Attached files
| file | filename |
|---|---|
| EX-31.2 - GLOBAL DYNAMICS CORP | v204056_ex31-2.htm |
| EX-32.1 - GLOBAL DYNAMICS CORP | v204056_ex32-1.htm |
| EX-32.2 - GLOBAL DYNAMICS CORP | v204056_ex32-2.htm |
| EX-31.1 - GLOBAL DYNAMICS CORP | v204056_ex31-1.htm |
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
(Mark
One)
x QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period
ended September 30, 2010
¨ 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:
333-156154
CONSUMER
PRODUCTS SERVICES GROUP, INC.
(Exact
name of Registrant as specified in its charter)
Delaware
(State or
other jurisdiction of Incorporation or organization)
98-0593668
(IRS
Employee Identification No.)
10 Grand
Blvd.
Deer
Park, New York 11729
(Address
of principal executive offices)
(631)
492-2500
(Registrant’s
telephone number, including area code)
Global
Dynamics Corp
43
Hakablan Street
Jerusalem,
Israel 93874
(Former
name, former address and former fiscal year, if changed since last
report)
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 x No ¨
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
x
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 definitions of “large accelerated filer,” “accelerated
filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
(Check one):
|
Large
accelerated filer
|
¨
|
Accelerated
Filer
|
¨
|
|
Non-accelerated
filer
|
¨
|
Smaller
reporting company
|
x
|
|
(Do
not check if a 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
The
number of shares of common stock of the issuer outstanding as of November 22,
2010 was 45,004,500
shares of common stock.
TABLE OF
CONTENTS
CONSUMER
PRODUCTS SERVICES GROUP, INC.
|
Part
I – Financial Information - Unaudited
|
||
|
Item
1.
|
Financial
Statements
|
F-1
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and
|
|
|
Results
of Operations
|
3
|
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risks
|
7
|
|
Item
4.
|
Controls
and Procedures
|
7
|
|
Part
II – Other Information
|
||
|
Item
1.
|
Legal
Proceedings
|
8
|
|
Item
1A.
|
Risk Factors |
8
|
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
8
|
|
Item
3.
|
Defaults
Upon Senior Securities
|
8
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
8
|
|
Item
5.
|
Other
Information
|
9
|
|
Item
6.
|
Exhibits
|
9
|
2
ITEM
1. UNAUDITED FINANCIAL STATEMENTS
CONSUMER
PRODUCTS SERVICES GROUP, INC. and SUBSIDIARY
INDEX
TO FINANCIAL STATEMENTS
SEPTEMBER
30, 2010
|
Consolidated
Financial Statements:
|
|
|
Accountants’
Review Report
|
F-2
|
|
Balance
Sheets as of September 30, 2010 and December 31, 2009
|
F-3
|
|
Statements
of Operations for the Three Months and Nine Months Ended
September 30, 2010 and 2009
|
F-4
|
|
|
|
|
Statements
of Cash Flows for the Nine Months Ended September 30,
2010 and 2009
|
F-5
|
|
Notes
to Financial Statements
|
F-6
|
F-1
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and
Stockholders
of Consumer Products Services Group, Inc.
We have
reviewed the accompanying balance sheet of Consumer Products Services Group,
Inc. and subsidiary as of September 30, 2010, and the related statements of
operations and cash flows for the three-month and nine month periods ended
September 30, 2010. These financial statements are the responsibility of the
company’s management.
We
conducted our review in accordance with the standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with standards
of the Public Company Accounting Oversight Board (United States), the objective
of which is the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Management
has informed us that the comparative balance sheet was not audited as of the
date of our review and may change. Additionally, the form 8k regarding the
reverse merger was not filed timely. The effect of these items on the
accompanying financial statements is not determinable at this time. The
statements do not include all of the disclosures that are required in conformity
with accounting principles generally accepted in the United States of
America.
Based on
our review, with the exception of the matters described in the preceding
paragraph, we are not aware of any material modifications that should be made to
the accompanying interim financial statements for them to be in conformity with
accounting principles generally accepted in the United States of
America.
