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EXCEL - IDEA: XBRL DOCUMENT - Global Security Agency Inc. | Financial_Report.xls |
EX-31.1 - Global Security Agency Inc. | ex31-1.htm |
EX-32.2 - Global Security Agency Inc. | ex32-2.htm |
EX-31.2 - Global Security Agency Inc. | ex31-2.htm |
EX-32.1 - Global Security Agency Inc. | ex32-1.htm |
UNITED STATES
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 June 30, 2012
or
o 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: 000-53184
GLOBAL SECURITY AGENCY INC.
(Exact name of registrant as specified in its charter)
Nevada
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98-0516432
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(State or other jurisdiction of incorporation or
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(I.R.S. Employer Identification No.)
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organization)
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12818 Hwy # 105 West, Suite 2-G
Conroe, TX 77304
(Address of principal executive offices)
(818) 281-1618
(Registrant’s 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 require 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 (of for such shorter period that the registrant was required to submit and post such files). Yes þ No o
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.
Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company þ
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
As of August 17, 2012, there were 71,421,645 shares of common stock of the registrant outstanding.
TABLE OF CONTENTS
PART I – FINANCIAL INFORMATION
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Item 1.
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3
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Item 2.
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4
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Item 3.
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7
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Item 4.
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7
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PART II – OTHER INFORMATION
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Item 1.
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9
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Item 2.
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9
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Item 3.
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9
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Item 4.
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9
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Item 5.
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9
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Item 6.
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9
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PART I - FINANCIAL INFORMATION
Item 1. Unaudited Financial Statements
GLOBAL SECURITY AGENCY INC.
INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2012
(Unaudited)
Index
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F-1
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F-2
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F-3
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F-4
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Global Security Agency Inc.
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Balance Sheets
(Unaudited)
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30-Jun-12
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31-Dec-11
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$ | $ | |||||||
ASSETS
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Current Assets
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Cash
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1,359 | 27,242 | ||||||
Accounts receivable, net
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820,872 | 874,970 | ||||||
Prepaid expenses and other current assets
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2,350 | 2,350 | ||||||
Total Current Assets
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824,581 | 904,562 | ||||||
Property and equipment, net
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21,187 | 27,243 | ||||||
Note receivable
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70,000 | 70,000 | ||||||
Total Assets
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915,768 | 1,001,805 | ||||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT
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Current Liabilities
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Bank indebtedness
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8,228 | 9,017 | ||||||
Accounts payable
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245,968 | 230,777 | ||||||
Accounts payable - related parties
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167,296 | 167,063 | ||||||
Accrued liabilities
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45,640 | 50,683 | ||||||
Convertible debt
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135,000 | - | ||||||
Total Current Liabilities
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602,132 | 457,540 | ||||||
Stockholders’ Equity (Deficit)
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Preferred Stock, 100,000,000 shares authorized, $0.00001 par value, none issued
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- | - | ||||||
Common stock, 100,000,000 shares authorized, $0.00001 par value
71,421,645 shares (December 31, 2011 – 66,221,645 shares) issued and outstanding |
714 | 662 | ||||||
Additional paid-in capital
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851,710 | 650,762 | ||||||
Accumulated deficit
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(538,788 | ) | (107,159 | ) | ||||
Total Stockholders’ Equity (Deficit)
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313,636 | 544,265 | ||||||
Total Liabilities and Stockholders’ Equity (Deficit)
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915,768 | 1,001,805 |
(The accompanying notes are an integral part of these unaudited financial statements)
Global Security Agency Inc.
