SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
[ X ] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 2007
------------------
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ___________ to ____________
Commission file number 000-50944
----------------------------------------------
Global Resource Corporation
--------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 84-1565820
--------------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
Bloomfield Business Park, 408 Bloomfield Drive, Unit 3,
West Berlin, New Jersey 08091
--------------------------------------------------------------------------------
(Address of principal executive offices)
(856) 767-5661
--------------------------------------------------------------------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the preceding 12 months (or for such
shorter period that the issuer was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 30,726,363 shares of common stock,
par value $0.001 were outstanding at October 30, 2007.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
2
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GLOBAL RESOURCE CORPORATION
(A Development Stage Company)
Condensed Balance Sheet
September 30, 2007
(Unaudited)
ASSETS As of Sept. 30,
------ 2007
------------
CURRENT ASSETS
Cash $ 255,514
Other Receivable $ 250,000
------------
TOTAL CURRENT ASSETS 505,514
------------
Fixed Assets, Net of depreciation 396,610
------------
OTHER ASSETS
Notes Recievable net - (reserved $650,000 for doutful collection) --
Investments & Deposits on Investments 74,860
------------
TOTAL OTHER ASSETS 74,860
TOTAL ASSETS $ 976,984
============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 141,957
Current portion - loan payable - equipment 39,913
------------
TOTAL CURRENT LIABILITIES 181,870
------------
LONG-TERM LIABILITIES
Loan payable - equipment, net of current portion 62,393
------------
Total liabilities 244,263
------------
STOCKHOLDERS' EQUITY
Preferred Stock - $.001 par value 50,000,000 shares authorized, 35,236
35,236,188 issued and outstanding at Sept. 30, 2007; none authorized at Sept. 30, 2006
Preferred Stock - $.001 par value 1,000 shares authorized and issued as Sept. 30, 2007 1
Common stock, $.001 par value; 2,000,000,000 shares authorized, 26,790
26,695,240 shares issued and outstanding at Sept. 30, 2007; and
Subscription receivable (215,693)
Additional paid-in capital 13,813,692
Deficit accumulated in the development stage (11,206,665)
------------
2,453,361
Treasury Stock (66,473)
Prepaid Sevices (1,408,917)
Deferred compensation (245,250)
------------
Total stockholders' equity 732,721
------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 976,984
============
The accompanying notes are an integral part of these finanical statements.
3
GLOBAL RESOURCE CORPORATION
(A Development Stage Company)
Condensed Statement of Operations
(With Cumulative Totals Since Inception)
(Unaudited)
Three Months Ended NINE MONTHS ENDED
------------------ ----------------- JULY 19, 2002
(INCEPTION)
Sept. 30 SEPT. 30 SEPT. 30 SEPT. 30 TO
2007 2006 2007 2006 SEPT. 30, 2007
------------ ------------ ------------ ------------ ------------
REVENUES $ -- $ -- $ -- $ -- $ --
COST OF SALES -- -- -- --
------------ ------------ ------------ ------------ ------------
GROSS PROFIT -- -- -- -- --
------------ ------------ ------------ ------------ ------------
OPERATING EXPENSES
Consulting fees 46,700 144,342 74,939 218,359 1,379,316
Professional fees 158,786 49,105 483,642 155,670 1,171,419
Other general and administrative expenses 2,547,121 543,643 3,556,154 2,462,880 7,741,323
Reserve for Note Receivable -- -- 650,000
Depreciation expense 24,345 15,543 72,222 24,369 162,088
------------ ------------ ------------ ------------ ------------
TOTAL OPERATING EXPENSES 2,776,952 752,633 4,186,957 2,861,278 11,104,146
------------ ------------ ------------ ------------ ------------
LOSS BEFORE OTHER INCOME (EXPENSE) (2,776,952) (752,633) (4,186,957) (2,861,278) (11,104,146)
------------ ------------ ------------ ------------ ------------
OTHER INCOME (EXPENSE)
Loss on deposit / real estate - net (100,000) (172,712)
Interest expense (3,008) (3,396) (19,373) (11,290) (34,542)
Interest income 7,262 20,575 31,776 45,973 104,846
------------ ------------ ------------ ------------ ------------
TOTAL OTHER INCOME (EXPENSE) 4,254 17,179 (87,597) 34,683 (102,408)
------------ ------------ ------------ ------------ ------------
NET LOSS BEFORE PROVISION FOR INCOME TAXES (2,772,698) (735,454) (4,274,554) (2,826,595) (11,206,554)
PROVISION FOR INCOME TAXES -- 111 -- 111 111
------------ ------------ ------------ ------------ ------------
NET LOSS APPLICABLE TO COMMON SHARES $ (2,772,698) $ (735,565) $ (4,274,554) $ (2,826,706) $(11,206,665)
============ ============ ============ ============ ============
BASIC AND DILUTED LOSS
PER SHARE $ (0.11) $ (0.02) $ (0.17) $ (0.06) $ (0.44)
============ ============ ============ ============ ============
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES 26,145,531 47,487,917 25,634,118 46,827,957 25,634,118
============ ============ ============ ============ ============
The accompanying notes are an integral part of these finanical statements.