Respectfully
submitted,
Weinberg
& Baer LLC
Baltimore,
Maryland
November
29, 2010
F-2
CONSUMER PRODUCTS
SERVICES GROUP INC. and SUBSIDIARY
CONSOLIDATED
BALANCE SHEETS
AS
OF SEPTEMBER 30, 2010 AND DECEMBER 31, 2009
|
As
of
|
As
of
|
|||||||
|
September
30,
|
December
31,
|
|||||||
|
2010
|
2009
|
|||||||
|
(Unaudited)
|
(Unaudited)
|
|||||||
|
ASSETS
|
||||||||
|
Current
Assets:
|
||||||||
|
Cash
and cash equivalents
|
$ | 4,889 | $ | 1,592 | ||||
|
Accounts
receivable, net
|
450,192 | 531,309 | ||||||
|
Inventory
|
426,148 | 488,158 | ||||||
|
Other
current assets
|
20,000 | - | ||||||
|
Total
current assets
|
901,229 | 1,021,059 | ||||||
|
Fixed
assets, net of accumulated depreciation
|
951,322 | 1,082,826 | ||||||
|
Other
Assets:
|
||||||||
|
Security
Deposits
|
96,324 | 140,144 | ||||||
|
Other
Assets
|
7,263 | - | ||||||
|
Total
other assets
|
103,587 | 140,144 | ||||||
|
Total
Assets
|
$ | 1,956,138 | $ | 2,244,029 | ||||
|
LIABILITIES AND STOCKHOLDERS'
(DEFICIT)
|
||||||||
|
Current
Liabilities:
|
||||||||
|
Accounts
payable and accrued expenses
|
$ | 2,091,728 | $ | 1,592,434 | ||||
|
Loan
payable
|
2,272,408 | 2,462,408 | ||||||
|
Notes
payable
|
1,325,183 | 547,412 | ||||||
|
Convertible
notes payable, net of unamortized discounts
|
448,400 | - | ||||||
|
Current
portion of capital leases
|
107,615 | 107,615 | ||||||
|
Due
to offier
|
- | 32,772 | ||||||
|
Payroll
taxes payable
|
97,015 | 23,197 | ||||||
|
Total
current liabilities
|
6,342,349 | 4,765,838 | ||||||
|
Capital
leases
|
135,047 | 186,658 | ||||||
|
Total
liabilities
|
6,477,396 | 4,952,496 | ||||||
|
Commitments
and Contingencies
|
||||||||
|
Stockholders'
Equity(Deficit):
|
||||||||
|
Preferred
stock, par value $.0001 per share, 50,000,000 shares authorized; 0 shares
issued and outstanding
|
- | - | ||||||
|
Common
stock, par value $.0001 per share, 1,000,000,000 shares authorized;
45,004,500 shares issued and outstanding
|
4,500 | |||||||
|
Additional
paid-in capital
|
736,727 | 383,354 | ||||||
|
Accumulated
(deficit)
|
(5,262,485 | ) | (3,091,821 | ) | ||||
|
Total
stockholders' equity(deficit)
|
(4,521,258 | ) | (2,708,467 | ) | ||||
|
Total
Liabilities and Stockholders' Equity(Deficit)
|
$ | 1,956,138 | $ | 2,244,029 | ||||
The
accompanying notes are an integral part of these financial
statements.
F-3
CONSUMER
PRODUCTS SERVICES GROUP, INC. and SUBSIDIARY
CONSOLIDATED
STATEMENTS OF OPERATIONS
FOR
THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2010 and 2009
(Unaudited)
|
Three
Months
|
Three
Months
|
Nine
Months
|
Nine
Months
|
|||||||||||||
|
Ended
|
Ended
|
Ended
|
Ended
|
|||||||||||||
|
September
30,
|
September
30,
|
September
30,
|
September
30,
|
|||||||||||||
|
2010
|
2009
|
2010
|
2009
|
|||||||||||||
|
Sales
|
$ | 1,108,751 | $ | 1,591,839 | $ | 3,399,887 | $ | 5,128,815 | ||||||||
|
Cost
of Sales
|
1,259,779 | 2,109,501 | 3,452,615 | 5,824,547 | ||||||||||||
|
Gross
Profit (Loss)
|
(151,028 | ) | (517,662 | ) | (52,728 | ) | (695,732 | ) | ||||||||
|
General
and Administrative Expenses
|
481,747 | 340,647 | 1,505,141 | 1,038,834 | ||||||||||||
|
Income
(Loss) from Operations
|
(632,775 | ) | (858,309 | ) | (1,557,869 | ) | (1,734,566 | ) | ||||||||
|
Other
Income (Expense)
|
||||||||||||||||
|
Interest
Expense
|
(295,061 | ) | (28,851 | ) | (412,367 | ) | (80,144 | ) | ||||||||
|
Deferred
Acquisition Costs
|
(65,000 | ) | - | (65,000 | ) | - | ||||||||||
|
Net
(Loss)
|
$ | (992,836 | ) | $ | (887,160 | ) | $ | (2,035,236 | ) | $ | (1,814,710 | ) | ||||
|
(Loss)
Per Common Share:
|
||||||||||||||||
|
Basic
and Fully Diluted
|
$ | (0.02 | ) | $ | (0.02 | ) | $ | (0.05 | ) | $ | (0.05 | ) | ||||
|
Weighted
Average Number of Common Shares Outstanding - Basic and
Diluted
|
45,004,500 | 45,004,500 | 45,004,500 | 38,476,373 | ||||||||||||
The
accompanying notes to an integral part of these statements.