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Statements of Operations
(Unaudited)
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For the Three
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For the Three
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For the Six
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For the Six
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Months Ended
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Months Ended
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Months Ended
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Months Ended
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30-Jun-12
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30-Jun-11
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30-Jun-12
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30-Jun-11
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$ | $ | $ | $ | |||||||||||||
Revenue
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Personal protection services
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- | 123,180 | 953 | 237,829 | ||||||||||||
Private investigation services
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2,175 | 272,117 | 23,204 | 688,965 | ||||||||||||
Total Revenue
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2,175 | 395,297 | 24,157 | 926,794 | ||||||||||||
Cost of Sales
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239 | 167,261 | 2,856 | 328,846 | ||||||||||||
General and administrative
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248,241 | 80,767 | 276,040 | 185,946 | ||||||||||||
Legal and accounting
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42,264 | 36,088 | 102,379 | 55,889 | ||||||||||||
Rent
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9,842 | 13,275 | 20,033 | 27,050 | ||||||||||||
Salaries
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15,995 | 56,002 | 28,595 | 123,254 | ||||||||||||
Salaries - officers
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- | 36,000 | - | 72,000 | ||||||||||||
Selling expenses
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17,500 | 14,932 | 23,343 | 41,809 | ||||||||||||
Total Expenses
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334,081 | 404,325 | 453,246 | 834,794 | ||||||||||||
Net Income (Loss) from Operations
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(331,906 | ) | (9,028 | ) | (429,089 | ) | 92,000 | |||||||||
Other Expenses
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Federal Income Tax Recovery (Expense)
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3,276 | 3,078 | 3,122 | (18,545 | ) | |||||||||||
Interest expense
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(3,676 | ) | (906 | ) | (5,662 | ) | (4,178 | ) | ||||||||
Net Income (Loss)
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(332,306 | ) | (6,856 | ) | (431,629 | ) | 69,277 | |||||||||
Net Income (Loss) Per Common Share – Basic and Diluted
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(0.00 | ) | (0.00 | ) | (0.01 | ) | 0.00 | |||||||||
Weighted Average Number of Common Shares Outstanding
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Basic
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70,432,634 | 61,721,645 | 68,345,821 | 61,721,645 | ||||||||||||
Diluted
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70,432,634 | 61,721,645 | 68,345,821 | 91,743,726 |
(The accompanying notes are an integral part of these unaudited financial statements)
Global Security Agency Inc. | ||||||||
Statements of Cash Flows (Unaudited) | ||||||||
For the six
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For the six
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months ended
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months ended
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30-Jun-12
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30-Jun-11
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$ | $ | |||||||
Operating Activities
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Net Income (loss)
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(431,629 | ) | 69,277 | |||||
Adjustments to reconcile net loss to net cash used in operating activities:
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Depreciation and amortization
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6,056 | 9,409 | ||||||
Bad debt expense
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54,461 | - | ||||||
Shares issued for services
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12,000 | - | ||||||
Loss on settlement of accounts payable
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184,000 | - | ||||||
Changes in operating assets and liabilities:
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Accounts receivable
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(363 | ) | (173,408 | ) | ||||
Prepaid expenses and other current assets
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- | (1,500 | ) | |||||
Accounts payable
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20,191 | 195,111 | ||||||
Accounts payable – related parties
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233 | - | ||||||
Accrued liabilities
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(5,043 | ) | 36,959 | |||||
Deferred revenue
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- | (31,348 | ) | |||||
Net Cash Provided by (Used in) Operating Activities
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(160,094 | ) | 104,500 | |||||
Investing Activities
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Purchase of property and equipment
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- | (3,759 | ) | |||||
Net Cash Used in Investing Activities
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- | (3,759 | ) | |||||
Financing Activities
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Proceeds from bank indebtedness
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(789 | ) | - | |||||
Proceeds from loan payable - related party
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135,000 | - | ||||||
Repayment of notes payable - related parties
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- | (70,000 | ) | |||||
Net Cash Provided by (Used in) Financing Activities
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134,211 | (70,000 | ) | |||||
Increase (Decrease) In Cash
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(25,883 | ) | 30,741 | |||||
Cash - Beginning of Period
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27,242 | 2,485 | ||||||
Cash - End of Period
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1,359 | 33,226 | ||||||
Supplemental Disclosures:
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Interest paid
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8,295 | 4,178 | ||||||
Income tax paid
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- | 18,545 |
(The accompanying notes are an integral part of these unaudited financial statements)
Global Security Agency, Inc.
Notes to the Unaudited Financial Statements
1. Nature of Business
The Company was incorporated in Nevada on September 27, 2006 under the name Belvedere Resources Corporation. On January 15, 2010, the Company incorporated a wholly-owned subsidiary, Global Security Agency, Inc.(“we”, “our”, the “Company” or ““Global Security”). On January 25, 2010, the Company completed a merger with Global Security and assumed the subsidiary’s name by filing Articles of Merger with the Nevada Secretary of State. Global Security was incorporated entirely for the purpose of effecting the name change and the merger did not affect the Company’s Articles of Incorporation or corporate structure in any other way. The Company’s principal business is in the security solutions and risk management services industry.
2. Basis of Presentation
The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the Company’s audited 2011 annual financial statements and notes thereto. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements, which would substantially duplicate the disclosure required in the Company’s 2011 annual financial statements have been omitted.
