As filed with the Securities and Exchange Commission on February 12, 2008
REGISTRATION NO. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
GLOBAL RESOURCE CORPORATION
(Exact name of registrant as specified in charter)
NEVADA 2860 84-1565820
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
408 BLOOMFIELD DRIVE-UNIT # 3
WEST BERLIN, NJ 08091
(856) 767-5661
(Address, including zip code, and telephone number, including area code
of registrant's principal executive offices)
408 BLOOMFIELD DRIVE-UNIT # 3
WEST BERLIN, NJ 08091
(Address of principal place of business or intended principal place of business)
FRANK G. PRINGLE
President and Chief Executive Officer
408 BLOOMFIELD DRIVE-UNIT #3
WEST BERLIN, NJ 08091
(480) 219-5005
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
COPIES TO:
FOX LAW OFFICES, P.A.
131 COURT STREET, #1
EXETER, NH 03833
(603) 778-9910
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this registration statement.
If any securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act, check
the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
CALCULATION OF REGISTRATION FEE
TITLE OF EACH CLASS OF AMOUNT TO PROPOSED MAXIMUM PROPOSED MAXIMUM REGISTRATION
SECURITIES TO BE REGISTERED OFFERING PRICE PER AGGREGATE OFFERING FEE
REGISTERED (2) (3) SHARE (1) PRICE
Mobilestream Acquisition
Shares of Common Stock
par value $.001 per share 11,145,225 $2.69 $29,980,655.25 $1178.24
Mobilestream Acquisition
Warrants 3,705,867 -0- -0- -0-
Mobilestream Acquisition
Warrant Shares of Common
Stock, par value #$.001
per share 3,705,867 $4.75(4) $17,602,868.25 $691.79
Carbon Recovery Acquisition
Shares of Common Stock
par value $.001 per share 11,188,996 $2.69 $30,098,399.24 $1182.87
Carbon Recovery
Acquisition
Class B Warrants 3,908,340 -0- -0- -0-
Carbon Recovery
Acquisition
Class B Warrant
Shares of Common
Stock, par value
$.001 per share 3,908,340 $2.75(4) $10,747,935 $422.39
Carbon Recovery
Acquisition
Class D Warrants 1,397,600 -0- -0- -0-
Carbon Recovery
Acquisition
Class D Warrant
Shares of Common
Stock, par value
$.001 per share 1,397,600 $2.75(4) $3,843,400 $151.05
Carbon Recovery
Acquisition
Class E Warrants 1,397,400 -0- -0- -0-
Carbon Recovery
Acquisition
Class E Warrant
Shares of Common
Stock,par value
$.001 per share 1,397,600 $4.00(4) $5,590,400 $219.70
(1) The price is estimated in accordance with Rule 457(c) under the
Securities Act of 1933, as amended, solely for the purpose of calculating the
registration fee and represents the average of the bid and asked prices of the
Common Stock on February 8, 2008 as reported on the electronic Bulletin Board.
(2) The 10,409,407 warrants and the 32,743,628 shares being registered for
distribution to our stockholders are for warrants to purchase shares of our
common stock and for shares of our common stock, and include:
(i) 11,145,225 currently issued shares of our common stock (the "Mobilestream
Acquistion Common Stock") being distributed to shareholders of a liquidating
trust (the "Mobilestream Liquidating Trust") established in connection with the
acquisition via merger (the "Mobilestream Acquisition") by the Company of
Mobilestream Oil, Inc. ("Mobilestream");
(ii) 3,705,867 currently issued warrants (the "Mobilestream Acquisition
Warrants") to purchase shares of our common stock are being distributed to the
shareholders of Mobilestream in connection with the Mobilestream Acquisition;
(iii) 3,705,867 shares of our common stock (the "Mobilestream Acquisition
Warrant Shares") issuable upon the exercise of the Mobilestream Acquisition
Warrants;
(iv) 11,188,996 currently issued shares of our common stock (the "Carbon
Recovery Acquisition Common Stock") are being distributed to shareholders of a
liquidating trust (the "Carbon Recovery Liquidating Trust") established in
connection with the acquisition by the Company (the "Carbon Recovery
Acquisition") of the assets of Carbon Recovery Corporation ("Carbon Recovery");
(v) 3,908,340 currently issued warrants (the "Carbon Recovery Acquisition Class
B Warrants") to purchase shares of our common stock are being distributed to
shareholders of Carbon Recovery in connection with the Carbon Recovery
Acquisition;
(vi) 3,908,340 shares of our common stock (the "Carbon Recovery Acquisition
Class B Warrant Shares") issuable upon the exercise of the Carbon Recovery
Acquisition Class B Warrants;
(vii) 1,397,600 currently issued warrants (the "Carbon Recovery Acquisition
Class D Warrants") to purchase shares of our common stock are being distributed
to shareholders of Carbon Recovery in connection with the Carbon Recovery
Acquisition;
(viii) 1,397,600 shares of our common stock (the "Carbon Recovery Acquisition
Class D Warrant Shares") issuable upon the exercise of the Carbon Recovery Class
D Warrants;
(ix) 1,397,600 currently issued warrants (the "Carbon Recovery Acquisition Class
E Warrants")to purchase shares of our common stock are being distributed to
shareholders of Carbon Recovery in connection with the Carbon Recovery
Acquisition; and
(x) 1,397,600 shares of our common stock (the "Carbon Recovery Acquisition Class
E Warrant Shares") issuable upon the exercise of the Carbon Recovery Acquisition
Class E Warrants.
(3) In addition to the shares set forth in the table, the amount to be
registered includes (i) an indeterminate number of warrants as such number may
be adjusted as a result of characteristics of the warrants such as dilution
protection and (ii) an indeterminate number of shares as such number may be
adjusted upon exercise of the various classes of warrants, and as such number
may be adjusted as a result of stock splits, stock dividends and similar
transactions in accordance with Rule 416.
(4) Pursuant to Rule 457(g) calculated based on the exercise price of the
various categories of Warrants being registered.
The registrant herby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
SUBJECT TO COMPLETION DATED FEBRUARY --, 2008
The information in this prospectus is not complete and may be changed. This
Prospectus is included in the registration statement filed by Global Resource
Corporation with the Securities and Exchange Commission. The warrant holders and
stockholders to whom the Shares, the Warrants and the Warrant Shares may be
distributed may not sell These securities until this registration statement
filed with the Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities and is not soliciting an offer to buy
these securities in any state Where the offer or sale is not permitted.
PRELIMINARY PROSPECTUS
10,409,407 WARRANTS
32,743,628 SHARES OF COMMON STOCK
GLOBAL RESOURCE CORPORATION
----------------------------------
This prospectus covers the registration and the distribution by the
liquidating trustee (the "Liquidating Trustee") of the Mobilestream Liquidating
Trust and the Carbon Recovery Liquidating Trust of (1) 22,334,221 shares of our
common stock; (2) warrants to purchase a total of 10,409,407 shares of our
common stock, and (3) 10,409,407 shares of our common stock underlying the
exercise of the warrants as described below:
(i) 11,145,225 currently issued shares of our common stock (the "Mobilestream
Acquistion Common Stock") are being distributed to shareholders of a liquidating
trust (the "Mobilestream Liquidating Trust") established in connection with the
acquisition via merger (the "Mobilestream Acquisition") by the Company of
Mobilestream Oil, Inc. ("Mobilestream");
(ii) 3,705,867 currently issued warrants to purchase shares of our common stock
(the "Mobilestream Acquisition Warrants") are being registered and distributed
to the shareholders of Mobilestream in connection with the Mobilestream
Acquisition;
(iii) 3,705,867 shares of our common stock (the "Mobilestream Acquisition
Warrant Shares") issuable upon the exercise of the Mobilestream Acquisition
Warrants;
(iv) 11,188,996 currently issued shares of our common stock (the "Carbon
Recovery Acquisition Common Stock") are being distributed to shareholders of a
liquidating trust (the "Carbon Recovery Liquidating Trust") established in
connection with the acquisition by the Company (the "Carbon Recovery
Acquisition") of the assets of Carbon Recovery Corporation ("Carbon Recovery");
(v) 3,908,340 currently issued warrants to purchase shares of our common stock
(the "(the "Carbon Recovery Acquisition Class B Warrants") are being registered
and distributed to shareholders of Carbon Recovery in connection with the Carbon
Recovery Acquisition;
(vi) 3,908,340 shares of our common stock (the "Carbon Recovery Acquisition
Class B Warrant Shares") issuable upon the exercise of the Carbon Recovery
Acquisition Class B Warrants;
(vii) 1,397,600 currently issued warrants to purchase shares of our common stock
(the "Carbon Recovery Acquisition Class D Warrants") are being registered and
distributed to shareholders of Carbon Recovery in connection with the Carbon
Recovery Acquisition;
(viii) 1,397,600 shares of our common stock (the "Carbon Recovery Acquisition
Class D Warrant Shares") issuable upon the exercise of the Carbon Recovery Class
D Warrants;
(ix) 1,397,600 currently issued warrants to purchase shares of our common stock
(the "Carbon Recovery Acquisition Class E Warrants") are being registered and
distributed to shareholders of Carbon Recovery in connection with the Carbon
Recovery Acquisition; and
(x) 1,397,600 shares of our common stock (the "Carbon Recovery Acquisition Class
E Warrant Shares") issuable upon the exercise of the Carbon Recovery Acquisition
Class E Warrants.
From time to time in this prospectus, we refer to the shares registered
under this prospectus collectively as the "Shares", the different classes of
warrants we have registered collectively as the "Warrants" and the separate
numbers of shares of our common stock we have registered and that are issuable
upon exercise of the Warrants collectively as the "Warrant Shares."
In connection with the Mobilestream and Carbon Recovery acquisitions, we
agreed to file a registration statement covering: (i) the shares of common stock
issued in the Mobilestream Acquisition, (ii) the warrants to purchase shares of
our common stock issued in the Mobilestream Acquisition; (iii) the shares of
common stock to be issued upon exercise of the Mobilestream Warrants, (iv) the
shares of common stock issued in the Carbon Recovery Acquisition, (v) the Class
B, D and E Warrants to purchase shares of our common stock issued in the Carbon
Recovery Acquisition; and (vi) the shares of common stock to be issued upon
exercise of the Class B, D and E Warrants.
The Shares, the Warrants and the Warrant Shares will be offered by our
respective distributees through public or private transactions at then
prevailing market prices or privately negotiated prices. There is no organized
market for our Warrants, and we do not expect such a market to be created or
developed in connection with this offering. The offering will terminate: (i)
with respect to the Shares and the Warrants when the distribution by the
Liquidating Trustee to the stockholders of Mobilestream and Carbon Recovery is
completed, and (ii) with respect to the Warrant Shares on the earlier of the
dates on which the Warrants expire or all of the Warrants are exercised and
converted into Warrant Shares. We will not receive any proceeds from the
distribution by the Liquidating Trustee of the Shares or the Warrants to the
respective stockholders of Mobilestream and Carbon Recovery or from the sale of
the Shares or Warrant Shares by such stockholders upon exercise of the Warrants.
Any proceeds from the exercise of the Warrants will be added to our working
capital.
Our common stock is quoted on the Pink Sheets under the symbol "GBRC.PK".
On February 8, 2008, the closing price of the common stock on the Pink Sheets
was $2.70 per share.
The Shares, the Warrants and the Warrant Shares included in this prospectus
may be disposed of on any stock exchange, market or trading facility on which
the shares are traded or in private transactions; however, there is no organized
market for our Warrants, and we do not expect such a market to be created or
developed in connection with this offering. These dispositions may be at fixed
prices, at prevailing market prices at the time of sale, at prices relating to
the prevailing market price, at varying prices determined at the time of sale,
or at negotiated prices. We will not control or determine the timing or the
price at which a stockholder decides to sell or otherwise dispose of its Shares
or its Warrant Shares, or the timing of exercise of its Warrants. Brokers or
dealers effecting transactions in the Shares, the Warrants and the Warrant
Shares should confirm that the Shares, the Warrants and the Warrant Shares are
registered under applicable state law or that an exemption from registration is
available.
No underwriter or person has been engaged to facilitate the sale of the
Shares, the Warrants or the Warrant Shares in this offering, and none of the
proceeds from the sale of the Shares or the Warrant Shares will be placed in
escrow, trust or similar account.
We have not authorized anyone to provide information different from that
contained in this prospectus. Neither the delivery of this prospectus nor the
sale of the Shares, the Warrants or the Warrant Shares means that information
contained in this prospectus is correct after the date of this prospectus. You
should assume that the information contained in this prospectus is accurate only
as of the date on the front cover of this prospectus. This prospectus is not an
offer to sell or solicitation of an offer to buy these securities in any
circumstances under which the offer or solicitation is unlawful.
INVESTING IN OUR WARRANTS OR COMMON STOCK INVOLVES SUBSTANTIAL RISKS.
BEFORE MAKING AN INVESTMENT, PLEASE READ THE "RISK FACTORS" SECTION OF THIS
PROSPECTUS WHICH BEGINS ON PAGE --.
THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE
NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OR
ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this prospectus is February __, 2008.
TABLE OF CONTENTS
Prospectus Summary.......................................................... 1
Risk Factors................................................................ 2
Special Note Regarding Forward Looking Statements........................... 9
Market Price of Common Stock and Other Stockholder Matters.................. 10
Management's Discussion and Analysis and Plan of Operation.................. 11
Business.................................................................... 14
Directors, Executive Officers, Promoters and Control Persons................ 17
Executive Compensation...................................................... 18
Security Ownership of Certain Beneficial Owners and Management ............. 21
Certain Relationships and Related Transactions.............................. 22
Plan of Distribution........................................................ 23
Legal Proceedings .......................................................... 25
Description of Securities................................................... 25
Experts..................................................................... 27
Disclosure of Commission Position on Indemnification for Securities Act
Liabilities............................................................... 27
Where You Can Find More Information......................................... 28
Index to Financial Statements............................................... 29
You should rely only on the information contained in this prospectus. We
have not authorized anyone, including any salesperson or broker, to give oral or
written information about this offering, our company, or the Shares, Warrants or
Warrant Shares offered hereby that is different from the information included in
this prospectus. If anyone provides you with different information, you should
not rely on it.
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus;
but it does not contain all information you should consider before investing in
our common stock. Read the entire prospectus before making an investment
decision.
Throughout this prospectus, the terms "we" "us" our" and "our company"
refer only to Global Resource Corporation, and the terms the "Warrants" and the
"Warrant Shares" refer respectively, to the aggregate of the different classes
of warrants and the number of shares of our common stock issuable upon exercise
of the separate classes of Warrants we have registered in this offering.
The following summary contains basic information about this offering. It
does not contain all of the information that is important to you.
COMPANY OVERVIEW
We are a development stage company with patent pending proven microwave
technology that allows for removal of oil and alternative petroleum products at
very low cost from various resources, including shale deposits, tar sands,
capped oil wells, waste oil streams and tires, with significantly greater yields
and lower costs than are available using existing known technologies. The
process uses specific frequencies of microwave radiation to extract oils and
alternative petroleum products from secondary raw materials. With the
acquisitions of (i) the assets and (ii) the development stage business of Carbon
Recovery Corporation ("Carbon Recovery" or "CRC"), and Mobilestream Oil, Inc.
("Mobilestream") in September 2006 and December 2006, respectively, described
below, our business became and continues to be: (i) 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; (ii) the design, manufacture and sale of machinery and equipment
units, embodying the technology and focused on specific applications; and (iii)
the licensing of our technology to third parties to exploit that technology.
Our offices are currently located at 408 Bloomfield Drive, Unit #3, West
Berlin, New Jersey 08091, and our telephone number is (856) 767-5661. We have a
website at www.globalresourcecorp.com but the contents of the website and all
hyperlinks therefrom are expressly excluded from this prospectus.
COMPANY HISTORY
We were originally organized as a Colorado corporation under the name Email
Mortgage.com, Inc. on March 28, 2000, with a primary business focus on marketing
first and second mortgages. We liquidated that business in 2002, and on August
14, 2002 we changed our state of domicile to Nevada by merging with and into
Mariner Health Care, Inc., a Nevada corporation, with Mariner Health Care
remained as the surviving Nevada entity. As part of the merger we changed our
name to "Advanced Healthcare Technologies, Inc." Initially, we engaged (through
a subsidiary) in the business of manufacturing and marketing of rigid extremity
hyperbaric chambers and a sacral patch device, both of which utilized oxygen
therapy for the treatment of wounds.
In December 2003 we completed a reverse merger with NutraTek, LLC, a Utah
limited liability company, under which we acquired 100% of the membership
interests in NutraTek in exchange for shares of our common stock, and the
principals of NutraTek assumed control of, and became the officers and directors
of, our company. NutraTek was in the business of researching and developing and
contracting with third parties to manufacture its own line of nutritional
dietary supplements, functional food products and proprietary natural
sweeteners. In March 2004, as a consequence of the NutraTek acquisition, we sold
the assets of the hyperbaric business in exchange for the assumption of its
existing liabilities. In June 2004, we sold the assets of NutraTek to our then
President and CEO, in exchange for his transfer of his controlling interest in
our Company. All of our existing officers and board members resigned from our
Company as part of the NutraTek sale transaction.
1
In September 2004 we changed our name to "Global Resource Corporation", and
filed a notice with the Securities and Exchange Commission to be regulated as a
business development company ("BDC") under the Investment Company Act of 1940.
While a BDC, we acquired a 50% ownership interest in Well Renewal, LLC, an
entity that owned and operated about 30 oil wells in Oklahoma through a pump and
injection system. In December 2005 we assigned our Well Renewal ownership
interest to Transnix Global Corporation in settlement of sums past due under a
$137,900 8% debenture we issued to Transnix. We filed a notice withdrawing our
BDC election on December 17, 2005, and the Company became a "development stage
company" and a shell corporation from that date until the Carbon Recovery
acquisition in September 2006.
On June 7, 2006, an unrelated third party acquired the Restated and Amended
Debenture owned by Transnix Global Corporation, which represented the balance of
the indebtedness by the Company to Transnix in the principal amount of $102,345
and accrued interest of $16,274. In conjunction with the assignment of the
Debenture, all of the Company's then directors (Messrs. Caldwell, Ferandell,
Jordan, Mangiarelli and van Adelsberg) and the Company's sole officer, Richard
Mangiarelli, resigned. Contemporaneously, Mary K. Radomsky was elected as a
director and as the sole officer of the Company. Mrs. Radomsky began
negotiations for the acquisition of Carbon Recovery Corporation ("Carbon
Recovery" or "CRC"). On September 22, 2006, the Company acquired the assets and
development stage business of CRC. The technology owned by CRC was licensed to
it by Mobilestream Oil, Inc. ("Mobilestream"). On December 31, 2006 the Company
acquired the assets of Mobilestream, thus bringing all of the variable microwave
frequency technology under its umbrella.
