Investview, Inc. - Quarter Report: 2009 June (Form 10-Q)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(Mark One)
|
x
|
QUARTERLY REPORT UNDER SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the quarterly period ended June 30, 2009
|
¨
|
TRANSITION REPORT UNDER SECTION
13 OR 15(d) OF THE EXCHANGE
ACT
|
For the
transition period from ________________ to _______________
000-27019
(Commission
file number)
Global
Investor Services, Inc.
(Exact
name of registrant as specified in its charter)
|
Nevada
|
87-0369205
|
|
|
(State
or other jurisdiction
|
(IRS
Employer
|
|
|
of
incorporation or organization)
|
Identification
No.)
|
110
William Street, 22nd
Floor
New
York, New York 10038
(Address
of principal executive offices)
(212)
227-2242
(Issuer's
telephone number)
TheRetirementSolution.com,
Inc.
(Former
name of Registrant)
Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes x No ¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definition of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
|
Large accelerated filer ¨
|
Accelerated filer ¨
|
|
Non-accelerated filer ¨
|
Smaller reporting company x
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes ¨ No x
Indicate
by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes x No ¨
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes ¨ No x
As of
August 14, 2009, there were 320,539,800 shares of common stock, par value
$.001 per share, outstanding.
Transitional
Small Business Disclosure Format (check one): Yes ¨ No x
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY
THERETIREMENTSOLUTION.COM, INC.)
FORM
10-Q
QUARTERLY
PERIOD ENDED JUNE 30, 2009
TABLE
OF CONTENTS
|
PART
1
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FINANCIAL
STATEMENTS
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3
|
|
|
|
|
|
|
|
Item
1.
|
Financial
Statements
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3
|
|
|
Condensed
Consolidated Balance Sheets as of June 30, 2009 (Unaudited) and March 31,
2009.
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3
|
||
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|
|||
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Condensed
Consolidated Statements of Losses for the Three Months Ended June 30, 2009
and 2008 (Unaudited)
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4
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||
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|||
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Condensed
Consolidated Statements of Cash Flows for the Three Months Ended June 30,
2009 and 2008 (Unaudited)
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5
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||
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|||
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Notes
to Condensed Consolidated Financial Statements as of June 30, 2009
(Unaudited)
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6
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||
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Item
2.
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
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39
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|
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Item
3.
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Quantitative
and Qualitative Disclosures About Market Risk
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48
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|
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Item
4.
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Controls
and Procedures
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49
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|
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PART
II
|
OTHER
INFORMATION
|
||
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Item
1.
|
Legal
Proceedings
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49
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|
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Item
1.A
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Risk
Factors
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49
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|
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Item
2.
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Unregistered
Sales of Equity Securities and Use of Proceeds
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49
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|
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Item
3.
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Defaults
Upon Senior Securities
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50
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|
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Item
4.
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Submission
of Matters to a Vote of Security Holders
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50
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|
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Item
5.
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Other
Information
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50
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|
|
Item
6.
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Exhibits
|
50
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SIGNATURES
|
51
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||
2
PART
I - FINANCIAL INFORMATION
ITEM
1 - FINANCIAL STATEMENTS
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
June 30,
|
March 31,
|
|||||||
|
2009
|
2009
|
|||||||
|
(unaudited)
|
||||||||
|
ASSETS
|
||||||||
|
Current
assets:
|
||||||||
|
Cash
and cash equivalents
|
$ | 53,248 | $ | 75,259 | ||||
|
Deferred
costs
|
15,631 | 17,373 | ||||||
|
Employee
advances
|
7,200 | 6,550 | ||||||
|
Other
current assets
|
1,480 | 1,432 | ||||||
|
Total
current assets
|
77,559 | 100,614 | ||||||
|
Property,
plant and equipment, net of accumulated depreciation of $1,133,644 and
$940,754 as of June 30, 2009 and March 31, 2009,
respectively
|
1,814,135 | 2,007,025 | ||||||
|
Other
assets:
|
||||||||
|
Capitalized
finance costs, net of amortization of $289,915 and $233,134 as of June 30,
2009 and March 31, 2009, respectively
|
11,180 | 67,962 | ||||||
|
Deposits
|
18,210 | 85,927 | ||||||
|
Customers
list, net of accumulated amortization of $242,933 and $201,187
as of June 30, 2009 and March 31, 2009, respectively
|
256,814 | 298,460 | ||||||
|
Total
assets
|
$ | 2,177,898 | $ | 2,559,988 | ||||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
|
Current
liabilities:
|
||||||||
|
Accounts
payable and accrued liabilities
|
$ | 1,693,340 | $ | 1,271,211 | ||||
|
Deferred
revenue
|
63,969 | 108,048 | ||||||
|
Due
to related party
|
286,814 | 130,701 | ||||||
|
Advances
payable
|
199,474 | 199,474 | ||||||
|
Convertible
debentures, current portion
|
200,000 | 200,000 | ||||||
|
Notes
payable, current portion
|
382,085 | 382,085 | ||||||
|
Total
current liabilities
|
2,825,682 | 2,291,519 | ||||||
|
Long
term debt:
|
||||||||
|
Convertible
debentures, long term portion
|
2,060,906 | 2,016,949 | ||||||
|
Convertible
debentures, long term portion-related party
|
1,333,333 | 1,333,333 | ||||||
|
Total
liabilities
|
6,219,921 | 5,641,801 | ||||||
|
STOCKHOLDERS'
EQUITY (DEFICIT)
|
||||||||
|
Common
stock, par value $0.001; 700,000,000 shares authorized; 315,314,800
and 312,214,800 issued and outstanding as of June 30, 2009 and
March 31, 2009, respectively
|
315,315 | 312,215 | ||||||
|
Additional
paid in capital
|
42,358,879 | 42,071,980 | ||||||
|
Subscription
received
|
500,000 | 500,000 | ||||||
|
Common
shares to be issued
|
4,696,878 | 4,696,878 | ||||||
|
Deferred
compensation
|
(724,903 | ) | (977,886 | ) | ||||
|
Accumulated
deficit
|
(51,188,192 | ) | (49,685,000 | ) | ||||
|
Total
stockholders' equity (deficit)
|
(4,042,023 | ) | (3,081,813 | ) | ||||
|
Total
liabilities and (deficiency in) stockholders' equity
|
$ | 2,177,898 | $ | 2,559,988 | ||||
The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements
3
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
CONDENSED
CONSOLIDATED STATEMENT OF LOSSES
(unaudited)
|
Three months ended June 30,
|
||||||||
|
2009
|
2008
|
|||||||
|
Revenue,
net:
|
||||||||
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Subscription
revenue
|
$ | 234,001 | $ | 607,143 | ||||
|
Training
revenue
|
41,581 | 313,214 | ||||||
|
Services
and other
|
- | 4,500 | ||||||
|
Total
revenue
|
275,582 | 924,857 | ||||||
|
Cost
of revenue
|
257,929 | 825,014 | ||||||
|
Gross
profit
|
17,653 | 99,843 | ||||||
|
Operating
costs:
|
||||||||
|
Selling,
general and administrative
|
1,050,144 | 1,798,277 | ||||||
|
Depreciation
and amortization
|
234,535 | 234,535 | ||||||
|
Total
operating expenses
|
1,284,679 | 2,032,812 | ||||||
|
Net
loss from operations
|
(1,267,026 | ) | (1,932,969 | ) | ||||
|
Other
income (expense):
|
||||||||
|
Interest,
net
|
(236,214 | ) | (512,914 | ) | ||||
|
Other
|
48 | 4,016 | ||||||
|
Net
loss before provision for income taxes
|
(1,503,192 | ) | (2,441,867 | ) | ||||
|
Income
taxes (benefit)
|
- | - | ||||||
|
NET
LOSS
|
$ | (1,503,192 | ) | $ | (2,441,867 | ) | ||
|
Loss
per common share-basic and assuming fully diluted
|
$ | (0.00 | ) | $ | (0.01 | ) | ||
|
Weighted
average number of common shares outstanding-basic and assuming fully
diluted
|
314,509,305 | 244,129,180 | ||||||
The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements
4
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
|
Three months ended June 30,
|
||||||||
|
2009
|
2008
|
|||||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
|
Net
loss
|
$ | (1,503,192 | ) | $ | (2,441,867 | ) | ||
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
||||||||
|
Depreciation
and amortization
|
234,535 | 234,534 | ||||||
|
Common
stock issued for services rendered
|
68,000 | 1,070,000 | ||||||
|
Beneficial
conversion features in connection with the issuance of convertible
debentures
|
43,957 | 353,775 | ||||||
|
Fair
value of vested options issued for services rendered
|
172,299 | 206,100 | ||||||
|
Amortization
of financing costs
|
56,782 | - | ||||||
|
Amortization
of deferred compensation
|
252,983 | 10,397 | ||||||
|
(Increase)
decrease in:
|
||||||||
|
Accounts
receivable
|
- | 584,913 | ||||||
|
Unbilled
revenue
|
- | 288,459 | ||||||
|
Deferred
costs
|
1,742 | 40,921 | ||||||
|
Employee
advances
|
(650 | ) | (58,500 | ) | ||||
|
Due
from related party
|
- | - | ||||||
|
Other
assets
|
67,669 | (12,024 | ) | |||||
|
Increase
(decrease) in:
|
||||||||
|
Accounts
payable and accrued liabilities
|
471,830 | (162,177 | ) | |||||
|
Deferred
revenue
|
(44,079 | ) | (207,384 | ) | ||||
|
Net
cash used in operating activities:
|
(178,124 | ) | (92,853 | ) | ||||
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
|
Net
cash provided by (used in) investing activities:
|
- | - | ||||||
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
|
Repayments
of notes payable, related party
|
- | 300,000 | ||||||
|
Proceeds
(repayments) of related party advances, net
|
156,113 | (83,213 | ) | |||||
|
Net
cash provided by financing activities
|
156,113 | 216,787 | ||||||
|
Net
(decrease) increase in cash and cash equivalents
|
(22,011 | ) | 123,934 | |||||
|
Cash
and cash equivalents-beginning of period
|
75,259 | 179,829 | ||||||
|
Cash
and cash equivalents-end of period
|
$ | 53,248 | $ | 303,763 | ||||
|
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION
|
||||||||
|
Cash
paid during the period for:
|
||||||||
|
Interest
|
$ | - | $ | - | ||||
|
Income
taxes
|
$ | - | $ | - | ||||
|
Common
stock issued for services rendered
|
$ | 68,000 | $ | 1,070,000 | ||||
|
Beneficial
conversion feature attributable to convertible debentures
|
$ | 43,957 | $ | 353,775 | ||||
|
Fair
value of vested options issued for services rendered
|
$ | 172,299 | $ | 206,100 | ||||
|
Common
stock issued for in settlement of outstanding payables
|
$ | 49,700 | $ | - | ||||
The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements
5
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2009
1. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
A summary
of the significant accounting policies applied in the preparation of the
accompanying financial statements follows:
General
The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and with the
instructions to Form 10-Q. 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. However, the
results from operations for the three months ended June 30, 2009, are not
necessarily indicative of the results that may be expected for the year ended
March 31, 2010. These unaudited condensed consolidated financial statements
should be read in conjunction with the consolidated March 31, 2009 financial
statements and footnotes thereto included in the Company's Form 10-K filed with
the Securities and Exchange Commission (the “SEC”).
Business
and basis of Presentation
Global
Investor Services, Inc. (the "Company") was incorporated on August 10, 2005
under the laws of the State of Nevada. On September 16, 2006, the Company
changed its name to TheRetirementSolution.Com, Inc. and on October 1, 2008 to
Global Investor Services, Inc. The Company currently markets directly and
through its marketing partners as well as online, certain investor products and
services that provide financial and educational information to its prospective
customers and to its subscribers. During the year ended March 31, 2008, the
Company transitioned from a development stage enterprise to an
operating company. While the Company has generated revenues from its
sale of products, the Company has incurred expenses, and sustained losses.
Consequently, its operations are subject to all risks inherent in the
establishment of a new business enterprise. As of June 30, 2009, the Company has
accumulated losses of $51,188,192.
On August
30, 2006, the Company entered into a Share Purchase Agreement (“Agreement”) with
Voxpath Holdings, Inc. (“Voxpath”). Prior to the merger, Voxpath was an inactive
corporation with no significant assets and liabilities. As a result of the
Agreement, there was a change in control of the public entity. In accordance
with SFAS No. 141, Voxpath was the acquiring entity. While the transaction is
accounted for using the purchase method of accounting, in substance the
Agreement is a recapitalization of Voxpath’s capital structure. For accounting
purposes, the Company accounted for the transaction as a reverse acquisition and
Voxpath is the surviving entity. The value of the net assets acquired was $0.
The Company did not recognize goodwill or any intangible assets in connection
with the transaction. Effective with the Agreement, all previously outstanding
shares of common stock were exchanged for an aggregate of 99,999,998 shares of
the Company’s common stock. The value of the stock issued was the historical
cost of the Company’s net tangible assets, which did not differ materially from
their fair value. The total consideration paid was $86,135.
During
the year ended March 31, 2008, the Company acquired Investment Tools and
Training, LLC (“ITT); a Utah limited liability company founded on November 9,
2006 and Razor Data, LLC (“Razor”); a Utah limited liability company formed July
23, 2002.
The
unaudited condensed consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries, Voxpath Holdings, Inc., ITT and
Razor. All significant inter-company transactions and balances have been
eliminated in consolidation.
6
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2009
1. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Acquisition
of ITT
On
January 15, 2008, the Company completed the purchase of all the outstanding
membership interests of ITT. The total purchase price was $18,650,000,
consisting of an aggregate of 66,600,000 shares of the Company’s common stock
and the issuance of convertible promissory notes of $2,000,000.
An
aggregate of 54,600,000 shares of the Company’s common stock was issued at the
time of closing with the remaining 12,000,000 shares of common stock to be
issued over a four year period. The common stock, valued at the date of closing,
was $16,650,000 and was not registered under the Securities Act of 1933, as
amended.
The
promissory notes bear interest at 6% per annum, mature on April 15, 2009 and
convert, at the holders’ option, at a conversion price of $0.25 per share (Refer
Note 7).
In
accordance with Statement of Financial Accounting Standards (“SFAS”) No. 141,
Business Combinations
(“SFAS No. 141”), the purchase method of accounting was used to account
for the acquisition of ITT. The results of operations of ITT have been included
in the Consolidated Statements of Losses since the date of
acquisition.
