of Regulation S-B.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.