RISK FACTORS
AN INVESTMENT IN OUR WARRANTS, WARRANT SHARES OR OUR COMMON STOCK INVOLVES A
HIGH DEGREE OF RISK. YOU SHOULD CONSIDER CAREFULLY THE FOLLOWING INFORMATION
ABOUT THESE RISKS, TOGETHER WITH THE OTHER INFORMATION CONTAINED IN THIS
PROSPECTUS BEFORE BUYING WARRANTS OR SHARES OF OUR COMMON STOCK. OUR BUSINESS,
PROSPECTS, FINANCIAL CONDITION, AND RESULTS OF OPERATIONS MAY BE MATERIALLY AND
ADVERSELY AFFECTED AS A RESULT OF ANY OF THE FOLLOWING RISKS. THE TRADING AND
PRICE PER SHARE OF OUR COMMON STOCK COULD DECLINE AS A RESULT OF ANY OF THESE
RISKS. YOU COULD LOSE ALL OR PART OF YOUR INVESTMENT IN OUR COMMON STOCK. SOME
OF THE STATEMENTS IN "RISK FACTORS" ARE FORWARD LOOKING STATEMENTS. SEE "SPECIAL
NOTE REGARDING FORWARD LOOKING STATEMENTS".
RISKS RELATED TO OUR BUSINESS OPERATIONS
THERE IS SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING
CONCERN.
Our financial statements were prepared on the assumption that we will
continue as a going concern. If sufficient capital is not available, we would
likely be required to scale back our sales, marketing, research and development
efforts. We estimate that our current cash reserves will be sufficient to permit
us to continue our anticipated level of operations for the next 6 months from
the date of this prospectus. However, we plan to increase sales and marketing
efforts, research and development, and administrative expenses relating to our
business in 2008. We intend to use these reserves, as well as other funding
resources, in the event they shall be available on commercially reasonable
terms, to fund these activities and other activities described herein, although
we can provide no assurance that these additional funds will be available in the
amounts or at the times we may require. See "Risk Factors-We will need
additional capital in order to satisfy our business objectives."
2
WE HAVE A LIMITED OPERATING HISTORY, AND INVESTORS MAY NOT HAVE A
SUFFICIENT HISTORY ON WHICH TO BASE AN INVESTMENT DECISION.
Although we were incorporated in 2000, we acquired our operating assets for
our current business only in September and December 2006 and are a development
stage company. Accordingly, we have a limited operating history upon which
investors may evaluate our prospects for success. Investors must consider the
risks and difficulties frequently encountered by early stage companies. Such
risks include, without limitation, the following:
o amount and timing of operating costs and capital expenditures relating
to expansion of our business, operations, and infrastructure;
o time line to develop, test, manufacture, market and sell our products;
o negotiation and implementation of strategic alliances or similar
arrangements with companies with sufficient resources to support our
research and manufacturing efforts;
o need for acceptance of products;
o ability to anticipate and adapt to a competitive market and rapid
technological developments;
o dependence upon key personnel.
We cannot be certain our strategy will be successful or that we will
successfully address these risks. In the event that we do not successfully
address these risks, our business, prospects, financial condition, and results
of operations could be materially and adversely affected.
WE ARE A DEVELOPMENT STAGE COMPANY WITH A HISTORY OF LOSSES AND CAN PROVIDE
NO ASSURANCE OF OUR FUTURE OPERATING RESULTS.
We are a development stage company with no revenues from our contemplated
principal business activity. We have incurred net losses and negative cash flows
since inception and expect such losses and negative cash flows to continue in
the foreseeable future. We currently have no product revenues, and may not
succeed in developing or commercializing any products which will generate
product or licensing revenues. We do not know when we will have any products on
the market, and each such product will be manufactured only upon receipt of an
order. In addition, the sale completion for each of our machines requires a
process of testing, during which our products could fail. We may not be able to
enter into agreements with one or more companies experienced in the
manufacturing and marketing of complex equipment machines and, to the extent
that we are unable to do so, we will not be able to market our products.
Eventual profitability will depend on our success in developing, manufacturing,
and marketing our products. We may never achieve profitability.
WE WILL NEED ADDITIONAL CAPITAL IN ORDER TO SATISFY OUR BUSINESS
OBJECTIVES.
To date, we have financed our operations principally through offerings of
securities exempt from the registration requirements of the Securities Act. We
believe that our available resources and cash flow will be sufficient to meet
our anticipated working capital needs for the next 6 months from the date of
this prospectus. Notwithstanding the foregoing, we estimate that we will require
substantial additional financing at various intervals in order to continue our
research and development programs, including significant requirements for
operating expenses including intellectual property protection, and for
commercialization of our products. We can provide no assurance that additional
funding will be available on a timely basis, on terms acceptable to us, or at
all. In the event that we are unable to obtain such financing, we will not be
able to fully develop and commercialize our technology.
Our future capital requirements will depend upon many factors, including:
o effects of commercialization activities and facility expansions if and
as required;
o our ability to establish collaborative relationships;
o increases in our management, research, sales and marketing personnel;
o competing technological and market developments;
o continued progress in our research and development programs; and
o patent prosecutions.
3
If we cannot secure adequate financing when needed, we may be required to
delay, scale back or eliminate one or more of our research and development
programs or to enter into license or other arrangements with third parties to
commercialize products or technologies that we would otherwise seek to develop
and commercialize ourselves. In such event, our business, prospects, financial
condition, and results of operations may be adversely affected as we may be
required to scale-back, eliminate, or delay development efforts or product
introductions or enter into royalty, sales or other agreements with third
parties in order to commercialize our products.
WE CAN PROVIDE NO ASSURANCE OF THE SUCCESSFUL AND TIMELY DEVELOPMENT OF OUR
PRODUCTS.
Our products are at various stages of research and development. Further
development and extensive testing will be required to determine their technical
feasibility and commercial viability. Our success will depend on our ability to
achieve scientific and technological advances and to translate such advances
into reliable, commercially competitive products on a timely basis. Products
that we have developed and may in the future develop are not likely to be
commercially available for some time because of the time and expense in building
any individual machine. The proposed development schedules for our products may
be affected by a variety of factors, including technological difficulties,
proprietary technology of others, and changes in governmental regulation, many
of which will not be within our control. Any delay in the development,
introduction, or marketing of our products could result either in such products
being marketed at a time when their cost and performance characteristics would
not be competitive in the marketplace or in the shortening of their commercial
lives. In light of the long-term nature of our projects, the technology
involved, and the other factors described elsewhere in "Risk Factors", there can
be no assurance that we will be able to complete successfully the development or
marketing of any new products.
WE LACK THE RESOURCES AND EXPERIENCE NEEDED TO MANUFACTURE OUR PRODUCTS.
We currently lack the resources and experience needed to manufacture any of
our products. Our ability to conduct trials and commercialize our products will
depend, in part, on our ability to manufacture our products, either directly or,
as currently intended, through contract manufacturers, at a competitive cost and
in accordance with current good manufacturing practices and safety,
environmental, health and other regulatory requirements. We anticipate that we
will be required to depend on contract manufacturers or collaborative partners
for the manufacturing of our products during the testing phases and intend to
use contract manufacturers to produce any products we may eventually
commercialize. We have identified and entered into an arrangement with one such
manufacturer thus far. If we are not able to obtain or maintain contract
manufacturing on commercially reasonable terms, we may not be able to conduct or
complete trials of our machines or commercialize our products. We have
identified multiple suppliers for most if not all of the components of our
machines, although we can provide no assurance that these components will be
available when needed on commercially reasonable terms.
In order to succeed, we ultimately will be required to either develop such
manufacturing capabilities or to outsource manufacturing on a long-term basis to
third parties. We can provide no assurance that third parties will be interested
in manufacturing our products on a timely basis, on commercially reasonable
terms, or at all. If we are unable to establish manufacturing capabilities
either by developing our own organization or by entering into agreements with
others, we may be unable to commercialize our products, which would have a
material adverse effect upon our business, prospects, financial condition, and
results of operations. Further, in the event that we are required to outsource
these functions on disadvantageous terms, we may be required to pay a relatively
large portion or our net revenue to these organizations, which would have a
material adverse effect upon our business, prospects, financial condition, and
results of operations.
IN THE FUTURE, WE MAY RELY UPON COLLABORATIVE AGREEMENTS WITH LARGE
INDUSTRIAL AND MANUFACTURING COMPANIES.
In the future, we may rely heavily on collaborative agreements with large
industrial and manufacturing companies, governments, or other parties for our
revenues. Our inability to obtain any one or more of these agreements, on
commercially reasonable terms, or at all, or to circumvent the need for any such
agreement, could cause significant delays and cost increases and materially
affect our ability to develop and commercialize our products.
4
WE HAVE LIMITED SALES, MARKETING, AND DISTRIBUTION CAPABILITIES. WE WILL BE
REQUIRED TO EITHER DEVELOP SUCH CAPABILITIES OR TO OUTSOURCE THESE
ACTIVITIES TO THIRD PARTIES.
We currently have limited sales, marketing and distribution capabilities.
In order to succeed, we ultimately will be required to either develop such
capabilities or to outsource these activities to third parties. We can provide
no assurance that third parties will be interested in acting as our outsourced
sales, marketing, and distribution arms on a timely basis, on commercially
reasonable terms, or at all. If we are unable to establish sales, marketing, or
distribution capabilities either by developing our own organization or by
entering into agreements with others, we may be unable to successfully sell any
products that we are able to begin to commercialize, which would have a material
adverse effect upon our business, prospects, financial condition, and results of
operations. Further, in the event that we are required to outsource these
functions on disadvantageous terms, we may be required to pay a relatively large
portion of our net revenue to these organizations, which would have a material
adverse effect upon our business, prospects, financial condition, and results of
operations.
WE RELY UPON OUR PATENT APPLICATIONS TO PROTECT OUR TECHNOLOGY. WE MAY BE
UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS, AND WE MAY BE LIABLE
FOR INFRINGING THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS.
Our ability to compete effectively will depend on our ability to maintain
the proprietary nature of our technologies. We currently hold several pending
patent applications in the United States and corresponding patent applications
filed in certain other countries covering the proposed use of microwaves for the
recovery of hydrocarbons and fossil fuels. Further, we intend to rely on a
combination of trade secrets and non-disclosure, and other contractual
agreements and technical measures to protect our rights in our technology. We
intend to depend upon confidentiality agreements with our officers, directors,
employees, consultants, and subcontractors, as well as collaborative partners,
to maintain the proprietary nature of our technology. These measures may not
afford us sufficient or complete protection, and others may independently
develop technology similar to ours, otherwise avoid our confidentiality
agreements, or produce patents that would materially and adversely affect our
business, prospects, financial condition, and results of operations. We believe
that our technology is not subject to any infringement actions based upon the
patents of any third parties; however, our technology may in the future be found
to infringe upon the rights of others. Others may assert infringement claims
against us, and if we should be found to infringe upon their patents, or
otherwise impermissibly utilize their intellectual property, our ability to
continue to use our technology or the licensed technology could be materially
restricted or prohibited. If this event occurs, we may be required to obtain
licenses from the holders of this intellectual property, enter into royalty
agreements, or redesign our products so as not to utilize this intellectual
property, each of which may prove to be uneconomical or otherwise impossible.
Licenses or royalty agreements required in order for us to use this technology
may not be available on terms acceptable to us, or at all. These claims could
result in litigation, which could materially adversely affect our business,
prospects, financial condition, and results of operations.
The patent position of petroleum extraction and decomposition technology
firms is generally uncertain and involves complex legal and factual questions.
We do not know whether any of our current or future patent applications will
result in the issuance of any patents. Even issued patents may be challenged,
invalidated or circumvented. Patents may not provide a competitive advantage or
afford protection against competitors with similar technology. Competitors or
potential competitors may have filed applications for, or may have received
patents and may obtain additional and proprietary rights to processes
competitive with ours. In addition, laws of certain foreign countries do not
protect intellectual property rights to the same extent as do the laws of the
United States or Canada.
5
Patent litigation may occur in our industry and we cannot predict how this
will affect our efforts to form strategic alliances, conduct testing or
manufacture and market any products under development. If challenged, our
pending patents may not be held valid. We could also become involved in
interference proceedings in connection with one or more of our patent
applications to determine priority of invention. If we become involved in any
litigation, interference or other administrative proceedings, we will likely
incur substantial expenses and the efforts of our technical and management
personnel will be significantly diverted. In addition, an adverse determination
could subject us to significant liabilities or require us to seek licenses that
may not be available on favorable terms, if at all. We may be restricted or
prevented from manufacturing and selling our products in the event of an adverse
determination in a judicial or administrative proceeding or if we fail to obtain
necessary licenses.
Our commercial success will also depend significantly on our ability to
operate without infringing the patents and other proprietary rights of third
parties. Patent applications are, in many cases, maintained in secrecy until
patents are issued. The publication of discoveries in the scientific or patent
literature frequently occurs substantially later than the date on which the
underlying discoveries were made and patent applications are filed. In the event
of infringement or violation of another party's patent, we may be prevented from
pursuing product development or commercialization. See "Business--Patents and
Licenses".
WE CAN PROVIDE NO ASSURANCE THAT OUR PRODUCTS WILL OBTAIN REGULATORY
APPROVALS AT OR PRIOR TO THE TIME OF INSTALLATION.
The installation of any of our products at a customer site may require the
prior approval of various federal and state regulatory authorities governing
such areas as the environment, hazardous waste, health and worker safety. We
cannot predict with any certainty the amount of time necessary to obtain such
approvals and whether any such approvals will ultimately be granted. Operational
trials of our built to scale machines as opposed to laboratory scale models may
reveal that one or more of our products are ineffective or unsafe, in which
event further development of such products could be seriously delayed or
terminated. Delays in obtaining any necessary regulatory approvals of any
proposed product and failure to receive such approvals would have an adverse
effect on the product's potential commercial success and on our business,
prospects, financial condition, and results of operations. In addition, it is
possible that a product may be found to be ineffective or unsafe due to
conditions or facts which arise after development has been completed and
regulatory approvals have been obtained. In this event we may be required to
withdraw such product from the market. See "Business - Governmental Regulation".
WE DEPEND UPON OUR SENIOR MANAGEMENT AND SKILLED PERSONNEL AND THEIR LOSS
OR UNAVAILABILITY COULD PUT US AT A COMPETITIVE DISADVANTAGE.
We currently depend upon the efforts and abilities of our senior
executives, as well as the services of other key personnel. The loss or
unavailability of the services of any of these individuals for any significant
period of time could have a material adverse effect on our business, prospects,
financial condition, and results of operations. We have purchased "Key Man"
insurance policies on only Frank G. Pringle, our Chairman, President and CEO (in
the amount of $6,000,000, of which $2,000,000 is payable to his wife and the
other $4,000,000 is payable to the Company) but not on any other executives. In
addition, recruiting and retaining qualified engineering and scientific
personnel to perform future research and development work will be critical to
our success. There is currently a shortage of employees with expertise in our
areas of research, and this shortage is likely to continue. Competition for
skilled personnel is intense and turnover rates are high. Our ability to attract
and retain qualified personnel may be limited. Our inability to attract and
retain qualified skilled personnel would have a material adverse effect on our
business, prospects, financial condition, and results of operations.
RISKS RELATED TO THE SHARES, THE WARRANTS AND THE WARRANT SHARES
IN RECENT YEARS, THE STOCK MARKET IN GENERAL HAS EXPERIENCED PERIODIC PRICE
AND VOLUME FLUCTUATIONS. THIS VOLATILITY HAS HAD A SIGNIFICANT EFFECT ON
THE MARKET PRICE OF SECURITIES ISSUED BY MANY COMPANIES FOR REASONS OFTEN
UNRELATED TO THEIR OPERATING PERFORMANCE. THESE BROAD MARKET FLUCTUATIONS
MAY ADVERSELY AFFECT OUR STOCK PRICE, REGARDLESS OF OUR OPERATING RESULTS.
THE MARKET PRICE OF OUR COMMON STOCK MAY FLUCTUATE SIGNIFICANTLY, AND IT
MAY BE DIFFICULT TO RESELL YOUR SHARES OF COMMON STOCK WHEN YOU WANT OR AT
PRICES YOU FIND ATTRACTIVE.
6
The price of our common stock is quoted on the Pink Sheets and constantly
changes. We expect that the market price of the common stock will continue to
fluctuate. These fluctuations may result from a variety of factors, many of
which are beyond our control. These factors include:
o quarterly variations in our financial results;
o operating results that vary from the expectations of management,
securities analysts and investors;
o changes in expectations as to our business, prospects, financial
condition, and results of operations;
o announcements by us or our competitors of material developments;
o the operating and securities price performance of other companies that
investors believe are comparable to us;
o future sales of our equity or equity-related securities;
o changes in general conditions in our industry and in the economy, the
financial markets and the domestic or international political
situation;
o departures of key personnel; and
o regulatory and intellectual property considerations.
As a result of these fluctuations, you may experience difficulty selling shares
of our common stock when desired or at acceptable prices.
FUTURE SALES OF COMMON STOCK OR THE ISSUANCE OF SECURITIES SENIOR TO THE
COMMON STOCK OR CONVERTIBLE INTO, OR EXCHANGEABLE OR EXERCISABLE FOR,
COMMON STOCK COULD MATERIALLY ADVERSELY AFFECT THE TRADING PRICE OF THE
COMMON STOCK, AND OUR ABILITY TO RAISE FUNDS IN NEW EQUITY OFFERINGS.
Future sales of substantial amounts of our common stock or other
equity-related securities in the public market or privately, or the perception
that such sales could occur, could adversely affect prevailing trading prices of
our common stock and could impair our ability to raise capital through future
offerings of equity or other equity-related securities. We can make no
prediction as to the effect, if any, that future sales of shares of common stock
or equity-related securities, or the availability of shares of common stock for
future sale, will have on the trading price of our common stock. However, it
should be noted that upon the effectiveness of this registration statement,
there will immediately be an additional 22,334,221 free-trading shares of our
common stock issued and outstanding and, subject to exercise of the Warrants,
another 10,409,407 shares of our common stock that could be introduced into the
public markets during the next 12 months.
OUR COMMON STOCK IS SUBJECT TO THE PENNY STOCK REGULATIONS THAT IMPOSE
RESTRICTIONS ON THE MARKETABILITY OF OUR COMMON STOCK. AS A CONSEQUENCE,
THE ABILITY OF OUR STOCKHOLDERS TO SELL SHARES OF OUR STOCK COULD BE
IMPAIRED.
The Securities and Exchange Commission (the "Commission") has adopted
regulations that generally define a "penny stock" to be an equity security that
has a market price of less than $5.00 per share or an exercise price of less
than $5.00 per share subject to certain exceptions that are not applicable to
our company at present. Our common stock is subject to the penny stock rules
that impose additional sales practice requirements on broker-dealers who sell
these securities to persons other than established customers and accredited
investors. The regulations require that prior to any transaction involving a
penny stock, a risk disclosure schedule must be delivered to the buyer
explaining the penny stock market and its risks. For transactions covered by
these rules, the broker-dealer must make a special suitability determination for
the purchase, and must have received the purchaser's written consent to the
transaction prior to sale. As such the market liquidity for the common stock
will be limited to the ability of broker-dealers to sell it in compliance with
the above-mentioned disclosure requirements.