F-4
CONSUMER
PRODUCTS SERVICES GROUP, INC. and SUBSIDIARY
CONSOLIDATED
STATEMENT OF CASH FLOWS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2010 and 2009
(Unaudited)
|
September
30,
|
September
30,
|
|||||||
|
2010
|
2009
|
|||||||
|
Operating
Activities:
|
||||||||
|
Net
(loss)
|
$ | (2,035,236 | ) | $ | (1,814,710 | ) | ||
|
Adjustments
to reconcile net (loss) to net cash (used in) operating
activities:
|
||||||||
|
Depreciation
and amortization
|
140,456 | 140,456 | ||||||
|
Write-off
of convertible note discounts
|
70,845 | - | ||||||
|
Changes
in operating assets and liabilities;
|
||||||||
|
Accounts
receivable
|
81,117 | (100,169 | ) | |||||
|
Inventory
|
62,010 | (72,061 | ) | |||||
|
Other
current assets
|
(20,000 | ) | (42,402 | ) | ||||
|
Security
deposits
|
43,820 | 48,125 | ||||||
|
Other
assets
|
(7,263 | ) | - | |||||
|
Accounts
payable and accrued expenses
|
499,294 | (51,378 | ) | |||||
|
Payroll
taxes payable
|
73,818
|
(69,394 | ) | |||||
|
Net
Cash (Used) in Operating Activities
|
(1,091,139 | ) | (1,961,533 | ) | ||||
|
Investing
Activities:
|
||||||||
|
Purchases
of fixed assets
|
(8,952 | ) | (176,456 | ) | ||||
|
Net
Cash (Used) by Investing Activities
|
(8,952 | ) | (176,456 | ) | ||||
|
Financing
Activities:
|
||||||||
|
Conversion
of trade debt to term loan
|
- | 2,102,041 | ||||||
|
Repayment
of loan payable
|
(190,000 | ) | ||||||
|
Payments
related to capital leases
|
(51,611 | ) | (59,506 | ) | ||||
|
Proceeds
from convertible notes payable
|
600,000 | |||||||
|
Proceeds
from notes payable, net of repayments
|
777,771 | 94,380 | ||||||
|
Repayment
of amounts due to officer
|
(32,772 | ) | (9,764 | ) | ||||
|
Net
Cash Provided by Financing Activities
|
1,103,388 | 2,127,151 | ||||||
|
Net
(Decrease) Increase in Cash
|
3,297 | (10,838 | ) | |||||
|
Cash
- Beginning of Period
|
1,592 | 12,439 | ||||||
|
Cash
- End of Period
|
$ | 4,889 | $ | 1,601 | ||||
|
Supplemental
disclosure of cash flow information:
|
||||||||
|
Cash
paid during the period for:
|
||||||||
|
Interest
|
$ | - | $ | - | ||||
|
Income
taxes
|
$ | - | $ | - | ||||
|
Non-cash
financing and investing activities:
|
||||||||
|
Beneficial
conversion feature related to convertible note
|
$ | 143,733 | $ | - | ||||
|
Value
of warrants related to convertible notes
|
$ | 154,400 | $ | - | ||||
The
accompanying notes are an integral part of these financial
statements.
F-5
CONSUMER
PRODUCTS SERVICES GROUP, INC. and SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2010
(1) Reorganization and Basis of
Presentation
Consumer
Products Services Group Inc. formerly Global Dynamics Corp. (the “Company”) was
incorporated under the laws of the State of Delaware on September 2,
2008.
On March
19, 2010, the Company filed a Certificate of Amendment to the Certificate of
Incorporation of the Company with the Secretary of State of the State of
Delaware. The filing with the Secretary of State amended the name of the
Company to Consumer Products
Services Group, Inc., and amended the capital structure of the Company to
be 1,050,000,000 (One Billion Fifty Million), consisting of 1,000,000,000 (One
Billion) shares of common stock, par value of $0.0001 and 50,000,000 (Fifty
Million) shares of preferred stock, par value of $0.0001 per
shares.