4
GLOBAL RESOURCE CORPORATION
(A Development Stage Company)
Condensed Statement of Stockholders' Equity
AT SEPTEMBER 30, 2007
PREFERRED STOCK COMMON STOCK
-------------------------- -------------------------- DISCOUNT
PAR VALUE PAR VALUE ADDITIONAL ON
PREFERRED $.001 COMMON $.001 PAID-IN COMMON
SHARES $ AMOUNT SHARES $ AMOUNT CAPITAL STOCK
------------ ------------ ------------ ------------ ------------ ------------
BALANCE - JULY 19,
2002 (INCEPTION) -- -- -- $ -- $ -- $ --
Issuance of initial
founders' shares,
September 2002,
net of subsequent
cancellations -- -- 2,555,000 -- -- --
Shares issued for
services, September
2002 -- -- 1,000,000 -- 472,000 --
Shares issued for
cash, November 2002 -- -- 29,000 -- 14,500 --
Shares issued for
services, November
and December 2002 -- -- 13,600 -- 6,800 --
Net loss for the
period July 19, 2002
(Inception) through
December 31, 2002,
as originally stated -- -- -- -- -- --
Prior period
adjustment, Note 11 -- -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
BALANCE AT DECEMBER 31, 2002 -- -- 3,597,600 -- 493,300 --
------------ ------------ ------------ ------------ ------------ ------------
Re-issuance of
founders' shares
- July 2003 -- -- 1,455,000 -- -- --
Shares issued for cash -- -- 519,800 -- 259,900 --
Issuance of subscription
receivable from shareholders -- -- -- -- -- --
Net loss for the
year ended December
31, 2003, as
originally stated -- -- -- -- -- --
Prior period
adjustment, Note 11 -- -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
BALANCE AT
DECEMBER 31, 2003 -- -- 5,572,400 -- 753,200 --
------------ ------------ ------------ ------------ ------------ ------------
Shares issued for cash -- -- 917,645 -- 553,105 --
Shares issued in
exchange for
real estate -- -- 650,000 -- 650,000 --
Shares issued
for compensation -- -- 545,000 -- 545,000 --
Shares issued as
charitable contribution -- -- 50,000 -- 50,000 --
Initial founders'
shares cancelled -- -- (250,000) -- -- --
Issuance of
subscription receivable
from shareholders -- -- -- -- -- --
Net loss for the
year ended
December 31, 2004 -- -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
BALANCE AT DECEMBER 31, 2004 -- -- 7,485,045 -- 2,551,305 --
------------ ------------ ------------ ------------ ------------ ------------
5a
continued on next page
continued from previous page
GLOBAL RESOURCE CORPORATION
(A Development Stage Company)
Condensed Statement of Stockholders' Equity
AT SEPTEMBER 30, 2007
DEFICIT
ACCUMULATED
DURING THE CONTRA
DEVELOPMENT DEFERRED PREPAID FOR SUBSCRIPTION TREASURY
STAGE COMPENSATION SERVICES RECEIVABLE STOCK TOTAL
------------ ------------ ------------ ------------ ------------ ------------
BALANCE - JULY 19,
2002 (INCEPTION) $ -- $ -- -- $ -- -- $ --
Issuance of initial
founders' shares,
September 2002,
net of subsequent
cancellations -- -- -- -- -- --
Shares issued for
services, September
2002 -- -- -- -- -- 472,000
Shares issued for
cash, November 2002 -- -- -- -- -- 14,500
Shares issued for
services, November
and December 2002 -- -- -- -- -- 6,800
Net loss for the
period July 19, 2002
(Inception) through
December 31, 2002,
as originally stated (2,008,508) -- -- -- -- (2,008,508)
------------ ------------ ------------ ------------ ------------ ------------
Prior period
adjustment, Note 11 1,500,000 -- -- -- -- 1,500,000
------------ ------------ ------------ ------------ ------------ ------------
BALANCE AT DECEMBER 31, 2002 (508,508) -- -- -- -- (15,208)
------------ ------------ ------------ ------------ ------------ ------------
Re-issuance of
founders' shares
- July 2003 -- -- -- -- -- --
Shares issued for cash -- -- -- -- -- 259,900
Issuance of subscription
receivable from shareholders -- -- -- (14,340) -- (14,340)
Net loss for the
year ended December
31, 2003, as
originally stated (931,159) -- -- -- -- (931,159)
Prior period
adjustment, Note 11 727,500 -- -- -- -- 727,500
------------ ------------ ------------ ------------ ------------ ------------
BALANCE AT
DECEMBER 31, 2003 (712,167) -- -- (14,340) -- 26,693
------------ ------------ ------------ ------------ ------------ ------------
Shares issued for cash -- -- -- -- -- 553,105
Shares issued in
exchange for
real estate -- -- -- -- -- 650,000
Shares issued
for compensation -- (545,000) -- -- -- --
Shares issued as
charitable contribution -- -- -- -- -- 50,000
Initial founders'
shares cancelled -- -- -- -- -- --
Issuance of
subscription receivable
from shareholders -- -- -- (74,240) -- (74,240)
Net loss for the
year ended
December 31, 2004 (672,219) -- -- -- -- (672,219)
------------ ------------ ------------ ------------ ------------ ------------
BALANCE AT DECEMBER 31, 2004 (1,384,386) (545,000) -- (88,580) -- 533,339
------------ ------------ ------------ ------------ ------------ ------------
5b
GLOBAL RESOURCE CORPORATION
(A Development Stage Company)
Condensed Statement of Stockholders' Equity
AT SEPTEMBER 30, 2007
PREFERRED STOCK COMMON STOCK
-------------------------- -------------------------- DISCOUNT
PAR VALUE PAR VALUE ADDITIONAL ON
PREFERRED $.001 COMMON $.001 PAID-IN COMMON
SHARES $ AMOUNT SHARES $ AMOUNT CAPITAL STOCK
------------ ------------ ------------ ------------ ------------ ------------
Shares issued for cash -- -- 745,655 -- 914,507 --
Shares issued to
acquire technology -- -- 37,500,000 -- 37,500,000 (37,500,000)
Remaining shares
issued in exchange
for real estate -- -- 80,800 -- 80,800 --
Shares issued for services -- -- 53,500 -- 53,500 --
Accounts payable
converted to equity -- -- 1,087 -- 1,087 --
Stock subscriptions
received, net -- -- -- -- -- --
Amortization of
deferred compensation -- -- -- -- -- --
Net loss for the
year ended
December 31, 2005 -- -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
BALANCE AT
DECEMBER 31, 2005 -- -- 45,866,087 -- 41,101,199 (37,500,000)
------------ ------------ ------------ ------------ ------------ ------------
Shares issued for cash -- -- 2,786,286 -- 2,810,877 --
Stock subscriptions
received, net -- -- -- -- -- --
Amortization of
deferred compensation -- -- -- -- -- --
Shares issued
for services -- -- 14,123 -- 14,746 --
Shares issued for
investment in land -- -- 22,500 -- 45,000 --
Effect of reverse merger -- -- 72,241 48,761 (37,669,444) 37,500,000
Shares issued for
conversion of debt -- -- 2,681,837 2,682 118,000 --
Shares issued
for consulting -- -- 25,000 25 49,975 --
Shares issued for
merger with
Mobilestream Inc -- -- 11,145,255 11,145 2,842,136 --
Cancellation of
shares for merger
with Mobilestream Inc -- -- (37,500,000) (37,500) 37,500 --
Preferred convertible
stock issued for merger
with Mobilestream 2 for
1 convertible into common 35,236,188 $ 35,236 -- -- 468,138 --
Net loss for the
year ended December
31, 2006 -- -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