7
You should be aware that, according to the Commission, the market for penny
stocks has suffered in recent years from patterns of fraud and abuse. Such
patterns include:
o control of the market for the security by one or a few broker-dealers;
o "boiler room" practices involving high-pressure sales tactics;
o manipulation of prices through prearranged matching of purchases and
sales;
o the release of misleading information;
o excessive and undisclosed bid-ask differentials and markups by selling
broker-dealers; and
o dumping of securities by broker-dealers after prices have been
manipulated to a desired level, which hurts the price of the stock and
causes investors to suffer loss.
We are aware of the abuses that have occurred in the penny stock market.
Although we do not expect to be in a position to dictate the behavior of the
market or of broker-dealers who participate in the market, we will strive within
the confines of practical limitations to prevent such abuses with respect to our
common stock.
ONE EXISTING SHAREHOLDER CURRENTLY OWNS MORE THAN 51.0% OF OUR VOTING STOCK,
AND, AS A RESULT, YOU WILL HAVE MINIMAL INFLUENCE OVER SHAREHOLDER DECISIONS.
Our Chairman, President and CEO, Frank G. Pringle, presently owns directly
and through one or more affiliated entities, more than 51% of all of our issued
and outstanding voting stock through his ownership of shares of common stock and
shares of 2006 Series of Convertible Preferred Stock. See "Security Ownership of
Certain Beneficial Owners and Management." After the distribution of the Shares
covered by this prospectus, and assuming all the registered Warrants are
exercised for Warrant Shares, Mr. Pringle will own approximately 35% of all of
our issued and outstanding voting stock. As a result, Mr. Pringle will retain
significant control of the Company in the future and will have significant
influence over the management and affairs of our business. Mr. Pringle will also
exert considerable, ongoing influence over matters subject to stockholder
approval, including the election of directors and significant corporate
transactions, such as a merger, sale of assets or other business combination or
sale of our business. This concentration of ownership may have the effect of
delaying, deferring, or preventing a change in control, impeding a merger,
consolidation, takeover or other business combination involving us, or
discouraging a potential acquirer from making a tender offer or otherwise
attempting to obtain control of our business, even if such a transaction would
benefit other shareholders.
WE WILL NOT PAY CASH DIVIDENDS IN THE FORESEEABLE FUTURE.
We have not paid any cash dividends on our common stock and do not intend
to pay cash dividends in the foreseeable future. We intend to retain future
earnings, if any, for reinvestment in the development and expansion of our
business. Any credit agreements which we may enter into with institutional
lenders or otherwise may restrict our ability to pay dividends. Whether we pay
cash dividends in the future will be at the discretion of our board of directors
and will be dependent upon our financial condition, results of operations,
capital requirements, and any other factors that the board of directors decides
is relevant. See "Dividend Policy" and "Description of Securities -- Common
Stock".
8
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. This document contains forward-looking
statements, which reflect the views of our management with respect to future
events and financial performance. These forward-looking statements are subject
to a number of uncertainties and other factors that could cause actual results
to differ materially from such statements. Forward-looking statements are
identified by words such as "anticipates," "believes," "estimates," "expects,"
"plans," "projects," "targets" and similar expressions. Readers are cautioned
not to place undue reliance on these forward-looking statements, which are based
on the information available to management at this time and which speak only as
of this date. We undertake no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
For a discussion of some of the factors that may cause actual results to differ
materially from those suggested by the forward-looking statements, please read
carefully the information under "Risk Factors" beginning on page --.
The identification in this document of factors that may affect future
performance and the accuracy of forward-looking statements is meant to be
illustrative and by no means exhaustive. All forward-looking statements should
be evaluated with the understanding of their inherent uncertainty. You may rely
only on the information contained in this prospectus.
USE OF PROCEEDS
We will not receive any proceeds from the sale or other disposition of the
common stock distributed by the Liquidating Trustee to the former stockholders
of Mobilestream and Carbon Recovery pursuant to this prospectus. However, we
will receive the exercise price for any Warrants we distribute to the former
Mobilestream and Carbon Recovery stockholders upon their exercise of the
Warrants whose underlying shares ("Warrant Shares") are covered by this
prospectus. If all such Warrants are exercised, the total amount of proceeds we
would receive is $37,784,358.50. We expect to use the proceeds we receive
from the exercise of Warrants, if any, for general working capital purposes. We
will pay the expenses of registration of the Warrant Shares underlying the
Warrants, including legal and accounting fees.
9
MARKET PRICE OF COMMON STOCK AND OTHER STOCKHOLDER MATTERS
MARKET INFORMATION
Our common stock has been traded over the counter in the Pink Sheets since
April 2007. The trading symbol for our common stock is "GRBC.PK." From September
2004 to Aril 2007 our common stock traded on the OTCBB. In Aril 2007 our common
stock was delisted from the OTCBB for failure to satisfy applicable maintenance
criteria. The following table sets forth quarterly high and low bid prices for
the Common Stock for the periods presented, as reported by the OTCBB and, since
April 2006, the Pink Sheets. Quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commission and may not necessarily represent actual
transactions. We consider our stock to be "thinly-traded" and any reported sales
prices may not be a true market based valuation of the stock.
Fiscal Year Ended December 31, 2005
HIGH BID LOW BID
First Quarter* $.047 $.006
Second Quarter* .074 .011
Third Quarter* .034 .013
Fourth Quarter* .0265 .012
Fiscal Year Ended December 31, 2006
First Quarter* .035 .013
Second Quarter* .032 .015
Third Quarter 3.00 1.75
Fourth Quarter 4.60 1.10
Fiscal Year Ended December 31, 2007
First Quarter
Second Quarter 2.43 0.70
Third Quarter 5.13 1.55
Fourth Quarter 3.59 1.73
*This period was prior to the 1 for 100 reverse stock split of our common stock
which was effective on August 14, 2006, following which there were only 72,150
shares of our common stock issued and outstanding. On September 22, 2006 the
Company acquired the assets of Carbon Recovery Corporation by the issuance of
48,188,996 shares of its common stock. On December 31, 2006 the Company acquired
the assets of Mobilestream Oil, Inc. by the issuance of 11,145,225 shares of its
common stock; however, the Mobilestream acquired assets included 37,000,000
shares of our own common stock, all of which have been cancelled. As of February
5, 2008 our issued and outstanding shares of common stock total 33,923,957
shares.
Shares eligible for future sale could depress the price of our common
stock, thus lowering the value of a buyer's investment. Sales of substantial
amounts of our common stock, or the perception that such sales could occur,
could adversely affect prevailing market prices for shares of our common stock.
On February 8, 2008 the prices of our common stock were $2.78 high,
$2.60 low and $2.70 close as quoted on the Pink Sheets. On February 8, 2008 we
had 33,923,957 shares of our common stock issued and outstanding.
HOLDERS
As of February 8, 2008 there were approximately 106 record holders of our
common stock. We believe that the number of beneficial holders of our common
stock on such date was in excess of 470.
DIVIDENDS
We have never paid a cash dividend on our common stock and anticipate for
the foreseeable future any earnings will be retained for use in our business.
Accordingly, we do not anticipate the payment of any cash dividends in the
foreseeable future.
10
MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION
The following discussion of our financial condition and results of
operations should be read in conjunction with our Financial Statements and Notes
and the other financial information included elsewhere in this prospectus.
OVERVIEW
Since the acquisitions of Carbon Recovery and Mobilestream in 2006, our
business was, and continues to be: (i) 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; (ii) the
design, manufacture and sale of machinery and equipment units, embodying the
technology and focused on specific applications; and (iii) the licensing of
third parties to exploit that technology.
PLAN OF OPERATION
We have not had any revenues from operations since the acquisitions of
Carbon Recovery Corporation in September 2006 and Mobilestream Oil, Inc. in
December 2006, and our immediate predecessors in interest never received any
revenues from their respective businesses before we acquired their assets. Prior
to September 2006, all revenues we received from operations were derived from
lines of business unrelated to our current activities, and in which we no longer
have any ownership interest or other participation. See "Prospectus
Summary-History of the Company." We have financed our operations principally
through private sales of equity securities, and convertible notes and
debentures. In 2007 we raised net proceeds of $1,168,461 through the sale
of 1,519,564 shares of our common stock.
As of September 30, 2007, our total current assets were $505,514, of which
cash and cash equivalents were $255,514. As of September 30, 2007, our total
current liabilities were $181,870 and our total liabilities were $244,263.
We have no manufacturing capability of our own. Accordingly, we have
entered into an agreement with a manufacturing facility in the Midwest for the
manufacture of our machines. We are expecting completion of our first 1 ton HAWK
microwave reactor ASR processing machine by the end of March 2008.
We have begun our marketing efforts in various industry sectors. We have
hired dedicated sales and marketing personnel. We have submitted several
proposals to build one or more forms of microwave reactor ASR processing
machines with varying processing speeds. We reasonably expect to sign our first
contract for a HAWK-10 microwave reactor ASR processing machine for application
in the tire recycling industry within the next 180 days. We are also in
negotiation with a company in the oil industry concerning funding for
construction and testing of a HAWK microwave processing machine to decompose
hydrocarbons in a different segment of the petroleum materials market. If the
results of the operation of this machine are successful, then the company will
have the right to enter into a five year exclusive agreement with our company
for the right to purchase, market and distribute machines that perform in this
segment of the market place.
We also intend to consider the development of additional machines and
equipment using our core technology in areas outside of the tire recycling
industry, but, as discussed in the section on our business, we will require the
assistance of outside capital equity investments on a large scale or we will
need to align ourselves with joint venture or strategic alliance partners in
order to have the funds available to exploit these other potential applications.
We plan to continue to finance our operations with the sale of additional
common stock or sale of convertible securities. We also have alternative plans
which include, among others, reducing our expenses to the required level based
on our financial situation. There are no assurances however, that we will be
successful in obtaining an adequate level of financing needed for the long term
development and commercialization of our planned products.
11
We estimate that we can satisfy our cash requirements and will not have to
raise additional funds during the next 6 months. Our assessment of our cash
needs is based on assumptions concerning the rate of our cash expenses, the
technological and engineering challenges in the development of our products, the
projected development times, the equipment construction and testing trials
required along with their projected timetable, the demand for our product and
the costs of product sales, and the receipt of orders for our products. Our
actual operations may be affected by technological or engineering difficulties,
deviation from the timetables for experimentation and testing trials, unexpected
regulatory problems,delays in receipt and acceptance of orders for our machines,
low demand for our products or the effects of competition.
We raised $1,250,000 from a private placement of our common stock and
warrants in December 2007, of which we have received $1,000,000 at the closing
and the remaining $250,000 is being held in escrow by counsel for the investor.
The investor may choose to release the additional $250,000 in its sole
discretion. In 2008, we expect to continue to raise funds through the private
sale of convertible debt or equity in our Company, but as yet no terms have been
established for the sale of such debt and equity and there can be no assurance
we will be successful in raising required capital.
As an additional, but not complete, alternative we may enter into strategic
alliances joint ventures and similar arrangements for the development, testing,
construction, marketing and sale of our machines. In each such arrangement we
will be required to share our revenues from sale of our products with the other
party to the arrangement. The methods, terms and amounts of these arrangements
may vary greatly for each such transaction. One such alliance is currently under
discussion, but the terms including revenue sharing and funding, have not been
finalized. In the proposal, the other company will fund research and development
of a machine for application in an area of the petroleum recovery sector using
our technology in return for which it will have a five year exclusive right to
market and sell the machines if the product is commercially successful.
We also estimate an increase in the number of our employees in the next
twelve months. The increase in number of employees is expected mostly in
marketing and sales and operations as we start to market our machines for a
variety of purposes. The expected increase in the number of employees in the
next twelve months is between 3-5 employees.
CRITICAL ACCOUNTING POLICIES
The discussion and analysis of our financial condition and results of
operations are based on our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these consolidated financial statements
requires us to make estimates and judgments that affect the reported amounts of
assets, liabilities and expenses and related disclosure of contingent assets and
liabilities. On an on-going basis, we evaluate our estimates based on historical
experience and various other assumptions that are believed to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.
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 institution that is insured by the Federal
Deposit Insurance Corporation up to $100,000. At September 30, 2007 the
Company's uninsured cash balances total $55,514.
12
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 Mobilestream has been
allocated to the assets acquired and the liabilities assumed based on their fair
market values in accordance with SFAS 141, BUSINESS COMBINATIONS. All account
amounts and 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) includes
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.
RECENT ACCOUNTING PRONOUNCEMENTS
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.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements.
13
BUSINESS
INTRODUCTION
Prior to our acquisition of the assets and development stage business of
Carbon Recovery Corporation on September 22, 2006, and the subsequent
acquisition of the assets of Mobilestream Oil, Inc. on December 31, 2006 we had
been a shell corporation since approximately December 15, 2005. Our business
history prior to September 22, 2006 may be found at "Prospectus Summary-History
of the Company."
We are a development stage company with patent pending proven microwave
technology that allows for removal of oil and alternative petroleum products at
very low cost from various sources, including shale deposits, tar sands, capped
oil wells, tires and waste oil streams, with significantly greater yields and
lower costs than are available using existing known technologies. The process
uses specific frequencies of microwave radiation to extract oils and alternative
petroleum products from secondary raw materials, and is expected to dramatically
reduce the cost for oil and gas recovery from a variety of these unconventional
hydrocarbon sources.
With the acquisition of (i) the assets and (ii) the development stage
business from Carbon Recovery, our business became that of Carbon Recovery. That
business was, and continues to be: (i) 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; (ii) the
design, manufacture and sale of machinery and equipment units, embodying the
technology and focused on specific applications; and (iii) the licensing of
third parties to exploit that technology.
One application of the process utilizes the technology to decompose waste
tires into their components of carbon black, scrap steel, and hydrocarbon liquid
and gas. Since the tires are manufactured with a combination of different grades
of carbon black, the collected carbon black product is a composite of 4 to 6
different grades. The hydrocarbon liquid is not truly "oil". A tire is
manufactured from hydrocarbons (60%), and rubber and steel (40% together). The
hydrocarbons used to make a tire are "process oil". This "process oil" is a
refined product, but with our technology it is broken into a gas which is then
partially liquified. The precise composition of the resulting condensed liquid
is not known but it has been tested and has a BTU content comparable to diesel
fuel so we believe that it can be readily sold for fuel value.
The tire decomposition process involves a series of steps including
repeated break down of the materials into smaller components to fit the machine
size, repeated washings and dryings, and repeated exposure of the materials to
the microwave process at temperatures and for time periods applicable to this
kind of material.
At the present time, the process operates successfully in 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 our
process for application to tires in a large scale manner. We have not
demonstrated the ability to repeat these results at the macro level because we
have not had funds sufficient to build the equipment to apply the technology at
the requisite sizes for mass commercial application. However, we have entered
into a contract with Ingersoll Production Systems to build a prototype reactor
system and one 1-ton microwave reactor system. The estimated delivery date is
March 31, 2008. We are also negotiating with tire recycling facilities for the
purchase of a HAWK-10 microwave reactor ASR processing machine for use in the
tire recycling industry with a capability of processing ten (10) tons of tires
per hour with the final purchase price to be determined.
We are also in negotiation with a company in the oil industry to fund the
construction and testing of a similar HAWK microwave processing machine to
decompose hydrocarbons in a different segment of the petroleum materials market.
If the results of the operation of this machine are successful, then the oil
industry company will have the right to enter into a five year exclusive
purchase, marketing and sales distribution agreement with us for machines that
perform in this segment of the market place. We have not finalized the economic
arrangements or other terms of this agreement
14
There are other potential applications for our microwave technology covered
by the pending patents. 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.
Each potential application will require additional testing and refinement
in the laboratory, creation and design of equipment that will use the technology
to recover hydrocarbons from these alternate sources, the construction of test
units in situ that are sufficiently large to determine whether the application
works on a large scale and has commercial value, securing orders for the
manufacture of machines designed to implement the process, and the manufacture,
sale and distribution of such equipment. Currently, we do not have adequate
funds available to take these steps for any of these alternate applications.
Therefore, our ability to expand our business in any such direction will depend
upon our success in finding joint venture or strategic alliance partners to
underwrite these activities, or licensees with the resources to develop these
applications while paying us royalties and similar fees. There can be no
assurance that we will succeed.
MANUFACTURING OUTSOURCING
We do not have our own factory site nor the equipment, personnel and funds
required to manufacture the machines designed to implement applications of our
pending patents technology. Accordingly, our strategy will be to enter into
manufacturing agreements with companies that have the physical sites, manpower
and financial strength to manufacture our equipment to our specifications. We
have entered into one five year joint cooperation agreement with Ingersoll
Production Systems in Rockford, Illinois. Under our agreement, the manufacturer
will build a piece of equipment against payment in stages which will be linked
to the payments we receive from a customer under a purchase agreement. The first
1 ton prototype reactor system is currently under construction. The agreement
also grants us discounts based on larger units orders. Under the agreement,
Ingersoll will also increase its staff and dedicate certain facilities to the
production of our equipment once the backlog value of orders reaches
$20,000,000. Subject to our obligations under the cooperation agreement, we will
seek to develop similar arrangements with other manufacturers.
JOINT VENTURES OR STRATEGIC ALLIANCES
We currently have limited funds available to pursue research and
development of our technology in other potential areas of application. These
additional applications require the investment of large amounts of capital over
extended time periods to investigate, refine and eventually develop the correct
techniques for the use of microwave technology for the relevant application,
build test units to evaluate the viability of the techniques on a large scale,
deterrmine the commercial usefulness of the application, and develop a sales and
marketing force with expertise in the intended area of use. Accordingly, our
strategy will be to negotiate collaborative agreements with large industrial and
manufacturing companies, governments, or other parties to pursue opportunities
in these areas of application. We are currently in negotiation with one such
company in the oil industry concerning the funding for construction and testing
of a HAWK microwave processing machine to decompose hydrocarbons in a segment of
the petroleum materials market other than the tire recycling industry. If the
results of the operation of this machine are successful, then, at the option of
the oil industry company, we likely will enter into a five year exclusive
purchase, marketing and sales distribution agreement with this company for
machines that perform in this segment of the market place. We have not
negotiated the terms of the exclusive agreement.
15
MARKETING AND DISTRIBUTION ARRANGEMENTS
We currently have 1 full time sales person and several part time
consultants for the sale, marketing and distribution of our products. Subject to
obtaining additional funding, we intend to increase our sales force during the
next twelve months by hiring at least 1-2 sales persons. If we cannot expand our
own sales and marketing personnel, then we will be required to partly outsource
these activities to third parties. Currently, we do not have any discussions or
plans underway to do so, and we do not know what terms and conditions may be
required to obtain this assistance from third party sales organizations.