In
accordance with SFAS No. 141, the total purchase price was allocated to the
estimated fair value, as determined by management, of the assets acquired and
liabilities assumed, as follows:
|
Cash
|
$
|
83,807
|
||
|
Current
assets acquired
|
32,832
|
|||
|
Software
|
1,676,000
|
|||
|
Liabilities
assumed
|
(100,000
|
)
|
||
|
Goodwill
acquired
|
16,957,361
|
|||
|
Total
purchase price
|
$
|
18,650,000
|
The
Company identified software as identifiable intangible assets with estimated
life of 3 years.
Goodwill
in the amount of $16,957,361 represents the excess of the purchase price over
the fair value of the net identifiable tangible and intangible assets acquired
and their associated costs and expenses.
Acquisition
of Razor
On
January 15, 2008, the Company completed the purchase of substantially all of the
assets of Razor and assumed specified liabilities. The total purchase price was
$12,500,000, consisting of an aggregate of 38,000,000 shares of the Company’s
common stock and the issuance of convertible promissory notes of
$3,000,000.
An
aggregate of 32,000,000 shares of the Company’s common stock was issued at the
time of closing with the remaining 6,000,000 shares of common stock to be issued
on the second and third anniversary of the closing. The common stock, valued at
the date of closing, was $9,500,000 and was not registered under the Securities
Act of 1933, as amended.
The
promissory notes bear interest at 6% per annum, mature on April 15, 2009 and
convert, at the holders’ option, at a conversion price of $0.25 per share (Refer
Note 7).
7
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2009
1. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Acquisition
of Razor (continued)
In
accordance with Statement of Financial Accounting Standards (“SFAS”) No. 141,
Business Combinations
(“SFAS No. 141”), the purchase method of accounting was used to account
for the acquisition of Razor. The results of operations of ITT have been
included in the Consolidated Statements of Losses since the date of
acquisition.
In
accordance with SFAS No. 141, the total purchase price was allocated to the
estimated fair value, as determined by management, of the assets acquired and
liabilities assumed, as follows:
|
Cash
|
$
|
3,856
|
||
|
Accounts
receivable
|
325,428
|
|||
|
Unbilled
revenue
|
192,569
|
|||
|
Deferred
costs and prepaid expenses
|
96,065
|
|||
|
Software
license
|
1,244,000
|
|||
|
Customer
lists
|
499,747
|
|||
|
Non
current assets
|
3,443
|
|||
|
Liabilities
assumed
|
(140,920
|
)
|
||
|
Goodwill
acquired
|
10,275,812
|
|||
|
Total
purchase price
|
$
|
12,500,000
|
The
Company identified software and customer lists as identifiable intangible assets
with estimated life of 6 and 3 years, respectively.
Goodwill
in the amount of $10,275,812 represents the excess of the purchase price over
the fair value of the net identifiable tangible and intangible assets acquired
and their associated costs and expenses.
Revenue
Recognition
For
revenue from product sales and services, the Company recognizes revenue in
accordance with Staff Accounting Bulletin No. 104, Revenue Recognition
("SAB104"), which superseded Staff Accounting Bulletin No. 101, Revenue Recognition in Financial
Statements ("SAB101"). SAB 101 requires that four basic criteria must be
met before revenue can be recognized: (1) persuasive evidence of an arrangement
exists; (2) delivery has occurred or services have been rendered; (3) the
selling price is fixed and determinable; and (4) collectibility is reasonably
assured. Determination of criteria (3) and (4) are based on management's
judgments regarding the fixed nature of the selling prices of the products
delivered and the collectibility of those amounts. Provisions for discounts and
rebates to customers, estimated returns and allowances, and other adjustments
are provided for in the same period the related sales are recorded. The Company
defers any revenue for which the product has not been delivered or is subject to
refund until such time that the Company and the customer jointly determine that
the product has been delivered or no refund will be required. SAB 104
incorporates Emerging Issues Task Force 00-21 ("EITF 00-21"), Multiple-Deliverable Revenue
Arrangements. EITF 00-21 addresses accounting for arrangements that may
involve the delivery or performance of multiple products, services and/or rights
to use assets. The effect of implementing EITF 00-21 on the Company's financial
position and results of operations was not significant.
8
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2009
1. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Revenue
Recognition (continued)
Revenue
arises from subscriptions to the websites/software, workshops, online workshops
and training and coaching/counseling services where the payments are received
before the service has been rendered. Beginning January 1, 2009, the
company changed its marketing strategy such that the company no longer collects
revenues in advance of rendering services. Instead, for all new customers,
a monthly subscription fee is received for access to the online training and
courses and website/data during a given month. As all the products and
services are delivered during the month, the revenues are recognized in the
month it is delivered. All revenues collected in prior periods from
the legacy marketing strategy are deferred and recognized as per the existing
revenue recognition policy. Additionally, any revenues from services such as
coaching/counseling that are sold in advance of delivery will be deferred using
the existing revenue recognition policy. Thus we have two distinct revenue
models that were used during FY 2009 and revenue under either model will be
recognized under its appropriate model. The company reserves the option to
operate under either model as the business environment dictates.
We
sell our products separately and in various bundles that contain multiple
deliverables that include website/data subscriptions, educational workshops,
online workshops and training, one-on-one coaching and counseling sessions,
along with other products and services. In accordance with EITF 00-21, sales
arrangements with multiple deliverables are divided into separate units of
accounting if the deliverables in the arrangement meet the following criteria:
(i) the product has value to the customer on a standalone basis; (ii) there is
objective and reliable evidence of the fair value of undelivered items; and
(iii) delivery or performances of any undelivered item is probable and
substantially in our control. The fair value of each separate element is
generally determined by prices charged when sold separately. In certain
arrangements, we offer these products bundled together. If there is any
discount from the combined fair value of the individual elements, the discount
is allocated to the portion of the revenues that is attributed to the online
courses and training. As per EITF 00-21, if fair value of all undelivered
elements in an arrangement exists, but fair value does not exist for a delivered
element, then revenue is recognized using the residual method. Under the
residual method, the fair value of undelivered elements is deferred and the
remaining portion of the arrangement fee (after allocation of 100 percent of any
discount to the delivered item) is recognized as revenue. The deferral
policy for each of the different types of revenues is summarized as
follows:
|
Product
|
Recognition Policy
|
|
|
Live
Workshops and Workshop Certificates
|
Deferred
and recognized as the workshop is provided or certificate
expires
|
|
|
Online
training and courses
|
Deferred
and recognized a.) as the services are delivered, or b.) when usage
thresholds are met, or c.) on a straight-line basis over the initial
product period
|
|
|
Coaching/Counseling
services
|
Deferred
and recognized as services are delivered, or on a straight-line basis over
the initial product period
|
|
|
Website/data
fees (monthly)
|
Not
Deferred, recognized in the month delivered
|
|
|
Website/data
fees (pre-paid subscriptions)
|
Deferred
and recognized on a straight-line basis over the subscription
period
|
As of
June 30, 2009 and March 31, 2009, the Company’s deferred revenue was $63,969 and
$108,048, respectively
9
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2009
1. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Use
of Estimates
The
preparation of unaudited condensed consolidated financial statements
in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those
estimates.
Advertising Costs
The
Company expenses advertising costs as incurred. Advertising expense was $20,231
and $5,970 for the three months period ended June 30, 2009 and 2008,
respectively.
Property
and Equipment
Property
and equipment are stated at cost. When retired or otherwise disposed, the
related carrying value and accumulated depreciation are removed from the
respective accounts and the net difference less any amount realized from
disposition, is reflected in earnings. For financial statement purposes,
property and equipment are recorded at cost and depreciated using the straight
line method over their estimated useful lives as follows:
|
Office
equipment
|
5
years
|
|
|
Software
|
3 to 7 years
|
Research
and Development
The
Company accounts for research and development costs in accordance with the
Financial Accounting Standards Board’s Statement of Financial Accounting
Standards No. 2 (“SFAS 2”), “Accounting for Research and Development Costs.”
Under SFAS 2, all research and development costs must be charged to expense as
incurred. Accordingly, internal research and development costs are expensed as
incurred. Third-party research and developments costs are expensed when the
contracted work has been performed or as milestone results have been achieved.
Company-sponsored research and development costs related to both present and
future products are expensed in the period incurred. For the three month period
ended June 30, 2009 and 2008, the Company’s expenditures on research and product
development were immaterial.
Reclassification
Certain
reclassifications have been made in prior year’s financial statements to conform
to classifications used in the current year.
Intangible
Assets and Goodwill
The
Company accounts for acquisitions in accordance with the provisions of SFAS No.
141, “Business
Combinations.” The Company assigns to all identifiable assets acquired
(including intangible assets), and to all identifiable liabilities assumed, a
portion of the cost of the acquired company equal to the estimated fair value of
such assets and liabilities at the date of acquisition. The Company records the
excess of the cost of the acquired company over the sum of the amounts assigned
to identifiable assets acquired less liabilities assumed, if any, as
goodwill.
As a
result of the acquisitions of ITT and Razor on January 15, 2008, the Company
acquired intangible assets in the aggregate amount of
$30,652,920.
10
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2009
1. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Intangible
Assets and Goodwill (continued)
The
Company allocated $2,920,000 and $499,747 to identifiable intangible assets
including a developed software and customer lists, respectively. The remaining
$27,233,173 was allocated to goodwill.
The
Company amortized its identifiable intangible assets using the straight-line
method over their estimated period of benefit. The estimated useful
lives of the developed software and the customer lists are three years. The
Company periodically evaluates the recoverability of intangible assets and takes
into account events or circumstances that warrant revised estimates of useful
lives or indicate that impairment exists.
The
Company accounts for and reports acquired goodwill and other intangible assets
under SFAS No. 142, Goodwill and Other Intangible Assets (“SFAS No. 142”). In
accordance with SFAS No. 142, the Company tests its intangible assets for
impairment on an annual basis and when there is reason to suspect that their
values have been diminished or impaired. Any write-downs will be included in
results from operations.
Total
identifiable intangible assets acquired in the acquisition of ITT and Razor and
their carrying values at June 30, 2009 are:
|
|
Gross Carrying
Amount
|
Accumulated
Amortization
|
Net
|
Residual
Value
|
Weighted average
Amortization Period
(Years)
|
|||||||||||||||
|
Amortized
Identifiable intangible
assets:
|
||||||||||||||||||||
|
Customer/subscriber
lists-Razor
|
$
|
499,747
|
$
|
(242,933
|
)
|
$
|
256,814
|
$
|
-0-
|
3
|
||||||||||
|
Software
license-Razor
|
1,244,000
|
(302,361
|
)
|
941,639
|
-0-
|
6
|
||||||||||||||
|
Software
ITT
|
1,676,000
|
(814,722
|
)
|
861,278
|
-0-
|
3
|
||||||||||||||
|
Unamortized
Identifiable Assets
|
NONE
|
|||||||||||||||||||
|
Total
|
$
|
3,419,747
|
$
|
(1,360,016
|
)
|
$
|
2,059,731
|
$
|
-0-
|
|||||||||||
Total
amortization expense charged to operations for the three month periods ended
June 30, 2009 and 2008 was $233,145 and $233,146, respectively. Estimated
amortization expense is as follows:
|
Year
ended March 31,
|
||||
|
2010
|
$
|
699,437
|
||
|
2011
|
781,488
|
|||
|
2012
|
207,333
|
|||
|
2013
|
207,333
|
|||
|
2014 and after
|
164,140
|
|||
|
Total
|
$
|
2,059,731
|
||
The
Company does not amortize goodwill. The Company recorded goodwill in the amount
of $27,233,173 as a result of the acquisition of Razor Data & IT during
the year ended March 31, 2008.
During
the year ended March 31, 2009 the Company management performed an evaluation of
its goodwill for purposes of determining the implied fair value of the assets at
March 31, 2009. The test indicated that the recorded remaining book value of its
goodwill exceeded its fair value for the year ended March 31,
2009. As a result, upon completion of the assessment, management
recorded a non-cash impairment charge of $27,233,173, net of tax, or $0.11 per
share during the year ended March 31, 2009 to reduce the carrying value of the
goodwill to $0. Considerable management judgment is necessary to estimate the
fair value. Accordingly, actual results could vary significantly from
management’s estimates.
11
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2009
1. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Impairment
of long lived assets
The
Company has adopted Statement of Financial Accounting Standards No. 144 (SFAS
144). The Statement requires that long-lived assets and certain identifiable
intangibles held and used by the Company be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Events relating to recoverability may include
significant unfavorable changes in business conditions, recurring losses, or a
forecasted inability to achieve break-even operating results over an extended
period. The Company evaluates the recoverability of long-lived assets based upon
forecasted undiscounted cash flows. Should impairment in value be indicated, the
carrying value of intangible assets will be adjusted, based on estimates of
future discounted cash flows resulting from the use and ultimate disposition of
the asset. SF AS No. 144 also requires assets to be disposed of is reported at
the lower of the carrying amount or the fair value less costs to
sell.
Fair
value of financial instruments
Fair
value estimates discussed herein are based upon certain market assumptions and
pertinent information available to management as of June 30, 2009 and March 31,
2009. The respective carrying value of certain on-balance-sheet financial
instruments approximated their fair values. These financial instruments include
cash and accounts payable. Fair values were assumed to approximate carrying
values for cash and payables because they are short term in nature and their
carrying amounts approximate fair values or they are payable on
demand.
Concentrations
of Credit Risk
Financial
instruments and related items which potentially subject the Company to
concentrations of credit risk consist primarily of cash, cash equivalents and
trade receivables. The Company places its cash and temporary cash investments
with credit quality institutions. At times, such investments may be in excess of
the FDIC insurance limit. The Company periodically reviews its trade receivables
in determining its allowance for doubtful accounts. There were no trade
receivables as of June 30, 2009 and March 31, 2009.
Website
Development Costs
The
Company recognizes website development costs in accordance with Emerging Issue
Task Force ("EITF") No. 00-02, "Accounting for Website Development Costs." As
such, the Company expenses all costs incurred that relate to the planning and
post implementation phases of development of its website. Direct costs incurred
in the development phase are capitalized and recognized over the estimated
useful life. Costs associated with repair or maintenance for the website are
included in cost of net revenues in the current period expenses. During the
three month period ended June 30, 2009 and 2008, the Company did not capitalize
any costs associated with the website development.
Software
Development Costs
The
Company accounts for software development costs intended for sale in accordance
with SFAS No. 86,
Accounting for Costs of Computer Software to be Sold, Leased, or Otherwise
Marketed (“SFAS 86”). SFAS No. 86 requires product development
costs to be charged to expense as incurred until technological feasibility is
attained and all other research and development activities for the hardware
components of the product have been completed. Technological feasibility is
attained when the planning, design and testing phase related to the development
of the Company’s software has been completed and the software has been
determined viable for its intended use, which typically occurs when beta testing
commences.