BALANCE AT
DECEMBER 31, 2006 35,236,188 $ 35,236 25,113,329 $ 25,113 $ 9,818,127 $ --
============ ============ ============ ============ ============ ============
6a
continued on next page
continued from previous page
GLOBAL RESOURCE CORPORATION
(A Development Stage Company)
Condensed Statement of Stockholders' Equity
AT SEPTEMBER 30, 2007
DEFICIT
ACCUMULATED
DURING THE CONTRA
DEVELOPMENT DEFERRED PREPAID FOR SUBSCRIPTION TREASURY
STAGE COMPENSATION SERVICES RECEIVABLE STOCK TOTAL
------------ ------------ ------------ ------------ ------------ ------------
Shares issued for cash -- -- -- -- -- 914,507
Shares issued to
acquire technology -- -- -- -- -- --
Remaining shares
issued in exchange
for real estate -- -- -- -- -- 80,800
Shares issued for services -- -- -- -- -- 53,500
Accounts payable
converted to equity -- -- -- -- -- 1,087
Stock subscriptions
received, net -- -- -- 10,398 -- 10,398
Amortization of
deferred compensation -- 109,000 -- -- -- 109,000
Net loss for the
year ended
December 31, 2005 (1,291,169) -- -- -- -- (1,291,169)
------------ ------------ ------------ ------------ ------------ ------------
BALANCE AT
DECEMBER 31, 2005 (2,675,555) (436,000) -- (78,182) -- 411,462
------------ ------------ ------------ ------------ ------------ ------------
Shares issued for cash -- -- -- -- -- 2,810,877
Stock subscriptions
received, net -- -- -- (582,511) -- (582,511)
Amortization of
deferred compensation -- 109,000 -- -- -- 109,000
Shares issued
for services -- -- -- -- -- 14,746
Shares issued for
investment in land -- -- -- -- -- 45,000
Effect of reverse merger -- -- -- -- -- (120,683)
Shares issued for
conversion of debt -- -- -- -- -- 120,682
Shares issued
for consulting -- -- -- -- -- 50,000
Shares issued for
merger with
Mobilestream Inc (10,498) -- -- -- -- 2,842,783
Cancellation of
shares for merger
with Mobilestream Inc -- -- -- -- -- --
Preferred convertible
stock issued for merger
with Mobilestream 2 for
1 convertible into common -- -- -- -- -- 503,374
Net loss for the
year ended December
31, 2006 (4,246,058) -- -- -- -- (4,246,058)
------------ ------------ ------------ ------------ ------------ ------------
BALANCE AT
DECEMBER 31, 2006 $ (6,932,111) $ (327,000) $ -- $ (660,693) $ -- $ 1,958,672
============ ============ ============ ============ ============ ============
6b
GLOBAL RESOURCE CORPORATION
(A Development Stage Company)
Condensed Statement of Stockholders' Equity
AT SEPTEMBER 30, 2007
PREFERRED STOCK COMMON STOCK
-------------------------- -------------------------- DISCOUNT
PAR VALUE PAR VALUE ADDITIONAL ON
PREFERRED $.001 COMMON $.001 PAID-IN COMMON
SHARES $ AMOUNT SHARES $ AMOUNT CAPITAL STOCK
------------ ------------ ------------ ------------ ------------ ------------
Shares issued
for cash -- -- 17,500 17 5,233 --
Shares issued for
Stock to be
issued (liability) -- -- 186,822 187 201,156 --
Amortization of
deferred compensation -- -- -- -- 27,250 --
Shares issued for services -- -- 36,000 36 25,964 --
Net loss for the
period ended March
31, 2007 -- -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
BALANCE AT MARCH 31, 2007 35,236,188 $ 35,236 25,353,651 $ 25,353 $ 10,050,480 $ --
============ ============ ============ ============ ============ ============
Shares issued for cash -- -- 499,564 500 157,711 --
Shares issued for
Stock to be issued
(liability) -- -- -- -- -- --
Treasury Stock -- -- (94,961) -- -- --
Amortization of
deferred compensation -- -- -- -- -- --
Shares issued
for services -- -- -- -- -- --
Net loss for
the period ended
June 30, 2007 -- -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
BALANCE AT JUNE 30, 2007 35,236,188 $ 35,236 25,758,254 $ 25,853 $ 10,208,191 $ --
============ ============ ============ ============ ============ ============
Shares issued for cash -- -- -- -- -- --
Shares issued for
Stock to be
issued (liability) -- -- -- -- -- --
Treasury Stock -- -- -- -- -- --
Amortization of
deferred compensation -- -- -- -- -- --
Preferred Shares
issued for settlement
of legal issues 1,000 1 -- -- 399,999 --
Shares issued for
services & Prepaid
contra account -- -- 936,986 937 3,205,502 --
Net loss for the
period ended June
30, 2007 -- -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
BALANCE AT
SEPTEMBER 30, 2007 35,237,188 $ 35,237 26,695,240 $ 26,790 $ 13,813,692 $ --
============ ============ ============ ============ ============ ============
7a
continued on next page
continued from previous page
GLOBAL RESOURCE CORPORATION
(A Development Stage Company)
Condensed Statement of Stockholders' Equity
AT SEPTEMBER 30, 2007
DEFICIT
ACCUMULATED
DURING THE CONTRA
DEVELOPMENT DEFERRED PREPAID FOR SUBSCRIPTION TREASURY
STAGE COMPENSATION SERVICES RECEIVABLE STOCK TOTAL
------------ ------------ ------------ ------------ ------------ ------------
Shares issued
for cash -- -- -- -- -- 5,250
Shares issued for
Stock to be
issued (liability) -- -- -- -- -- 201,343
Amortization of
deferred compensation -- 27,250 -- -- -- --
Shares issued for services -- -- -- -- -- 26,000
Net loss for the
period ended March
31, 2007 (741,864) -- -- -- -- (741,864)
------------ ------------ ------------ ------------ ------------ ------------
BALANCE AT MARCH 31, 2007 $ (7,673,975) $ (299,750) $ -- $ (660,693) $ -- $ 1,476,651
============ ============ ============ ============ ============ ============
Shares issued for cash -- -- -- -- -- 158,211
Shares issued for
Stock to be issued
(liability) -- -- -- 15,000 -- 15,000
Treasury Stock -- -- -- -- (66,473) (66,473)
Amortization of
deferred compensation -- 27,250 -- -- -- 27,250
Shares issued
for services -- -- -- -- -- --
Net loss for
the period ended
June 30, 2007 (759,992) -- -- -- -- (759,992)
------------ ------------ ------------ ------------ ------------ ------------
BALANCE AT JUNE 30, 2007 $ (8,433,967) $ (272,500) $ -- $ (645,693) $ (66,473) $ 850,647
============ ============ ============ ============ ============ ============
Shares issued for cash -- -- -- -- -- --
Shares issued for
Stock to be
issued (liability) -- -- -- 430,000 -- 430,000
Treasury Stock -- -- -- -- -- --
Amortization of
deferred compensation -- 27,250 -- -- -- 27,250
Preferred Shares
issued for settlement
of legal issues -- -- -- -- -- 400,000
Shares issued for
services & Prepaid
contra account -- -- (1,408,917) -- -- 1,797,522
Net loss for the
period ended June
30, 2007 (2,772,698) -- -- -- -- (2,772,698)
------------ ------------ ------------ ------------ ------------ ------------
BALANCE AT
SEPTEMBER 30, 2007 $(11,206,665) $ (245,250) $ (1,408,917) $ (215,693) $ (66,473) $ 732,721
============ ============ ============ ============ ============ ============
7b
The accompanying notes are an integral part of these financial statements.