On March
16, 2010, the Company entered into a Purchase Agreement, dated March 12, 2010
with Consumer Products Services, LLC whereby the Company agreed to purchase all
of the membership interests of Consumer Products Services LLC subject to certain
terms and conditions including, but not limited to, the raising of a minimum of
$3,000,000 by the Company. On August 2, 2010, the Company redeemed, cancelled
and reissued 27,002,700 shares of restricted common stock in exchange for all of
the membership interests of Consumer Products Services, LLC. For accounting
purposes, the acquisition has been treated as an acquisition of Consumer
Products Services Group, Inc. by Consumer Product Services, LLC and a
recapitalization of Consumer Product Services, LLC. Accordingly, the historical
financial statements prior to August 2, 2010 are those of Consumer Product
Services, LLC.
Unaudited
Interim Financial Statements
The
interim consolidated financial statements of the Company as of September 30,
2010, and for the nine month period then ended are unaudited. However, in the
opinion of management, the interim consolidated financial statements include all
adjustments, including normal recurring adjustments, necessary to present fairly
the Company’s financial position as of September 30, 2010, and the results of
its operations and its cash flows for the nine months then ended. These results
are not necessarily indicative of the results expected for the calendar year
ending December 31, 2010. The accompanying financial statements and notes
thereto do not reflect all disclosures required under accounting principles
generally accepted in the United States. Refer to the Company’s audited
financial statements as of December 31, 2009 for additional information,
including significant accounting policies.
(2) Going Concern
The
accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplate continuation of the Company as a going concern. The Company has
incurred significant losses through September 30, 2010 and has an accumulated
deficit of approximately $5,200,000 as of September 30, 2010. Furthermore, as of
September 30, 2010, the cash resources of the Company were insufficient to meet
its current business plan. These and other factors raise substantial doubt about
the Company’s ability to continue as a going concern. The accompanying financial
statements do not include any adjustments to reflect the possible future effects
on the recoverability and classification of assets or the amounts and
classification of liabilities that may result from the possible inability of the
Company to continue as a going concern.
F-6
CONSUMER
PRODUCTS SERVICES GROUP, INC. and SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2010
(3) Convertible Notes
Payable
On June
1, 2010, the Company issued a convertible note to an investor for $400,000. The
note has a six month term and accrues interest at 8% per annum. However, the
note is payable upon the closing of any offering, including the sale of
securities or any debt or convertible offering, from which the Company shall
have raised the gross amount of $4,000,000 prior to the maturity date.
After 90 days the holder has the right to convert the note, in whole or in part,
plus accrued interest into shares of restricted common stock at the greater of
$.25 or 50% of the average closing bid price for the ten trading days ending
five days before the conversion date. Pursuant to a separate written escrow
agreement, a stockholder, who is also the Chairman and CEO of the Company, has
pledged 6,000,000 restricted common shares as additional collateral for the
benefit of the note holder. A warrant was also issued to this investor to
purchase up to 400,000 restricted common shares, with “piggy back” registration
rights, at a price of $.25 per shares, or net issuance in lieu of cash, for a
period of five years from the date of issuance. In addition, the holder may, no
later than 45 days after the completion of a capital raise with gross proceeds
of no less than $4,000,000, notify and demand the Company that the shares
covered by this warrant be registered. The Company must use its best efforts to
have the registration declared effective as soon as practicable prior to the
90th
day following the demand date. All expenses incurred in connection with the
registration shall be paid by the Company.
On August
17, 2010, the Company issued a convertible note to an investor for $200,000. The
note has a six month term and accrues interest at 8% per annum. However, the
note is payable upon the closing of any offering, including the sale of
securities or any debt or convertible offering, from which the Company shall
have raised the gross amount of $4,000,000 prior to the maturity date. After 90
days the holder has the right to convert the note, in whole or in part, plus
accrued interest into shares of restricted common stock at the greater of $.25
or 50% of the average closing bid price for the ten trading days ending five
days before the conversion date. A warrant was also issued to this investor to
purchase up to 400,000 restricted common shares, with “piggy back” registration
rights, at a price of $.30 per shares for a period of five years from the date
of issuance. In addition, the holder may, no later than 45 days after the
completion of a capital raise with gross proceeds of no less than $4,000,000,
notify and demand the Company that the shares covered by this warrant be
registered. The Company must use its best efforts to have the registration
declared effective as soon as practicable prior to the 90th day
following the demand date. All expenses incurred in connection with the
registration shall be paid by the Company.