12
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2009
1. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Stock-Based
Compensation
On
January 1, 2006 the company adopted Statement of Financial Accounting Standards
No. 123 (revised 2004) "Share-Based Payment" (SFAS
123 (R)) which requires the measurement and recognition of compensation expense
for all share-based payment awards made to employees and directors including
employee stock options and employee stock purchases related to a Employee Stock
Purchase Plan based on the estimated fair values. SFAS 123 (R) supersedes the
company's previous accounting under Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued
to Employees" ("APB 25") for the periods beginning fiscal
2006.
The
company adopted SFAS 123 (R) using the modified prospective transition method,
which required the application of the accounting standard as of January 1, 2006.
The company's Financial Statements as of and for the year ended March 31, 2007
reflects the impact of SFAS 123(R). In accordance with the modified prospective
transition method, the company's Financial Statements for the prior periods have
not been restated to reflect, and do not include the impact of SFAS 123 (R).
Stock based compensation expense recognized under SFAS 123 (R) for the year
ended March 31, 2007 was $1,440,776.
For the
three month periods ended June 30, 2009 and 2008, the Company did not grant
stock options to employees. The fair value of options granted in previous years
vesting during the three month periods ended June 30, 2009 and 2008 of $157,638
and $206,100 respectively was recorded as a current period charge to
earnings.
Segment
Information
Statement
of Financial Accounting Standards No. 131, “Disclosures about Segments of an
Enterprise and Related Information” (“SFAS 131”) establishes standards for
reporting information regarding operating segments in annual financial
statements and requires selected information for those segments to be presented
in interim financial reports issued to stockholders. SFAS 131 also establishes
standards for related disclosures about products and services and geographic
areas. Operating segments are identified as components of an enterprise about
which separate discrete financial information is available for evaluation by the
chief operating decision maker, or decision-making group, in making decisions
how to allocate resources and assess performance. The information disclosed
herein materially represents all of the financial information related to the
Company’s principal operating segment.
13
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2009
1. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Comprehensive
Income (Loss)
The
Company adopted Statement of Financial Accounting Standards No. 130; “Reporting
Comprehensive Income” (SFAS) No. 130 establishes standards for the reporting and
displaying of comprehensive income and its components. Comprehensive income is
defined as the change in equity of a business during a period from transactions
and other events and circumstances from non-owners sources. It includes all
changes in equity during a period except those resulting from investments by
owners and distributions to owners. SFAS No. 130 requires other comprehensive
income (loss) to include foreign currency translation adjustments and unrealized
gains and losses on available for sale securities.
Liquidity
As shown
in the accompanying unaudited condensed consolidated financial statements, the
Company incurred a net loss of $1,503,192 for the three month period ended June
30, 2009. The Company's current liabilities exceeded its current assets by
$2,748,123 as of June 30, 2009.
Cash
and Cash Equivalents
For
purposes of the statement of cash flows, cash includes demand deposits, saving
accounts and money market accounts. The Company considers all highly liquid debt
instruments with maturities of three months or less when purchased to be cash
equivalents.
Loss
per Share
The
Company has adopted Statement of Financial Accounting Standard No. 128,
"Earnings Per Share," specifying the computation, presentation and disclosure
requirements of earnings per share information. Basic earnings per share have
been calculated based upon the weighted average number of common shares
outstanding. Stock options and warrants have been excluded as common stock
equivalents in the diluted earnings per share because they are either
antidilutive, or their effect is not material.
14
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2009
1. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Recent
Accounting Pronouncements
In
December 2007, the FASB issued SFAS No. 141(R), "Business Combinations"
("SFAS No. 141(R)"), which establishes principles and requirements for how
an acquirer recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, and any noncontrolling interest in an
acquiree, including the recognition and measurement of goodwill acquired in a
business combination. SFAS No. 141R is effective as of the beginning of the
first fiscal year beginning on or after December 15, 2008. Earlier adoption
is prohibited. The Company did not have a material impact with the adoption of
SFAS No. 141R in 2009 on its consolidated financial position, results of
operations or cash flows.
In
December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interest in
Consolidated Financial Statements, an amendment of ARB No. 51”
(“SFAS No. 160”), which will change the accounting and reporting for
minority interests, which will be recharacterized as noncontrolling interests
and classified as a component of equity within the consolidated balance sheets.
SFAS No. 160 is effective as of the beginning of the first fiscal year beginning
on or after December 15, 2008. Earlier adoption is prohibited. The Company
did not have a material impact with the adoption of SFAS No. 160 in 2009 on its
consolidated financial position, results of operations or cash
flows.
In
December 2007, the FASB ratified the consensus in Emerging Issues Task Force
(EITF) Issue No. 07-1, “Accounting for Collaborative Arrangements”
(EITF 07-1). EITF 07-1 defines collaborative arrangements and requires
collaborators to present the result of activities for which they act as the
principal on a gross basis and report any payments received from (made to) the
other collaborators based on other applicable authoritative accounting
literature, and in the absence of other applicable authoritative literature, on
a reasonable, rational and consistent accounting policy is to be elected.
EITF 07-1 also provides for disclosures regarding the nature and purpose of
the arrangement, the entity’s rights and obligations, the accounting policy for
the arrangement and the income statement classification and amounts arising from
the agreement.
EITF 07-1
will be effective for fiscal years beginning after December 15, 2008, which
will be the Company’s fiscal year 2009, and will be applied as a change in
accounting principle retrospectively for all collaborative arrangements existing
as of the effective date. The Company did not have a material impact with the
adoption of EITF 07-1 in 2009 on its consolidated financial position, results of
operations or cash flows.
In
June 2008, the FASB ratified the consensus on Emerging Issues Task Force
(EITF) Issue 07-5, “Determining whether an Instrument (or Embedded Feature)
is indexed to an Entity’s Own Stock.” This issue addresses whether an instrument
(or an embedded feature) is indexed to an entity’s own stock, which is the first
part of the scope exception in paragraph 11(a) of SFAS No. 133, for
purposes of determining whether the instrument should be classified as an equity
instrument or accounted for as a derivative instrument. The provisions of EITF
Issue No. 07-5 are effective for financial statements issued for fiscal
years beginning after December 15, 2008 and will be applied retrospectively
through a cumulative effect adjustment to retained earnings for outstanding
instruments as of that date. The Company did not have a material impact with the
adoption of EITF Issue 07-5 in 2009 on its consolidated financial position,
results of operations or cash flows.
15
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2009
1. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Recent
Accounting Pronouncements (continued)
In March
2008, the FASB” issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities - an amendment to FASB Statement No.
133” (“SFAS No. 161”). SFAS No. 161 is
intended to improve financial standards for derivative instruments and hedging
activities by requiring enhanced disclosures to enable investors to better
understand their effects on an entity's financial position, financial
performance, and cash flows. Entities are required to provide
enhanced disclosures about: (a) how and why an entity uses derivative
instruments; (b) how derivative instruments and related hedged items are
accounted for under SFAS No. 133 and its related interpretations; and (c) how
derivative instruments and related hedged items affect an entity’s financial
position, financial performance and cash flows. It is effective for
financial statements issued for fiscal years beginning after November 15, 2008,
with early adoption encouraged. The Company did not have a material
impact with the adoption of SFAS No. 161 in 2009 on its consolidated financial
position, results of operations or cash flows
In April
2008, the FASB issued FSP No. FAS 142-3,“Determination of the Useful Life of
Intangible Assets”. This FSP amends the factors that should be considered
in developing renewal or extension assumptions used to determine the useful life
of a recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible
Assets”. The Company is required to adopt FSP 142-3 on January
1, 2009, earlier adoption is prohibited. The guidance in FSP 142-3
for determining the useful life of a recognized intangible asset shall be
applied prospectively to intangible assets acquired after adoption, and the
disclosure requirements shall be applied prospectively to all intangible assets
recognized as of, and subsequent to, adoption. The Company did not have a
material impact with the adoption of FSP No. FAS 142-3 in 2009 on its
consolidated financial position, results of operations or cash
flows
In May
2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
Accounting Principles" ("SFAS No. 162"). SFAS No.
162 identifies the sources of accounting principles and the framework for
selecting the principles used in the preparation of financial statements of
nongovernmental entities that are presented in conformity with generally
accepted accounting principles (the GAAP hierarchy). SFAS No.
162 will become effective 60 days following the SEC's approval of the
Public Company Accounting Oversight Board amendments to
AU Section 411, "The Meaning of Present Fairly in Conformity With
Generally Accepted Accounting Principles." The Company does not
expect the adoption of SFAS No. 162 to have a material effect on its
consolidated financial position, results of operations or cash
flows.
In May
2008, the FASB issued FSP Accounting Principles Board ("APB") 14-1 "Accounting for Convertible Debt
Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash
Settlement) " ("FSP APB 14-1"). FSP APB 14-1
requires the issuer of certain convertible debt instruments that may be settled
in cash (or other assets) on conversion to separately account for the liability
(debt) and equity (conversion option) components of the instrument in a manner
that reflects the issuer's non-convertible debt borrowing rate. FSP
APB 14-1 is effective for fiscal years beginning after December 15,
2008 on a retroactive basis. The Company did not have a material impact with the
adoption of FSP Accounting Principles Board in 2009 on its consolidated
financial position, results of operations or cash flows
16
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2009
1. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Recent
Accounting Pronouncements (continued)
In May
2008, the FASB issued FASB Statement No. 163, “Accounting for Financial
Guarantee Insurance Contracts”, which clarifies how FASB Statement No. 60,
“Accounting and Reporting by Insurance Enterprises”, applies to financial
guarantee insurance contracts issued by insurance enterprises.
The standard is effective for financial statements issued for fiscal
years beginning after December 15, 2008, including interim periods in that year.
The Company did not have a material impact with the adoption of SFAS No. 163 in
2009 on its consolidated financial position, results of operations or cash
flows.
In
June 2008, the FASB issued FSP Emerging Issues Task Force
(EITF) No. 03-6-1, “Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating
Securities.” Under the FSP, unvested share-based payment awards that
contain rights to receive non-forfeitable dividends (whether paid or unpaid) are
participating securities, and should be included in the two-class method of
computing EPS. The FSP is effective for fiscal years beginning after
December 15, 2008, and interim periods within those years. The Company did
not have a material impact with the adoption of EITF No, 03-6-1 in 2009 on its
consolidated financial position, results of operations or cash flows. The
Company does not expect the adoption of FSP EITF No. 03-6-1 to have a
material effect on its consolidated financial position, results of operations or
cash flows.
In
October 2008, the FASB issued FSP SFAS No. 157-3, “Determining the
Fair Value of a Financial Asset When the Market for That Asset Is Not Active.”
This position clarifies the application of SFAS No. 157 in a market
that is not active and provides an example to illustrate key considerations in
determining the fair value of a financial asset when the market for that
financial asset is not active. It also reaffirms the notion of fair value as an
exit price as of the measurement date. This position was effective upon
issuance, including prior periods for which financial statements have not been
issued. The adoption had no impact on the Company’s consolidated financial
statements.
In
December 2008, the FASB issued FSP 132(R)-1, Employers’ Disclosures about
Postretirement Benefit Plan Assets, which is effective for fiscal years ending
after December 15, 2009. FSP 132(R)-1 requires disclosures about fair value
measurements of plan assets that would be similar to the disclosures about fair
value measurements required by SFAS 157. . The Company does not
expect the adoption of FSP 132(R)-1 to have a material effect on its
consolidated financial position, results of operations or cash
flows.
In
December 2008, the FASB issued FSP SFAS 140-4 and FIN 46(R)-8,
Disclosures about Transfers of Financial Assets and Interests in Variable
Interest Entities. The FSP requires extensive additional disclosure by public
entities with continuing involvement in transfers of financial assets to
special-purpose entities and with variable interest entities (VIEs), including
sponsors that have a variable interest in a VIE. This FSP became effective for
the first reporting period ending after December 15, 2008 and did not have
any material impact on the Company's consolidated financial
statements.
In
January 2009, the FASB issued Financial Statement of Position (“FSP”) Issue
No. EITF 99-20-1, “Amendments to the Impairment Guidance of EITF Issue
No. 99-20” (“FSP EITF No. 99-20-1”). FSP EITF No. 99-20-1 amends
the impairment guidance in EITF Issue No. 99-20, “Recognition of Interest
Income and Impairment on Purchased Beneficial Interests and Beneficial Interests
that Continue to be Held by a Transferor in Securitized Financial Assets” to
achieve more consistent determination of whether an other-than-temporary
impairment has occurred. The Company adopted FSP EITF No. 99-20-1 and it
did not have a material impact on the consolidated financial
statements.
17
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2009
1. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Recent
Accounting Pronouncements (continued)
In April
2009, the FASB issued FSP FAS 157-4, Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly , provides
guidelines for making fair value measurements more consistent with the
principles presented in FASB Statement No. 157 (“SFAS 157”), Fair Value Measurements .
FSP FAS 157-4 reaffirms what SFAS 157 states is the objective of fair value
measurement, to reflect how much an asset would be sold for in an orderly
transaction at the date of the financial statements under current market
conditions. Specifically, it reaffirms the need to use judgment to ascertain if
a formerly active market has become inactive and in determining fair values when
markets have become inactive. The Company does not expect this pronouncement to
have a material impact on its consolidated results of operations, financial
position, or cash flows.
In April
2009, the FASB issued FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair
Value of Financial Instruments, enhances consistency in financial
reporting by increasing the frequency of fair value disclosures. This relates to
fair value disclosures for any financial instruments that are not currently
reflected on the consolidated balance sheet at fair value. FSP FAS 107-1 and APB
28-1 now require that fair value disclosures be made on a quarterly basis,
providing qualitative and quantitative information about fair value estimates
for all those financial instruments not measured on the balance sheet at fair
value. The Company does not expect this pronouncement to have a material impact
on its consolidated results of operations, financial position, or cash
flows.
In April
2009, the FASB issued FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of
Other-Than-Temporary Impairments, provides additional guidance designed
to create greater clarity and consistency in accounting for and presenting
impairment losses on securities. This FSP is intended to bring greater
consistency to the timing of impairment recognition and to provide greater
clarity to investors about the credit and noncredit components of impaired debt
securities that are not expected to be sold. This FSP also requires increased
and timelier disclosures sought by investors regarding expected cash flows,
credit losses, and an aging of securities with unrealized losses. The Company
does not expect this pronouncement to have a material impact on its consolidated
results of operations, financial position, or cash flows.