GLOBAL RESOURCE CORPORATION
(A Development Stage Company)
Condensed Statement of Cash Flows
(With Cumulative Totals Since Inception)
(Unaudited)
NINE MONTHS ENDED JULY 19, 2002
----------------- (INCEPTION)
SEPTEMBER 30, SEPTEMBER 30, TO
2007 2006 SEPTEMBER 30, 2007
------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (4,274,554) $ (2,826,706) $(11,206,665)
------------ ------------ ------------
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH (USED IN)
OPERATING ACTIVITIES:
Depreciation 72,222 24,369 161,401
Preferred stock issued for settlement 400,000 -- 400,000
Common stock issued for services 1,823,522 -- 2,355,821
Amortization of deferred compensation 81,750 81,750 300,000
Allowance reserve for note payable -- -- 650,000
Loss on sale of fixed asset 2,141 -- (2,141)
Loss on real estate -- -- 87,036
Common stock issued as charitable contribution -- -- 50,000
CHANGES IN ASSETS AND LIABILITIES
(Increase) in prepaid expenses (250,000) (18,500) (316,333)
(Increase) decrease in deposits 70,140 16,911 70,140
(Increase) in notes receivable -- -- (650,000)
(Decrease) in accounts receivable -- -- --
(Decrease) in accounts payable 27,911 (138,584) (129,976)
------------ ------------ ------------
TOTAL ADJUSTMENTS 2,227,686 (34,054) 2,975,947
------------ ------------ ------------
NET CASH USED IN OPERATING ACTIVITIES (2,046,868) (2,860,760) (8,230,718)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (9,033) (471,676) (587,152)
Proceeds from sale of Fixed assets net of loss of gain 27,000 -- 27,000
Proceeds from sale of real estate -- -- 617,864
Investment -- (685,000) (145,000)
Investment in real estate, net -- -- (80,800)
------------ ------------ ------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 17,967 (1,156,676) (168,088)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock for cash 163,461 51,468 3,888,345
Issuance of equity securities and paid-in capital for merger and other 201,342 3,913,375 5,979,074
Liability for stock to be issued (201,342) (975) (975)
(Increase) decrease in stock subscription receivable 445,000 896,848 (1,247,957)
Proceeds from officer's loan -- -- 38,550
Repayment of officer's loan -- (17,050) (38,550)
Purchase of Treasury Stock (66,473) (25,000) (66,473)
Proceeds from loan payable - equipment 73,817 100,133
Repayment of loan payable - vehicle (19,510) (31,937)
Proceeds from loan payable - equipment 75,000 75,000
Repayment of loan payable - equipment (27,575) (10,285) (40,890)
------------ ------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 514,413 4,937,688 8,654,320
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,514,488) 920,252 255,514
CASH AND CASH EQUIVALENTS
- BEGINNING OF PERIOD 1,770,002 1,074,272 --
------------ ------------ ------------
CASH AND CASH EQUIVALENTS
- END OF PERIOD $ 255,514 $ 1,994,524 $ 255,514
============ ============ ============
SUPPLEMENTAL DISCLOSURES OF
NON-CASH ACTIVITIES:
Common stock issued for services $ 400,000 -- $ 400,000
============ ============ ============
Common stock issued for services net of prepaid contra equity account $ 1,823,522 -- $ 2,355,821
============ ============ ============
Common stock issued for land investment -- -- $ 125,800
============ ============ ============
Common stock issued as charitable contribution -- -- $ 50,000
============ ============ ============
The accompanying notes are an integral part of these finanical statements.
8
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2007
NOTE 1 - BASIS OF PRESENTATION AND NATURE OF BUSINESS AND ORGANIZATION
-------------------------------------------------------------
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Item 310 of
Regulation S-B. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the nine
months ended September 30, 2007 are not necessarily indicative of the
results that maybe expected for the year ended December 31, 2007.
Global Resource Corporation (the Company") was formed on July 19, 2002 in
the state of New Jersey under the name Carbon Recovery Corporation as a
development stage company. The Company's business plan is to research and
develop and market the business of decomposing petroleum-based materials
by subjecting them to variable frequency microwave radiation at
specifically selected frequencies for a time sufficient to at least
partially decompose the materials, converting the materials into
industrial products and chemicals for the petroleum chemical industry.
The Company's business goals are as follows:
1) The construction of plants to exploit certain technology for
decomposing petroleum-based materials by subjecting them to variable
frequency microwave radiation at specifically selected frequencies
for a time sufficient to at least partially decompose the materials;
2) The design, manufacture and sale of machinery and equipment units,
embodying the technology; and 3) the sub-licensing of third parties
to exploit that technology.
At the present time, the process is in a laboratory mode. There will have
to be a transition from the "one batch at a time" operation, used in the
laboratory to a "continuous feed" line in order to commercialize the
process. Currently, the continuous feed line is in the final design stage.
The Company believes that the design of the machinery and equipment for
the decomposition of waste tires fully protects the environment from the
release of components during the decomposition process.
In a similar decomposition process, the Company has designed machinery and
equipment which will decompose "fluff", which is the non-metallic portions
of scrap motor vehicles, primarily, the interiors. It appears that
although scrap vehicles are specifically taken without the tires due to
environmental rules, they are often removed but then placed ("hidden") in
the trunk of the vehicle and crushed into it, thus "disposing" of the
tires. The Company's machinery will, of course, permit any tires to be
decomposed together with the other materials.
9
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2007
NOTE 1- BASIS OF PRESENTATION AND NATURE OF BUSINESS AND ORGANIZATION
-------------------------------------------------------------
(CONTINUED)
-----------
The Company is currently offering three models: one which disposes of five
tons per hour, one which disposes of ten tons per hour, and one which
disposes of twenty tons per hour. The Company is soliciting orders and has
issued various proposals.
There are other potential applications for the microwave technology
covered by the license, in addition to the application for decomposing
waste tires and fluff. These include:
1. Stimulation of production of mature oil and gas wells ("stripper"
wells);
2. Reduction of hydrocarbons in drilling cuttings to permit on-site
disposal;
3. Volatilization of heavy or slurry oil;
4. Recovery of oil from oil shale and oil sands; and
5. Medicinal applications.
To date, the Company has allocated a substantial portion of their time and
investment in bringing their product to the market and the raising of
capital. The Company has not commenced any commercial operations as of
September 30, 2007.
On December 31, 2006, Global Resource Corporation acquired all the assets
and assumed all of the liabilities of Mobilestream Oil, Inc. in exchange
for; a) 11,145,255 shares of the Company's Common Stock; b) the issuance
by the Company for the benefit of the holders of the 2006 series of
convertible preferred stock of Mobilestream of 35,236,188 shares of the
Company's own "2006 Series" in the process of designation (see "Subsequent
Events" note 13 below for changes); c) the issuance of 27,205,867 common
stock purchase warrants on the basis of 1 warrant for each 3 shares of
either common stock or preferred stock (the 2006 Series), exercisable at
$4.75 per share for a period ending on December 31, 2007. The prior
ownership of Mobilestream owned 37,500,000 shares of the Company's stock
which were cancelled. The total cost of the acquisition of Mobilestream
has been allocated to the assets acquired and the liabilities assumed
based on their fair values in accordance with SFAS 141, BUSINESS
COMBINATIONS. The net asset and liabilities of Mobilestream equal
approximately $2.4 million. The assets consisted of cash approximately
$1,678,000, and fixed assets of $149,000 offset by liabilities of
approximately $91,000.
On September 22, 2006, the Carbon Recovery Corporation entered into a Plan
and Agreement of Reorganization ("Agreement") with Global Resource
Corporation. Pursuant to the Agreement, Global Resource Corporation
acquired all of the assets and assumed all of the liabilities and related
development stage business of Carbon Recovery Corporation in exchange for
48,688,996 common shares and the assumption of a convertible debenture and
accrued interest in the amount of $120,682 by Carbon Recovery Corporation,
subsequent the convertible debenture was eliminated by issuing 2,681,837
of the Company's common stock.. The holders of Global Resource
Corporation's capital stock before the Agreement retained 72,241 shares of
common stock. Prior to the Agreement, Carbon Recovery Corporation had
warrants outstanding. Pursuant to the Agreement, those outstanding
warrants were exchanged for outstanding warrants of Global Resource
Corporation. Specifically, Global Resource Corporation issued 3,908,340
10
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2007
NOTE 1- BASIS OF PRESENTATION AND NATURE OF BUSINESS AND ORGANIZATION
-------------------------------------------------------------
(CONTINUED)
-----------
Class B warrants, 1,397,600 Class D warrants and 1,397,600 Class E
warrants. The Class B and Class D warrants have an exercise price of $2.75
and the Class E warrants have an exercise price of $4.00. All of the
warrants originally schedule to expire on September 21, 2007, but the
Board of directors of the Company has extended the expiration date to
December 31, 2007 fore class B and Class D warrants and March 31, 2008 for
Class E warrants (see "Subsequent Events" Note 13 below).