INTELLECTUAL PROPERTY
We currently have six patent pending applications at the United States
Patent and Trademark Office ("PTO") and internationally for applications of our
proprietary microwave technology to decompose and recover hydrocarbons and
fossil fuels from sources such as tires, oil shale, capped wells, shale
deposits, and waste oil streams. The same pending patents also cover certain
medical applications of our technology. We rely on a combination of trade
secrets and non-disclosure, and other contractual agreements and technical
measures to protect our rights in our technology. We maintain confidentiality
agreements with our officers, directors, employees, consultants, and
subcontractors, as well as collaborative partners, to maintain the proprietary
nature of our technology. We believe that our technology is not subject to any
infringement actions based upon the patents of any third parties.
We do not currently have any trademark or service mark protection other
than that available at common-law, if any. We intend to file appropriate
applications for protection upon receipt of funds allocated to that purpose.
REGULATORY ISSUES
At this time, there are no direct federal or state certification or
regulatory requirements for our products, except for the requirement that all
our equipment conform to regulations for microwave devices. We are not aware of
any pending federal or state legislation which would introduce regulatory
requirements that would negatively impact or impede the manufacture, sale and
distribution of our equipment in the United States or elsewhere.
There will be federal, state and local environmental, health and hazardous
substance regulations that will apply at each location at which one of our
machines is installed. It is not possible to discuss the variety of these
regulations in detail; however, we believe that the design of our equipment for
the decomposition of hydrocarbons for the applications in which they are
currently being marketed--namely waste tires--will protect the environment from
any harmful releases or waste products.
Wholly apart from any regulatory requirements, we will maintain product
liability insurance for our products as a condition of our ability to market
them. Our purchase agreements will require our customers to maintain adequate
amounts of product liability insurance naming us as an additional insured.
HISTORY OF THE COMPANY. The Company was organized as a Colorado corporation
on March 28, 2000 under the name "Email Mortgage Com, Incorporated ("Email
Mortgage Com"). Its business focus was the marketing of first and second
mortgages, principally through its website. The Company was not successful with
that business and in 2002 it discontinued those operations, liquidated its loan
inventory, and paid off its then existing liabilities. Also in 2002, Email
Mortgage Com changed its state of domicile from Colorado to Nevada and changed
its name to "Advanced Healthcare Technologies, Inc." ("Advanced Healthcare").
Under such name, the Company first owned and operated a subsidiary named
"Advanced Hyperbaric Industries, Inc." ("Advanced Hyperbaric") which engaged in
the manufacture and marketing of rigid extremity hyperbaric chambers and a
sacral patch device, both of which utilized oxygen therapy for the treatment of
open sores and wounds, including bedsores. On December 4, 2003, the Company
acquired a 100% interest in "Nutratek LLC" ("Nutratek") which was engaged in the
research and development of nutritional dietary supplements, functional food
products and natural sweeteners, which products were manufactured by non-related
third parties. On March 31, 2004, as a consequence of the Nutratek acquisition,
the Company spun off and sold the intellectual properties and oxygen therapy
16
products and business of Advanced Hyperbaric in exchange for the assumption of
Advanced Hyperbaric's liabilities. On June 30, 2004 the former President, Chief
Executive Officer, Director and majority stockholder sold his interest in the
Company to an unrelated third party. In connection with that sale and change in
control, the Company's operating subsidiary, Nutratek was spun off to the
selling majority stockholder and the purchaser determined to change the business
of the Company to that of a business development company. On September 147, 2004
the Company filed a notice with the Securities and Exchange Commission ("SEC")
electing to be regulated as a business development company ("BDC") under the
Investment Company Act of 1940, as amended. The intent was to focus on acquiring
interests in portfolio companies doing business in the energy sector. While
operating as a BDC, and seeking energy-related portfolio companies, on January
11, 2005 the Company acquired a 50% interest in Well Renewal, LLC ("Well
Renewal"), an entity which managed and operated approximately 30 oil wells in
Oklahoma by utilizing a nitrogen and carbon dioxide gas injection unit to "pump
up" and re-pressurize the wells to increase oil output.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following table sets forth the name, age and position held by each of our
directors and executive officers. Directors are elected at each annual meeting
and thereafter serve until the next annual meeting at which their successors are
duly elected by the stockholders. Currently, our directors are not compensated
for their services, although their expenses in attending meetings are
reimbursed.
Name Age Position
----- --- --------
Frank G. Pringle 64 Chairman of the Board of Directors,
President and Chief Executive Officer
Jeffrey J. Andrews 56 Director, Chief Financial Officer,
Secretary and Treasurer
Frederick A. Clark 44 Director
Kim Thorne O'Brien 49 Director
Jonathan L. Simon 56 Director
BUSINESS EXPERIENCE
The following describes the business backgrounds of our executive officers
and directors.
FRANK G. PRINGLE has served as our Chairman of the Board, President and
Chief Executive Officer since September 22, 2006. Mr. Pringle is the inventor of
the process and related apparatus covered by the patent pending covering
portions of the described technology. Mr. Pringle attended Kent State from 1962
to 1963, Hiram College from 1963 to 1964, Lake Erie College from 1963 to 1964
and Towson State College from 1965 to 1966, majoring in Chemistry and
Mathematics. Since 1964: he has (i) designed and installed "turn key"
engineering operations for food, soft drink, brewery, glass and plastic
manufacturing plants, (ii) been a consultant to clients for previously designed
and installed manufacturing plants, (iii) designed, built and managed the
operations of a plant for recycling glass, and (iv) since approximately 1999,
worked on the development of the technology.
JEFFREY J. ANDREWS has served as a director, and our Chief Financial
Officer, Treasurer and Secretary since September 22, 2006. Mr. Andrews graduated
from Villanova University in May, 1974 with a B.S. in Accounting. He has been a
C.P.A. in Pennsylvania since 1978. He commenced his accounting career as an
Audit Manager for a regional firm, and over his career has served as the
Controller, Treasurer and/or CFO of various companies, and has had experience in
corporate restructurings and reorganizations as well as IPO's and SEC periodic
reporting. From April, 1999 to June, 2002 Jeff served as CFO of Collectible
Concepts Group, Inc., a public company. From June 2002 to October 2004 Mr.
Andrews was the Controller of Encapsulation Systems Inc. He joined the Company
upon the acquisition of Carbon Recovery Corporation on September 22, 2006, but
he had been employed by Carbon Recovery Corporation since November 1, 2004.
17
FREDERICK A. CLARK has served as a director of the Company since December
14, 2006. Mr. Clark is President/CEO of Clark Resources, Inc., a governmental
relations consulting firm located in Harrisburg, Pennsylvania. Mr. Clark
graduated from Pennsylvania State University with a B.A. in Elementary Education
in 1985. Mr. Clark has served as a member of the Board of Education of the
Harrisburg School District, has served as the President of the African American
Chamber of Commerce, is the former CEO of the Urban League of Metropolitan
Harrisburg, and is currently Chairman of the National African American Cultural
Center. For the past several years, Mr. Clark has been a part-time lecturer at
the Pennsylvania Governor's School on Business and Industry and has been
appointed by the past three Pennsylvania governors to serve on boards and
commissions. Clark Resources, Inc. is representing the Company in Pennsylvania
for matters with respect to the proposed tire disposal facility.
MS. KIM THORNE O'BRIEN has served as a director of the Company since
September 20, 2007. Since May, 2004 Ms. O'Brien has been President of
Independence, Inc., a firm engaged in providing consulting services to start-up
biotechnology companies. From December, 2001 to May, 2004 Kim was Vice
President, Business Development & Marketing, of AdvancedTraces, Inc. a company
engaged in the development of supersensitive detectors of biowarfare agents.
Prior to that, Kim was Regional Business Director, Northeast Region, of
MedImmune, Inc. from October 1995 to October 2001. She graduated from Ursinius
College in 1980 with a B.S. in Health & Physical Education, graduated from
Temple University with an M.S.Ed in Exercise Physiology in 1981 and completed
all work except for the dissertation for a Ph.D. in Cardiovascular Physiology
from Temple University. Thereafter, and until October 1995, Kim held various
jobs in the health industry.
JONATHAN L. SIMON has been a director of the Company since September 20,
2007. Mr. Simon has been engaged in the recycling industry since approximately
the mid-1970's. From 1990 to March, 2006 he was President of Royal Green Corp.,
a company engaged primarily in recycling ferrous metals. From April, 2006 to the
present, he has been President of Royal Green LLC, a successor company to the
corporation, still engaged in recycling ferrous metals. In addition, since May,
2006 he has been a director of Green Energy Technologies. Jonathan graduated
from the University of Pittsburgh in 1973 with a BS in Biology (with honors).
There are no family relationships between any of the executive officers and
directors.
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to, earned by, or
paid for services in all capacities during 2007 and 2006 by our Chief Executive
Officer and Chief Financial Officer.
NAME AND STOCK OPTION ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS AWARDS AWARDS COMPENSATION TOTAL
-------------------------------------------------------------------------------------------------------------
Frank G. Pringle, 2007 $354,166.50 N/A $2,189,000 $(1)$44,175.00 $2,587,341.50
President and CEO (1) 2006 N/A N/A N/A N/A $ 37,002.50 $ 37,002.50
-------------------------------------------------------------------------------------------------------------
Richard Mangerilli 2007 N/A N/A N/A N/A N/A $-0-
Former Pres. and 2006 $30,000 $-0- N/A N/A N/A $30,000
CEO(2)
-------------------------------------------------------------------------------------------------------------
Jeffrey J Andrews 2007 $162,439.00 $-0- $579,000 $ $(3) $741,439.00
CFO, Treasurer(3) 2006 $30,000 $-0- N/A $ N/A N/A
-------------------------------------------------------------------------------------------------------------
18
(1) Mr. Pringle received $26,000 as the President of Carbon Recovery
Corporation, a predecessor of the Company, and $259,416.67 as the President of
Mobilestream Oil, Inc., another predecessor of the Company during 2006. In 2007
Mr. Pringle was compensated under an unsigned employment arrangement with the
Company. The Company awarded Mr. Pringle shares of its common stock on the
following dates and at the following prices: (i) 300,000 shares on April 20,
2007 at a price of $1.38 per share or a total value of $414,000; (ii) 250,000
shares on August 1, 2007 at a price of $2.60 per share or a total value of
$650,000 and (iii) 250,000 shares on August 16, 2007 at a price of $4.50 per
share or a total value of $1,125,000. In 2006 the Company paid the rental value
of three used automobiles for the use of Mr. Pringle and two members of his
family who were also employees of the Company. In 2007, however, the Company
sold all 3 automobiles to Mr. Pringle. Under the employment arrangement, in 2007
the Company paid for a $6,000,000 life insurance policy on Mr. Pringle's life,
$2,000,000 of which is payable to his wife and $4,000,000 to the Company. The
annual premium paid was $44,175.00 in 2007 and $37,002.50 in 2006. was included
in All Other Compensation.
(2) Mr. Mangierelli was President and CEO of the Company from 2003 through
[MONTH?] 2006. The sum shown represents his accrued and unpaid salary for that
period and they were paid to him prior to filing the Company's Form 10-KSB for
the fiscal year ended March 31, 20006.
(3) Mr. Andrews does not have a written employment agreement. In 2006 Mr.
Andrews received $30,800 for serving as CFO of the Company, and was paid an
additional $69,200 for acting as the CFO and Treasurer of Carbon Recovery
Corporation. In 2007 Mr. Andrews received $162,439.00 as his salary. The Company
awarded Mr. Andrews shares of its common stock on the following dates and at the
following prices: (i) 100,000 shares on June 1, 2007 at a price of $1.36 per
share or a total value of $136,000; and (ii) 100,000 shares on August 1, 2007 at
a price of $4,43 per share or a total value of $443,000. We pay $344.00 each
month for a disability policy for Mr. Andrews and we pay for a life insurance
policy for which his family is the beneficiary. In 2007 the annual premium for
the policy was $5,010.00 and in 2006 it was $2,748.90
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
Option Awards Stock Awards
Equity Equity
Incentive Incentive
Plan Plan
Awards: Awards:
Equity Number Market or
Incentive of Payout
Plan Unearned Value of
Awards: Market Shares, Unearned
Number of Number of Number of Number of Value of Units or Shares,
Securities Securities Securities Shares or Shares or Other Units or
Underlying Underlying Underlying Units of Units of Rights Other
Unexercised Unexercised Unexercised Option Option Stock That Stock That Rights
Options (#) Options (#) Unearned Exercise Expiration Have Not That Have Have Not That Have
Name Exercisable Unexercisable Options Price Date Vested Not Vested Vested Not Vested
(#) ($) (#)(1) ($) (#) ($)
------------------------------------------------------------------------------------------------------------------------------------
Frank G. Pringle -0- -0- -0- -0- -0- -0- -0- -0- -0-
Jeffrey J.Andrews 160,000 40,000 -0- $1.00 40,000 108,000 -0- -0- -0-
EXECUTIVE EMPLOYMENT ARRANGEMENTS
Mr. Pringle did not have a written employment agreement with the Company in
2007. Under the terms of his employment arrangement, Frank G. Pringle, the
President and CEO, received a salary of $354,166.50 in 2007. In 2007 the Board
of Directors awarded Mr. Pringle a total of 800,000 shares of common stock
pursuant to the 2007 Employees Compensation and Stock Option Plan having an
aggregate value of $2,189,000. We also paid an annual premium of $7273.00 and
$3597.50 in 2007 and 2006, respectively, for a disability policy for Mr.
Pringle. We paid premiums of $44,175.00 and $37,002.50 in 2007 and 2006,
respectively for a $2,000,000 life insurance policy for Mr. Pringle for which
his family is the beneficiary.
The Company and Mr. Pringle are in negotiations to replace the employment
arrangement with a consulting agreement, the terms and conditions of which have
not been finalized.
19
Jeffrey J. Andrews, the Chief Financial Officer, Treasurer and Corporate
Secretary, is employed pursuant to at will agreement with the Company. In 2007
Mr. Andrews received a salary of $162,439.00. In 2007 the Board of Directors
awarded Mr. Andrews a total of 200,000 shares of common stock pursuant to the
2007 Employees Compensation and Stock Option Plan having an aggregate value of
$741,439.We pay $344.00 each month for a disability policy for Mr. Andrews and
we pay for a life insurance policy for which his family is the beneficiary. In
2007 the annual premium for the policy was $5,010.00 and in 2006 it was
$2,748.90
COMPENSATION OF DIRECTORS
DIRECTOR COMPENSATION
---------------------
Non-Equity Change in Pension
Incentive Value and
Fees Earned Plan Non-Qualified All Other
or Paid in Stock Option Compensation Deferred Compensation
Cash ($) Awards ($) Awards ($) ($) Earnings Compensation ($)(1) Total ($)
Frank G. Pringle $ - $ - $ - $ - $ - $ - $ -
Jeffrey J. Andrews $ - $ - $ - $ - $ - $ - $ -
Frederick A. Clark $ - $ - $ - $ - $ - $ - $ -
Kim Thorne O'Brien $ - $ - $ - $ - $ - $ - $ -
Jonathan L. Simon $ - $ - $ - $ - $ - $ - $ -
Mary K. Rdomsky $ - $50,000 - $ - $ - $ - $ - $ -
(1)For the fiscal year ended December 31, 2006 and December 31, 2007, neither
the former directors (except as discussed below) nor the current directors were
compensated for their services as directors. We do not intend to compensate our
current directors, or any additional directors who may be elected; however,
expenses of attending meetings will be reimbursed. During the fiscal year ended
December 31, 2006 there were no formal meetings of the Board of Directors;
action was taken by written consent.
Mary K. Radomsky served as the sole director and officer from June 7, 2006 to
September 22, 2006. Although she was not compensated, the in-coming directors
voted to give her an honorarium by the issuance of 25,000 shares of our Common
Stock.
20
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of February 8, 2008, information
regarding the beneficial ownership of shares of our common stock (i) by each
person known by us to own 5% or more of the outstanding shares of our common
stock, (ii) by each of our named executive officers and our directors, and (iii)
by all executive officers and directors as a group. At the close of business on
February 8, 2008, there were 33,923,957 shares of our common stock issued and
outstanding. Unless otherwise noted, we believe that all persons named in the
table have sole voting power and investment power with respect to all shares
beneficially owned by them.
Shares of Percentage
Common of Class as of
Name and Address of Beneficial Owners Stock 2/8/2008(1)
------------------------------------- --------- --------------
Frank G. Pringle 17,737,094(2) 34.33%(3)
109 Bortons Road
Marlton, New Jersey 08053
Jeffrey J. Andrews 200,000(4) 0.0076%(4)
8 Cushman Road
Rosemount, Pennsylvania 19010
Frederick A. Clark -0- -0-
321 N. Front Street
Harrisburg, Pennsylvania 17101
Kim Thorne O'Brien -0- -0-
19 Sawmill Road
Medford, NJ 08055
Jonathan L. Simon -0- -0-
1722 Garfield Street
Wyomissing, PA 19610
Lois Augustine Pringle 1,557,237(4) 3.00%
109 Bortons Road
Marlton, New Jersey 08053
Olde Monmouth Stock Transfer Co., Inc., Trustee
Carbon Recovery Corporation
Liquidating Trust 11,188,996(5) -0-(6)
200 Memorial Parkway
Atlantic Highlands, New Jersey 07716
Olde Monmouth Stock Transfer Co., Inc., Trustee
Mobilestream Oil, Inc.
Liquidating Trust 11,145,225 -0-(6)
200 Memorial Parkway
Atlantic Highlands, New Jersey 07716
All Directors and Officers as a Group (5 persons) 18,738,094(2),(3) 34.33%
-----------
1. The ownership percentages below are calculated based on 33,923,957 shares of
common stock issued and outstanding as of February 8, 2008 to which are added
17,737,094 shares of common stock issuable upon conversion of the 2006 Series of
Convertible Preferred Stock at the rate of 1/2 of 1 share of common stock for
each 1 shares of 2006 Series of Convertible Preferred. Excluded are: the shares
of common stock issuable upon exercise of the Company's Mobilestream Acquisition
Warrants, the Carbon Recovery Acquisition Warrants, or stock options. For
purposes of calculating Mr. Pringle's percentage of ownership, however, the
35,236,188 shares of 2006 Series of Convertible Preferred Stock were assumed to
have been converted into common stock. If the calculation of Mr. Pringle's
percentage of ownership for voting purposes is made while he continues to own
the 2006 Series of Convertible Preferred Stock, then his voting percentage is
51.12%
21
2. Includes 17,618,094 shares of common stock issuable upon conversion of the
Company's 2006 Series of Convertible Preferred Stock, 119,000 shares
distributable from the Carbon Recovery Corporation liquidating trust as a
shareholder of Carbon Recovery Corporation, and 250,000 shares issued under our
2007 Employees Comensation and Stock Option Plan. Does not include common stock
purchase options to purchase 200,000 shares of the Company's common stock, 80%
of which have not yet vested and are therefore not exercisable. Does not include
1,557,237 shares held by Lois Augustine-Pringle, Mr. Pringle's wife, in which
Mr. Pringle disclaims a beneficial interest.