In May
2009, the FASB issued SFAS No. 165, Subsequent Events (“SFAS
No. 165”). SFAS No. 165 establishes general standards of accounting
for and disclosure of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. It requires the
disclosure of the date through which an entity has evaluated subsequent events
and the basis for that date, that is, whether that date represents the date the
financial statements were issued or were available to be issued. SFAS
No. 165 is effective for interim or annual financial periods ending after
June 15, 2009. The Company did not have a material impact with the adoption
of SFAS No. 165 in 2009 on its consolidated financial position, results of
operations or cash flows.
In
June 2009 the FASB issued SFAS 166, “Accounting for Transfers of financial
Assets — an amendment of FASB Statement No. 140” (SFAS 166). SFAS 166
eliminates the concept of a qualifying special-purpose entity, creates more
stringent conditions for reporting a transfer of a portion of a financial asset
as a sale, clarifies other sale-accounting criteria, and changes the initial
measurement of a transferor’s interest in transferred financial assets. SFAS No.
166 is applicable for annual periods after November 15, 2009 and interim periods
therein and thereafter. The Company does not expect this pronouncement to have a
material impact on its consolidated results of operations, financial position,
or cash flows.
18
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2009
1. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Recent
Accounting Pronouncements (continued)
In
June 2009 the FASB issued SFAS 167, “Amendments to FASB Interpretation
No. 46(R)” (SFAS 167). SFAS 167 eliminates Interpretation 46(R)’s
exceptions to consolidating qualifying special-purpose entities, contains new
criteria for determining the primary beneficiary, and increases the frequency of
required reassessments to determine whether a company is the primary beneficiary
of a variable interest entity. SFAS 167 also contains a new requirement that any
term, transaction, or arrangement that does not have a substantive effect on an
entity’s status as a variable interest entity, a company’s power over a variable
interest entity, or a company’s obligation to absorb losses or its right to
receive benefits of an entity must be disregarded in applying Interpretation
46(R)’s provisions. SFAS No. 167 is applicable for annual periods after November
15, 2009 and interim periods thereafter. The Company does not expect this
pronouncement to have a material impact on its consolidated results of
operations, financial position, or cash flows.
Other
recent accounting pronouncements issued by the FASB (including its Emerging
Issues Task Force), the AICPA, and the SEC did not, or are not believed by
management to, have a material impact on the Company’s present or future
consolidated financial statements.
2. PROPERTY AND
EQUIPMENT
The
Company’s property and equipment at June 30, 2009 and March 31, 2009 consist of
the following:
|
|
June 30, 2009
|
March 31, 2009
|
||||||
|
Software
|
$
|
2,920,000
|
$
|
2,920,000
|
||||
|
Computer
equipment
|
4,211
|
4,211
|
||||||
|
Office
equipment
|
23,568
|
23,568
|
||||||
|
2,947,779
|
2,947,779
|
|||||||
|
Less
accumulated depreciation
|
(1,133,644
|
)
|
(940,754
|
)
|
||||
|
$
|
1,814,135
|
$
|
2,007,025
|
|||||
Depreciation
and amortization expense charged to operations amounted to $192,890 and $192,889
for the three month periods ended June 30, 2009 and 2008,
respectively.
3. CUSTOMERS LIST
The
Company’s customers list at June 30, 2009 and March 31, 2009 consist of the
following:
|
June 30,
2009
|
March 31,
2009
|
|||||||
|
Customers
list
|
$
|
499,747
|
$
|
499,747
|
||||
|
Less
accumulated amortization
|
(242,933
|
)
|
(201,287
|
)
|
||||
|
$
|
256,814
|
$
|
298,460
|
|||||
The
Company recorded amortization expense for the three month period ended June 30,
2009 and 2008 of $41,646 and $41,645, respectively.
19
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2009
4. ACCOUNTS PAYABLE AND ACCRUED
LIABILITIES
Accounts
payable and accrued liabilities consisted of the following at June 30, 2009 and
March 31, 2009:
|
June 30,
2009
|
March 31,
2009
|
|||||||
|
Accounts
payable
|
$
|
768,955
|
$
|
682,808
|
||||
|
Accrued
consulting payable
|
29,998
|
10,949
|
||||||
|
Accrued
interest payable
|
288,020
|
152,676
|
||||||
|
Accrued
payroll taxes
|
4,807
|
8,555
|
||||||
|
Accrued
salaries and wages
|
601,560
|
416,222
|
||||||
|
$
|
1,693,340
|
$
|
1,271,210
|
|||||
5.
ADVANCES
The
Company received advances of $239,562 on July 7, 2008, $310,000 on September 4,
2008 and $450,000 on November 3, 2008 to finance future marketing activities.
The advances are payable at 120% from each marketing event of the Company with
the proceeds or if proceeds are insufficient, from other marketing events or
revenues of the Company each at six months from the date of the advance. In the
event the Company does not pay off the advances by January 9, 2009 and February
4, 2009; the remaining balance is converted to a six month, interest free
secured convertible debentures. The debentures are convertible into the
Company’s common stock at $0.10 per share and are secured by 12,000,000 shares
of the Company’s common stock.
The
financing costs of $199,912 are amortized ratably over a six month
term.
On March
31, 2009, the Company issued a convertible debenture of $1,000,000 as payment of
the above advances. The convertible note is due on July 31, 2011 with interest
at 20% per annum, due at maturity. The note is convertible at $0.08, unsecured.
(See note 7 below)
6. NOTES PAYABLE
A summary
of notes payable at June 30, 2009 and March 31, 2009 are as
follows:
Convertible
Promissory Note
In August
2005, the Company entered into an agreement to borrow $250,000 in exchange for a
Convertible Promissory Note (Convertible Note). The Convertible Note included
interest at 10% compounded semiannually, due and payable in five equal
installments of $50,000 through December 2005. At Noteholder’s option, the
Convertible Note could be convertible into 250,000 shares stock of the majority
shareholder of the Company (Parent) at the equivalent conversion price of $1.00
per share. In addition to the Convertible Note, the Noteholder was to be issued
warrants to purchase 250,000 shares (205,761 shares after pre-merger adjustment)
of the Parent’s common stock at an exercise price of $1.25 per
share.
Under the
terms of the Convertible Note, if the existing president should resign or be
dismissed, the monies loaned to the Company, including all accrued interest,
would immediately be due and payable. The president resigned on February 19,
2006, thus accelerating the payment of the loan, plus accrued
interest.
20
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2009
6. NOTES PAYABLE
(continued)
On April
24, 2006, the Company entered into an agreement with the Noteholder regarding
his forbearance of collecting the debt owed to him due to the resignation of its
former President. The Company will pay from the proceeds of a Private Placement,
10% of the first $500,000 of funds raised and 20% of the next $500,000 raised,
for a total of $150,000. The remaining balance will be due on December 31, 2007,
including interest at 10% compounding semi-annually. If the Private Placement
raises less than $1,000,000 by October 2006, the Company will pay 10% of all
additional capital raised by the Company. If no Private Placement Offering is
circulated, the balance will be due immediately. Additionally, as consideration
for his forbearance, the Company granted the Noteholder 500,000 shares (411,523
shares after pre-merger adjustment) of the Company’s common stock which was
issued to him on April 24, 2006. (Note in default.)
Promissory
Note Payable
On
January 20, 2009, the Company received $200,000 in exchange for a promissory
note payable, due July 20, 2009 with interest due monthly at 20% per annum. The
note is secured by common stock and is personally guaranteed by certain officers
of the Company. The note contains certain first right of payment should the
Company be successful in raising $500,000 to $1,500,000 in a Private Placement
Offering before any payments can be distributed from the escrow.
In
connection with the issuance of the promissory note payable, the Company issued
warrants to purchase its common stock at $0.01 per share for five years. The
fair value of the warrants of $101,183 is amortized ratably of the term of the
promissory note. During the three month period ended June 30, 2009, the Company
had charged to current period operations $50,871 as amortization of financing
costs. The fair value of the warrants were determined using the Black Scholes
Option Pricing Model based on the following assumptions: Dividend yield: -0-%;
Volatility: 138.87%; Risk free rate: 1.48%; Term: 5 years.
At June
30, 2009 and March 31, 2009, balances consist of the following:
|
June 30,
2009
|
March 31,
2009
|
|||||||
|
Convertible
promissory note
|
$
|
182,085
|
$
|
182,085
|
||||
|
Note
payable to related party
|
200,000
|
200,000
|
||||||
|
382,085
|
382,085
|
|||||||
|
Less:
current portion
|
(382,085
|
)
|
(382,085
|
)
|
||||
|
Long-term
debt
|
$
|
-
|
$
|
-
|
||||
7. CONVERTIBLE
DEBENTURES
During
the year ended March 31, 2009, the Company issued an aggregate of 23,487,186
shares of common stock in exchange for convertible debentures totaling
$4,431,983 and accrued interest.
Convertible Debenture
#1
In May
2007, the Company received $50,000 in exchange for a Convertible Debenture
(Debenture) that matured on August 31, 2007. The Debenture bears an interest
rate of 12% and is convertible into the Company's common stock at the greater of
$0.25 per share or 67.5% of the average 10 previous trade days prior to
conversion. (Note in default.)
21
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2009
7. CONVERTIBLE DEBENTURES
(continued)
Convertible Debenture
#2
In May
2007, the Company received $50,000 in exchange for a Convertible Debenture
(Debenture) that matured on August 31, 2007. The Debenture bears an interest
rate of 12% and is convertible into the Company's common stock at the greater of
$0.25 per share or 67.5% of the average 10 previous trade days prior to
conversion. (Note in default)
Convertible Debenture
#3
In May
2007, the Company received $100,000 in exchange for a Convertible Debenture
(Debenture) that originally matured on August 31, 2007. The Company reached a
settlement to issue common stock by no later than December 8, 2008 at the
average price back 90 days. Subsequent to the conversion, the Company agreed to
issue additional shares should the average price per share be lower in the
subsequent 90 days. (Note in default)
Convertible Debenture
#4
In
January 2008, the Company received $50,000 in exchange for a Convertible
Debenture (“Debenture”) that matures in March 31, 2008. The Debenture bears
interest at a rate of 10% and will be convertible into 333,333 shares of the
Company’s common stock, at a conversion rate of $.15 per share. Interest will
also be converted into common stock at a conversion rate of $.25 per
share.
In
accordance with Emerging Issues Task Force
Issue 98-5, Accounting for Convertible Securities with a Beneficial Conversion
Features or Contingently Adjustable Conversion Ratios (“EITF 98-5”), the
Company recognized an imbedded beneficial conversion feature present in
Convertible Note #17. The Company allocated a portion of the proceeds equal to
the intrinsic value of that feature to additional paid-in capital. The Company
recognized and measured an aggregate of $20,000 of the proceeds, which is equal
to the intrinsic value of the imbedded beneficial conversion feature, to
additional paid-in capital and a discount against the Convertible Note. The debt
discount attributed to the beneficial conversion feature is charged to current
period operations as interest expense
In
connection with the issuance of the convertible debenture, the Company issued
100,000 shares of common stock. The common stock was valued at the date of the
related convertible debenture and charged to current period operations as
financing costs.
During
the year ended March 31, 2009, $25,000 of the Convertible Debenture was
converted to common stock. This note was in default as of March 31,
2009.
Convertible Debenture
#5
In
February 2008, the Company received $50,000 in exchange for a Convertible
Debenture (“Debenture”) that matures in May 2011. The Debenture bears interest
at a rate of 10% and will be convertible into 333,333 shares of the Company’s
common stock, at a conversion rate of $.15 per share. Interest will also be
converted into common stock at the conversion rate of $.15 per
share.
In
accordance with Emerging Issues Task Force
Issue 98-5, Accounting for Convertible Securities with a Beneficial Conversion
Features or Contingently Adjustable Conversion Ratios (“EITF 98-5”), the
Company recognized an imbedded beneficial conversion feature present in
Convertible Note #18. The Company allocated a portion of the proceeds equal to
the intrinsic value of that feature to additional paid-in capital. The Company
recognized and measured an aggregate of 32,333 of the proceeds, which is equal
to the intrinsic value of the imbedded beneficial conversion feature, to
additional paid-in capital and a discount against the Convertible
Note.
22
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2009
7. CONVERTIBLE DEBENTURES
(continued)
Convertible Debenture #5
(continued)
In
connection with the issuance of the convertible debenture, the Company issued
100,000 shares of common stock. The common stock was valued at the date of the
related convertible debenture.
The total
debt discount attributed to the beneficial conversion feature of $32,333 is
charged operations ratably over the note term as interest expense.
For the
three month periods ended June 30, 2009 and 2008, the Company amortized $2,687
and $1,624 to current period operations as interest expense,
respectively.
Convertible Debentures
#6
In May
2008, the Company received $250,000 and the cancellation of an existing
convertible debenture of $100,000 in exchange for a Convertible Debentures
(“Debentures”) that matures in May 2011. The Debentures bears interest at a rate
of 10% and will be convertible into 2,333,333 shares of the Company’s common
stock, at a conversion rate of $.15 per share. Interest will also be converted
into common stock at the conversion rate of $.15 per share.
In
accordance with Emerging Issues Task Force
Issue 98-5, Accounting for Convertible Securities with a Beneficial Conversion
Features or Contingently Adjustable Conversion Ratios (“EITF 98-5”), the
Company recognized an imbedded beneficial conversion feature present in
Convertible Notes #19. The Company allocated a portion of the proceeds equal to
the intrinsic value of that feature to additional paid-in capital. The Company
recognized and measured an aggregate of $108,182 of the proceeds, which is equal
to the intrinsic value of the imbedded beneficial conversion feature, to
additional paid-in capital and a discount against the Convertible
Note.
In
connection with the issuance of the convertible debenture, the Company issued
700,000 shares of common stock. The common stock was valued at the date of the
related convertible debenture.
The total
debt discount attributed to the beneficial conversion feature of $108,182 is
charged operations ratably over the note term as interest expense.
For the
three month periods ended June 30, 2009 and 2008, the Company amortized $8,990
and $5,434 to current period operations as interest expense,
respectively.
Convertible Debenture
#7
In March
2009, the Company issued a $125,000 Convertible Debenture that matures in May
2011 in exchange for a Convertible Debenture previously matured. The Debenture
bears interest at a rate of 10% and will be convertible into 1,250,000 shares of
the Company’s common stock, at a conversion rate of $.10 per share. Interest
will also be converted into common stock at the conversion rate of $.10 per
share. In connection with the issuance of the Convertible Debenture, the Company
will issue 500,000 shares of its common stock.