The above transaction has been accounted for as a reverse merger
(recapitalization) with Carbon Recovery Corporation being deemed the
accounting acquirer and Global Resource Corporation being deemed the legal
acquirer. Accordingly, the historical financial information presented in
the financial statements is that of Carbon Recovery Corporation as
adjusted to give effect to any difference in the par value of the issuer's
and the accounting acquirer's stock with an offset to additional paid in
capital. The basis of the assets and liabilities of Carbon Recovery
Corporation, the accounting acquirer, have been carried over in the
recapitalization. Concurrent with the merger, Carbon Recovery Corporation
changed its name to Global Resource Corporation.
The Company is considered to be in the development stage as defined in
Statement of Financial Accounting Standards (SFAS) No. 7, "ACCOUNTING AND
REPORTING BY DEVELOPMENT STAGE ENTERPRISES". The Company has devoted
substantially all of its efforts to business planning and development, as
well as allocating a substantial portion of their time and investment in
bringing their product to the market, and the raising of capital.
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
USE OF ESTIMATES
----------------
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
CASH AND CASH EQUIVALENTS
-------------------------
The Company considers all highly liquid debt instruments and other
short-term investments with an initial maturity of three months or less to
be cash or cash equivalents.
At September 30, 2007, the Company maintained cash and cash equivalent
balances at two financial institutions that are insured by the Federal
Deposit Insurance Corporation up to $100,000. At September 30, 2007 the
Company's uninsured cash balances total $55,514.
11
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2007
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
------------------------------------------------------
START-UP COSTS
--------------
In accordance with the American Institute of Certified Public Accountants
Statement of Position 98-5, "REPORTING ON THE COSTS OF START-UP
Activities", the Company expenses all costs incurred in connection with
the start-up and organization of the Company.
INCOME TAXES
------------
Deferred income taxes are reported using the liability method. Deferred
tax assets are recognized for deductible temporary differences and
deferred tax liabilities are recognized for taxable temporary differences.
Temporary differences are the differences between the reported amounts of
assets and liabilities and their tax bases. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management, it is
more likely than not that some portion or all of the deferred tax assets
will not be realized. Deferred tax assets and liabilities are adjusted for
the effects of changes in tax laws and rates on the date of enactment.
Effective December 31, 2006 the Company completed a merger with
Mobilestream Corp. and due to the transfer of assets between entities
under common control, the total cost of the acquisition of Mobilesstream
has been allocated to the assets acquired and the liabilities assumed
based on their fair values in accordance with SFAS 141, BUSINESS
COMBINATIONS. All account amounts and shares amounts have been updated and
presented to reflect the change.
Effective July 31, 2006 the Company completed a reverse split of its
common stock. All share amounts have been updated and presented to reflect
the change.
EARNINGS (LOSS) PER SHARE OF COMMON STOCK
-----------------------------------------
Historical net loss per common share is computed using the weighted
average number of common shares outstanding. Diluted earnings per share
(EPS) include additional dilution from common stock equivalents, such as
stock issuable pursuant to the exercise of stock options and warrants.
Common stock equivalents were not included in the computation of diluted
earnings per share when the Company reported a loss because to do so would
be antidilutive.
12
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2007
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
------------------------------------------------------
EARNINGS (LOSS) PER SHARE OF COMMON STOCK
-----------------------------------------
The following is a reconciliation of the computation for basic and diluted
earnings per share:
Nine Months Ended September 30,
-------------------------------
2007 2006
------------ ------------
Net loss ($ 4,274,554) ($ 2,826,706)
------------ ------------
Weighted-average common shares
Outstanding (Basic) 25,634,118 46,827,957
------------ ------------
Weighted-average common shares
Outstanding (Diluted) 25,634,118 46,827,957
============ ============
Weighted-average common stock Equivalents for preferred stock convertible
to 1 for 2 of common are 17,618,094 and warrants common stock equivalents
are 10,409,407, these are not part of the weighted-average outstanding
common stock calculation because inclusion would have been anti-dilutive
as of September 30, 2007 and September 30, 2006.
In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of
Financial Assets, an amendment of FASB Statement No. 140." SFAS No. 156
requires an entity to recognize a servicing asset or liability each time
it undertakes an obligation to service a financial asset by entering into
a servicing contract under a transfer of the servicer's financial assets
that meets the requirements for sale accounting, a transfer of the
servicer's financial assets to a qualified special-purpose entity in a
guaranteed mortgage securitization in which the transferor retains all of
the resulting securities and classifies them as either available-for-sale
or trading securities in accordance with SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities" and an acquisition or
assumption of an obligation to service a financial asset that does not
relate to financial assets of the servicer or its consolidated affiliates.
Additionally, SFAS No. 156 requires all separately recognized servicing
assets and servicing liabilities to be initially measured at fair value,
permits an entity to choose either the use of an amortization or fair
value method for subsequent measurements, permits at initial adoption a
one-time reclassification of available-for-sale securities to trading
securities by entities with recognized servicing rights and requires
separate presentation of servicing assets and liabilities subsequently
measured at fair value and additional disclosures for all separately
recognized servicing assets and liabilities. SFAS No. 156 is effective for
transactions entered into after the beginning of the first fiscal year
that begins after September 15, 2006. The Company is currently evaluating
the effect the adoption of SFAS No. 156 will have on its financial
position or results of operations.
13
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2007
NOTE 3- FIXED ASSETS
------------
Fixed assets as of September 30, 2007 were as follows:
Estimated
Useful Live
(Years) Amount
------------- ----------
Testing Equipment 5 - 7 $ 439,014
Vehicles 5 83,799
Office & Computer Equip. 5 16,643
Leasehold improvements 3 4,670
----------
Total $ 544,126
==========
Less accumulated Depreciation & amortization 147,516
----------
NET FIXED ASSETS $ 396,610
==========
There was $72,222 and $24,369 charged to operations for depreciation
expense for the nine months ended September 30, 2007 and 2006,
respectively.
NOTE 4- LOAN PAYABLE - EQUIPMENT
------------------------
In January 2006 the Company entered into a five year loan related to the
purchase of new equipment. The principal amount of the loan is $75,000 at
an interest rate of 13.43% annually. Monthly payments on the loan are
approximately $1,723. In October 2006 the Company entered into a three
year loan related to lab equipment. The principal amount of the loan is
$73,817 at an interest rate of 8.71% annually. Monthly payments on the
loan are approximately $2,396.
2007
-------------
Total Loans Payable $ 102,306
Less current maturities (39,913)
-------------
Long-Term payable $ 62,393
=============
The amount of principal maturities of the loans
payable by years is as follows:
2007 $ 39,913
2008 41,853
2009 19,032
2010 1,508
-------------
$ 102,306
=============
14
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2007
NOTE 5- PROVISION FOR INCOME TAXES
--------------------------
Deferred income taxes will be determined using the liability method for
the temporary differences between the financial reporting basis and income
tax basis of the Company's assets and liabilities. Deferred income taxes
will be measured based on the tax rates expected to be in effect when the
temporary differences are included in the Company's tax return. Deferred
tax assets and liabilities are recognized based on anticipated future tax
consequences attributable to differences between financial statement
carrying amounts of assets and liabilities and their respective tax bases.