3. Includes 200,000 shares issued under our 2007 Employees Compensation and
Stock Option Plan, but does not include 200,000 options issued under a stock
option agreement between the Company and Mr. Andrews entered into in 2005, of
which 160,000 options have vested as of December 31, 2007, and the remaining
40,000 options will vest on December 31, 2008 if Mr. Andrews is employed by the
Company as at that date.
4. Does not include 369,000 shares of common stock and 35,236,188 shares of 2006
Series of Convertible Preferred Stock that are convertible into 17,618,094
shares of common stock held by Frank G. Pringle, her husband, in all of which
Ms. Pringle disclaims a beneficial interest.
5. The 48,188,996 shares the Company issued for the acquisition of the assets of
Carbon Recovery Corporation was subsequently reduced to 11,188,996 shares by the
cancellation of 37,500,000 shares of the Company's common stock indirectly owned
by the Company in the Carbon Recovery Liquidating Trust after the acquisition of
the assets of Mobilestream Oil, Inc. which had owned the 37,500,000 shares of
Carbon Recovery Corporation.
6. Old Monmouth Stock Transfer Co., Inc. is the Trustee of both Liquidating
Trusts; it has no beneficial interest in the shares held in the trusts. With the
exceptions of Frank G. Pringle and Lois Augustine Pringle, no person or entity
has a 5% or greater interest in the Company as the result of his/her/its
beneficial interest in either Liquidating Trust.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In January 2005 we formalized a prior intended agreement with Careful Sell
Holding, L.L.C. ("Careful Sell"), a Delaware limited liability company formed by
the President of our Company. Our President and his wife, at the time a director
of the Company, own all of the limited liability interests of Careful Sell. Our
President is also the Manager of Careful Sell. Under the revised agreement we
entered into a technology contribution agreement (the "Contribution Agreement"),
with Careful Sell. Careful Sell is the owner of all the rights to the inventions
of our President. Under the Contribution Agreement, Careful Sell transferred to
us the rights to commercialize such inventions and to operate and use the
related processes and apparatus to make, sell, use and otherwise dispose of
products, which may be processed utilizing the inventions. In the Contribution
Agreement we agreed to pay Careful Sell royalties of 2% of all revenues derived
from the inventions. In further consideration for the transfer of the
inventions, we issued to Careful Sell a total of 37,500,000 shares of our common
stock. The Contribution Agreement supersedes a prior agreement not formalized
between ourselves and Careful Sell in 2002.
We have engaged in two transactions for the acquisition of our assets and
our business with related persons. On September 22, 2006 we closed an
acquisition for substantially all of the assets and certain liabilities of
Carbon Recovery Corporation (the "CRC Acquisition") pursuant to a plan and
agreement of reorganization dated July 27, 2006 (the "CRC Agreement") with
Carbon Recovery Corporation ("CRC" or "Carbon Recovery") for the acquisition of
substantially all of the assets and certain liabilities of CRC (the "CRC
Acquisition"). Mr. Frank Pringle, the controlling stockholder of CRC is also our
Chairman of the Board, President and CEO. Under the CRC Agreement, on September
22, 2006 we issued to the Carbon Recovery liquidating trust comprised of the
stockholders of CRC (the "Carbon Recovery Liquidating Trust") the following: (i)
48,688,996 shares of our common stock (the "CRC Common Stock") for the assets of
CRC, and (ii) 3,908,340 Class B Warrants, 1,397,000 Class D Warrants and
1,397,000 Class E Warrants (together the "CRC Warrants" and individually by
22
their respective class names) to assume the liabilities of CRC to its warrant
holders under similar classes of warrants of CRC. The CRC Warrants have the
following characteristics: (i) the CRC Class B Warrants and the CRC Class D
Warrants have an exercise price of $2.75 per warrant, and (ii) the CRC Class E
Warrants have an exercise price of $4.00 per warrant. The CRC Class E Warrants
can only be exercised together with the exercise of a similar number of CRC
Class D Warrants. Initially, all of the CRC Warrants expired on September 21,
2007; however, we have extended the expiration date of the CRC Class B Warrants,
the CRC Class D Warrants and the CRC Class E Warrants to December 31, 2008.
Frank G. Pringle, our Chairman, President and CEO, was elected to our Board
of Directors in connection with the closing of the Carbon Recovery acquisition.
Mr. Andrews, our Secretary, Treasurer and CFO, was also elected to the Board at
that time, following which they appointed themselves to the respective offices
each of them holds.
In December 2006 we acquired the assets of Mobilestream Oil, Inc., a
Delaware corporation controlled by Mr. Pringle. Mr. Pringle is the inventor of
the variable microwave technology embodied in the four patent applications which
he assigned to a predecessor of Mobilestream Oil, Inc. and which is now owned by
us as the result of the acquisition of the assets of Mobilestream. At the time
of the Mobilestream Acquisition, Mr. Pringle previously owned shares of
Mobilestream Oil, Inc.'s Common Stock, which had been converted into 503,374,112
shares of Mobilestream's 2006 Series of Convertible Preferred Stock. When we
acquired the assets of Mobilestream Oil, Inc., we issued 11,145,225 shares of
our common stock to the holders of Mobilestream's Common Stock, and we issued
35,236,188 shares of our own 2006 Series of Convertible Preferred Stock (the
"2006 Series") to Mr. Pringle (the sole holder of Mobilestream's 2006 Series)
using the same conversion ratio as for the common stock. At the time of the
acquisition closing, each share of our 2006 Series is convertible into 2 shares
of our common stock, but prior to January 1, 2009 conversion is limited to that
number of shares of Common Stock which is less than 4.99% of our issued and
outstanding common stock after conversion. Subsequent thereto, in October 2007,
Mr. Pringle and the Company agreed to amend the conversion terms of the 2006
Series such that each share of our 2006 Series is now convertible into 1/2
of 1 share of our common stock and an amended Certificate of Designation was
filed with the Nevada Secretary of State in January 2008. Each share of our 2006
Series has 2 votes per share, voting with the common stock as a single class.
On May 17, 2007 we purchased 94,961 shares of our common stock for $66,471
in cash from Ms. Lois Pringle, the wife of Mr. Frank G. Pringle, our President
and Chief Executive Officer.
In 2007 the Company issued a total of 505,040 warrants to two individuals,
one of whom is currently a director of our Company, as part of a transaction
pursuant to which they purchased shares of the Company's common stock in a
private sale transaction with Lois Pringle, the wife of the Company's CEO.
PLAN OF DISTRIBUTION
The Liquidating Trustee will distribute the Shares and the Warrants to the
respective stockholders of Carbon Recovery and Mobilestream Oil. Thereafter, the
Carbon Recovery or Mobilestream stockholders, which as used herein includes
donees, pledgees, transferees or other successors-in-interest selling the Shares
or the Warrants or the Warrant Shares received after the date of this prospectus
from a Carbon Recovery or Mobilestream stockholder as a gift, pledge,
partnership distribution or other transfer, may, from time to time, sell,
transfer or otherwise dispose of any or all of their Shares, Warrants or Warrant
Shares on any stock exchange, market or trading facility on which the Shares,
Warrants or Warrant Shares are traded or in private transactions. These
dispositions may be at fixed prices, at prevailing market prices at the time of
sale, at prices related to the prevailing market price, at varying prices
determined at the time of sale, or at negotiated prices.
The Carbon Recovery or Mobilestream stockholders may use any one or more of
the following methods when disposing of the Shares, the Warrants or the Warrant
Shares or interests therein:
- ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
23
- block trades in which the broker-dealer will attempt to sell the the Shares,
the Warrants or the Warrant Shares as agent, but may position and resell a
portion of the block as principal to facilitate the transaction;
- purchases by a broker-dealer as principal and resale by the broker-dealer for
its account;
- an exchange distribution in accordance with the rules of the applicable
exchange;
- privately negotiated transactions;
- short sales effected after the date the registration statement of which this
prospectus is a part is declared effective by the SEC;
- through the writing or settlement of options or other hedging transactions,
whether through an options exchange or otherwise;
- broker-dealers may agree with the Carbon Recovery or Mobilestream stockholders
to sell a specified number of such Shares, Warrants and Warrant Shares at a
stipulated price;
- a combination of any such methods of sale; and
- any other method permitted pursuant to applicable law.
The aggregate proceeds to the Carbon Recovery and Mobilestream stockholders
from the sale of the Shares, the Warrants or the Warrant Shares offered by them
will be the purchase price of each less discounts or commissions, if any. We
will not receive any of the proceeds from this offering, except that. upon any
exercise of the Warrants we will receive the exercise price of the Warrants.
The distributes also may resell all or a portion of the shares in open
market transactions in reliance upon Rule 144 under the Securities Act of 1933,
provided that they meet the criteria and conform to the requirements of that
rule.
The distributees and any underwriters, broker-dealers or agents that
participate in the sale of the common stock or interests therein may be
"underwriters" within the meaning of Section 2(11) of the Securities Act. Any
discounts, commissions, concessions or profit they earn on any resale of the
shares may be underwriting discounts and commissions under the Securities Act.
Any distributes who are "underwriters" within the meaning of Section 2(11) of
the Securities Act will be subject to the prospectus delivery requirements of
the Securities Act.
To the extent required, the Shares of our common stock, the Warrants and
the Warrant Shares to be sold, the names of the selling stockholders, the
respective purchase prices and public offering prices, the names of any agents,
dealer or underwriter, any applicable commissions or discounts with respect to a
particular offer will be set forth in an accompanying prospectus supplement or,
if appropriate, a post-effective amendment to the registration statement that
includes this prospectus.
In order to comply with the securities laws of some states, if applicable,
the Shares, the Warrants and the Warrant Shares may be sold in these
jurisdictions only through registered or licensed brokers or dealers. In
addition, in some states the common stock may not be sold unless it has been
registered or qualified for sale or an exemption from registration or
qualification requirements is available and is complied with.
We have agreed to keep the registration statement of which this prospectus
constitutes a part effective until the earlier of (1) such time as all of the
Shares, the Warrants and the Warrant Shares covered by this prospectus have been
disposed of pursuant to and in accordance with the registration statement or (2)
the date on which the shares may be sold pursuant to Rule 144(k) of the
Securities Act, provided that such period may be extended under limited
circumstances.
24
LEGAL PROCEEDINGS
There is no litigation pending or threatened by or against us or any of our
former or current officers or directors, as such.
DESCRIPTION OF SECURITIES
The following information describes our common stock and our preferred
stock, options and warrants to purchase our common stock, and provisions of our
amended Articles of Incorporation and our bylaws. This description is only a
summary. You should also refer to our amended Articles of Incorporation, and our
bylaws, which have been filed with the SEC. With respect to our 2006 Series of
Convertible Preferred Stock, the MJCCC Series Convertible Preferred Stock and
our warrants, you should also refer to (i) the 2006 Series of Convertible
Preferred Stock Certificate of Designation as amended, (ii) the MJCCC
Certificate of Designation, (iii) the Mobilestream Acquisition Warrants, and
(iii) each of the Carbon Recovery Class B, D and E Acquisition Warrants.
We are presently authorized to issue 200,000,000 shares of common stock,
$0.001 par value, and 100,000,000 shares of preferred stock, $0.001 par value.
As of February 8, 2008, we have 33,923,957 shares of common stock issued and
outstanding, and 35,236,188 shares of 2006 Series of Convertible Preferred Stock
issued and outstanding.
COMMON STOCK
The holders of our common stock are entitled to equal dividends and
distributions per share with respect to the common stock when, as and if
declared by the board of directors from funds legally available therefor. No
holder of any shares of common stock has a preemptive right to subscribe for any
of our securities, nor are any of our shares of common stock subject to
redemption or convertibility into any other securities. Upon liquidation,
dissolution or winding-up of our Company, and after payment of creditors and
preferred stockholders, if any, the assets will be divided pro-rata on a share
for share basis among the holders of the shares of common stock. All shares of
common stock now outstanding are fully paid, validly issued, and non-assessable.
Each share of our common stock is entitled to one vote with respect to the
election of any director or any other matter upon which stockholders are
required or permitted to vote. There is no cumulative voting. We have not paid
any dividends on our common stock to date and do not anticipate that we will be
paying dividends in the foreseeable future.
PREFERRED STOCK
Under our Articles of Incorporation, the board of directors has the power,
without further action by the holders of the common stock, to designate the
relative rights and preferences of the preferred stock, and to issue the
preferred stock in on or more series as designated by the board of directors.
The designation of rights and preferences could include preferences as to
liquidation, redemption and conversion rights, voting rights, dividends or other
preferences, any of which may be dilutive of the interest of the holders of the
common stock or the preferred stock of any other series. The issuance of
preferred stock may have the effect of delaying or preventing a change in
control of the company without further stockholder action and may adversely
affect the rights and powers, including voting rights, of the holders of the
common stock.
In December 2006, the Board authorized the issuance of 70,472,376 shares of
our 2006 Series of Convertible Preferred Stock (the "2006 Mobilestream
Acquisition Preferred Stock") in exchange for 503,374,112 shares of Mobilestream
2006 Series Convertible Preferred Stock at the exchange rate of 1 share of our
2006 Mobilestream Preferred Stock for each 7.143 shares of Mobilestream 2006
Series of Convertible Preferred Stock. Under the Mobilestream Acquisition
Agreement, if we file a registration statement with the Commission under the
Securities Act, we must give written notice to the trustee of the liquidation
trust created for the Mobilestream Acquisition and, if the trustee so elects, we
must include in any such registration statement such number of shares of
Mobilestream Acquisition Common Stock, Mobilestream Acquisition 2006 Preferred
Stock and common stock underlying the Mobilestream Warrants as the trustee may
demand. If the categories of shares are not registered by December 31, 2007,
then the trustee of the liquidating trust may demand that we register the shares
of Mobilestream Common Stock, the Mobilestream 2006 Preferred Stock and the
common stock underlying the Mobilestream Warrants. Accordingly, we are
registering the Mobilestream Acquisition Common Stock and the Mobilestream
Acquisition Warrants as part of this registration statement.
25
On December 31, 2006, at the closing of the Mobilestream Acquistion, we
issued the shares of Mobilestream Acquisition Common Stock and the Mobilestream
Warrants; however, we issued only 35,236,188 (instead of 70,472,376) shares of
our Mobilestream Acquisition 2006 Preferred Stock to Mr. Pringle because of
limitations on the number of authorized preferred shares in our Articles of
Incorporation. To maintain the proper share numbers for the Mobilestream
Acquisition, the current Mobilestream 2006 Preferred Stock Certificate of
Designation initially provided that they could be converted into our common
stock at the rate of 2 shares of our common stock for each share of our
Mobilestream Acquisition 2006 Preferred Stock. Subsequent thereto, in October
2007, Mr. Pringle and the Company agreed to amend the conversion terms of the
2006 Series such that each share of our 2006 Series is now convertible into 1/2
of 1 share of our common stock. An amendment to the Certificate of Designation
for the 2006 Series to reflect the revised rate of conversion was filed in the
State of Nevada on January 30, 2008.
WARRANTS
We currently have eight different classes of warrants outstanding as
follows: Mobilestream Acquisition Warrants and Carbon Recovery Class B, D, and E
Acquisition Warrants, the 2007 Private Placement Warrants, the 2007 Private Sale
Warrants, the 2007 December 2007 Private Placement Warrants, the Black Diamond
Warrants and the Nutmeg Warrants, all of which may be converted into shares of
our Common Stock, with these characteristics:
CLASS NUMBER EXERCISE PRICE EXPIRATION DATE
Mobilestream 3,705,867 $4.75 December 31, 2008
B 3,908,340 $2.75 December 31, 2008
D 1,397,500 $2.75 December 31, 2008(1)
E 1,397,600 $4.00 December 31, 2008
Private Placement 400,000 $-0- December 31, 2009
Private Placement 400,000 $0.80 December 31, 2009
Private Sale 290,000 $2.50 December 31, 2008
Private Sale 215,040 $2.75 December 31, 2008
Private Placement 650,000 $2.00 December 31, 2012
The shares of common stock underlying the Mobilestream Acquisition
Warrants, and the Carbon Recovery Class B, D and E Acquisition Warrants, a total
of 10,409,407 shares, are being registered as part of this registration
statement. The number of shares issuable upon exercise of any class of Warrant
is subject to adjustment for stock splits, stock dividends, combinations,
reclassifications and the like.
------------------
(1) The Class D Warrant and the Class E Warrant can only be exercised in tandem
with each other, i.e., one Class E Warrant must be exercised for each Class D
Warrant exercised.
SHARES ELIGIBLE FOR FUTURE SALE
As of February 8, 2007, we had 33,923,957 shares of common stock
outstanding. That number does not include (i) 160,000 shares of common stock
underlying outstanding options, $1.00 per share, (ii) 110,000 shares of common
stock underlying outstanding notes in the aggregate principal amount of
$110,000, which are convertible into our common stock at a rate of $1.00 per
share, (iii) 35,236,188 shares of 2006 Series of Convertible Preferred Stock
that are convertible into 17,618,094 shares of common stock, and (iv) 10,409,407
Warrant Shares of common stock underlying the Warrants covered by this
prospectus
26
Freely Tradable Shares After Offering. As of February 8, 2008, excluding
the shares that are covered by this prospectus, all but [NEED NUMBER] of our
currently outstanding shares, which are deemed "restricted" securities, can be
publicly resold without restriction. Upon the resale of the 22,334,221 currently
outstanding shares of our common stock covered by this prospectus, and the
exercise of, issuance and sale of the 10,409,407 Shares covered by the Warrants
included in this prospectus, all of these shares will also be freely tradable
without restriction or limitation under the Securities Act. As a result, after
the completion of this offering, all but __________ shares of our common stock
will be tradable without restriction under the Securities Act.
Rule 144. In general, under Rule 144 as currently in effect, a person (or
persons whose shares are aggregated) who has beneficially owned restricted
securities for at least one year, including persons who may be deemed our
"affiliates," as that term is defined under the Securities Act, would be
entitled to sell within any three month period a number of shares that does not
exceed the greater of 1% of the then outstanding shares (approximately [NEED
NUMBER] shares if the currently outstanding warrants and options are not
exercised) or the average weekly trading volume of shares during the four
calendar weeks preceding such sale. Sales under Rule 144 are subject to certain
manner-of-sale provisions, notice requirements and the availability of current
public information about the company. A person who has not been our affiliate at
any time during the three months preceding a sale, and who has beneficially
owned his shares for at least one year, would be entitled under Rule 144(k) to
sell such shares without regard to any volume limitations under Rule 144.
Subject to certain volume limitations and other conditions, all of the currently
outstanding unregistered shares are eligible for public resale under Rule 144.
The availability of Rule 144 to our holders of restricted securities is,
however, conditioned on various factors, including the availability of certain
public information concerning our company.