In
accordance with Emerging Issues Task Force
Issue 98-5, Accounting for Convertible Securities with a Beneficial Conversion
Features or Contingently Adjustable Conversion Ratios (“EITF 98-5”), the
Company recognized an imbedded beneficial conversion feature present in
Convertible Note #21. The Company allocated a portion of the proceeds equal to
the intrinsic value of that feature to additional paid-in capital. The Company
recognized and measured an aggregate of $27,344 of the proceeds, which is equal
to the intrinsic value of the imbedded beneficial conversion feature, to
additional paid-in capital and a discount against the Convertible
Note.
23
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2009
7. CONVERTIBLE DEBENTURES
(continued)
Convertible Debenture #7
(continued
The total
debt discount attributed to the beneficial conversion feature of $27,344 is
charged operations ratably over the note term as interest expense.
For the
three month period ended June 30, 2009, the Company amortized $3,270 to current
period operations as interest expense.
Convertible Debenture
#8
In March
2009, the Company issued a $50,000 Convertible Debenture that matures in May
2011 in exchange for a Convertible Debenture previously matured. The Debenture
bears interest at a rate of 10% and will be convertible into 500,000 shares of
the Company’s common stock, at a conversion rate of $.10 per share. Interest
will also be converted into common stock at the conversion rate of $.10 per
share. In connection with the issuance of the Convertible Debenture, the Company
will issue 200,000 shares of its common stock.
In
accordance with Emerging Issues Task Force
Issue 98-5, Accounting for Convertible Securities with a Beneficial Conversion
Features or Contingently Adjustable Conversion Ratios (“EITF 98-5”), the
Company recognized an imbedded beneficial conversion feature present in
Convertible Note #22. The Company allocated a portion of the proceeds equal to
the intrinsic value of that feature to additional paid-in capital. The Company
recognized and measured an aggregate of $10,938 of the proceeds, which is equal
to the intrinsic value of the imbedded beneficial conversion feature, to
additional paid-in capital and a discount against the Convertible
Note.
The total
debt discount attributed to the beneficial conversion feature of $10,938 is
charged operations ratably over the note term as interest expense.
For the
three month period ended June 30, 2009, the Company amortized $1,306 to current
period operations as interest expense.
Convertible Debenture
#9
In March
2009, the Company issued a $150,000 Convertible Debenture that matures in May
2011 in exchange for a Convertible Debenture previously matured. The Debenture
bears interest at a rate of 10% and will be convertible into 1,500,000 shares of
the Company’s common stock, at a conversion rate of $.10 per share. Interest
will also be converted into common stock at the conversion rate of $.10 per
share. In connection with the issuance of the Convertible Debenture, the Company
will issue 600,000 shares of its common stock.
In
accordance with Emerging Issues Task Force
Issue 98-5, Accounting for Convertible Securities with a Beneficial Conversion
Features or Contingently Adjustable Conversion Ratios (“EITF 98-5”), the
Company recognized an imbedded beneficial conversion feature present in
Convertible Note #23. The Company allocated a portion of the proceeds equal to
the intrinsic value of that feature to additional paid-in capital. The Company
recognized and measured an aggregate of $32,813 of the proceeds, which is equal
to the intrinsic value of the imbedded beneficial conversion feature, to
additional paid-in capital and a discount against the Convertible
Note.
The total
debt discount attributed to the beneficial conversion feature of $32,813 is
charged operations ratably over the note term as interest expense.
For the
three month period ended June 30, 2009, the Company amortized $3,924 to current
period operations as interest expense
24
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2009
7. CONVERTIBLE DEBENTURES
(continued)
Convertible Debenture
#10
In March
2009, the Company issued a $200,000 Convertible Debenture that matures in May
2011 in exchange for a Convertible Debenture previously matured. The Debenture
bears interest at a rate of 10% and will be convertible into 2,000,000 shares of
the Company’s common stock, at a conversion rate of $.10 per share. Interest
will also be converted into common stock at the conversion rate of $.10 per
share. In connection with the issuance of the Convertible Debenture, the Company
will issue 800,000 shares of its common stock.
In
accordance with Emerging Issues Task Force
Issue 98-5, Accounting for Convertible Securities with a Beneficial Conversion
Features or Contingently Adjustable Conversion Ratios (“EITF 98-5”), the
Company recognized an imbedded beneficial conversion feature present in
Convertible Note #24. The Company allocated a portion of the proceeds equal to
the intrinsic value of that feature to additional paid-in capital. The Company
recognized and measured an aggregate of $43,750 of the proceeds, which is equal
to the intrinsic value of the imbedded beneficial conversion feature, to
additional paid-in capital and a discount against the Convertible
Note.
The total
debt discount attributed to the beneficial conversion feature of $43,750 is
charged operations ratably over the note term as interest expense.
For the
three month period ended June 30, 2009, the Company amortized $5,232 to current
period operations as interest expense.
Convertible Debenture
#11
In March
2009, the Company issued a $50,000 Convertible Debenture that matures in May
2011 in exchange for a Convertible Debenture previously matured. The Debenture
bears interest at a rate of 10% and will be convertible into 500,000 shares of
the Company’s common stock, at a conversion rate of $.10 per share. Interest
will also be converted into common stock at the conversion rate of $.10 per
share. In connection with the issuance of the Convertible Debenture, the Company
will issue 200,000 shares of its common stock.
In
accordance with Emerging Issues Task Force
Issue 98-5, Accounting for Convertible Securities with a Beneficial Conversion
Features or Contingently Adjustable Conversion Ratios (“EITF 98-5”), the
Company recognized an imbedded beneficial conversion feature present in
Convertible Note #25. The Company allocated a portion of the proceeds equal to
the intrinsic value of that feature to additional paid-in capital. The Company
recognized and measured an aggregate of $10,938 of the proceeds, which is equal
to the intrinsic value of the imbedded beneficial conversion feature, to
additional paid-in capital and a discount against the Convertible
Note.
The total
debt discount attributed to the beneficial conversion feature of $10,938 is
charged operations ratably over the note term as interest expense.
For the
three month period ended June 30, 2009, the Company amortized $1,308 to current
period operations as interest expense
25
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2009
7. CONVERTIBLE DEBENTURES
(continued)
Convertible Debenture
#12
In March
2009, the Company issued a $50,000 Convertible Debenture that matures in May
2011 in exchange for a Convertible Debenture previously matured. The Debenture
bears interest at a rate of 10% and will be convertible into 500,000 shares of
the Company’s common stock, at a conversion rate of $.10 per share. Interest
will also be converted into common stock at the conversion rate of $.10 per
share. In connection with the issuance of the Convertible Debenture, the Company
will issue 200,000 shares of its common stock.
In
accordance with Emerging Issues Task Force
Issue 98-5, Accounting for Convertible Securities with a Beneficial Conversion
Features or Contingently Adjustable Conversion Ratios (“EITF 98-5”), the
Company recognized an imbedded beneficial conversion feature present in
Convertible Note #26. The Company allocated a portion of the proceeds equal to
the intrinsic value of that feature to additional paid-in capital. The Company
recognized and measured an aggregate of $10,938 of the proceeds, which is equal
to the intrinsic value of the imbedded beneficial conversion feature, to
additional paid-in capital and a discount against the Convertible
Note.
The total
debt discount attributed to the beneficial conversion feature of $10,938 is
charged operations ratably over the note term as interest expense.
For the
three month period ended June 30, 2009, the Company amortized $1,308 to current
period operations as interest expense
Convertible Debenture
#13
In March
2009, the Company issued a $25,000 Convertible Debenture that matures in May
2011 in exchange for a Convertible Debenture previously matured. The Debenture
bears interest at a rate of 10% and will be convertible into 250,000 shares of
the Company’s common stock, at a conversion rate of $.10 per share. Interest
will also be converted into common stock at the conversion rate of $.10 per
share. In connection with the issuance of the Convertible Debenture, the Company
will issue 100,000 shares of its common stock.
In
accordance with Emerging Issues Task Force
Issue 98-5, Accounting for Convertible Securities with a Beneficial Conversion
Features or Contingently Adjustable Conversion Ratios (“EITF 98-5”), the
Company recognized an imbedded beneficial conversion feature present in
Convertible Note #27. The Company allocated a portion of the proceeds equal to
the intrinsic value of that feature to additional paid-in capital. The Company
recognized and measured an aggregate of $5,469 of the proceeds, which is equal
to the intrinsic value of the imbedded beneficial conversion feature, to
additional paid-in capital and a discount against the Convertible
Note.
The total
debt discount attributed to the beneficial conversion feature of $5,469 is
charged operations ratably over the note term as interest expense.
For the
three month period ended June 30, 2009, the Company amortized $654 to current
period operations as interest expense
26
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2009
7. CONVERTIBLE DEBENTURES
(continued)
Convertible Debenture
#14
In March
2009, the Company issued a $250,000 Convertible Debenture that matures in May
2011 in exchange for a Convertible Debenture previously matured. The Debenture
bears interest at a rate of 10% and will be convertible into 3,846,154 shares of
the Company’s common stock, at a conversion rate of $.065 per share. Interest
will also be converted into common stock at the conversion rate of $.065 per
share. In connection with the issuance of the Convertible Debenture, the Company
will issue 1,000,000 shares of its common stock.
In
accordance with Emerging Issues Task Force
Issue 98-5, Accounting for Convertible Securities with a Beneficial Conversion
Features or Contingently Adjustable Conversion Ratios (“EITF 98-5”), the
Company recognized an imbedded beneficial conversion feature present in
Convertible Note #28. The Company allocated a portion of the proceeds equal to
the intrinsic value of that feature to additional paid-in capital. The Company
recognized and measured an aggregate of $128,606 of the proceeds, which is equal
to the intrinsic value of the imbedded beneficial conversion feature, to
additional paid-in capital and a discount against the Convertible
Note.
The total
debt discount attributed to the beneficial conversion feature of $128,606 is
charged operations ratably over the note term as interest expense.
For the
three month period ended June 30, 2009, the Company amortized $15,278 to current
period operations as interest expense
Convertible Debenture
#15
In March
2009, the Company issued a $60,000 Convertible Debenture that matures in May
2011 in exchange for outstanding accounts payable. The Debenture bears interest
at a rate of 10% and will be convertible into 600,000 of the Company’s common
stock, at a conversion rate of $.10 per share. Interest will also be converted
into common stock at the conversion rate of $.10 per share.
Convertible Debenture
#16
In March
2009, the Company issued a $1,000,000 Convertible Debenture that matures in July
2011 in exchange for outstanding advances for marketing (See Note 5 above). The
Debenture bears interest at a rate of 20% and will be convertible into
12,500,000 of the Company’s common stock, at a conversion rate of $.08 per
share. Interest will also be converted into common stock at the conversion rate
of $.08 per share.
Convertible Promissory Notes
(related party)
In
conjunction with the acquisitions of ITT and Razor, the Company issued
$5,000,000 in convertible promissory notes that matures on April 15, 2009. The
Notes bears interest at a rate of 6% and are convertible into 20,000,000 shares
of the Company’s common stock, at a conversion rate of $0.25 per share at any
time at the holders’ option. The convertible promissory notes are held by
current employees of ITT and Razor.
27
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2009
7. CONVERTIBLE DEBENTURES
(continued)
In
accordance with Emerging Issues Task Force
Issue 98-5, Accounting for Convertible Securities with a Beneficial Conversion
Features or Contingently Adjustable Conversion Ratios (“EITF 98-5”), the
Company recognized an imbedded beneficial conversion feature present in the
Convertible Promissory Notes. The Company allocated a portion of the proceeds
equal to the intrinsic value of that feature to additional paid-in capital. The
Company recognized and measured an aggregate of $1,250,000 of the proceeds,
which is equal to the intrinsic value of the imbedded beneficial conversion
feature, to additional paid-in capital and a discount against the Convertible
Note. The debt discount attributed to the beneficial conversion feature is
amortized ratably to operations as interest expense over the term of the
promissory note.
For the
year ended March 31, 2009, the Company amortized $1,041,667 to current period
operations as interest expense.
During
the year ended March 31, 2009, the Company converted $3,333,334 in related party
promissory notes and related interest into 14,300,000 shares of common
stock. In addition, $333,333 of the outstanding related party notes
was forgiven. The remaining balance ($1,333,333) were converted to
modified promissory note(s) due May 15, 2011, bearing an interest rate of 8% per
annum which are convertible into 13,333,333 shares of the Company’s common stock
at a rate of $0.10 per share at anytime at the Holder’s option.
At June
30, 2009 and March 31, 2009, balances consisted of the following:
|
|
June
30,
2009
|
March 31,
2009
|
||||||
|
Convertible debenture
#1
|
50,000
|
50,000
|
||||||
|
Convertible
debenture #2
|
50,000
|
50,000
|
||||||
|
Convertible
debenture #3
|
100,000
|
100,000
|
||||||
|
Convertible
debenture #4
|
25,000
|
50,000
|
||||||
|
Convertible
debenture #5, net of unamortized debt discount of $19,931 and $22,618,
respectively
|
30,069
|
27,382
|
||||||
|
Convertible
debentures #6, net of unamortized debt discount of $66,687 and $75,678,
respectively
|
283,313
|
274,322
|
||||||
|
Convertible
debenture #7, net of unamortized debt discount of $24,038 and $27,308,
respectively
|
100,962
|
97,692
|
||||||
|
Convertible
debenture #8, net of unamortized debt discount of $9,603 and $10,909,
respectively
|
40,397
|
39,091
|
||||||
|
Convertible
debenture #9, net of unamortized debt discount of $28,846 and $32,770,
respectively
|
121,154
|
117,230
|
||||||
|
Convertible
debenture #10, net of unamortized debt discount of $38,461 and $43,693,
respectively
|
161,539
|
156,307
|
||||||
|
Convertible
debenture #11, net of unamortized debt discount of $9,616 and $10,923,
respectively
|
40,384
|
39,077
|
||||||
|
Convertible
debenture #12, net of unamortized debt discount of $9,616 and $10,923,
respectively
|
40,384
|
39,077
|
||||||
28
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2009
7. CONVERTIBLE DEBENTURES
(continued)
|
|
|
June 30,
2009
|
|
|
March 31,
2009
|
|
||
|
Convertible
debenture #13, net of unamortized debt discount of $4,808 and $5,462,
respectively
|
20,192
|
19,538
|
||||||
|
Convertible
debenture #14, net of unamortized debt discount of $112,488 and $127,767,
respectively
|
137,512
|
122,233
|
||||||
|
Convertible
debenture #15
|
60,000
|
60,000
|
||||||
|
Convertible
debenture #16
|
1,000,000
|
1,000,000
|
||||||
|
Convertible
promissory notes, net of unamortized debt discount of $-0 and $1,041,667,
respectively, related party
|
1,333,333
|
1,333,333
|
||||||
|
Total
|
3,594,239
|
3,550,282
|
||||||
|
Less:
current portion
|
(200,000
|
)
|
(200,000
|
)
|
||||
|
Long
term portion
|
$
|
2,060,906
|
$
|
2,016,949
|
||||
|
Long
term portion, related party
|
$
|
1,333,333
|
$
|
1,333,333
|
||||
8. RELATED PARTY
TRANSACTIONS
The
Company is periodically advanced interest free operating funds from related
parties and shareholders. The advances are due on demand. At June 30,
2009 and March 31, 2009, due to related party was $286,814 and $130,701,
respectively.