As of
September 30, 2010, the Convertible Notes Payable consisted of;
|
Face
Value of Convertible Notes
|
$
|
600,000
|
||
|
Beneficial
Conversion Feature, Net of accumulated amortization of
$75,265
|
(
68,468
|
)
|
||
|
Value
Attributable to Warrants Issued, Net of accumulated amortization of
$71,268
|
(
83,132
|
)
|
||
|
Convertible
Note, Net of Unamortized Discounts
|
$
|
448,400
|
In
accordance with Emerging Issues Task Force (“EITF”) 98-5, the Company recognized
an imbedded beneficial conversion feature present in these notes. The Company
measured an aggregate of $143,733 of the proceeds, which is equal to the
intrinsic value of the imbedded beneficial conversion feature, and recognized it
as Additional Paid-In Capital and a discount against the Convertible Note. This
discount is being amortized as Interest Expense over the six month maturity
period of each Convertible Note.
F-7
CONSUMER
PRODUCTS SERVICES GROUP, INC. and SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2010
In
accordance with EITF 00-27, the Company recognized the value attributable to the
Warrants in the amount of $154,400 as Additional Paid-In Capital and a discount
against the Convertible Note. The Company valued the Warrants using the
Black-Scholes pricing model. Assumptions used in the calculation included the
contractual term of the Warrants (five years) as the expected term, a risk free
rate of 2.1% and a market price volatility factor of 100%. The debt discount
attributable to these Warrants is being amortized as Interest Expense over the
six month maturity period of each Convertible Note.
(4) Notes
Payable
Included
in Notes Payable is a note dated July 30, 2010 where the Company received net
proceeds of $240,000 with a face amount of $250,000 after considering an upfront
4% discount, or $10,000, charged by the lender. This loan was due in 7 days, is
unsecured and accrues interest at 18% per annum payable together with the
principal sum of $250,000 at maturity. This note was not repaid when demanded by
the lender and, as such, is in default. As a result, and pursuant to the terms
of the Promissory Note, the Company is required to pay a 10% late fee based on
the total outstanding principal balance plus any unpaid interest. Additionally,
interest reverts to a 24% per annum default rate until the note is repaid. The
remaining notes included in Notes Payable are unsecured, non-interest bearing
and are payable on demand.
(5)
Loan Payable
The Loan
payable balance of $2,272,408 at September 30, 2010 was originally trade debt of
Consumer Product Services, LLC that was converted to a term loan. This loan is
in default and significantly reduced payments related to this loan are being
made pursuant to a forbearance agreement, as amended. This loan is secured by
default judgments against both the Company and CPS, as well as separate personal
guarantees made by the CEO and a shareholder of the Company.
(6) Common Stock
On
September 3, 2008, the Company issued 27,002,700 (post reverse stock split)
shares of its common stock to two individuals who are Directors and officers for
proceeds of $300. These shares were subsequently redeemed, cancelled and
reissued in connection with the acquisition of Consumer product Services, LLC
(See below).
The
Company commenced a capital raising activity and submitted a Registration
Statement on Form S-1 to the Securities and Exchange Commission (“SEC”) to
register and sell,in a self-directed offering, 18,001,800 (post reverse stock
split) shares of newly issued common stock at an offering price of $0.0004 for
total gross proceeds of up to $80,000. The Registration Statement on Form S-1
was filed with the SEC on December 16, 2008 and declared effective on January
13, 2009. The Company has issued 18,001,800 (post reverse stock split) shares of
common stock pursuant to the Registration Statement on Form S-1 and received
gross proceeds of $80,000. The Company incurred $20,000 of offering costs
related to this capital raising activity.
On April
19, 2010, the Company implemented a 1 for 11.11 reverse stock split on its
issued and outstanding shares of common stock to the holders of record as of
April 19, 2010. After the reverse split, the number of shares of common stock
issued and outstanding were 45,004,500 shares. The accompanying financial
statements and related notes thereto have been adjusted accordingly to reflect
the effect of this reverse stock split.
On August
2, 2010, the Company redeemed, cancelled and reissued 27,002,700 shares of
restricted common stock in exchange for all of the membership interests of
Consumer Products Services, LLC.
F-8
ITEM 2. MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
As used
in this Quarterly Report on Form 10-Q (this “Report”), references to the
“Company,” the “Registrant,” “we,” “our,” “us”, “Consumer Products Services LLC”
or “CPS”, unless the context otherwise indicates.
Forward-Looking
Statements
This
Report contains forward-looking statements. For this purpose, any statements
contained in this Report that are not statements of historical fact may be
deemed to be forward-looking statements. Forward-looking information includes
statements relating to future actions, prospective products, future performance
or results of current or anticipated products, sales and marketing efforts,
costs and expenses, interest rates, outcome of contingencies, financial
condition, results of operations, liquidity, business strategies, cost savings,
objectives of management, and other matters. You can identify forward-looking
statements by those that are not historical in nature, particularly those that
use terminology such as “may,” “will,” “should,” “expects,” “anticipates,”
“contemplates,” “estimates,” “believes,” “plans,” “projected,” “predicts,”
“potential,” or “continue” or the negative of these similar terms. The Private
Securities Litigation Reform Act of 1995 provides a “safe harbor” for
forward-looking information to encourage companies to provide prospective
information about themselves without fear of litigation so long as that
information is identified as forward-looking and is accompanied by meaningful
cautionary statements identifying important factors that could cause actual
results to differ materially from those projected in the
information.