Form S-8 Registration of Shares. We have registered 2,500,000 shares of our
common stock on Form S-8 that are eligible for sale under our 2008 Employees
Compensation Plan. Accordingly, except for shares held by affiliates of our
Company, these shares may be resold in the public market without restriction.
TRANSFER AGENT
Our transfer agent currently is Olde Monmouth Stock Transfer Co., Inc., 200
Memorial Parkway, Atlantic Highlands, New Jersey 07716.
EXPERTS
The financial statements for the years ended December 31, 2006 and 2005
included in this prospectus have been audited by Bagell, Josephs, Levine &
Company, L.L.C. to the extent and for the periods indicated in their report
thereon, which report included an explanatory paragraph concerning our company's
ability to continue as a going concern. Such financial statements have been
included in this prospectus and registration statement in reliance upon the
report of Bagell, Josephs, Levine & Company, L.L.C. and upon the authority of
such firm as experts in auditing and accounting.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
The Nevada General Corporation Law generally provides that a corporation is
empowered to indemnify any person who is made a party to any threatened, pending
or completed action, suit or proceeding by reason of the fact that he is or was
a director, officer, employee or agent of the corporation or is or was serving,
at the request of the corporation, in any of such capacities of another
corporation or other enterprise, if such director, officer, employee or agent
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. Under Nevada law, a director or officer may not be indemnified
where his act or failure to act constitutes a breach of is fiduciary duty and
such breach involved intentional misconduct, fraud, or a knowing violation of
law. This statute describes in detail the right of corporations such as our
Company to indemnify any such person.
27
Our Articles of Incorporation and our By-laws provide generally for
mandatory indemnification of our directors and officers to the fullest extent
permitted under the Nevada General Corporation Law if they have been successful
in the defense of any claim asserted against them, and permissive
indemnification for any claim asserted against them if it appears they acted in
good faith and in a manner not opposed to the best interests of the Company. We
are also permitted to indemnify all other persons whom we requested to act on
behalf of the Company in the same manner. Our By-Laws permit us to advance
expenses on behalf of any person, including officers and directors, with regard
to any action or proceeding, provided that we receive an undertaking to repay
all such advances if it is determined that such person was not entitled to be
indemnified by us.
We have entered into indemnification agreements with our directors and
officers. The agreements provide that we will indemnify the indemnitee to the
fullest extent permitted by applicable law against expenses, including
reasonable attorneys' fees, judgments, penalties, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with any civil
or criminal action or administrative proceeding arising out of his performance
of his duties as a director or officer of our company other than an action
initiated by a director or officer. Such indemnification is available if the
indemnitee acted in good faith and in a manner he reasonably believed to be in,
or not opposed to, our best interests, and, with respect to any criminal action,
had no reasonable cause to believe his conduct was unlawful.
Under each indemnification agreement, the entitlement of a director or
officer to indemnification shall be determined by a majority vote of a quorum of
disinterested directors, or if such quorum either is not obtainable or so
directs, by independent counsel or by our stockholders, as determined by such
quorum of disinterested directors. Under certain circumstances, a party to the
indemnification agreement will be conclusively presumed to have met the
applicable statutory standard of conduct unless our board of directors,
stockholders or independent legal counsel determines that the relevant standard
has not been met. If a change of control of our company has occurred, the
entitlement of such director or officer to indemnification shall be determined
by independent counsel selected by such director or officer, unless such
director or officer requests that either the board of directors or the
stockholders make such determination.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the small
business issuer pursuant to the foregoing provisions, or otherwise, we have been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
LEGAL MATTERS
Richard C. Fox, P.A., Exeter, New Hampshire, has provided us with an
opinion concerning legality of the securities being registered by this
prospectus. The principal of the firm owns 87,530 shares of our common stock.
WHERE YOU CAN FIND MORE INFORMATION
We have filed electronically with the Securities and Exchange Commission a
registration statement on Form S-1 under the Securities Act for the common stock
offered under this prospectus. We are subject to the informational requirements
of the Exchange Act, and file annual reports, quarterly reports, special
reports, proxy statements and other information with the Commission. The
reports, proxy statements and other information we file can be read and copied
at prescribed rates at the Public Reference Room of the Commission at Station
Place, 100 F Street, N.E., Washington, D.C. 20549 on official business days
during the hours of 10 a.m. to 3 p.m. Information about the operation of the
Public Reference Room may be obtained by calling the Commission at
1-800-SEC-0330. The Commission also maintains a web site http://www.sec.gov that
contains our reports, proxy statements, information statements and other
information concerning Global Resource in the registration statement and its
exhibits, which we have filed with the Commission under the Securities Act and
to which reference is made.
28
FINANCIAL STATEMENTS
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
CONTENTS
Page
----
For The Nine Months Ended September 30, 2007 (unaudited)
Condensed Balance Sheets.................................................... 30
Condensed Statement of Operations........................................... 31
Condensed Statement of Stockholders' Equity................................. 32
Condensed Statements of Cash Flows.......................................... 38
Notes to Consolidated Financial Statements
For The Years Ended December 31, 2006 and 2005............................ 39
Report of Independent Registered Public Accounting Firm..................... 51
Consolidated Balance Sheets as of December 31, 2006 and 2005................ 52
Consolidated Statements of Operations for the Years Ended
December 31, 2006 and 2005 ............................................... 53
Consolidated Statements of Stockholders' Equity/(Deficit) for the Years
Ended December 31, 2006 and 2005.......................................... 54
Consolidated Statements of Cash Flows for the Years Ended
December 31, 2006 and 2005................................................ 57
Notes to Consolidated Financial Statements for the Years Ended
December 31, 2006 and 2005................................................ 58
29
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 Receivable net - (reserved $650,000 for doubtful 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 financial statements.
30
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 financial statements.
31
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 --
------------ ------------ ------------ ------------ ------------ ------------
continued on next page
32
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
------------ ------------ ------------ ------------ ------------ ------------
33
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 $ --
============ ============ ============ ============ ============ ============
continued on next page
34
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
============ ============ ============ ============ ============ ============
35
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 $ --
============ ============ ============ ============ ============ ============
continued on next page
36
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
============ ============ ============ ============ ============ ============
The accompanying notes are an integral part of these financial statements.
37
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 financial statements.
38
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.
39
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
40
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.
41
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.
42
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.
43
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
=============
44
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
=========
45
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.
46
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
---------- -----------
47
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.
48
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.
49
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.
50
BAGELL, JOSEPHS, LEVINE & COMPANY, L.L.C.
Certified Public Accountants
200 Haddonfield Berlin Road, Suite 402
Gibbsboro, New Jersey 08026-1239
(856) 346-2828 Fax (856) 346-2882
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA)
CENTER FOR PUBLIC COMPANY AUDIT FIRMS (CPCAF)
NEW JERSEY SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
PENNSYLVANIA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
FLORIDA STATE BOARD OF ACCOUNTANCY
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
Global Resource Corporation
408 Bloomfield Drive, #3
West Berlin, NJ 08091
We have audited the accompanying consolidated balance sheet of Global Resource
Corporation (the "Company"), a development stage enterprise, as of December 31,
2006, and the related consolidated statements of operations, stockholder's
equity (deficit), and cash flows for each of the years in the two-year period
ended December 31, 2006, and the cumulative totals since the company's
inception, July 19, 2002. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Global Resource
Corporation, a development stage enterprise, as of December 31, 2006, and the
results of its operations and its cash flows for each of the years in the
two-year period ended December 31, 2006, and the cumulative totals since the
company's inception, July 19, 2002, in conformity with accounting principles
generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 7 to the financial
statements, unless the Company is successful in generating new sources of
revenue, or obtaining debt or equity financing, or restructuring its business,
the Company is likely to deplete its working capital during 2007. These matters
raise substantial doubt about the Company's ability to continue as a going
concern. Management's plan in regard to these matters is also described in Note
7. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
/s/ BAGELL, JOSEPHS, LEVINE & COMPANY, L.L.C.
---------------------------------------------
Bagell, Josephs, Levine & Company, L.L.C.
Gibbsboro, NJ 08026
April 16, 2007
51
GLOBAL RESOURCE CORPORATION
(A Development Stage Company)
Consolidated Balance Sheet
December 31, 2006
ASSETS
Year Ended
December 31, 2006
-----------------
CURRENT ASSETS
Cash $ 1,770,002
---------------
TOTAL CURRENT ASSETS 1,770,002
---------------
Fixed Assets, Net of depreciation 488,940
---------------
OTHER ASSETS
Notes Receivable net - (reserved $650,000 for doubtful collection) --
Investments & Deposits on Investments 145,000
---------------
TOTAL OTHER ASSETS 145,000
TOTAL ASSETS $ 2,403,942
===============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 114,047
Current portion - loan payable - equipment 36,929
Liabilities to be settled in common stock 201,342
---------------
TOTAL CURRENT LIABILITIES 352,318
---------------
LONG-TERM LIABILITIES
Loan payable - equipment, net of current portion 92,952
---------------
Total liabilities 445,270
---------------
STOCKHOLDERS' EQUITY
Preferred Stock - $.001 par value 50,000,000 shares authorized, 35,236
35,236,188 issued and outstanding at December 31, 2006; none authorized in
2005 Common stock, $.001 par value; 2,000,000,000 shares authorized, 25,113
25,113,329 shares issued and outstanding at December 31, 2006; and
45,866,087 shares issued and outstanding at December 31, 2005
Subscription receivable (660,693)
Additional paid-in capital 9,818,127
Discount on Common stock --
Deficit accumulated in the development stage (6,932,111)
Deferred compensation (327,000)
---------------
Total stockholders' equity 1,958,672
---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,403,942
===============
The accompanying notes are an integral part of these financial statements.
52
GLOBAL RESOURCE CORPORATION
(A Development Stage Company)
Consolidated Statement of Operations
(WITH CUMULATIVE TOTALS SINCE INCEPTION)
JULY 19, 2002
Twelve Months year ended (INCEPTION)
------------------------------------ TO
December 31, DECEMBER 31, DECEMBER 31,
2006 2005 2006
--------------- --------------- ---------------
REVENUES $ -- $ -- $ --
COST OF SALES -- -- --
--------------- --------------- ---------------
GROSS PROFIT -- -- --
--------------- --------------- ---------------
OPERATING EXPENSES
Consulting fees 313,870 198,912 1,304,377
Professional fees 368,215 221,297 687,777
Other general and administrative expenses 2,924,776 847,752 4,185,856
Reserve for Note Receivable 650,000 -- 650,000
Depreciation expense 58,154 23,528 89,179
--------------- --------------- ---------------
TOTAL OPERATING EXPENSES 4,315,015 1,291,489 6,917,189
--------------- --------------- ---------------
LOSS BEFORE OTHER INCOME (EXPENSE) (4,315,015) (1,291,489) (6,917,189)
--------------- --------------- ---------------
OTHER INCOME (EXPENSE)
Loss on real estate - net 14,324 (13,207) (72,712)
Interest expense (13,428) (1,270) (15,169)
Interest income 68,172 4,297 73,070
--------------- --------------- ---------------
TOTAL OTHER INCOME (EXPENSE) 69,068 (10,180) (14,811)
--------------- --------------- ---------------
NET LOSS BEFORE PROVISION FOR INCOME TAXES (4,245,947) (1,301,669) (6,932,000)
PROVISION FOR INCOME TAXES 111 -- 111
--------------- --------------- ---------------
NET LOSS APPLICABLE TO COMMON SHARES $ (4,246,058) $ (1,301,669) $ (6,932,111)
=============== =============== ===============
BASIC AND DILUTED LOSS
PER SHARE $ (0.09) $ (1,802.87) $ (0.14)
=============== =============== ===============
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES 47,939,917 722 47,939,917
=============== =============== ===============
The accompanying notes are an integral part of these financial statements.
53
GLOBAL RESOURCE CORPORATION
(A Development Stage Company)
Consolidated Statement of Stockholders' Equity (Deficit)
At December 31, 2006
PREFERRED STOCK COMMON STOCK DEFICIT
------------------- -------------------- DISCOUNT ACCUMULATED
PAR VALUE PAR VALUE ADDITIONAL ON DURING THE DEFERRED SUBSCRIP-
PREFERRED $.001 COMMON $.001 PAID-IN COMMON DEVELOPMENT COMPEN- TION
SHARES $ AMOUNT SHARES $ AMOUNT CAPITAL STOCK STAGE SATION RECEIVABLE TOTAL
------- -------- ----------- ------- -------- ------- ----------- --------- -------- -----------
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 -- -- -- -- 472,000
Shares issued for
cash, November 2002 -- -- 29,000 -- 14,500 -- -- -- -- 14,500
Shares issued for
services, November
and December 2002 -- -- 13,600 -- 6,800 -- -- -- -- 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 -- -- 3,597,600 -- 493,300 -- (508,508) -- -- (15,208)
------- -------- ----------- ------- -------- ------- ----------- --------- -------- -----------
Re-issuance of
founders' shares
- July 2003 -- -- 1,455,000 -- -- -- -- -- -- --
Shares issued for
cash -- -- 519,800 -- 259,900 -- -- -- -- 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 -- -- 5,572,400 -- 753,200 -- (712,167) -- (14,340) 26,693
------- -------- ----------- ------- -------- ------- ----------- --------- -------- -----------
Shares issued for
cash -- -- 917,645 -- 553,105 -- -- -- -- 553,105
Shares issued in
exchange for real
estate -- -- 650,000 -- 650,000 -- -- -- -- 650,000
Shares issued for
compensation -- -- 545,000 -- 545,000 -- -- (545,000) -- --
Shares issued as
charitable
contribution -- -- 50,000 -- 50,000 -- -- -- -- 50,000
Initial founders'
shares cancelled -- -- (250,000) -- -- -- -- -- -- --
Issuance of
subscription
receivable from
shareholders -- -- -- -- -- -- -- -- (74,240) (74,240)
Net loss for the
year ended
December 31, 2004 -- -- -- -- -- -- (672,219) -- -- (672,219)
------- -------- ----------- ------- -------- ------- ----------- --------- -------- -----------
(CONTINUED BELOW)
54
GLOBAL RESOURCE CORPORATION
(A Development Stage Company)
Consolidated Statement of Stockholders' Equity (Deficit)
At December 31, 2006
PREFERRED STOCK COMMON STOCK DEFICIT
------------------- -------------------- DISCOUNT ACCUMULATED
PAR VALUE PAR VALUE ADDITIONAL ON DURING THE DEFERRED SUBSCRIP-
PREFERRED $.001 COMMON $.001 PAID-IN COMMON DEVELOPMENT COMPEN- TION
SHARES $ AMOUNT SHARES $ AMOUNT CAPITAL STOCK STAGE SATION RECEIVABLE TOTAL
---------- ------- ----------- -------- ------------ ------------ ----------- --------- --------- -----------
BALANCE AT
DECEMBER 31,
2004 -- -- 7,485,045 -- 2,551,305 -- (1,384,386) (545,000) (88,580) 533,339
---------- ------- ----------- -------- ------------ ------------ ----------- --------- --------- -----------
Shares issued
for cash -- -- 745,655 -- 914,507 -- -- -- -- 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 -- -- -- -- 80,800
Shares issued
for services -- -- 53,500 -- 53,500 -- -- -- -- 53,500
Accounts
payable
converted to
equity -- -- 1,087 -- 1,087 -- -- -- -- 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)
---------- ------- ----------- -------- ------------ ------------ ----------- --------- --------- -----------
(CONTINUED BELOW)
55
GLOBAL RESOURCE CORPORATION
(A Development Stage Company)
Consolidated Statement of Stockholders' Equity (Deficit)
At December 31, 2006
PREFERRED STOCK COMMON STOCK DEFICIT
------------------- -------------------- DISCOUNT ACCUMULATED
PAR VALUE PAR VALUE ADDITIONAL ON DURING THE DEFERRED SUBSCRIP-
PREFERRED $.001 COMMON $.001 PAID-IN COMMON DEVELOPMENT COMPEN- TION
SHARES $ AMOUNT SHARES $ AMOUNT CAPITAL STOCK STAGE SATION RECEIVABLE TOTAL
---------- ------- ----------- -------- ------------ ------------ ----------- --------- --------- -----------
BALANCE AT
DECEMBER 31,
2005 -- -- 45,866,087 -- 41,101,199 (37,500,000) (2,675,555) (436,000) (78,182) 411,462
---------- ------- ----------- -------- ------------ ------------ ----------- --------- --------- -----------
Shares issued
for cash -- -- 2,786,286 -- 2,810,877 -- -- -- -- 2,810,877
Stock
subscriptions
received, net -- -- -- -- -- -- -- -- (582,511) (582,511)
Amortization
of deferred
compensation -- -- -- -- -- -- -- 109,000 -- 109,000
Shares issued
for services -- -- 14,123 -- 14,746 -- -- -- -- 14,746
Shares issued
for invest-
ment in land -- -- 22,500 -- 45,000 -- -- -- -- 45,000
Effect of
reverse
merger -- -- 72,241 48,761 (37,669,444) 37,500,000 -- -- -- (120,683)
Shares issued
for conver-
sion of debt -- -- 2,681,837 2,682 118,000 -- -- -- -- 120,682
Shares issued
for
consulting -- -- 25,000 25 49,975 -- -- -- -- 50,000
Shares issued
for merger
with Mobile-
stream Inc. -- -- 11,145,255 11,145 2,842,136 -- (10,498) -- -- 2,842,781
Cancellation
of shares
for merger
with Mobile-
stream Inc. -- -- (37,500,000) (37,500) 37,500 -- -- -- -- --
Preferred
convertible
stock issued
for merger
with Mobile-
stream
2 for 1
convertible
into common 35,236,188 $35,236 -- -- 468,138 -- -- -- -- 503,374
Net loss for
the year
ended
December 31,
2006 -- -- -- -- -- -- (4,246,058) -- -- (4,246,058)
---------- ------- ----------- -------- ------------ ------------ ----------- --------- --------- -----------
BALANCE AT
DECEMBER 31,
2006 35,236,188 $35,236 25,113,329 $ 25,113 $ 9,818,127 $ -- $(6,932,111) $(327,000) $(660,693) $ 1,958,672
========== ======= =========== ======== ============ ============ =========== ========= ========= ===========
The accompanying notes are an integral part of these financial statements.