In
addition, as described in note 7 above, the Company issued an aggregate of
$5,000,000 in convertible promissory notes in connection with the acquisition of
ITT and Razor during the year ended March 31, 2008. As of June 30,
2009, the outstanding balance was $1,333,333. The noteholders are current
employees of the Company’s consolidated group.
The
Company is under a contract with a related party corporation whereby the related
party provides marketing and promotional activity in exchange for 20% of gross
revenue from sales of the related corporation’s products and services. Contained
within the contract are a minimum number of subscribers the Company is required
to maintain to ensure exclusivity.
9. OPERATING LEASE
COMMITMENTS
In June
2007, the Company entered into a lease agreement for office space under an
operating lease agreement (Agreement). Under the Agreement, minimum monthly
lease payments of $11,267 (including utilities and operating expenses) are
required, continuing on a month-to-month basis until July 29, 2010. The first
payment began in July 2007. A security deposit in the amount of $33,800 is
required to be maintained on deposit with the landlord and has been capitalized
as an asset on the balance sheet. The unused portion of the security deposit
will be returned to the Company, after expiration of the term of the lease and
delivery to the landlord of possession of the premises in accordance with the
provisions of the Agreement. As the June 30, 2009, the Company moved from the
facility and accordingly recorded a change to current period operations the
security deposit of $33,800. See Note 16 below.
29
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2009
9. OPERATING LEASE COMMITMENTS
(continued)
In March
2008, the Company entered into a lease agreement for office space under a
sublease agreement (“sublease”). Under the sublease, minimum monthly lease
payments of $18,210 are required with payments escalating annually through
September 30, 2010. The first payment began April 15, 2008.
The
future minimum lease rentals under this sublease are as follows:
|
Period
Ending March 31,
|
||||
|
2010
|
$
|
227,252
|
||
|
2011
|
115,914
|
|||
|
$
|
343,166
|
The rent
expense for all leases for the three month period ended June 30, 2009 and 2008
was $115,333 and $117,355, respectively.
10. CAPITAL STOCK
Subscription
During
the year ended March 31, 2009, the Company received a preferred stock
subscription for 62,500 shares of Series B convertible preferred stock for
$500,000, subject to approval of the shareholders of the Company.
The
Company is obligated to issue 6,250,000 shares of its common stock should the
Company is unable to issue the preferred stock and therefore the subscription
received is considered an equity financing transaction.
Common
stock
The
Company is authorized to issue 700,000,000 shares of common stock with par value
$.001 per share. As of June 30, 2009, the Company had 315,314,800 shares of
common stock issued and outstanding.
In April
2009, the Company issued an aggregate of 400,000 shares of its common stock for
services rendered.
In April
2009, the Company issued an aggregate of 1,600,000 shares of its common stock in
exchange for outstanding accounts payable.
In May
2009, the Company issued an aggregate of 1,100,000 shares of its common stock
for services rendered.
11. COMMITMENTS AND
CONTINGENCIES
Employment and Consulting
Agreements
The
Company has consulting agreements with outside contractors to provide certain
marketing and financial advisory services. The Agreements are generally for a
term of 12 months from inception and renewable automatically from year to year
unless either the Company or Consultant terminates such engagement by written
notice.
30
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2009
11. COMMITMENTS AND CONTINGENCIES
(continued)
On June
30, 2008, the Company entered into an Amended and Restated Employment Agreement
(the “Agreement”) with Nicholas S. Maturo, the Company’s Chairman of the Board
and Chief Executive Officer of Company since January 23, 2007.
The
Agreement extends the term of Mr. Maturo’s employment for five (5) years, as may
be extended or earlier terminated pursuant to the terms and conditions of the
Agreement and provides for automatic renewals for successive three (3) year
periods unless, prior to the 90th
calendar day preceding the expiration of the then existing term, either Company
or Mr. Maturo provide written notice to the other that it elects not to renew
the term.
On June
27, 2008, the Company received the resignation of Mr. J. Christopher Albanese as
a member of the Company’s Board of Directors. The resignation did not contain
any reason for his departure from the Board of Directors. Mr. Albanese has been
General Counsel of American Capital Partners, LLC, an investment banking firm,
since August 2002 and was appointed to the Company’s Board of Directors on
October 5, 2007
Litigation
The
Company may be subject to legal proceedings and claims which arise in the
ordinary course of its business. Although occasional adverse decisions or
settlements may occur, the Company believes that the final disposition of such
matters should not have a material adverse effect on its financial position,
results of operations or liquidity. The Company had no pending legal proceedings
or claims as of June 30, 2009.
12. LOSS PER COMMON
SHARE
The
following table presents the computation of basic and diluted loss per share for
the three month period ended June 30, 2009 and 2008:
|
|
Three months
ended
June 30,
2009
|
Three months
ended
June 30,
2008
|
||||||
|
Net
loss available for common shareholders
|
$
|
(1,503,192
|
)
|
$
|
(2,441,867
|
)
|
||
|
Loss
per share (basic and assuming dilution)
|
$
|
(0.00
|
)
|
$
|
(0.01
|
)
|
||
|
Weighted average common shares
outstanding
|
||||||||
|
Basic
|
314,509,305
|
244,129,180
|
||||||
|
Fully
diluted
|
314,509,305
|
244,129,180
|
||||||
Fully-diluted
weighted-average common shares outstanding are not utilized in the calculation
of loss per common share as the effect would be anti-dilutive, decreasing the
reported loss per common share.
31
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2009
13. INCOME TAXES
The
Company has adopted Financial Accounting Standard No. 109 which requires the
recognition of deferred tax liabilities and assets for the expected future tax
consequences of events that have been included in the financial statement or tax
returns. Under this method, deferred tax liabilities and assets are determined
based on the difference between financial statements and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse. Temporary differences between taxable
income reported for financial reporting purposes and income tax purposes are
insignificant.
At June
30, 2009 the Company has available for federal income tax purposes a net
operating loss carryforward of approximately $51,000,000 expiring in the year
2026, that may be used to offset future taxable income. The Company has provided
a valuation reserve against the full amount of the net operating loss benefit,
since in the opinion of management based upon the earnings history of the
Company; it is more likely than not that the benefits will not be realized. Due
to significant changes in the Company's ownership, the future use of its
existing net operating losses may be limited. Components of deferred tax assets
as of June 30, 2009 are as follows:
|
Noncurrent:
|
||||
|
Net
operating loss carryforward
|
$
|
17,850,000
|
||
|
Valuation
allowance
|
(17,850,000
|
)
|
||
|
Net
deferred tax asset
|
$
|
-
|
The total
provision differs from the amount that would be obtained by applying the federal
statutory rate of 34% to income before income taxes, as follows:
|
Expected
tax provision (benefit)
|
$
|
(17,850,000
|
)
|
|
|
Effect
of:
|
||||
|
State
income taxes, net of federal benefit
|
-
|
|||
|
Net
operating loss carryforward
|
16,800,000
|
|||
|
Increase
in valuation allowance
|
1,050,000
|
|||
|
Graduated
rates
|
-
|
|||
|
$
|
17,850,000
|
14. STOCK OPTIONS AND
WARRANTS
Employee
Stock Options
The
following table summarizes the changes in employee stock options outstanding and
the related prices for the shares of the Company’s common stock issued to
employees of the Company under a non-qualified employee stock option plan at
June 30, 2009:
32
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2009
14. STOCK OPTIONS AND WARRANTS
(continued)
Employee
Stock Options (continued)
|
Options Outstanding
|
Options Exercisable
|
|||||||||||||||||||||
|
Weighted
|
Weighted
|
|||||||||||||||||||||
|
Weighted
|
Average
|
Average
|
||||||||||||||||||||
|
Average
|
Exercise
|
Exercise
|
||||||||||||||||||||
|
Range
of
|
Number
of
|
Remaining
|
Price
of
|
Number
of
|
Price
of
|
|||||||||||||||||
|
Exercise
|
Shares
|
Contractual
|
Outstanding
|
Shares
|
Exercisable
|
|||||||||||||||||
|
Prices
|
Outstanding
|
Life (Years)
|
Options
|
Exercisable
|
Options
|
|||||||||||||||||
| $ | 0.25 | 1,330,490 | 0.04 | $ | 0.25 | 1,330,490 | $ | 0.25 | ||||||||||||||
| $ | 0.41 | 6,000,000 | 7.54 | $ | 0.41 | 5,125,000 | $ | 0.41 | ||||||||||||||
| $ | 0.42 | 1,500,000 | 7.61 | $ | 0.42 | 1,500,000 | $ | 0.42 | ||||||||||||||
| 8,830,490 | 6.70 | $ | 0.39 | 7,955,490 | $ | 0.38 | ||||||||||||||||
Transactions
involving stock options issued to employees are summarized as
follows:
|
|
|
|
|
Weighted
|
|
|||
|
|
|
|
|
Average
|
|
|||
|
|
|
Number of
|
|
|
Exercise
|
|
||
|
|
|
Shares
|
|
|
Price
|
|
||
|
Options
outstanding at March 31, 2008
|
8,830,490
|
$
|
0.388
|
|||||
|
Granted
|
-
|
-
|
||||||
|
Exercised
|
-
|
-
|
||||||
|
Cancelled
or expired
|
-
|
-
|
||||||
|
Options
outstanding at March 31, 2009
|
8,830,490
|
0.388
|
||||||
|
Granted
|
-
|
-
|
||||||
|
Exercised
|
-
|
-
|
||||||
|
Cancelled
or expired
|
-
|
-
|
||||||
|
Options
outstanding at June 30, 2009
|
8,830,490
|
$
|
0.388
|
|||||
For the
three month periods ended June 30, 2009 and 2008, the Company did not grant
stock options to employees. The fair value of options granted in previous years
vesting during the three month periods ended June 30, 2009 and 2008 of $157,638
and $206,100 was recorded as a current period charge to earnings.
Non-Employee
Stock Options
The
following table summarizes the changes in options outstanding and the related
prices for the shares of the Company’s common stock issued to consultants and
non-employees of the Company at June 30, 2009:
33
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2009
14. STOCK OPTIONS AND WARRANTS
(continued)
Non-Employee
Stock Options (continued)
|
Options Outstanding
|
Options Exercisable
|
|||||||||||||||||||||
|
Weighted
|
||||||||||||||||||||||
|
Average
|
Weighted
|
Weighted
|
||||||||||||||||||||
|
Remaining
|
Average
|
Average
|
||||||||||||||||||||
|
Exercise
|
Number
|
Contractual
|
Exercise
|
Number of
|
Exercise
|
|||||||||||||||||
|
Prices
|
Outstanding
|
Life (Years)
|
Price
|
Exercisable
|
Price
|
|||||||||||||||||
| $ | 0.145 | 500,000 | 3.95 | $ | 0.145 | 500,000 | $ | 0.145 | ||||||||||||||
| $ | 0.22 | 300,000 | 6.50 | $ | 0.22 | 300,000 | $ | 0.22 | ||||||||||||||
| $ | 0.25 | 2,469,135 | 2.04 | $ | 0.25 | 2,469,135 | $ | 0.25 | ||||||||||||||
| $ | 0.33 | 20,000 | 0.49 | $ | 0.33 | 20,000 | $ | 0.33 | ||||||||||||||
| $ | 0.42 | 500,000 | 0.86 | $ | 0.42 | 500,000 | $ | 0.42 | ||||||||||||||
| 3,789,135 | 2.49 | $ | 0.26 | 3,789,135 | $ | 0.26 | ||||||||||||||||
Transactions
involving stock options issued to consultants and non-employees are summarized
as follows:
|
|
|
|
|
Weighted
|
|
|||
|
|
|
|
|
Average
|
|
|||
|
|
|
Number of
|
|
|
Price
|
|
||
|
|
|
Shares
|
|
|
Per Share
|
|
||
|
|
||||||||
|
Options
outstanding at March 31, 2008
|
4,989,135
|
$
|
0.29
|
|||||
|
Granted
|
500,000
|
0.145
|
||||||
|
Exercised
|
-
|
-
|
||||||
|
Cancelled
or expired
|
(1,700,000
|
)
|
(0.22
|
)
|
||||
|
Options
outstanding at March 31, 2009
|
3,789,135
|
0.26
|
||||||
|
Granted
|
-
|
-
|
||||||
|
Exercised
|
-
|
-
|
||||||
|
Cancelled
or expired
|
-
|
-
|
||||||
|
Options
outstanding at June 30, 2009
|
3,789,135
|
$
|
0.26
|
|||||
During
the year ended March 31, 2009, the Company granted 500,000 non-employee stock
options with an exercise price of $0.145 in one year and expiring approximately
five years from issuance. The fair value of the vested amounts was determined
using a Black-Scholes option pricing model based on the following
assumptions:
|
Risk-free
interest rate at grant date:
|
2.81
|
%
|
||
|
Expected
volatility
|
141.65
|
%
|
||
|
Expected
dividend payout
|
$
|
0
|
||
|
Expected
option life-years (a)
|
4
years
|
|||
(a) the
expected option life is based on contractual expiration dates
The
determined fair value of $14,661 was charged to current period operations during
the three months ended June 30, 2009.