At September 30, 2007 the deferred tax assets consist of the following:
SEPTEMBER 30,
2007
-----------
Deferred taxes due to net
operating loss carryforwards $ 3,362,000
Less: Valuation allowance (3,362,000)
-----------
Net deferred tax asset $ --
===========
At September 30, 2007, the Company had deficits accumulated during the
development stage in the approximate amount of $11,206,665 available to
offset future taxable income through 2027. The Company established
valuation allowances equal to the full amount of the deferred tax assets
due to the uncertainty of the utilization of the operating losses in
future periods.
NOTE 6- OPERATING LEASES
----------------
The Company leases office space under a lease agreement that commenced
June 1, 2006, the monthly lease payments are $5,000 per month and the
leases expires on May 31, 2009. The Company is required to pay property
taxes, utilities, insurance and other costs relating to the leased
facilities.
Minimum lease payments under the operating lease are as follows:
For the Periods Ending Sept., 30 Amount
-------------------------------- ------
2007 $ 15,000
2008 60,000
2009 21,700
---------
$ 96,700
=========
15
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2007
NOTE 7- GOING CONCERN
-------------
As shown in the accompanying financial statements, the Company incurred
substantial net losses for the periods ended September 30, 2007 and 2006,
and has no revenue stream to support itself. This raises doubt about the
Company's ability to continue as a going concern.
The Company's future success is dependent upon its ability to raise
additional capital or to secure a future business combination. There is no
guarantee that the Company will be able to raise enough capital or
generate revenues to sustain its operations. Management believes they can
raise the appropriate funds needed to support their business plan and
acquire an operating, cash flow positive company.
The financial statements do not include any adjustments relating to the
recoverability or classification of recorded assets and liabilities that
might result should the Company be unable to continue as a going concern.
NOTE 8- STOCKHOLDERS' EQUITY
--------------------
COMMON STOCK
------------
The following details the stock transactions for the Three months ended
September 30, 2007:
The Company issued 936,986 shares of stock for services which have a gross
value at $3,205,502 of which $1,408,917 will be amortized and expensed
over one year period beginning in September of 2007. The three month
services expenses are as follows:
o Wages & Bonus for management, service valued at $1,568,000,
(350,000 shares issued)
o Consulting services from various vendors valued at $229,521
PREFERRED STOCK
---------------
Currently there 35,236,188 shares of convertible preferred, these shares
can be converted into common stock,1 preferred for 2 common stock shares.
(see "Subsequent Event" Note 13 below on changes to convertible
preferred).
The Company issued 1,000 shares of new convertible preferred to complete a
settlement agreement for services in dispute. These shares can be
converted into common stock after 1 year, applicable to rule 144, by
dividing the $400 stated capital by the average of the closing bid prices
of such Common stock for the twenty (20) consecutive trading days prior to
and including the day of conversion.
16
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2007
NOTE 8- STOCKHOLDERS' EQUITY (CONTINUED)
--------------------------------
WARRANTS
The Company issued 3,908,340 Class B warrants, 1,397,600 Class D warrants
and 1,397,600 Class E warrants. The Class B and Class D warrants have an
exercise price of $2.75 and the Class E warrants have an exercise price of
$4.00. All of the warrants, originally schedule to expire on September 21,
2007, but the Board of directors of the Company has extended the
expiration date to December 31, 2007 for class B and Class D warrants and
March 31, 2008 for Class E warrants (see "Subsequent Events" Note 13
below).
The Company issued 27,205,867 Common Stock Purchase warrants on the basis
of 1 warrant for each 3 shares of either common stock or preferred stock
(the 2006 Series), exercisable at $4.75 per share. These warrants expire
on December 31, 2007, but the Board of directors of the Company has
extended the expiration date as follows: Carbon Recovery Corporation
("CRC") "B" and "D" warrants, exercisable at $2.75, extended to December
31, 2007. CRC "E" warrants, exercisable at $4.00, extended to March 31,
2008. Warrants for Mobilestream, exercisable at $4.75, extended to March
31, 2008.
A summary of the status of the Company's outstanding stock warrants as of
September 30, 2006 is as follows:
Weighted Average
Shares Exercise Price
---------- -----------
Outstanding at January 1, 2007 -- $ --
Granted 33,909,407 4.41
Exercised -- --
Forfeited -- --
---------- -----------
Outstanding at September 30, 2007 33,909,407 $ 4.41
---------- -----------
Exercisable at September 30, 2007 33,909,407 $ 4.41
---------- -----------
17
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2007
NOTE 9- COMMITMENTS AND CONTINGENCIES
-----------------------------
Effective January 1, 2005 the Company entered into an employment agreement
with its President. Under the agreement the President shall be entitled to
an annual base salary of $250,000 in 2005 escalating to $366,025 in 2009.
In 2005, $156,000 of the salary shall be paid ratably during the course of
the year and the remaining $94,000 will be paid in accordance with the
terms of the agreement. The initial term of the agreement is for a period
of five years. The President has the option to renew this agreement for a
second five-year term. In addition to the base salary the Company has
granted the President 545,000 shares of restricted common stock as
deferred compensation. The common stock vests to the President over a
five-year period commencing January 1, 2005.
On March 12, 2007 the Company entered into an Exclusive Placement Agent
Agreement with an investment banker pursuant to which the investment
banker was to place up to $3,000,000 of debt securities (with related
warrants) within a 45 day period following approval of offering documents.
During the offering term, two subscriptions, for a total of $800,000, were
received, of which amount $400,000 was paid-in. After payment of Escrow
Agent fees and costs of $2,510 and transaction fees and costs of $62 200,
which costs and fees have been contemporaneously expensed, the Company
netted $335,299. On June 13, 2007, following expiration of the 45-day
term, the Company notified the Escrow Agent and the investment banker (1)
that the Exclusive Placement Agent Agreement would not be extended and (2)
that the offering was withdrawn. The Company determined to rescind the two
subscriptions and on August 1, 2007 returned the $400,000 together with 9%
interest of $9,640. The interest was expensed in June 2007. The Company
concurrent with the rescind agreement settle all outstanding claims for
$25,000, which was expensed in the third quarter 2007.
The Company set up a prepaid in the amount of $250,000 in June 2007 for a
finder fee related to the $3,000,000 debt securities funding discuss
above. In the connection with the rescission of these debt securities the
Company has gotten agreement from parties to refund the $250,000 in the
fourth quarter 2007.
In June 2007 the Company entered into purchase agreement with Ingersoil
Production Systems of Rockford Illinois to build one 10 ton microwave
reactor system and one prototype reactor system. The total purchase
commitment is $679,000, expected delivery date is approximately six months
from September. An initial payment of $66,333 will be paid in the fourth
quarter of 2007, with balance due upon delivery of products in 2008.
18
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2007
NOTE 10- RELATED PARTY TRANSACTION
-------------------------
On December 29, 2006 the Company completed a merger with Mobilestream Oil,
which had common control owners. The transfer of assets between entities
was recorded at their cost basis for accounting purposes. A royalties
receivable and payable in the amount of $70,832 was eliminated in the
consolidation of two companies for first quarter 2006. Revenue for
royalties and development expenses in amount of $116,667 was also
eliminated in the consolidation of the two companies.