56
GLOBAL RESOURCE CORPORATION
(A Development Stage Company)
Consolidated Statement of Cash Flows
(WITH CUMULATIVE TOTALS SINCE INCEPTION)
TWELVE MONTHS ENDED JULY 19, 2002
---------------------------- (INCEPTION) TO
DECEMBER 31, DECEMBER 31, DECEMBER 31,
2006 2005 2006
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(4,246,058) $(1,301,669) $(6,932,111)
----------- ----------- -----------
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH (USED IN)
OPERATING ACTIVITIES:
Depreciation 58,154 23,528 89,179
Common stock issued for services -- 64,000 532,300
Amortization of deferred compensation 109,000 109,000 218,250
Allowance reserve for note payable 650,000 -- 650,000
Loss on real estate -- (13,007) 87,036
Common stock issued as charitable contribution -- -- 50,000
CHANGES IN ASSETS AND LIABILITIES
(Increase) in prepaid expenses -- 2,882 --
(Increase) decrease in deposits 16,911 33,089 --
(Increase) in notes receivable (650,000) -- (650,000)
(Decrease) in accounts receivable
Increase in accounts payable (66,750) 122,133 (224,219)
----------- ----------- -----------
TOTAL ADJUSTMENTS 117,315 341,625 752,545
----------- ----------- -----------
NET CASH USED IN OPERATING ACTIVITIES (4,128,743) (960,044) (6,179,566)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (503,902) (8,923) (578,119)
Proceeds from sale of real estate -- 68,107 617,864
Investment (135,000) -- (145,000)
Investment in real estate, net -- -- (80,800)
----------- ----------- -----------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (638,902) 59,184 (186,055)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock for cash 2,810,877 914,507 3,725,384
Issuance of equity security and paid-in capital for
merger and other 2,941,321 596,471 5,772,949
Liability for stock to be issued 200,367 (109,805) 200,367
(Increase) decrease in stock subscription receivable (582,511) 10,398 (1,692,957)
Proceeds from officer's loan -- 38,550
Repayment of officer's loan (17,050) -- (38,550)
Proceeds from loan payable - vehicle 73,817 -- 100,133
Repayment of loan payable - vehicle (25,131) (5,195) (31,937)
Proceeds from loan payable - equipment 75,000 -- 75,000
Repayment of loan payable - equipment (13,315) -- (13,315)
----------- ----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 5,463,375 1,406,376 7,485,624
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 695,730 505,516 1,120,002
CASH AND CASH EQUIVALENTS
- BEGINNING OF PERIOD 1,074,272 568,756 --
----------- ----------- -----------
CASH AND CASH EQUIVALENTS
- END OF PERIOD $ 1,770,002 $ 1,074,272 $ 1,120,002
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF
NON-CASH ACTIVITIES:
Common stock issued for services 64,746 $ 53,500 $ 532,300
=========== =========== ===========
Common stock issued as charitable contribution $ 45,000 $ -- $ 50,000
=========== =========== ===========
Accounts payable converted to equity $ -- -- $ 1,087
=========== =========== ===========
The accompanying notes are an integral part of these financial statements.
57
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
NOTE 1 - BASIS OF PRESENTATION AND NATURE OF BUSINESS AND ORGANIZATION
-------------------------------------------------------------
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.
To date, the Company has allocated a substantial portion of their time
and investment in bring their product to the market and the raising of
capital. The Company has not commenced any commercial operations as of
December 31, 2006.
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; 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 ownership
Mobilestream owned 37,500,000 shares of the Company's stock which were
cancelled. The ownership of Mobilestream had a controlling interest in
the Company and due to the transfer of assets between entities under
common control, these transfers were recorded at their cost basis
(Pooling of interest) for accounting purposes. The net asset and
liabilities of Mobilestream equal approximately $2.4 million. The
assets consisted of cash approximately $1,678,000, receivables $650,000
million 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 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 expire on
September 21, 2007.
58
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
NOTE 1 - BASIS OF PRESENTATION AND NATURE OF BUSINESS AND ORGANZIATION
-------------------------------------------------------------
(CONTINUED)
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. Additionally, the Company has allocated 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 December 31, 2006, the Company
maintained cash and cash equivalent balances at two financial
institution that is insured by the Federal Deposit Insurance
Corporation up to $100,000. At December 31, 2006 the Company's
uninsured cash balances total $1,578,362.
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.
59
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
------------------------------------------
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, these transfers were recorded at their cost basis
(Pooling method) for accounting purposes. 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) includes 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.
60
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
------------------------------------------
EARNINGS (LOSS) PER SHARE OF COMMON STOCK (CONTINUED)
The following is a reconciliation of the computation for basic and
diluted earnings per share:
Twelve Months Ended December 31,
--------------------------------
2006 2005
------------- -------------
Net loss ($ 4,246,058) ($ 1,301,669)
============= =============
Weighted-average common shares
Outstanding (Basic) 47,939,917 722
------------- -------------
Weighted-average common shares
Outstanding (Diluted) 47,939,917 722
============= =============
Weighted-average common stock equivalents for preferred stock
convertible to 1 for 2 of common are 70,472,376 and warrants common
stock equivalents are 33,909,407, these are not part of the
weighted-average outstanding common stock calculation due to
anti-dilution impact.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 2001, the FASB issued Statement No. 142 "Goodwill and Other
Intangible Assets". This statement addresses financial accounting and
reporting for acquired goodwill and other intangible assets and
supersedes APB Opinion No. 17, Intangible Assets. It addresses how
intangible assets that are acquired individually or with a group of
other assets (but not those acquired in a business combination) should
be accounted for in financial statements upon their acquisition. This
Statement also addresses how goodwill and other intangible assets
should be accounted for after they have been initially recognized in
the financial statements. In January 2005, the Company entered into a
licensing agreement with Careful Sell Holdings, Ltd., a related party.
(See Note 10)
61
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
------------------------------------------
EARNINGS (LOSS) PER SHARE OF COMMON STOCK (CONTINUED)
On December 16, 2004, the Financial Accounting Standards Board ("FASB")
published Statement of Financial Accounting Standards No. 123 (Revised
2004), "SHARE-BASED PAYMENT" ("SFAS 123R"). SFAS 123R requires that
compensation cost related to share-based payment transactions be
recognized in the financial statements. Share-based payment
transactions within the scope of SFAS 123R include stock options,
restricted stock plans, performance-based awards, stock appreciation
rights, and employee share purchase plans. The provisions of SFAS 123R
are effective for small business issuers as of the first interim period
that begins after December 15, 2005. Currently, the Company accounts
for its share-based payment transactions under the provisions of APB
25, which does not necessarily require the recognition of compensation
cost in the financial statements. The Company has not issued any
options during the reporting periods and as such, the effect of SFAS
123R has no impact on the results of operations for the nine months
ended December 31, 2006.
On December 16, 2004, FASB issued Statement of Financial Accounting
Standards No. 153, "EXCHANGES OF NON-MONETARY ASSETS, AN AMENDMENT OF
APB OPINION NO. 29, ACCOUNTING FOR NON-MONETARY TRANSACTIONS" ("SFAS
153"). This statement amends APB Opinion 29 to eliminate the exception
for non-monetary exchanges of similar productive assets and replaces it
with a general exception for exchanges of non-monetary assets that do
not have commercial substance. Under SFAS 153, if a non-monetary
exchange of similar productive assets meets a commercial-substance
criterion and fair value is determinable, the transaction must be
accounted for at fair value resulting in recognition of any gain or
loss. SFAS 153 is effective for non-monetary transactions in fiscal
periods that begin after June 15, 2005. The Company does not anticipate
that the implementation of this standard will have a material impact on
its financial position, results of operations or cash flows.
62
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
------------------------------------------
RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)
In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and
Error Corrections." SFAS No. 154 replaces Accounting Principles Board
("APB") Opinion No. 20, "Accounting Changes" and SFAS No. 3, "Reporting
Accounting Changes in Interim Financial Statements." SFAS No. 154
requires retrospective application to prior periods' financial
statements of a voluntary change in accounting principle unless it is
impracticable. APB No. 20 previously required that most voluntary
changes in accounting principle be recognized by including the
cumulative effect of changing to the new accounting principle in net
income in the period of the change. SFAS No. 154 is effective for
accounting changes and corrections of errors made in fiscal years
beginning after December 15, 2005. The adoption of SFAS No. 154 did not
have a material impact on the Company's financial position or results
of operations.
In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain
Hybrid Financial Instruments, an amendment of FASB Statements No. 133
and 140." SFAS No. 155 resolves issues addressed in SFAS No. 133
Implementation Issue No. D1, "Application of Statement 133 to
Beneficial Interests in Securitized Financial Assets," and permits fair
value remeasurement for any hybrid financial instrument that contains
an embedded derivative that otherwise would require bifurcation,
clarifies which interest-only strips and principal-only strips are not
subject to the requirements of SFAS No. 133, establishes a requirement
to evaluate interests in securitized financial assets to identify
interests that are freestanding derivatives or that are hybrid
financial instruments that contain an embedded derivative requiring
bifurcation, clarifies that concentrations of credit risk in the form
of subordination are not embedded derivatives and amends SFAS No. 140
to eliminate the prohibition on a qualifying special-purpose entity
from holding a derivative financial instrument that pertains to a
beneficial interest other than another derivative financial instrument.
SFAS No. 155 is effective for all financial instruments acquired or
issued 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. 155 will have on its financial position or results
of operations.
63
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
------------------------------------------
RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)
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.
64
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
NOTE 3 - FIXED ASSETS
------------
Fixed assets as of December 31, 2006 were as follows:
ESTIMATED USEFUL
LIVES (YEARS) 2006
------------------ -----------------
Equipment 5-7 $ 451,293
Vehicles 5 127,513
-----------------
578,806
Less: accumulated depreciation (89,866)
-----------------
Fixed assets, net $ 488,940
=================
There was $58,154 and $23,528 charged to operations for depreciation
expense for the nine months ended December 31, 2006 and 2005,
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.
65
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
NOTE 4 - LOANS PAYABLE - EQUIPMENT (CONTINUED)
-------------------------
2006
-----------------
Total Loans Payable $ 129,881
Less current maturities (36,929)
-----------------
Long-Term payable $ 92,952
=================
The amount of principal maturities of the loans payable by
years is as follows:
2007 $ 36,929
2008 40,964
2009 35,775
2010 16,213
-----------------
$ 129,881
=================
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 December 31, 2006 the deferred tax assets consist of the following:
TWELVE MONTHS ENDED
DECEMBER 31,
2006
-----------
Deferred taxes due to net
operating loss carryforward $ 1,884,633
Less: Valuation allowance (1,884,633)
-----------
Net deferred tax asset $ --
===========
66
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
NOTE 5 - PROVISION FOR INCOME TAXES (CONTINUED)
--------------------------
At December 31, 2006, the Company had deficits accumulated during the
development stage in the approximate amount of $6,932,111 available to
offset future taxable income through 2026. 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 that commenced October
15, 2004. Monthly payments under the initial lease term range from
$3,000 to $3,400. During the second quarter of 2006 the Company entered
into a lease agreement for additional office space for a term of three
years commencing June 1, 2006. The term of the initial leased space was
extended at the same time and both leases now expire 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
SEPTEMBER 30,
---------------------
2007 $ 60,000
2008 60,000
2009 21,700
-------------
$ 141,700
=============
67
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
NOTE 7 - GOING CONCERN
-------------
As shown in the accompanying financial statements, the Company incurred
substantial net losses for the periods ended December 31, 2006 and
2005, 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 Twelve months
ended Twelve 31, 2006:
The Company issued 1,786,286 shares of stock for $1,810,877 cash.
The Company issued 39,746 shares of common stock in exchange for
services valued at $64,746.
The Company issued 22,500 shares of common stock in exchange for land
valued at $45,000.
The Company issued 1,681,837 shares of common stock in conversion of
debt of $120,682.
The Company issued 11,145,255 shares of common stock in merge with
Mobilesteam Inc. in exchange for assets & liabilities valued at
$2,511,998.
The Company cancelled 37,500,000 shares of common stock in merge with
Mobilestream due common ownership
68
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
NOTE 8 - STOCKHOLDERS' EQUITY (CONTINUED)
--------------------
PREFERRED STOCK
---------------
The Company (Mobilestream which was merged into Global Resource
Corporation) issued 503,374,112 shares of preferred stock to the
President of the Company in 2006 from a cash payment made in 2005,
recorded to paid-in capital. This preferred stock has been re-issued
into Global Resource Corporation convertible preferred as a result of
the merger with Mobilestream. 35,236,188 shares have been issued which
can converted into common stock,1 preferred for 2 common stock shares.
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 expire on September 21,
2007.
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.
A summary of the status of the Company's outstanding stock warrants as
of December 31, 2006 is as follows:
Weighted Average
Shares Exercise Price
---------------- ----------------
Outstanding at January 1, 2006 - $ -
Granted 33,909,407 4.41
Exercised - -
Forfeited - -
---------------- ----------------
Outstanding at December 31, 2006 33,909,407 $ 4.41
---------------- ----------------
Exercisable at December 31, 2006 33,909,407 $ 4.41
---------------- ----------------
69
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
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.
NOTE 10- RELATED PARTY TRANSACTION
-------------------------
In January 2005 the Company formalized a prior intended agreement with
Careful Sell Holding, L.L.C. ("Careful Sell"), a Delaware limited
liability company formed by the President of the Company. The Company's
President and his spouse, a Director of the Company, own all of the
limited liability interests of Careful Sell. The Company's President is
also the Manager of Careful Sell. Under the revised agreement the
Company entered into a Technology Contribution Agreement (the
"Agreement"), with Careful Sell. Careful Sell is the owner of all the
rights to the inventions of the Company's President. The Agreement
transfers to the Company the rights to commercialize such inventions
and to operate and use the related processes and apparatus to make,
sell, use and otherwise dispose of products, which may be processed
utilizing the inventions. The terms of the Agreement include a
provision whereby the Company will pay Careful Sell royalties of 2% of
all revenues derived from the inventions. In further consideration for
the transfer of the inventions, the Company has issued to Careful Sell
a total of 37,500,000 shares of common stock of the Company. This
agreement supersedes a prior agreement not formalized between the
Company and Careful Sell in 2002.
70
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
NOTE 10- RELATED PARTY TRANSACTION (CONTINUED)
-------------------------
In January 2006 Careful Sell merger with PSO Enterprises, Inc., a
Delaware corporation ("PSO"). At that time the separate existence of
Careful Sell ceased and PSO continues as the surviving corporation. At
that time the members of Careful Sell were issued 10,000,000 shares of
PSO representing a 100% interest in PSO. In February 2006 PSO reversed
merged into Mobilestream Oil.
On December 29, 2006 the Company completed a merger with Mobilestream
Oil, which had a common control owners. The transfer of assets between
entities were recorded at their cost basis for accounting purposes. A
royalties receivable and payable in the amount of $125,634 was
eliminated in the consolidation of two companies. Revenue for royalties
and development expenses in amount of $1,166,667 was also eliminated in
the consolidation of the two companies.
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.
71
GLOBAL RESOURCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
NOTE 12- SUBSEQUENT EVENTS
-----------------
Subsequent to the balance sheet date, in March 2007, the Company
authorized two payment transaction for services by issuing stock in
lieu of cash; 11,000 shares in consideration for services regarding
testing of customer samples and 20,000 shares in consideration for
services rendered in regarding merger and acquisition.
72
PART II---INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Global Resource Corporation's Articles of Incorporation, as amended,
contain provisions to indemnify the directors, officers, employees or other
agents to the fullest extent permitted by the Private Corporation Law of Nevada.
These provisions may have the practical effect in certain cases of eliminating
the ability of shareholders to collect monetary damages from directors. Global
Resource Corporation believes that these provisions will assist Global Resource
in attracting or retaining qualified individuals to serve as Directors.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
SEC Registration Fee
Legal and Accounting Fees and Expenses*
Transfer Agent and Registrar Fees*
Printing Expenses*
Miscellaneous*
Total
*Estimated
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
Set forth below in chronological order is information regarding the numbers
of shares of capital stock sold by us, the number of options and warrants issued
by us, and the principal amount of debt instruments issued by us since
September 1, 2004, the consideration received by us for such shares, options
and debt instruments and information relating to the section of the Securities
Act or rule of the Securities and Exchange Commission under which exemption from
registration was claimed. None of these securities was registered under the
Securities Act. Except as otherwise indicated, no sales of securities involved
the use of an underwriters and no commissions were paid in connection with the
sale of any securities.
Each of such transactions was exempt from registration under the Securities
Act by virtue of the provisions of Section 4(2) and/or Section 3(b) of the
Securities Act. Each purchaser of the securities described below has represented
that he/she/it understands that the securities acquired may not be sold or
otherwise transferred absent registration under the Securities Act or the
availability of an exemption from the registration requirements of the
Securities Act, and each certificate evidencing the securities owned by each
purchaser bears or will bear upon issuance a legend to that effect.
The information below gives affect to all stock splits, reverse stock
splits and stock dividends to date.
On September 14, 2004 we borrowed $25,000 from Javelin Holdings, Inc. and
issued a $25,000 convertible debenture (the "Javelin Debenture") to the lender.
The Javelin Debenture bears interest at the rate of 8% per annum, and is
convertible into shares of our common stock at (i) a floating conversion price
of 50% of the closing bid price on the date of conversion or (ii) the lowest
price set by the Company in a registration statement for the converted shares to
be filed and declared effective under the Securities Act of 1933, as amended
(the "Securities Act"). Subsequent thereto the transaction was rescinded and the
Javelin Debenture was cancelled, and 175,000 shares of common stock that had
been issued for a partial conversion of the Javelin Debenture were returned to
the Company.
In September 2004 we commenced an offering of one billion (1,000,000,000)
shares of our common stock under Regulation E of the Securities Act at prices
ranging between $.05 and $.005 per share. As of November 12, 2004 we had sold
1,220,000 shares of common stock for $12,200. Pursuant to this offering, holders
of the convertible debentures described immediately below converted $17,975 of
the debentures into 3,595,000 shares of our common stock.
On September 30, 2004 our Board of Directors adopted the "Global Resource
Corporation Stock Option Plan" which was subsequently approved by our
stockholders. No options were ever granted under the 2004 Plan. We terminated
the 2004 Plan when we discovered that it was not permissible for a BDC to adopt
an option plan.
73
Between October 2004 to January 2005 we sold $155,000 convertible
debentures in a private placement. The debentures bear interest at the rate of
8% per annum and are due five (5) months after issuance. At the option of the
Company or the holder, the debentures are convertible into shares of our common
stock at any time at (i) a floating conversion price of 50% of the closing bid
price per on the conversion date, or (ii) the lowest price set by the Company in
a registration statement for the converted shares to be filed and declared
effective under the Securities Act. During the period between September 27, 2004
and December 6, 2004, $17,975 face amount of the debentures were converted into
3,595,000 shares of our common stock. We have an obligation to register the
resale of the shares to be converted under the Securities Act.
On September 1, 2004 we effected a 1 for 100 reverse stock split of our
issued and outstanding shares without a similar change to our authorized shares.
On September 7, 2004 we elected to register as a small business development
company under the Investment Company Act of 1940.
In January 2005 the Company issued 37,000,000 shares of its common stock to
Careful Sell Holding, L.L.C. ("Careful Sell"), a Delaware limited liability
company, as part of the consideration for the transfer and assignment of the
patents, technology and intellectual property used to commercialize such
inventions and to operate and use the related processes and apparatus to make,
sell, use and otherwise dispose of products, which may be processed utilizing
the inventions.