34
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2009
14. STOCK OPTIONS AND WARRANTS
(continued)
Warrants
The
following table summarizes the changes in warrants outstanding and the related
prices for the shares of the Company’s common stock issued to shareholders at
June 30, 2009:
|
Warrants Outstanding
|
Warrants Exercisable
|
|||||||||||||||||||||
|
Weighted
|
||||||||||||||||||||||
|
Average
|
Weighted
|
Weighted
|
||||||||||||||||||||
|
Remaining
|
Average
|
Average
|
||||||||||||||||||||
|
Exercise
|
Number
|
Contractual
|
Exercise
|
Number
|
Exercise
|
|||||||||||||||||
|
Price
|
Outstanding
|
Life (Years)
|
Price
|
Exercisable
|
Price
|
|||||||||||||||||
| $ | 0.01 | 2,000,000 | 4.55 | $ | 0.01 | 1,000,000 | $ | 0.01 | ||||||||||||||
| $ | 0.22 | 195,000 | 0.85 | $ | 0.22 | 195,000 | $ | 0.22 | ||||||||||||||
| $ | 0.50 | 3,602,500 | 0.83 | $ | 0.50 | 3,602,500 | $ | 0.50 | ||||||||||||||
|
Total
|
5,797,500 | 1.61 | 0.39 | 4,797,500 | 0.39 | |||||||||||||||||
Transactions
involving the Company’s warrant issuance are summarized as follows:
|
|
|
|
|
Average
|
|
|||
|
|
|
Number of
|
|
|
Price
|
|
||
|
|
|
Shares
|
|
|
Per Share
|
|
||
|
Warrants
outstanding at March 31, 2008
|
3,797,500
|
$
|
0.49
|
|||||
|
Granted
|
2,000,000
|
0.01
|
||||||
|
Exercised
|
-
|
-
|
||||||
|
Cancelled
or expired
|
-
|
-
|
||||||
|
Warrants
outstanding at March 31, 2009
|
5,797,500
|
0.39
|
||||||
|
Granted
|
-
|
-
|
||||||
|
Exercised
|
-
|
-
|
||||||
|
Cancelled
or expired
|
-
|
-
|
||||||
|
Warrants
outstanding at June 30, 2009
|
5,797,500
|
$
|
0.39
|
|||||
Warrants
granted during the year ended March 31, 2009 totaling 2,000,000 were issued in
connection with promissory note payable. The warrants are exercisable
until five years after the date of issuance at a purchase price of $0.01 per
share. The fair value of the warrants at the date of issuance was
determined using the Black-Scholes Option Pricing Method with the following
assumptions: dividend yield: -0-%; volatility: 138.87%, risk free interest rate:
1.48%
35
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2009
15. FAIR
VALUE MEASUREMENT
The
Company adopted the provisions of SFAS No. 157, “Fair Value Measurements” on
January 1, 2008. SFAS No. 157 defines fair value as the price that would be
received from selling an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. When
determining the fair value measurements for assets and liabilities required or
permitted to be recorded at fair value, the Company considers the principal or
most advantageous market in which it would transact and considers assumptions
that market participants would use when pricing the asset or liability, such as
inherent risk, transfer restrictions, and risk of nonperformance. SFAS
No. 157 establishes a fair value hierarchy that requires an entity to
maximize the use of observable inputs and minimize the use of unobservable
inputs when measuring fair value. SFAS No. 157 establishes three levels of
inputs that may be used to measure fair value:
Level 1 -
Quoted prices in active markets for identical assets or
liabilities.
Level 2 -
Observable inputs other than Level 1 prices such as quoted prices for similar
assets or liabilities; quoted prices in markets with insufficient volume or
infrequent transactions (less active markets); or model-derived valuations in
which all significant inputs are observable or can be derived principally from
or corroborated by observable market data for substantially the full term of the
assets or liabilities.
Level 3 -
Unobservable inputs to the valuation methodology that are significant to the
measurement of fair value of assets or liabilities.
To the
extent that valuation is based on models or inputs that are less observable or
unobservable in the market, the determination of fair value requires more
judgment. In certain cases, the inputs used to measure fair value may fall into
different levels of the fair value hierarchy. In such cases, for disclosure
purposes, the level in the fair value hierarchy within which the fair value
measurement is disclosed and is determined based on the lowest level input that
is significant to the fair value measurement.
Upon
adoption of SFAS No. 157, there was no cumulative effect adjustment to
beginning retained earnings and no impact on the consolidated financial
statements.
The
carrying value of the Company’s cash and cash equivalents, accounts receivable,
accounts payable, short-term borrowings (Including convertible notes payable),
and other current assets and liabilities approximate fair value because of their
short-term maturity.
Items
recorded or measured at fair value on a recurring basis in the accompanying
condensed consolidated financial statements consisted of the following items as
of June 30, 2009:
The
following table sets forth the Company’s short investments as of June 30, 2009
which are measured at fair value on a recurring basis by level within the fair
value hierarchy. As required by SFAS No. 157, these are classified
based on the lowest level of input that is significant to the fair value
measurement:
36
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2009
15. FAIR
VALUE MEASUREMENT (continued)
|
|
Quoted
Prices in
Active
Markets for
Identical
Instruments
Level 1
|
Significant
Other
Observable
Inputs
Level 2
|
Significant
Unobservable
Inputs
Level 3
|
Assets at
fair Value
|
||||||||||||
|
Assets:
|
||||||||||||||||
|
Cash
|
$
|
53,248
|
$
|
-
|
$
|
-
|
$
|
53,248
|
||||||||
|
Other current assets
|
1,480
|
-
|
-
|
1,480
|
||||||||||||
|
Liabilities:
|
||||||||||||||||
|
Long term convertible debentures
|
-
|
-
|
(3,743,084
|
)
|
(3,743,084
|
)
|
||||||||||
|
|
||||||||||||||||
|
Total
|
$
|
54,728
|
$
|
-
|
$
|
(3,743,084
|
)
|
$
|
(3,688,356
|
)
|
||||||
At June
30, 2009, the fair values of the convertible debentures were determined at a net
discount rate of 2% per annum for the terms of the notes.
15. GOING CONCERN
MATTERS
The
Company’s unaudited condensed consolidated financial statements are prepared
using generally accepted accounting principles applicable to a going concern
which contemplates the realization of assets and liquidation of liabilities in
the normal course of business. The Company has incurred significant losses which
have resulted in an accumulated deficit of $51,188,192 at June 30, 2009 which
raises substantial doubt about the Company’s ability to continue as a going
concern. The accompanying unaudited condensed consolidated financial statements
do not include any adjustments relating to the recoverability and classification
of asset carrying amounts or the amount and classification of liabilities that
might result from the outcome of this uncertainty.
Continuation
as a going concern is dependent upon obtaining additional capital and upon the
Company’s attaining profitable operations. The Company will require a
substantial amount of additional funds to complete the development of its
products, to build a sales and marketing organization, and to fund additional
losses which the Company expects to incur over the next few years. The
management of the Company intends to seek additional funding through a Private
Placement Offering which will be utilized to fund product development and
continue operations. The Company recognizes that, if it is unable to raise
additional capital, it may find it necessary to substantially reduce or cease
operations.
16. SUBSEQUENT EVENTS
In July
2009, the Company issued an aggregate of 4,425,000 shares of its common stock in
connection with previously issued convertible debentures and related accrued
interest.
In July
2009, the Company issued 400,000 shares of it common stock for services
rendered.
On July
16, 2009, a petition for judgment was filed with the Civil Court of the City of
New York naming the Company as a defendant relating to property leased by the
Company from the defendant for recovery of past due rent payments, interest and
legal costs totally $82,732. As of June 30, 2009, the Company has
accrued their obligation under the lease.
37
GLOBAL
INVESTOR SERVICES, INC.
(FORMERLY THERETIREMENT SOLUTION.COM, INC.)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2009
16. SUBSEQUENT EVENTS
(Continued)
On July
30, 2009, the Company completed the sale of $850,500 in 8% secured convertible
debentures. The debentures are convertible into the Company’s common stock at
$0.03 per share and are due three years from the date of issuance.
In
conjunction with the issuance of the convertible debentures, each note holder
will receive 50% warrant coverage to purchase the Company’s common stock for
five years at $0.05 per share.
In August
2009, the Company issued 400,000 shares of its common stock for services
rendered.
38
Item 2 - Management’s Discussion and
Analysis of
Financial condition and results of Operations.
Forward-Looking
Statements
This
Quarterly Report of Form 10-Q, including this discussion and analysis by
management, contains or incorporates forward-looking statements. All statements
other than statements of historical fact made in report are forward looking. In
particular, the statements herein regarding industry prospects and future
results of operations or financial position are forward-looking statements.
These forward-looking statements can be identified by the use of words such as
“believes,” “estimates,” “could,” “possibly,” “probably,” anticipates,”
“projects,” “expects,” “may,” “will,” or “should” or other variations or similar
words. No assurances can be given that the future results anticipated by the
forward-looking statements will be achieved. Forward-looking statements reflect
management’s current expectations and are inherently uncertain. Our actual
results may differ significantly from management’s expectations. For factors
that may cause actual results to differ from management’s expectations,
reference should be made to the Company’s Form 10-K for the year ended March 31,
2009 filed with the Securities and Exchange Commission and our other periodic
filings with the Securities and Exchange Commission.
The
following discussion and analysis should be read in conjunction with our
financial statements, included herewith. This discussion should not be construed
to imply that the results discussed herein will necessarily continue into the
future, or that any conclusion reached herein will necessarily be indicative of
actual operating results in the future. Such discussion represents only the best
present assessment of our management.
Background
The
Company was incorporated in the state of Nevada on August 1, 2005. On August 30,
2006, the Company entered into a Share Purchase Agreement (“Agreement”) with
Voxpath Holdings, Inc. (“Voxpath”). Prior to the merger, Voxpath was an inactive
corporation with no significant assets and liabilities. On September
16, 2006, the Company changed its name to TheRetirementSolution.Com,
Inc. Effective October 1, 2008, the Company changed its name to
Global Investor Services, Inc.
The
Company currently markets directly and through its marketing partners as well as
online, certain investor products and services that provide financial and
educational information to its prospective customers and to its subscribers.
During the year ended March 31, 2008, the Company transitioned from a
development stage enterprise to an operating company.
On
January 15, 2008, the Company completed the purchase of all the outstanding
membership interests of ITT. The total purchase price was $18,650,000,
consisting of an aggregate of 66,600,000 shares of the Company’s common stock
and the issuance of convertible promissory notes of $2,000,000. On January 15,
2008, the Company completed the purchase of substantially all of the assets of
Razor Data and assumed specified liabilities. The total purchase price was
$12,500,000, consisting of an aggregate of 38,000,000 shares of the Company’s
common stock and the issuance of convertible promissory notes of
$3,000,000.
Plan
of Operations
The
Company is executing its marketing strategy through direct-to-market campaigns
with its marketing partners and through the internet where it delivers investor
products and services. The Company’s target market is comprised of a large base
of entry level investors, active investors in the on-line brokerage sector and
higher-end users of financial information, services and financial
news.
The
Company’s marketing strategy is designed to grow the business and to deliver
high customer value in education and investor services at the lowest possible
cost. These goals will be achieved through on-line customer acquisition, product
sales and customer service, and on-line education and services
delivery.
39
Customer
acquisition is realized via the company’s marketing partners and through on-line
marketing. Our partners have the marketing and operations capability to attract
customers by way of low cost introductory courses and products which
then allows for upsell opportunities to a complete on-line education curriculum
and expanded investor services. Customer service is supported by a comprehensive
client management system that tracks the customer throughout the purchase,
education and added services cycle which also includes live data feeds, news and
investment letters.
On-line
education delivery is completed starting with early stage courses through a
complete curriculum of learning modules, podcasts, webinars and webisodes. In
addition, our customer management system follows every student at this level in
the form of surveys, competency assessments, learning assignments, hotline,
coaching and mentoring.
The
Company has a number of different delivery formats that is focused on a
structured investing methodology that focuses on searching for an investment,
industry group analysis, fundamental analysis, technical analysis, and portfolio
management. The objective is to provide a complete investor education experience
for both beginning and experienced investors and to help them better understand
the investment decision process.
The
company’s longer term goals include the expansion to other markets beyond the
United States. The comprehensive investor education curriculum and related
investor services will be marketed and delivered on-line in target markets
principally via joint venture arrangements in other countries.
Investor
Information Services
The
Company provides a complete turnkey solution to its clients in the financial
community by providing a broad array of information services that include stock
market information and tools, comprehensive database creation and management,
distributed web hosting and network environments, and complete e-content
creation, management and delivery. Razor Data provides technology and data
solutions for the Company which allows ITT, the investor education arm of the
company, and the TRES portfolios to stay focused on their core competencies to
expand product offerings and acquire new customers.
Stock
Market Data
Razor
Data aggregates and distributes data from over 18 different data providers into
a “one stop shop” for client users to get their stock market tools and data. In
any given month Razor Data provides data to thousands of users through web and
desktop clients. The expansive tools and data include: searches, company
valuations, technical analysis, fundamental analysis, analyst recommendations,
real-time streaming news, real-time streaming quotes, over 20 years of
historical data, insider activity, industries and sectors, exclusive
newsletters, proprietary streaming data replay, and institutional ownership. All
of the data is delivered to the user through powerful yet intuitively easy to
use software tools and website.
No major
disposition or purchase of equipment is expected during the next twelve months
except for some office furniture and rental of a modest office
space.
40
Results
of Operations
Three
months ended June 30, 2009 compared to three months ended June 30,
2008:
Revenues:
|
|
Three Months Ended
|
Three Months Ended
|
||||||||||||||||||||||
|
|
June 30, 2009
|
June 30, 2008
|
Variance
|
|||||||||||||||||||||
|
Subscription
revenues
|
$
|
234,001
|
85
|
%
|
$
|
607,143
|
66
|
%
|
$
|
(373,142
|
)
|
(61.5)
|
%
|
|||||||||||
|
Training
revenues
|
41,581
|
15
|
%
|
313,214
|
34
|
%
|
(271,633
|
)
|
(86.7)
|
%
|
||||||||||||||
|
Services
and other
|
-
|
-
|
%
|
4,500
|
0
|
%
|
(4,500
|
)
|
100
|
%
|
||||||||||||||
|
Total
|
$
|
275,582
|
100
|
%
|
$
|
924,857
|
100
|
%
|
$
|
(649,275
|
)
|
(70.2)
|
%
|
|||||||||||
Revenue
for the three months ended June 30, 2009 was $275,802 which represented a
$649,055 decrease from revenue of $924,857 for the three months ended June 30,
2008. Revenue in the past quarter was below forecast primarily due to
the continuation of the economic crisis and the upheaval in the markets. While
the company was able to attract consumers to its direct marketing efforts in the
past months, there appeared to be a general lack of consumer confidence as we
observed that potential clients at our events were reluctant to spend on
Investor Education during this difficult and unsettled period.