These
forward-looking statements are not guarantees of future performance and involve
risks, uncertainties and assumptions that we cannot predict. In evaluating these
forward-looking statements, you should consider various factors, including the
following: (a) those risks and uncertainties related to general economic
conditions, (b) whether we are able to manage our planned growth efficiently and
operate profitable operations, (c) whether we are able to generate sufficient
revenues or obtain financing to sustain and grow our operations, (d) whether we
are able to successfully fulfill our primary requirements for cash, which are
explained below under “Liquidity and Capital Resources.” We assume no obligation
to update forward-looking statements, except as otherwise required under the
applicable federal securities laws.
Corporate
Background
We were
incorporated in Delaware on September 2, 2008. Our registered office in Delaware
is located at 113 Barksdale Professional Center, Newark, DE 19711, and our
registered agent is Delaware Intercorp. Our principal offices are located at 10
Grand Boulevard, Deer Park NY 11729. Our telephone number is 631-492-2500. Our
fiscal year end is December 31st.
3
Business
Summary
On
September 23, 2008, we entered into an exclusive worldwide patent sale agreement
(the "Patent Transfer and Sale Agreement ") with Appelfeld Zer Fisher, in
relation to a patented technology (Patent Number: 6,382,057) for a right-angle
wrench socket wrench adaptor. The technology presents the design and development
of an adapter for adapting a right-angle wrench, such as an Allen wrench, to a
socket wrench or ratchet handle in exchange for a commitment to pay Appelfeld
Zer Fisher US $26,000, according to the condition specified in the Patent
Transfer and Sale Agreement related to the Patent Number: 6,382,057. Under
the terms of the Patent Transfer and Sale Agreement, the Company was assigned
rights to the patent free of any liens, claims, royalties, licenses, security
interests or other encumbrances. The historical cost of obtaining the patent
($26,000) has been capitalized by the Company. As of March 31, 2010 the
remaining value of the patent was expensed as an impairment loss.
On March
16, 2009, 2010, the Company entered into a Purchase Agreement, dated March
12, 2010 with Consumer Products Services LLC whereby the Registrant agreed to
purchase all of the membership interests of Consumer Products Services LLC
subject to certain terms and conditions including, but not limited to, the
raising of a minimum of $3,000,000 by the Company The consideration for the
purchase is the issuance of 27,002,700 post reverse shares of common stock of
the Registrant. On August 2, 2010, the Company redeemed, cancelled and reissued
27,002,700 shares of restricted common stock in exchange for all of the
membership interests of Consumer Products Services, LLC.
In late
March 2010, Messrs. Darren A. Krantz, Kevin O’Boyle and Richard Hamilton were
elected by the majority of shares entitled to vote to the GLOBAL Board of
Directors and naming Darren A. Krantz as Chairman and CEO of
Global.
The
Company has filed a Certificate of Amendment to its Certificate of Incorporation
with the Secretary of State of the State of Delaware to amend the name of the
corporation to Consumer Products Services Group, Inc. as well as amending the
capital structure as is more fully described under Item 8.01 below.
Consumer
Product Services, LLC (“CPS”) is engaged in “Reverse Supply Chain Services”
including, transportation, remanufacturing, return center services,
reprocessing, repairing and recycling of durable consumer products. For over two
decades the management team at CPS has been servicing some of the world's
leading consumer product manufacturers.
Instead
of discarding millions of defective, damaged, and un-repairable returned
products into America's overflowing landfills, which cost manufacturers millions
of dollars to transport, process and dispose of annually, CPS developed
environmentally conscious proprietary remanufacturing, reprocessing and
recycling processes with the highest recovery rate of those very products
without the use of new replacement parts.
4
CPS has
positioned itself as a returned product management and remanufacturing company,
offering the following services to consumer product manufacturers thru out North
America:
· Reverse
Logistics Services
· Return
Product Management
· Return
Center Services
· Quality
Assurance Inspection Services
· Defect
Data Reporting
· Re-qualification
Services
· Remanufacturing
Services
· Warranty
Repair Services
· Recycling
Services
· Warehousing
& Distribution of Remanufactured Products
· Re-marketing
Services
· Supply
Chain Consulting
CPS’s
rigorous proprietary remanufacturing; reprocessing and recycling processes are
utilized on all our customers' products by many of our factory trained
technicians followed by a strict schedule of final inspections and testing with
quality levels set to exceed manufacturers' specifications, consistently
producing products often “compare to new.” The facilities and remanufacturing
procedures exceed the stringent standard for both the US and Canadian listing
and approval requirements.