3. Going Concern
The Company has incurred a net loss and negative operating cash flows during the six months ended June 30, 2012. These factors raise substantial doubt about the Company's ability to continue as a going concern. The Company's management is implementing plans to sustain the Company’s cash flow from operating activities and/or acquire additional capital funding. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
4. Loans Payable
In February 2012, the Company issued an unsecured convertible note in the principal amount of $45,000 bearing interest at 8% per annum and maturing November 30, 2012. In March 2012, the Company issued an unsecured convertible note which was funded in April 2012 in the principal amount of $45,000 bearing interest at 8% per annum and maturing December 26, 2012. In May 2012, the Company issued an unsecured convertible note in the principal amount of $30,000 bearing interest at 8% per annum and maturing February 11, 2013. The notes cannot be converted for the first 180 days after which they are convertible at a price equal to 58% of the trading price of the Company’s shares on the OTC Bulletin Board on the conversion date.
The Company can prepay each of these notes as follows:
First 30 days - 115% of principal plus interest
31-60 days - 120% of principal plus interest
61-90 days - 125% of principal plus interest
91-120 days - 130% of principal plus interest
121-150 days - 135% of principal plus interest
151-180 days - 140% of principal plus interest
There is no right of prepayment after 180 days.
In June 2012, the Company issued an unsecured convertible note in the principal amount of $15,000 bearing interest at 8% per annum. The principal amount of the note is not repayable for 360 days after which the principal will remain payable until repaid in full except for any principal which is converted. The note can be converted in part or in whole after 360 days at $0.15 per share. Since the note could not be converted on June 30, 2012, the conversion option was not evaluated for liability classification or a beneficial conversion feature.
5. Related Party Transactions
As of June 30, 2012, the Company owed three officers a total of $167,296 for certain trade payables paid by them on behalf of the Company.
6. Common Stock
On March 17, 2012, the Company issued 200,000 shares with a fair value of $0.06 per share to DACC Associates, Inc. for services as part of a strategic alliance agreement entered in March 2012. The fair value of $12,000 was expensed during the six months ended June 30, 2012.
On April 18, 2012, the Company issued 5,000,000 shares with a fair value of $0.0378 per share for settlement of $5,000 of accounts payable. The fair value of the shares exceeded the carrying value of the payable by $184,000 which was recognized as a loss on settlement of accounts payable and is included in general and administrative expenses for the six months ended June 30, 2012.
7. Stock Options and Warrants
During 2010, 661,000 warrants were issued in conjunction with sales of common stock. All warrants issued are exercisable at $0.75 for the first year and $1.00 for the second year. The aggregate intrinsic value of these warrants was $0 and the weighted average remaining life was 0.21 years as of June 30, 2012.
Item 2. Management’s Discussion And Analysis Of Financial Condition And Results Of Operations
As used in this quarterly report: (i) the terms "we", "us", "our", and the “Company" mean Global Security Agency Inc., and (ii) all dollar amounts in this quarterly report refer to U.S. dollars unless otherwise indicated.
Cautionary Statement Regarding Forward-Looking Information
This quarterly report, any supplement to this quarterly report, and any documents incorporated by reference in this quarterly report, include “forward-looking statements”. To the extent that the information presented in this quarterly report discusses financial projections, information or expectations about our business plans, results of operations, services or markets, or otherwise makes statements about future events, such statements are forward-looking. Such forward-looking statements can be identified by the use of words such as “intends”, “anticipates”, “believes”, “estimates”, “projects”, “forecasts”, “expects”, “plans” and “proposes”. Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. These include, among others, the risks and uncertainties outlined under the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of this quarterly report, many of which are beyond our control.
These forward-looking statements include, but are not limited to, the following:
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statements contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the notes to our financial statements, concerning our results of operations, financial condition and our ability to finance our business;
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statements concerning our operations; and
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statements throughout concerning our business and the markets for our common stock.
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Factors that could cause actual results to differ materially include, but are not limited to the following:
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our anticipated strategies for growth;
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our ability to manage our planned growth;
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our need for additional capital to expand our operations;
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our dependence on key personnel;
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our ability to compete effectively with competitors that have greater financial, marketing and other resources; and
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risks related to government regulations and approvals.
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The forward-looking statements made in this quarterly report relate only to events or information as of the date on which the statements are made in this quarterly report. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this quarterly report and the documents that we reference in this quarterly report and have filed as exhibits to the quarterly report with the understanding that our actual future results may be materially different from what we expect. You should not rely upon forward-looking statements as predictions of future events.
Other sections of this quarterly report include additional factors which could adversely impact our business and financial performance. Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors and uncertainties. We cannot assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. You should carefully review the reports and other documents we file from time to time with the SEC.
Our Business
We are security solutions and risk management services company. We offer a wide range of security and risk management services for individuals, corporations and other entities. Our services include assessments, training, crisis management, protection, support and intelligence. We also operate a training facility at which we train people in a number of security related areas.