On May 17, 2006, the Company authorized the purchase of the Company stock
from Lois Pringle, officer and wife of the Company's Chief Executive
officer. The Company purchased 94,961 shares for $66,471 in cash.
NOTE 11- NOTE RECEIVABLE
---------------
On September 22, 2006, the Mobilestream Oil, Inc. loaned $650,000 to M J
Advanced Corporation Communications ("MJACC") with the understanding that
MJACC would advance money to CRCIC, LLC a limited liability company for,
the purpose to acquire a shell corporation (Global Resources Corporation)
for Carbon Recovery Corporation to perfect a reverse merger. Subsequent to
the balance sheet date, a dispute arose with respect to the agreement. A
resolution was agreed upon where 400,000 shares of Global Resources
Corporation stock owned by MJACC and CRCIC have been transferred to an
attorney as escrow for satisfaction of the note payable to the Company and
MJACC and CRCIC relinquished all rights. The stocks held in escrow will be
sold by the Escrow agent to satisfy the loan amount.
The note has been fully reserved due to market price volatility of the
Company's common stock price.
NOTE 12- IVESTMENTS AND DEPOSITS ON INVESTMENTS
--------------------------------------
The Company entered into preliminary sales agreement to purchase the
Equipment Service Parts Company (ESP), a $100,000 deposit was made to ESP
in December 2006. In June 2007 the Company has decided not to pursue the
acquisition of ESP and the deposit was deemed not refundable and was
expensed in June 2007.
19
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2007
NOTE 13- SUBSEQUENT EVENTS
-----------------
Subsequent to the balance sheet date of September 30, the following
transactions occurred:
On October 16, 2007 the Company revived an Agreement which had previously
expired for the sale of shares of it Common stock to a European fund
pursuant to Regulation S. Under the revived Agreement and Addendum,
Mercatus & Partners, Limited will purchase shares to a total purchase of
$2,000,000 on or before November 30, 2007 with the expectation, however,
that the transaction will be completed by November 15, 2007. During that
time period, Mercatus & Partners, Limited will make installment purchases.
The purchase price per share will be 50% of the calculated "value". The
"value" of the shares purchased will initially be determined based upon
the closing sale prices for the Company's Common Stock for ten (10)
consecutive trading days ending on and including the date of the payment.
A second valuation of the shares will be made on the anniversary dates of
the purchases and adjusted, if necessary, for conditions at that time. The
Company has deposited 2,665,666 shares of its Common Stock in escrow, with
any unpurchased balance of such shares as of November 30th to be returned
for cancellation.
On October 22, 2007 the Board of directors has accepted an offer, from
Frank G. Pringle, the Company's Chairman and CEO/President to amend the
terms of the Company's 2006 Series of Convertible Preferred Stock, of
which he is owner of all issued and outstanding shares. Each share of the
Preferred Stock will be convertible into one-half share of Common Stock
(subject to the same limitations). As a result, the 35,236,188 shares will
now be convertible into only 17,618,094 shares of Common Stock rather than
70,472,376 shares.
The Board of Directors has also accepted Mr. Pringle offered to cancel the
23,500,000 Common Stock Purchase Warrants received by him in the
transaction when the Company acquired the assets of Mobilestream Oil, Inc.
This action does not affect the remaining 3,705,867 warrants held by the
Mobilestream Oil Liquidating Trust and to be issued to the other
shareholders of Mobilestream Oil, Inc. upon their registration.
In October the Company issued to the Chairman and CEO/President, 300,000
shares of common stock as part of the employee compensation plan.
Valuation of stock at issuance and to be expensed in fourth quarter is
$780,000.
In October the Company entered into a one year service agreement with two
Media Consultant firms for investment marketing services. The Companies
were issued 350,000 and 75,000 shares of common stock respectively for
services valued at $864,500 and $180,000 respectively. These expenses will
be amortized over the 12 month period, the life of the service agreements.
20
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
Plan of Operations
------------------
On September 22, 2006 the Company acquired the assets and development stage
business of Carbon Recovery Corporation. Since, the Company has continued the
plan of operations developed by Carbon Recovery Corporation and in effect at the
time of that acquisition. Essentially, this involves finding commercial
applications for the various uses and applications of the variable microwave
technology to recover hydrocarbons either from waste products (E.G., waste tires
and non-metallic components of junked and wrecked vehicles) or from sources such
as oil shale, oil drilling cuttings, capped wells with appropriate geological
characteristics, etc.
Waste Tires:
Carbon Recovery Corporation had commenced negotiations for a lease of a 3 to 4
acre site, with a 135,000 sq. ft. building, at a former USX site in Fairless
Hills, Bucks County, Pennsylvania for the construction of a waste tire disposal
plant. Those negotiations were initially continued by the Company but have now
been tabled because the Company anticipates constructing a tire disposal
facility in conjunction with the dredging sludge disposal discussed below.
Fluff:
As explained in a prior filing, "fluff" is essentially the non-metallic
components (E.G., plastics) of junked and wrecked vehicles. As previously
reported, Company has developed a unit for the decomposition of such materials
for which it currently is seeking purchase orders. As a result of its search,
the Company is in negotiations with two companies. The first transaction would
be for an initial unit, potentially followed by several more. The second
transaction, with a major disposal company, is likely to be structured as an
"exclusive" (except for the first transaction already in progress). The second
transaction would involve a fee for the exclusivity, as well as support for
continuing R&D with respect to the types of materials encountered on a
world-wide basis.
Dredging:
Dredging of harbors and waterways creates piles of muck and debris contaminated
with various wastes, including especially hydrocarbons. The Company is
developing the machinery and plant required for the application of its microwave
technology to the handling of such dredging sludge, removing the moisture and
extracting the hydrocarbons so as to permit the residue to be put in landfills
or to be used for fill purposes. Under a plan currently under discussion, the
Company would install such a plant in conjunction with the dredging operations
of the Army Corps of Engineers to process the sludge as it is delivered onshore.
The Company's proposal would also construct a waste tire facility adjoining the
sludge treatment plant for the purpose of recovering sufficient hydrocarbons
from the tires to provide the energy to operate the sludge treatment plant. The
proposed plant is expected to dispose of approximately 6,000,000 tires per year.
21
Solid Waste:
The Company is designing a plant to apply its microwave technology to the
processing of municipal solid waste. The Company expects to deliver a plant by
February for use as a pilot project for military use. The plant is intended to
remove the moisture and extract the hydrocarbons, reducing the weight by 50% to
60% and reducing the volume by 70% to 80%, so that the residue can be put in
landfills.
Drilling Fluids/Drilling Mud
The drilling fluids used in the drilling process, which are primarily
hydrocarbons, contaminate the soil being drilled. Testing in conjunction with
major drilling companies has shown that the Company's microwave technology can
be applied to the treatment of the drilling muds so as to recapture the drilling
fluids.
Other Applications:
With respect to the other hydrocarbon applications of the technology, the
Company will continue its R&D in each of the areas and seek out joint venture
partners for field testing and ultimate licensing to users.