CPS
employs factory trained engineers, technicians, machinists, assemblers, material
handlers and warehousing personnel, as well as a full staff of product design,
mechanical and electrical engineers who manage and operate the engineering and
quality assurance departments.
Results
of Operations: For the three months ended September 30, 2010 vs. September 30,
2009
Sales for
the three months ended September 30, 2010 were $1,108,751, a decreased of
$483,088, or 30%, when compared to sales of $1,591,839 for the three months
ended September 30, 2009. Cost of sales for the three months ended September 30,
2010 was $1,259,779, a decrease of $849,722, or 40%, when compared to cost of
sales for the three months ended September 30, 2009 of $2,109,501. The result is
a decrease in the gross loss of $366,634 when comparing the gross loss of
$517,662 for the three months ended September 30, 2009 to the gross loss of
$151,028 for the three months ended September 30, 2010.
General
and administrative expenses increased $141,100, or 41%, when comparing the three
months ended September 30, 2010 to the three months ended September 30, 2009 in
the amount of $481,747 and $340,647, respectively. Interest expense increased as
a direct result of amortizing convertible note discounts for the three months
ended September 30, 2010.
5
Results
of Operations: For the nine months ended September 30, 2010 vs. September 30,
2009
Sales for
the nine months ended September 30, 2010 were $3,399,887, a decreased of
$1,728,928, or 34%, when compared to sales of $5,128,815 for the nine months
ended September 30, 2009. Cost of sales for the nine months ended September 30,
2010 was $3,452,615, a decrease of $2,371,932, or 41%, when compared to cost of
sales for the nine months ended September 30, 2009 of $5,824,547. The result is
a decrease in the gross loss of $643,004 when comparing the gross loss of
$695,732 for the nine months ended September 30, 2009 to the gross loss of
$52,728 for the nine months ended September 30, 2010.
General
and administrative expenses increased $466,307, or 45%, when comparing the nine
months ended September 30, 2010 to the nine months ended September 30, 2009 in
the amount of $1,505,141 and $1,038,34, respectively. Interest expense increased
as a direct result of amortizing convertible note discounts as well as the
increased cost of financing accounts receivable for the nine months ended
September 30, 2010.
Summary
Analysis: For the three and nine
months ended September 30, 2010 and 2009
The
decrease in sales and overall improvement in operations is the direct result of
changing the business model from “purchase and sale of inventory with
transportation” to a “fee for remanufacturing and related services”, which
resulted in lower cost of sales and increased margins. The negative gross profit
for the three and nine months ended September 30, 2010 results because sales
levels are below maximum capacity in relation to the direct fixed facility costs
at each location, as well as the management of direct labor costs. The negative
gross profit for the three and nine months ended September 30, 2009 results from
having to liquidate inventories at reduced margins as well as a historically low
margin for transportation services.
The
increase in general and administrative expenses for both the three and nine
months ended September 30, 2010 compared to the three and nine months ended
September 30, 2009 was the direct result of contractual requirements to expand
operations to five separate facilities and the general overhead costs related
thereto.
Liquidity
and Capital Resources:
The
Company currently has no liquidity and its capital resources are minimal.
Additionally, sales have been below the level required for CPS to generate cash
flow above the breakeven point. The focus over the past nine months has been on
raising debt and equity financing for CPS so it can expand operations and fully
execute on the contracts for remanufacturing. The Company is currently in the
process of raising additional equity financing through a private placement under
a formal investment banking agreement. It is anticipated that equity funding
raised in the near term, if successful, will be sufficient to meet its
obligations and its working capital needs for the next twelve months as well as
increase sales beyond the level necessary to generate breakeven cash
flow.
6
Going
Concern:
CPS has
incurred significant losses in prior years and had a net loss of approximately
$2,000,000 for the nine months ended September 30, 2010. As of September 30,
2010, CPS had an accumulated deficit of approximately $5,200,000 and the cash
resources were insufficient to meet its current business plan. These and other
factors raise substantial doubt about the Company’s ability to continue as a
going concern.