We operate our business through a network of consultants. Our consultants are experts in the field of crisis management with significant government, military, foreign services and private industry experience, and are located around the world. Our consultants are experienced in all aspects of the services we provide.
We recently fulfilled our commitments under certain of our contracts resulting in a decrease in revenues during the three and six months ended June 30, 2012. While we are currently negotiating a multi phase contract with an international government and also expect to enter into agreements to provide protection services to certain corporations, cruise lines and a yachting club, we have also shifted our focus to creating alliances with other companies that have in place or are negotiating significant security services related contracts and require our services. We believe these alliances will significantly increase our revenues going forward.
In that regard, in March 2012, we entered into a strategic alliance with DACC Associates, Inc. (“DACC”) pursuant to which we will become the primary contractor that DACC will recommend to its clientele. DACC’s staff has over 25 years of high-level experience in security administration worldwide. DACC’s history of success includes domestic and international work with numerous US government entities such as the United States Agency for International Development; the White House and Executive Office of the President; the Department of Homeland Security; the Department of Defense; the Department of Health and Human Services; and the Transportation Security Administration. In addition to direct support to US federal entities, all staff has worked extensively with non-US governments, United Nations entities, and private corporations. DACC Associates is a preferred supplier for security and materials to UN agencies worldwide with an extensive network.
We also operate a facility in North Zulch, Texas that serves as a tactical training center for Swat Teams, Sky Marshals, Federal agencies, our agents and operatives and law enforcement, among others. We provide training in, among other things, shooting, sniper shooting, hand-to-hand combat, knives, ambushes, tactical raids, medical trauma and defensive tactics.
In the second half of 2012, we plan to establish the Global Services Academy, a learning institution based in Conroe, Texas designed to service and train agents, contractors and other individuals in a wide range of safety security practices, including Advanced Police/Law Enforcement, Private Investigations, Armed Details, Personal Executive Protection, Human Resource requirements, Safety Specialist, Fire and Chemical Hazards, Computer Forensics and other security related practices and protocols, as well as specialized training to obtain a unique designation as a “Safety Security Specialist” certified in occupational safety, health and other related safety and operational concerns of the Occupational Safety and Health Administration (“OSHA”). We expect formal approval for the academy from the State of Texas in the next 60 days. However, there can be no assurance that such formal approval will be received or that the academy will be launched.
Our plan of operations over the next 12 months is to develop our business domestically and internationally, and continue to develop our academy and build additional more advanced training facilities. We anticipate we will require approximately $5 million to pursue our plans over the next 12 months. We plan to obtain the necessary funds from cash flow from operations, and equity or debt financings, if necessary. However, there can be no assurance that we will be able to obtain any required additional financing. If we are not able to obtain any required financing, we may be required to scale back our expansion plans or eliminate them altogether.
See our Annual Report on Form 10-K for the year ended December 31, 2011 filed with the SEC for more information.
Results of Operations
The following discussion and analysis of our results of operations and financial condition for the three and six months ended June 30, 2012 should be read in conjunction with our interim financial statements and related notes included in this quarterly report, as well as our most recent annual report on Form 10-K for the year ended December 31, 2011 filed with the SEC.
Three Months Ended June 30, 2012 Compared to Three Months Ended June 30, 2011
Revenues
Revenues from personal protection and private investigation services decreased to $2,175 in the three months ended June 30, 2012 from $395,297 in the three months ended June 30, 2011, due to reduced operations as described above.
Expenses
For the three months ended June 30, 2012, total operating expenses decreased to $334,081 from $404,325 for the same period in the prior year, due to reduced operations. Our cost of sales in the three months ended June 30, 2012 was $239, compared to $167,261 for the same period in the prior year, and related primarily to consultants engaged to provide our services. General and administrative expenses related to our operations increased to $248,241 in the current period from $80,767 in the prior year due to a non-cash loss on settlement of accounts payable in the current period. Legal and accounting expenses increased to $42,264 in the three months ended June 30, 2012 from $36,088 in the prior period, primarily due to increased costs related to our filing obligations with the SEC. Salaries paid to employees and to our officers decreased to $15,995 and $0, respectively, in the current period from $56,002 and $36,000, respectively, in the prior period, primarily due to a reduction in the number of our employees. Our selling expenses increased to $17,500 in the current period from $14,932 in the prior period due to increased promotional activities.
We generated an operating loss of $331,906 in the three months ended June 30, 2012, compared to $9,028 in the prior year.
Net Income
For the three months ended June 30, 2012, our net loss was $332,306, compared to $6,856 for the three months ended June 30, 2011.