The Company recognizes that it faces substantial competition from companies with
alternative technologies in the various areas where it seeks to exploit its own
microwave technology and that the transfer of the microwave technology from the
laboratory to the field will involve a variety of problems. The Company also
recognizes that its microwave technology requires certain equipment and
machinery components which are not commercially available and which must be
built to the Company's order and which may, accordingly, require a substantial
manufacturing or fabricating time.
Liquidity and Working Capital
-----------------------------
As of September 30, 2007 the Company had $255,514 in cash on hand. This was
considered adequate to covering anticipated working capital requirements for
approximately eight (2) months. During the quarter ending September 30, 2007,
the Company rescinded a partial financing for which the offering period had
elapsed, returning $400,000 to the investors, reducing the Company's cash. With
its on-going R&D for specific applications, as well as the engineering
development of the plants for current applications, the Company is required to
continue to seek capital. This is expected to continue for the foreseeable
future.
22
ITEM 3. CONTROLS AND PROCEDURES.
1. Reclassification of and changed accounting for convertible debentures. On
July 3, 2006, the Company concluded that it was necessary to restate its
financial results for the fiscal year ended March 31, 2005 and for the interim
periods ended September 30 and December 31, 2004 and 2005 and for the interim
period ended June 30, 2005 to reflect additional non-operating gains and losses
related to the classification of and accounting for convertible debentures
issued in fiscal 2005. The Company had previously determined a beneficial
conversion feature, valued the conversion features at the intrinsic value and
classified the convertible instruments as equity. After further review, the
Company determined that those instruments should have been classified as
derivative liabilities and, therefore, the fair value of each instrument should
have been recorded as a derivative liability on the Company's balance sheet.
Changes in the fair values of those instruments resulted in adjustments to the
amount of the recorded derivative liabilities and the corresponding gain or loss
will be recorded in the Company's statement of operations. At the date of the
conversion of each respective instrument or portion thereof, the corresponding
derivative liability was classified as equity. The Company filed amended Forms
10-QSB reflecting these changes.
2. Pursuant to rules adopted by the SEC as directed by Section 302 of the
Sarbanes-Oxley Act of 2002, the Company has performed an evaluation of its
disclosure controls and procedures (as defined by Exchange Act Rule 13a-15(e))
as of the end of the period covered by this report. The Company's disclosure
controls and procedures are designed to ensure (I) that information required to
be disclosed by the Company in the reports the Company files or submits under
the Exchange Act are recorded, processed, summarized, and reported within the
time periods specified in the SEC's rules and forms; and (ii) that information
required to be disclosed by the Company in the reports it files or submits under
the Exchange Act is accumulated and communicated to the Company's management,
including its principal executive and principal financial officer, or persons
performing similar functions, as appropriate to allow timely decisions regarding
required disclosure.
The Company has evaluated, with the participation of our CEO and CFO, the
effectiveness of the design and operation of the Company's disclosure controls
and procedures as of December 21, 2006, pursuant to Exchange Act Rule 15d-15.
Based upon that evaluation, the CEO and CFO identified deficiencies that existed
in the design or operation of our internal control over financial reporting that
it considered to be "material weaknesses". The Public Company Accounting
Oversight Board has defined a material weakness as a "significant deficiency or
combination of significant deficiencies that results in more than a reasonable
possibility that a material misstatement of the annual or interim financial
statements will not be prevented or detected."
The material weaknesses identified relate to:
o As of September 30, 2007 there continued to be a lack of
accounting personnel with the requisite knowledge of Generally
Accepted Accounting Principles in the US ("GAAP") and the
financial reporting requirements of the Securities and
Exchange Commission.
o As of September 30, 2007 there were insufficient written
policies and procedures to insure the correct application of
accounting and financial reporting with respect to the current
requirements of GAAP and SEC disclosure requirements.
o As of September 30, 2007 there was a continuing lack of
segregation of duties, in that we only had one person
performing all accounting-related duties.
23
The Company has taken the following corrective measures to address the material
weaknesses identified above and to improve our internal controls over financial
reporting:
1. We recognized the need to gain sufficient expertise in the knowledge
of "GAAP" and the financial reporting requirements of the SEC and, in the third
quarter of 2006, we hired a third party accounting firm to assist management in
the preparation of the financial statements. This third party accounting firm is
assisting us in evaluating and implementing internal control standards, as well
as beginning our Sarbanes-Oxley process. Because of the "barebones" level of
relevant personnel, however, certain deficiencies which are cured by separation
of duties cannot be cured, but only monitored as a weakness.
2. We are currently in the process of revising, establishing and
writing accounting policies and procedures needed to ensure the correct
application of accounting and financial reporting with respect to the current
requirements of GAAP and SEC disclosure requirements. This process is an
on-going process which began in the first quarter 2007 and will continue though
the end of this year. The Company's senior management will then evaluate and
report on the status of the Company's revised internal controls at the end of
the year 2007.
Notwithstanding the existence of material weaknesses in our internal control
over financial reporting, our management, including our Chief Executive Officer
and Chief Financial Officer, believes that the consolidated financial statements
included in this report fairly present in all material respects our financial
condition, results of operations and cash flows for the periods presented.
PART II - OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
The pending litigation previously reported (Starr Consulting, Inc. et al v.
Global Resources Corp. et al) is before the judge awaiting a decision on the
Company's. Motion to Set Aside the Default Judgment. If the Company's motion is
granted, which is anticipated, the Company intends to vigorously defend the
suit, including seeking dismissal for lack of jurisdiction.
ITEM 2 UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS
On August 30, 2007 the Company issued 3,745 shares of its Common Stock to a
consultant in payment for consulting fees of $2,996. The issuance of the shares
was considered exempt pursuant to Section 4(2) of the Securities Act of 1933 as
amended.
Also on August 30, 2007 the Company issued 30041 shares of its Common Stock to
am engineering services consultant in payment for consulting fees of $30,000.
The issuance of the shares was considered exempt pursuant to Section 4(2) of the
Securities Act of 1933 as amended.
On August 31, 2007 the Company issued 1,000 shares of its Common Stock to a mass
spectrometer consultant in payment for certain advisory services valued at
$1,000. The issuance of the shares was considered exempt pursuant to Section
4(2) of the Securities Act of 1933 as amended.
24
On October 2, 2007 the Company issued 350,000 shares of its Common Stock to a
media consultant pursuant to a financial public relations consulting contract.
The issuance of the shares was considered exempt pursuant to Section 4(2) of the
Securities Act of 1933 as amended.
On October 10, 2007 the Company issued 47,579 shares to an investor exercising
its cashless exercise warrants. The issuance of the shares was considered exempt
pursuant to Section 4(2) of the Securities Act of 1933 as amended.
ITEM 5 OTHER INFORMATION
To complete the rescission of the Westor Capital Group, Inc.("Westor") on
September, 2007 the Company entered into a Settlement Agreement with Westor
whereby the two companies (1) exchanged releases and covenants not to sue, (2)
canceled the outstanding agreements between the two companies except for certain
non-circumvention provisions relating to certain specific introductions made by
Westor, which provisions were amended, and (3) the Company paid Westor the
remaining $25,000 owed for the original due diligence and legal costs incurred
by Westor in connection with the rescinded offering.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
GLOBAL RESOURCE CORPORATION
By /s/ Frank G. Pringle, President/CEO
-------------------------------------
Date: November 8, 2007
25