Off-Balance
Sheet Arrangements
We are
not a party to any off-balance sheet arrangements, and we do not engage in
trading activities involving non-exchange traded contracts. In addition, we do
not have any financial guarantees, debt or lease agreements or other
arrangements that could trigger a requirement for an early payment or that could
change the value of ours assets, except for default judgments against both the
Company and CPS as collateral for a lender’s loan and forbearance agreement, as
amended, for trade debt of CPS that was converted to a term loan with a current
balance of approximately $2,300,000.
ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISKS
Inapplicable as we are a smaller
reporting company.
ITEM 4. CONTROLS AND
PROCEDURES
Disclosure
Controls and Procedures
Under the
supervision and with the participation of management, including our Chief
Executive Officer and our Chief Financial Officer, we have evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures. Disclosure controls and procedures are controls and
procedures that are designed to ensure that information required to be disclosed
in our reports filed or submitted under the Securities Exchange Act of 1934
(“Exchange Act”) is recorded, processed, summarized and reported within the time
periods specified in the SEC’s rules and forms. Based on this
evaluation, our Chief Executive Officer and Chief Financial Officer have
concluded that our disclosure controls and procedures were effective as of the
end of the period covered by this report.
7
Changes
in Internal Controls over Financial Reporting
Our
management, with the participation of our Chief Executive Officer and Chief
Financial Officer, performed an evaluation as to whether any change in the
internal controls over financial reporting (as defined in Rules 13a-15 and
15d-15 under the Exchange Act occurred during the period covered by this report.
Based on that evaluation, management and the chief executive officer/chief
financial officer concluded that no change occurred in the internal controls
over financial reporting during the period covered by this report that
materially affected, or is reasonably likely to materially affect, the internal
controls over financial reporting.
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements and even when determined to be effective, can
only provide reasonable assurance with respect to financial statement
preparation and presentation. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
PART
II - OTHER INFORMATION
ITEM
1. LEGAL PROCEEDINGS
None
ITEM
1A. RISK FACTORS
A small
business reporting company is not required to report
ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
None
ITEM
3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On March
16, 2010 the majority of shares entitled vote approved the amending the name of
the corporation to Consumer Products Services Group, Inc. and to effectuate a
reverse split of the shares of Common Stock of the Corporation ELEVEN point
ELEVEN (11.11) old shares of common stock for ONE (1) new share of common stock
of the Corporation and to increase the capitalization of the Corporation as
contained in the Certificate of Incorporation and to file a Certificate of
Amendment to the Certificate of Incorporation, amending the capital structure of
the Corporation to 1,050,000,000 (One Billion Fifty Million), consisting of
1,000,000,000 (One Billion) shares of common stock, par value of $0.0001 and
50,000,000 (Fifty Million) shares of preferred stock, par value of $0.0001 per
shares. The changes were effective April 16, 2010, and the trading
symbol was changed to “CPSV.”
8
ITEM
5. OTHER INFORMATION
None
ITEM
6. EXHIBITS
Index
to Exhibits
|
3.1
(1)
|
Articles
of Incorporation of the Company
|
|
3.11(2)
|
Amended
Articles of Incorporation
|
|
3.2
(1)
|
Bylaws
of the Company
|
|
10.1(1)
|
Patent
Transfer and Sale Agreement dated September 23 2008, between the
Company and the Patent assignor
|
|
31.1
(3)
|
Certification
of Principal Executive Officer Pursuant to Exchange Act Rule
13A-14(A)/15D-14(A) as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
31.2
(3)
|
Certification
of Principal Financial Officer Pursuant to Exchange Act Rule
13A-14(A)/15D-14(A) as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
32.1
(3)
|
Certification
of Principal Executive Officer pursuant to Section 302(a) of the
Sarbanes-Oxley Act of 2002
|
|
32.2
(3)
|
Certification
of Principal Financial Officer pursuant to Section 302(a) of the
Sarbanes-Oxley Act of 2002
|
|
(1)
|
Incorporated
by reference to similarly numbered exhibit on Form S1, filed with the
Securities and Exchange Commission on December 16,
2008
|
|
(2)
|
Incorporated
by reference to similarly numbered exhibit on Form 8-K filed with the
Securities and Exchange Commission on March 19,
2010
|
|
(3)
|
Filed
herewith
|
9
Signatures
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this Report to be signed on behalf of the
undersigned thereunto duly authorized on November 29, 2010.
|
Consumer Products Services
Group, Inc.
|
||
|
Date:
November 29, 2010
|
By:
|
/s/ Darren A. Krantz
|
|
Darren
A. Krantz, Chief Executive Officer
|
||
|
Date:
November 29, 2010
|
By:
|
/s/ Kevin O’Boyle
|
|
Kevin
O’Boyle
|
||
|
Chief
Financial Officer
|
||
10