On December 15, 2005 we transferred our 50% membership interest in Well
Renewal, LLC to Transnix Global Corporation in exchange for the surrender and
cancellation of $35,555 principal and accrued and past due interest on our
$137,900 8% convertible debentures previously issued to Transnix and terminated
the pledge agreement dated as of November 18, 2005 between the Company and
Transnix.
On June 7, 2006, an unrelated third party acquired the Restated and Amended
Debenture owned by Transnix Global Corporation, which represented the balance of
the indebtedness by the Company to Transnix in the principal amount of $102,345
and accrued interest of $16,274.
On September 22, 2006 we closed an acquisition for substantially all of the
assets and certain liabilities of Carbon Recovery Corporation (the "CRC
Acquisition") pursuant to a plan and agreement of reorganization dated July 27,
2006 (the "CRC Agreement") with Carbon Recovery Corporation ("CRC") for the
acquisition of substantially all of the assets and certain liabilities of CRC
(the "CRC Acquisition"). Under the CRC Agreement, on September 22, 2006 we
issued to a [insert name] liquidating trust comprised of the stockholders of CRC
the following: (i) 48,688,996 shares of our common stock (the "CRC Common
Stock") for the assets of CRC, and (ii) 3,908,340 Class B Warrants, 1,397,000
Class D Warrants and 1,397,000 Class E Warrants (together the "CRC Warrants" and
individually by their respective class names) to assume the liabilities of CRC
to its warrant holders under similar classes of warrants of CRC. The CRC
Warrants have the following characteristics: (i) the CRC Class B Warrants and
the CRC Class D Warrants have an exercise price of $2.75 per warrant, and (ii)
the CRC Class E Warrants have an exercise price of $4.00 per warrant. The CRC
Class E Warrants can only be exercised together with the exercise of a similar
number of CRC Class D Warrants. Initially, all of the CRC Warrants expired on
September 21, 2007; however, we have extended the expiration date of the CRC
Class B Warrants and the CRC` Class D Warrants to March 31, 2008, and the CRC
Class E Warrants to June 30, 2008. Mr. Frank Pringle, the controlling
stockholder of CRC is also our Chairman of the Board, President and CEO.
On September 22, 2006 we issued 25,000 shares of our common stock to Ms.
Mary Radomsky as compensation for her services as former director and CEO of the
Company from May to September 22, 2006.
On September 26, 2006 we issued 2,560,974 shares of our common stock out of
a total of 2,681,837 such shares to [identify names] two holders of our 8%
convertible debenture in connection with the conversion of $102,345 principal
amount of, and $18,337.68 in accrued interest, of the debentures. The remaining
120,863 shares issuable upon the conversion were issued on [GET DATE] as a
result of certain limitations in the convertible debenture.
74
On September 22, 2006, 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.
On December 29, 2006 we issued 20,000 shares of common stock to a
consultant in partial payment for services.
Between November 2005 and June 2006 we issued 1,786,286 shares of our
common stock for $1,810,877 cash.
In August 2006 we issued 25,000 shares of our common stock to one of our
directors for her services valued at $50,000.
In August 2006 we issued 14,746 shares of our common stock to a consultant
for services valued at $14,746.
On [insert date] we issued 22,500 shares of our common stock to [insert
name or identity marker] in exchange for land valued at $45,000.
On August 2006 we issued 2,500,000 shares of common stock to MJACC in
connection with the purchase and conversion of a convertible debenture of
$120,682.
On December 31, 2006 we closed an acquisition for substantially all of the
assets and certain liabilities of Mobilestream Oil, Inc. (the "Mobilestream
Acquisition") pursuant to a plan and agreement of reorganization dated November
28, 2006 (the "Mobilestream Agreement") with Mobilestream Oil, Inc.
("Mobilestream"). Under the Mobilestream Agreement, on January 3, 2007 we issued
to a [insert name] liquidating trust comprised of the stockholders of
Mobilestream the following: (i) 11,145,255 shares of our common stock (the
"Mobilestream Acquisition Common Stock") for all of the shares of Mobilestream
common stock at the exchange rate of one share of our common stock for each
7.143 shares of Mobilestream common stock; (ii) 70,472,376 shares of our 2006
Series Convertible Preferred Stock (the "2006 Mobilestream Acquisition Preferred
Stock") in exchange for 503,374,112 shares of Mobilestream 2006 Series
Convertible Preferred Stock at the exchange rate of one share of our 2006
Mobilestream Preferred Stock for each 7.143 shares of Mobilestream 2006 Series
Convertible Preferred Stock; and (iii) 27,205,867 common stock purchase warrants
having an exercise price of $4.75 per share and an expiration date of December
31, 2007 (the "Mobilestream Warrants") on the basis of one Mobilestream Warrant
for each three shares of Mobilestream common stock or Mobilestream 2006 Series
Convertible Preferred Stock. Under the Mobilestream Agreement, if we file a
registration statement with the Commission under the Securities Act, we must
give written notice to the trustee of the liquidation trust and, if the trustee
so elects, we must include in any such registration statement such number of
shares of Mobilestream Common Stock, Mobilestream 2006 Preferred Stock and
common stock underlying the Mobilestream Warrants as the trustee may demand. If
the categories of shares are not registered by December 31, 2007, then the
trustee of the liquidating trust may demand that we register the shares of
Mobilestream Common Stock, the Mobilestream 2006 Preferred Stock and the common
stock underlying the Mobilestream Warrants. Mr. Frank Pringle, the controlling
stockholder of Mobilestream and our Chairman of the Board, President and CEO,
agreed to convert 503,374,112 shares of his Mobilestream common stock into
503,374,112 shares of Mobilestream "2006 Series of Convertible Preferred Stock"
prior to the acquisition closing.
On December 31, 2006, at the closing of the Mobilestream Acquistion, we
issued the shares of Mobilestream Common Stock and the Mobilestream Warrants
shares as aforesaid; however, we issued only 35,236,188 (instead of 70,472,376)
shares of our Mobilestream 2006 Preferred Stock to Mr. Pringle because of
limitations on the number of authorized preferred shares in our Articles of
Incorporation. To maintain the proper share numbers for the Mobilestream
Acquisition, the current Mobilestream 2006 Preferred Stock provides that they
can be converted into our common stock at the rate of 2 shares of our common
stock for each share of our Mobilestream 2006 Preferred Stock. In addition, we
acquired 37,000,000 shares of our own common stock from Mobilestream as one of
the assets in the Mobilestream Acquisition. As part of the transaction, we
cancelled the 37,000,000 shares of our common stock we acquired.
75
On March 8, 2007 we issued 186,822 shares of our common stock to 25 non-US
persons under a Regulation S offering for $201,342 actually received in 2006.
On March 19, 2007 we issued 5,000 shares of our common stock to the
Director of Microwave Processing and Engineering Center at Pennsylvania State
University for consulting services valued at $5000.
On March 20, 2007 we issued 20,000 shares of our common stock to a
financial consultant in exchange for services regarding the Mobilestream
acquisition performed in 2006 and valued at $20,000.
On March 21, 2007 we issued 11,000 shares of common stock to an engineering
consultant in exchange for services regarding testing of customer samples valued
at $11,000.
In March 2007 we issued 36,000 shares of common stock in exchange for
services valued at $36,000.
In March 2007 we issued 17,500 shares of common stock in exchange for $5250
in cash.
In April 2007 we issued 155,300 shares of our common stock for $46,950 in
cash in a Regulation S offering.
During the three months ended June 30, 2007 we issued 499,564 shares of our
common stock for $157,711 in cash in a Regulation S offering.
On July 18, 2007 we issued 37,500 shares of our common stock to a
consultant for engineering services valued at $37,500.
In 2007 we issued 30,041 shares of our common stock in exchange for
services valued at $20,728.
On August 28, 2007 we issued a total of 800,000 common stock purchase
warrants to two private placement investors in connection with the rescission
of, and settlement of, a set of claims and counterclaims arising out of a
private placement transaction. 400,000 of the warrants are exercisable at $0.80
per share and expire on December 31, 2009 and 400,000 warrants are exercisable
for a cashless exercise price and expire on December 31, 2009.
On December 3, 2007 we issued a total of 45,094 shares of our common stock
to one consultant for services relating to a listing on the Frankfurt Stock
Exchange.
On December 5, 2007 we issued 55,000 shares and 22,500 shares of our common
stock, respectively, to two consultants for military related marketing services
with a value of $55,000 and $45,000.
On December 11, 2007 we issued a total of 200,000 shares of our common
stock to three investor relation firms.
On December 17, 2007 we issued a total of 100,000 shares of our common
stock to plaintiffs in settlement of a pending litigation against the Company.
On December 17, 2007 we issued a total of 400,000 shares of our common
stock upon conversion of the MJACC Series Convertible Preferred Stock.
On December 18, 2007 we issued a total of 50,000 shares of our common stock
to two consultants for military marketing and other marketing related services.
On December 21, 2007 we issued 1,900,000 shares of our common stock in
connection with a private placement to one investor. 900,000 of the shares are
being held by investor's counsel pursuant to an escrow arrangement.
76
On December 27, 2007 we issued a total of 50,000 shares of our common stock
in settlement of two claims arising from a dispute involving two investors in
the Company.
On February 1, 2008 we issued a total of 100,000 shares of our common stock
to one investor relation firms.
On February 6, 2008, we issued a total of 150,000 shares of our common
stock to three investor relation firms.
ITEM 27. EXHIBITS.
Exhibits required by Item 601 of Regulation S-K. The following exhibits are
filed as a part of, or incorporated by reference into, this Registration
Statement:
Number Description
------ -----------
3.1 Certificate of Incorporation of E-mail Mortgage.com, Inc., filed as
Exhibit 3 to the Company Registration Statement on Form SB-2 SEC File
Number 333-51058 filed on December 21, 2002 (the "2002 Registration
Statement") and incorporated herein by reference
3.1.1 Certificate of Amendment of Articles of Incorporation, filed as Exhibit
3(i) to the Company's Registration Statement on Form 8-A, filed on
September 17 2002 (the "2004 Registration Statement"), and incorporated
herein by reference.
3.1.2 Certificate of Amendment to the Articles of Incorporation filed as
Graphic to the Company's 2004 Registration Statement filed on September
17, 2004, and incorporated herein by reference.
3.1.3 Certificate of Designation of Series A Convertible Preferred Stock,
filed as Exhibit 3.1 to the Company's Current Report on Form 8-K, dated
September 17, 2004, filed on February 23, 2005, and incorporated herein
by reference.
3.2 Company Bylaws, filed as Exhibit 3 to the Company 2002 Registration
Statement filed on December 21, 2002 (the "2002 Registration
Statement") and incorporated herein by reference.
3.2(ii) Company Amended By-laws filed as Graphic to the Company Registration
Statement on Form 8-A filed on September 17, 2004 (the "2004
Registration Statement"), and incorporated by reference.
3.1.5 Amendment to Articles of Incorporation of the Company filed as Exhibit
A to the Company's Information Statement on Schedule 14C, SEC File
Number 000-50944, dated December 11, 2007, filed December 26, 2007, and
incorporated herein by reference
3.1.6 Amendment to Certificate of Designation for 2006 Series of Convertible
Preferred Stock of the Company filed as Exhibit B to the Company's
Information Statement on Schedule 14C, SEC File Number 000-50944, dated
December 11, 2007, filed December 26, 2007, and incorporated herein by
reference.
4.1 Specimen Common Stock Certificate filed as Exhibit 4.1 to the Company's
2002 Registration Statement filed on December 21, 2002, and
incorporated herein by reference.
4.2 $25,000 8% Convertible Debenture issued September 15, 2004 from the
Company to Javelin Holdings, Inc. filed as Exhibit 4 to the Company's
Current Report on Form 8-K filed on November 15, 2004, and incorporated
herein by reference.
4.3 Form of 8% Convertible Debenture filed as Exhibit 4.1 to the Company's
Current Report on Form 8-K, dated September 17, 2004, filed on February
23, 2005, and incorporated herein by reference.
4.4 2004 Stock Option Plan filed as Exhibit 4 to the Company's Annual
Report on Form 10-KSB for the year ended December 31, 2004, filed on
July 17, 2005, and incorporated herein by reference.
4.5 2007 Employee Compensation and Stock Option Plan filed as Exhibit 10.7
to the Company's Registration Statement on Form S-8, SEC File Number
333-141442, filed on March 20, 2007, and incorporated herein by
reference.
77
4.6 Warrant dated December 21, 2007 for 625,000 shares of the Company's
common stock issued to Professional Offshore Opportunity Fund, Ltd.
("PROOF") filed as Exhibit 10.7 to the Company's Current Report on Form
8-K for the period ended December 21, 2007, filed on December 21, 2007,
and incorporated herein by reference.
4.7 2008 Employees Compensation Plan filed as Exhibit 10.7 to the Company's
Registration Statement on Form S-8, SEC File Number 333-148916, filed
January 29, 2008, and incorporated herein by reference.
5.1 Opinion of Richard C. Fox, P.A. *
10.1 Agreement and Plan of Reorganization dated as of October 29, 2003,
2001, by and between Advanced Healthcare Technologies, Inc. and
Nutratek, Ltd., filed as Exhibit 99 to the Company's Current Report on
Form 8-K filed on January 12, 2004, and incorporated herein by
reference.
10.2 Stock Purchase Agreement dated as of June 30, 2004 by and among
Advanced Healthcare Technologies, Inc., Richard Mangierelli and Johnny
Sanchez filed as Exhibit 2.1 to the Company's Report on Form 8-K filed
on June 30, 2004, and incorporated herein by reference.
10.3 Release and Indemnity Agreement dated as of June 30, 2004 by and among
Advanced Healthcare Technologies, Inc., Richard Mangierelli and Johnny
Sanchez filed as Exhibit 10.1 to the Company's Report on Form 8-K filed
on June 30, 2004, and incorporated herein by reference.
10.4 Articles of Merger by and between E-mail Mortgage.com, Inc. and Mariner
Health Care, Inc. dated as of July 29, 2002 filed as Exhibit pig3 to
the Company 2004 Registration Statement, and incorporated herein by
reference.
10.5 Operating Agreement dated as of January 11, 2005 by and between Global
Resource Corporation and Well Renewal, LLC filed as Exhibit 10.1 to the
Company's Current Report on Form 8-K, dated September 17, 2004, filed
on February 23, 2005, and incorporated herein by reference.
10.6 Agreement and Plan of Reorganization dated as of July 26, 2006 by and
between Global Resource Corporation and Carbon Recovery Corporation
filed as Exhibit 10.3 to the Company's Current Report on Form 8-K,
dated July 26, 2006, filed on July 26, 2006, and incorporated herein by
reference.
10.7 Form of Indemnity Agreement between the Company and each of its
directors and executive officers filed as Exhibit 10.4 to the Company's
Current Report on Form 8-K for the period September 22, 2006, filed on
September 26, 2006, and incorporated herein by reference.
10.8 Pledge Agreement dated November 18, 2005 by and between the Company and
Transnix Global Corporation filed as Exhibit 10.1 to the Company's
Report on Form 10-QSB for the period ended December 31, 2005, filed
October 31, 2006, and incorporated herein by reference.
10.9 Settlement Agreement dated December 15, 2005 by and between the Company
and Transnix Global Corporation filed as Exhibit 10.1 to the Company's
Report on Form 10-QSB for the period ended December 31, 2005, filed
October 31, 2006, and incorporated herein by reference.
10.10 Combined Technology Agreement dated November 28, 2006 by and among the
Company, Carbon Recovery Corporation, Frank G. Pringle, Lois Augustine
Pringle, and Mobilestream Oil Corporation filed as Exhibit 10.5 to the
Company's Current Report on Form 8-K for the period ended November 28,
2006, filed on November 29, 2006, and incorporated herein by reference.
10.11 Plan and Agreement of Reorganization dated as of November 28, 2006 by
and between the Company and Mobilestream Oil Corporation filed as
Exhibit 10.5 to the Company's Current Report on Form 8-K for the period
ended November 28, 2006, filed on November 29, 2006, and incorporated
herein by reference.
10.12 Securities Purchase Agreement, dated as of December 21, 2007, by and
between the Registrant and PROOF, filed as Exhibit 10.6.1 to the
Company's Current Report on Form 8-K, SEC File No. 000-50944, for the
period ended December 21, 2007, filed on December 21, 2007, and
incorporated herein by reference.
10.13 Registration Rights Agreement dated as of December 21, 2007, by and
between the Registrant and PROOF, filed as Exhibit 10.8 to the
Company's Current Report on Form 8-K, SEC File No. 000-50944, for the
period ended December 21, 2007,filed on December 21, 2007, and
incorporated herein by reference.
78
10.14 Escrow Agreement dated as of December 21, 2007 by and among the
Company, PROOF and Sullivan & Worcester, LLP dated as of December 21,
2007, by and between the Registrant and PROOF, filed as Exhibit 10.6.1
to the Company's Current Report on Form 8-K, SEC File No. 000-50944,
for the period ended December 21, 2007,filed on December 21, 2007, and
incorporated herein by reference.
10.15 Form of Registration Rights Agreement, filed as Exhibit 4.4 to the
Company's February 2004 8-K, and incorporated herein by reference.
23.1 Consent of Bagell, Josephs, Levine and Company, L.L.C.*
23.3 Consent of Richard C. Fox, P.A. (included in Exhibit 5.1). *
ITEM 28. UNDERTAKINGS
(a) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer, or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(b) The registrant hereby undertakes:
79
To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a) (3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the maximum
offering range may be reflected in the form of prospectus filed with
the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs (b)1(i) and (a)(1)(ii) of this section do not
apply if the registration statement is on Form S-3, Form S-8 or Form F-3, and
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
That, for purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to section 13(a) or
section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
To determine any liability under the Securities Act, treat the information
omitted from the form of prospectus filed as part of this registration statement
in reliance upon Rule 430A and contained in a form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
as part of this registration statement as of the time the Commission declared it
effective.
For the purpose of determining any liability under the Securities Act, to
treat each post-effective amendment that contains a form of prospectus as a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time as the initial bona fide offering
thereof.
80
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form S-1 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of West
Berlin, State of New Jersey on February 12, 2008.
(Registrant) GLOBAL RESOURCE CORPORATION
By (Signature and Title) /s/ Frank G. Pringle
---------------------------------------------
Frank G. Pringle, Chief Executive Officer and
Chairman of the Board of Directors
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated:
(Signature) /s/ Frank G. Pringle
-----------------------------------------------------
Frank G. Pringle,
(Title) Chief Executive Officer and Chairman of the Board of Directors
(Principal Executive Officer)
(Date) February 12, 2008
(Signature) /s/ Jeffrey J. Andrews
-----------------------------------------------------
Jeffrey J. Andrews
(Title) Chief Financial Officer and Member of the Board of Directors
(Principal Financial Officer and Accounting Officer)
(Date) February 12, 2008
Director February __, 2008
------------------------
Frederick A. Clark
Director February __, 2008
------------------------
Kim Thorne O'Brien
/s/ Jonathan L. Simon Director February 12, 2008
------------------------
Jonathan L. Simon
81