Six Months Ended June 30, 2012 Compared to Six Months Ended June 30, 2011
Revenues
Revenues from personal protection and private investigation services decreased to $24,157 in the six months ended June 30, 2012 from $926,794 in the six months ended June 30, 2011, due to reduced operations as described above.
Expenses
For the six months ended June 30, 2012, total operating expenses decreased to $453,246 from $834,794 in the prior period, due to reduced operations. Our cost of sales in the six months ended June 30, 2012 was $2,856, compared to $328,847 in the prior period, and related primarily to consultants engaged to provide our services. General and administrative expenses related to our operations increased to $276,040 in the current period from $185,946 in the prior period due to a non-cash loss on settlement of accounts payable in the current period. Legal and accounting expenses increased to $102,379 in the six months ended June 30, 2012 from $55,889 in the prior period, primarily due to increased costs related to our filing obligations with the SEC. Salaries paid to employees and to our officers decreased to $28,595 and $0, respectively, in the current period from $123,254 and $72,000, respectively, in the prior period, primarily due to a reduction in the number of our employees. Our selling expenses decreased to $23,343 in the current period from $41,809 in the prior period due to reduced promotional activities.
We generated an operating loss of $429,089 in the six months ended June 30, 2012, compared to operating income of $92,000 in the prior period.
Net Income
For the six months ended June 30, 2012, our net loss was $431,629, compared to net income of $69,277 for the six months ended June 30, 2011.
Liquidity and Capital Resources
As of June 30, 2012, we had cash of $1,359, total assets of $915,768, total liabilities of $602,132, working capital of $222,449 and an accumulated deficit of $538,788.
For the six months ended June 30, 2012, operating activities used cash of $160,094, compared to providing cash of $104,500 in the prior period. An increase in accounts receivable used cash of $363 in the current period, compared to using cash of $173,408 in the prior period. An increase in accounts payable provided cash of $20,191 in the current period, compared to $195,111 in the prior period. A decrease in accrued liabilities used cash of $5,043 in the current period, compared to an increase in the same providing cash of $36,959 in the prior period.
For the six months ended June 30, 2012, there were no investing activities. For the six months ended June 30, 2011, investing activities used cash of $3,759 for the purchase of property and equipment.
During the six months ended June 30, 2012, financing activities provided cash of $134,211 primarily due to proceeds from loans. During the six months ended June 30, 2011, financing activities used cash of $70,000 in connection with the repayment of debt.
Our plan of operations over the next 12 months is to develop our business domestically and internationally, and continue to develop our academy and build additional more advanced training facilities. We anticipate we will require approximately $5 million to pursue our plans over the next 12 months. We plan to obtain the necessary funds from cash flow from operations, and equity or debt financings, if necessary. However, there can be no assurance that we will be able to obtain any required additional financing. If we are not able to obtain any required financing, we may be required to scale back our expansion plans or eliminate them altogether.
The Company has incurred a net loss and negative operating cash flows during the six months ended June 30, 2012. These factors raise substantial doubt about the Company's ability to continue as a going concern. The Company's management is implementing plans to sustain the Company’s cash flow from operating activities and/or acquire additional capital funding.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
As of the end of the period covered by this report, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures. Based upon this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were not effective to ensure that information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms due to the following deficiencies:
1.
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Management override of existing controls is possible given our small size and lack of personnel.
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We do not have a system in place to review and monitor internal control over financial reporting. We maintain an insufficient complement of personnel to carry out ongoing monitoring responsibilities and ensure effective internal control over financial reporting.
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In light of the existence of these control deficiencies, our management concluded that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis by our internal controls.
Management is currently evaluating remediation plans for the above control deficiencies. Management plans to enhance our risk assessment, internal control design and documentation and implement other procedures in the internal control function.
Changes in Internal Control
Other than as described above, during the three months ended June 30, 2012, there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
We are not a party to any material pending legal proceedings and are not aware of any legal proceedings that have been threatened against us. None of our directors, officers, affiliates, any owner of record or beneficially of more than 5% of our voting securities, or any associate of any such director, officer, affiliate or securityholder are (i) a party adverse to us in any legal proceedings, or (ii) have a material interest adverse to us in any legal proceedings.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. (Removed and Reserved)
Item 5. Other Information
None.
Item 6. Exhibits
Exhibit
Number
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Exhibit Description
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31.1
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31.2
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32.1
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32.2
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101.INS
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XBRL Instance Document
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101.SCH
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XBRL Taxonomy Extension Schema Document
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document
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SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: August 20, 2012
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GLOBAL SECURITY AGENCY INC.
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By: /s/ Larry E. Lunger
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Larry E. Lunger
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Chief Executive Officer
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