In this
reporting quarter the company also emerged from its concerted effort, which it
began in earnest last December and which it completed in April, to re-structure
and convert all marketing activities, course content and delivery, investor
tools and customer service to an On-Line Business Model. Our business strategy
is now based on GIS’s broad based online capability to effectively execute our
direct marketing as well as our partner campaigns on-line.
Our
revenue model has been transformed from a single point-of-sale event to a
recurring revenue stream via subscriptions. By eliminating both the high cost
event based marketing model and the high logistics costs of supporting live
events, our operating margins are expected to be substantially
higher. This on-line offering reduces the up-front customer cost,
produces higher buyer conversion rates, increases retention rates and further
increases customer value since we give immediate full access to all our products
and services.
Having
completed the conversion to full online capability, we began executing our
online customer campaigns in May and we continue to see positive consumer
response through June. The campaigns are continuing along with new online
webinar initiatives and we look forward to building on what we believe is a
robust online business system.
Cost
of sales:
Cost of
sales for the three month period ended June 30, 2009 was $257,929 (94% of sales)
as compared to $825,014 (89.2% of sales) for the same period last
year. The primary reason for this decrease is the drop on related
revenue volume. Our gross profit was $17,653 as compared to $99,843
for same period last year. The primary reason for this decrease was
due to revenue volume.
Operating
Expenses:
A summary
of significant operating expenses for the three months ended June 30, 2009 and
the three months ended June 30, 2008 follows:
41
|
|
Three Months
|
Three Months
|
||||||||||||||||||||||
|
|
Ended
|
Ended
|
||||||||||||||||||||||
|
|
June 30, 2009
|
June 30, 2008
|
Variance
|
|||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Selling,
general and administrative
|
$
|
1,050,144
|
82
|
%
|
$
|
1,798,277
|
89
|
%
|
$
|
(748,133
|
)
|
(41.6)
|
%
|
|||||||||||
|
Depreciation
and amortization
|
234,535
|
18
|
%
|
234,535
|
11
|
%
|
-
|
-
|
%
|
|||||||||||||||
|
Total
|
$
|
1,284,679
|
100
|
%
|
$
|
2,032,812
|
100
|
%
|
$
|
(748,133
|
)
|
(36.8)
|
%
|
|||||||||||
Our
selling, general and administrative expenses for the three month period ended
June 30, 2009 was $1,050,144 as compared to $1,798,277 for the three months
ended June 30, 2008. The primary reason for this decrease is a result
of reduced operating and overhead costs.
Liquidity
and Capital Resources
As of
June 30, 2009, the Company had a working capital deficit of $2,748,123. The
Company generated a deficit in cash flow from operating activities of $178,124
for the three month period June 30, 2009. This deficit is primarily attributable
to the Company's net loss from operations of $1,503,192 and is partially offset
by following: A charge for the value of options issued for services of $172,299,
recognition of an imbedded beneficial conversion of convertible debentures of
$43,957, stock issued for services of $68,000, amortization of financing costs
of $56,782, amortization and depreciation expense of $234,535, and changes in
the balances of current assets and liabilities. Employee advances, unbilled
revenue and other current assets decreased by $68,761, net. Accounts payable and
accrued liabilities increased by $471,830 and deferred revenue decreased by
$44,079, net.
The
Company did not generate any cash flow from investing activities for the three
months ended June 30, 2009.
The
Company’s generated a cash flow from financing activities for the three month
period ended June 30, 2009 through related party advances of
$156,113.
While we
have raised capital to meet our working capital and financing needs in the past,
additional financing is required in order to meet our current and projected cash
flow deficits from operations and development. We are seeking financing, which
may take the form of debt, convertible debt or equity, in order to provide the
necessary working capital. There can be no assurance that future financings will
be available to us on acceptable terms. If financing is not available to us on
acceptable terms, we may be unable to continue our operations.
We
estimate that during the next twelve months we will need approximately
$2,000,000 in additional capital to fully implement our business plan. Our
business plan encompasses investing behind our business development strategy,
our marketing campaigns and in building our business operations. As of the date
of this filing, we have minimal operating capital to continue our business and
marketing initiatives for the next twelve months. If we are not successful in
generating sufficient cash flow from operations or in raising sufficient capital
resources to finance our growth, on terms acceptable to us, this could have a
material adverse effect on our business, results of operations, liquidity and
financial condition, we will have to adjust our planned operations and
development on a more limited scale and, ultimately, may cease to continue our
business.
42
Critical
Accounting Policies
The
preparation of our financial statements in conformity with accounting principles
generally accepted in the United States requires us to make estimates and
judgments that affect our reported assets, liabilities, revenues, and expenses,
and the disclosure of contingent assets and liabilities. We base our estimates
and judgments on historical experience and on various other assumptions we
believe to be reasonable under the circumstances. Future events, however, may
differ markedly from our current expectations and assumptions. While there are a
number of significant accounting policies affecting our consolidated financial
statements; we believe the following critical accounting policy involves the
most complex, difficult and subjective estimates and
judgments.
Revenue
Recognition
For
revenue from product sales and services, the Company recognizes revenue in
accordance with Staff Accounting Bulletin No. 104, Revenue Recognition
("SAB104"), which superseded Staff Accounting Bulletin No. 101, Revenue Recognition in Financial
Statements ("SAB101"). SAB 101 requires that four basic criteria must be
met before revenue can be recognized: (1) persuasive evidence of an arrangement
exists; (2) delivery has occurred or services have been rendered; (3) the
selling price is fixed and determinable; and (4) collectibility is reasonably
assured. Determination of criteria (3) and (4) are based on management's
judgments regarding the fixed nature of the selling prices of the products
delivered and the collectibility of those amounts. Provisions for discounts and
rebates to customers, estimated returns and allowances, and other adjustments
are provided for in the same period the related sales are recorded. The Company
defers any revenue for which the product has not been delivered or is subject to
refund until such time that the Company and the customer jointly determine that
the product has been delivered or no refund will be required. SAB 104
incorporates Emerging Issues Task Force 00-21 ("EITF 00-21"), Multiple-Deliverable Revenue
Arrangements. EITF 00-21 addresses accounting for arrangements that may
involve the delivery or performance of multiple products, services and/or rights
to use assets. The effect of implementing EITF 00-21 on the Company's financial
position and results of operations was not significant.
Revenue
arises from subscriptions to the websites/software, workshops, online workshops
and training and coaching/counseling services where the payments are received
before the service has been rendered. Beginning January 1, 2009, the
company changed its marketing strategy such that the company no longer collects
revenues in advance of rendering services. Instead, for all new customers,
a monthly subscription fee is received for access to the online training and
courses and website/data during a given month. As all the products and
services are delivered during the month, the revenues are recognized in the
month it is delivered. All revenues collected in prior periods from
the legacy marketing strategy are deferred and recognized as per the existing
revenue recognition policy. Additionally, any revenues from services such as
coaching/counseling that are sold in advance of delivery will be deferred using
the existing revenue recognition policy. Thus we have two distinct revenue
models that were used during FY 2009 and revenue under either model will be
recognized under its appropriate model. The company reserves the option to
operate under either model as the business environment dictates.
We
sell our products separately and in various bundles that contain multiple
deliverables that include website/data subscriptions, educational workshops,
online workshops and training, one-on-one coaching and counseling sessions,
along with other products and services. In accordance with EITF 00-21, sales
arrangements with multiple deliverables are divided into separate units of
accounting if the deliverables in the arrangement meet the following criteria:
(i) the product has value to the customer on a standalone basis; (ii) there is
objective and reliable evidence of the fair value of undelivered items; and
(iii) delivery or performances of any undelivered item is probable and
substantially in our control. The fair value of each separate element is
generally determined by prices charged when sold separately. In certain
arrangements, we offer these products bundled together. If there is any
discount from the combined fair value of the individual elements, the discount
is allocated to the portion of the revenues that is attributed to the online
courses and training. As per EITF 00-21, if fair value of all undelivered
elements in an arrangement exists, but fair value does not exist for a delivered
element, then revenue is recognized using the residual method. Under the
residual method, the fair value of undelivered elements is deferred and the
remaining portion of the arrangement fee (after allocation of 100 percent of any
discount to the delivered item) is recognized as revenue. The deferral
policy for each of the different types of revenues is summarized as
follows:
43
|
Product
|
Recognition
Policy
|
|
|
Live
Workshops and Workshop Certificates
|
Deferred
and recognized as the workshop is provided or certificate
expires
|
|
|
Online
training and courses
|
Deferred
and recognized a.) as the services are delivered, or b.) when usage
thresholds are met, or c.) on a straight-line basis over the initial
product period
|
|
|
Coaching/Counseling
services
|
Deferred
and recognized as services are delivered, or on a straight-line basis over
the initial product period
|
|
|
Website/data
fees (monthly)
|
Not
Deferred, recognized in the month delivered
|
|
|
Website/data
fees (pre-paid subscriptions)
|
Deferred
and recognized on a straight-line basis over the subscription
period
|
As of
June 30, 2009 and March 31, 2009, the Company’s deferred revenue was $63,969 and
$108,048, respectively
Stock-Based
Compensation
On
January 1, 2006 the company adopted Statement of Financial Accounting Standards
No. 123 (revised 2004) "Share-Based Payment" (SFAS
123 (R)) which requires the measurement and recognition of compensation expense
for all share-based payment awards made to employees and directors including
employee stock options and employee stock purchases related to a Employee Stock
Purchase Plan based on the estimated fair values. SFAS 123 (R) supersedes the
company's previous accounting under Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued
to Employees" ("APB 25") for the periods beginning fiscal
2006.
The
company adopted SFAS 123 (R) using the modified prospective transition method,
which required the application of the accounting standard as of January 1, 2006.
The company's Financial Statements as of and for the year ended March 31, 2007
reflects the impact of SFAS 123(R). In accordance with the modified prospective
transition method, the company's Financial Statements for the prior periods have
not been restated to reflect, and do not include the impact of SFAS 123 (R).
Stock based compensation expense recognized under SFAS 123 (R) for the year
ended March 31, 2007 was $1,440,776.
For the
three month periods ended June 30, 2009 and 2008, the Company did not grant
stock options to employees and consultants. The fair value of options granted in
previous years vesting during the three month periods ended June 30, 2009 and
2008 of $157,638 and $206,100 respectively was recorded as a current period
charge to earnings.
Segment
Information
Statement
of Financial Accounting Standards No. 131, “Disclosures about Segments of an
Enterprise and Related Information” (“SFAS 131”) establishes standards for
reporting information regarding operating segments in annual financial
statements and requires selected information for those segments to be presented
in interim financial reports issued to stockholders. SFAS 131 also establishes
standards for related disclosures about products and services and geographic
areas. Operating segments are identified as components of an enterprise about
which separate discrete financial information is available for evaluation by the
chief operating decision maker, or decision-making group, in making decisions
how to allocate resources and assess performance. The information disclosed
herein materially represents all of the financial information related to the
Company’s principal operating segment.
44
Recent
Accounting Pronouncements
In
December 2007, the FASB issued SFAS No. 141(R), "Business Combinations"
("SFAS No. 141(R)"), which establishes principles and requirements for how
an acquirer recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, and any noncontrolling interest in an
acquiree, including the recognition and measurement of goodwill acquired in a
business combination. SFAS No. 141R is effective as of the beginning of the
first fiscal year beginning on or after December 15, 2008. Earlier adoption
is prohibited. The Company did not have a material impact with the adoption of
SFAS No. 141R in 2009 on its consolidated financial position, results of
operations or cash flows.
In
December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interest in
Consolidated Financial Statements, an amendment of ARB No. 51”
(“SFAS No. 160”), which will change the accounting and reporting for
minority interests, which will be recharacterized as noncontrolling interests
and classified as a component of equity within the consolidated balance sheets.
SFAS No. 160 is effective as of the beginning of the first fiscal year beginning
on or after December 15, 2008. Earlier adoption is prohibited. The Company
did not have a material impact with the adoption of SFAS No. 160 in 2009 on its
consolidated financial position, results of operations or cash
flows.
In
December 2007, the FASB ratified the consensus in Emerging Issues Task Force
(EITF) Issue No. 07-1, “Accounting for Collaborative Arrangements”
(EITF 07-1). EITF 07-1 defines collaborative arrangements and requires
collaborators to present the result of activities for which they act as the
principal on a gross basis and report any payments received from (made to) the
other collaborators based on other applicable authoritative accounting
literature, and in the absence of other applicable authoritative literature, on
a reasonable, rational and consistent accounting policy is to be elected.
EITF 07-1 also provides for disclosures regarding the nature and purpose of
the arrangement, the entity’s rights and obligations, the accounting policy for
the arrangement and the income statement classification and amounts arising from
the agreement.
EITF 07-1
will be effective for fiscal years beginning after December 15, 2008, which
will be the Company’s fiscal year 2009, and will be applied as a change in
accounting principle retrospectively for all collaborative arrangements existing
as of the effective date. The Company did not have a material impact with the
adoption of EITF 07-1 in 2009 on its consolidated financial position, results of
operations or cash flows.
In
June 2008, the FASB ratified the consensus on Emerging Issues Task Force
(EITF) Issue 07-5, “Determining whether an Instrument (or Embedded Feature)
is indexed to an Entity’s Own Stock.” This issue addresses whether an instrument
(or an embedded feature) is indexed to an entity’s own stock, which is the first
part of the scope exception in paragraph 11(a) of SFAS No. 133, for
purposes of determining whether the instrument should be classified as an equity
instrument or accounted for as a derivative instrument. The provisions of EITF
Issue No. 07-5 are effective for financial statements issued for fiscal
years beginning after December 15, 2008 and will be applied retrospectively
through a cumulative effect adjustment to retained earnings for outstanding
instruments as of that date. The Company did not have a material impact with the
adoption of EITF Issue 07-5 in 2009 on its consolidated financial position,
results of operations or cash flows.
45
In March
2008, the FASB” issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities - an amendment to FASB Statement No.
133” (“SFAS No. 161”). SFAS No. 161 is
intended to improve financial standards for derivative instruments and hedging
activities by requiring enhanced disclosures to enable investors to better
understand their effects on an entity's financial position, financial
performance, and cash flows. Entities are required to provide
enhanced disclosures about: (a) how and why an entity uses derivative
instruments; (b) how derivative instruments and related hedged items are
accounted for under SFAS No. 133 and its related interpretations; and (c) how
derivative instruments and related hedged items affect an entity’s financial
position, financial performance and cash flows. It is effective for
financial statements issued for fiscal years beginning after November 15, 2008,
with early adoption encouraged. The Company did not have a material
impact with the adoption of SFAS No. 161 in 2009 on its consolidated financial
position, results of operations or cash flows
In April
2008, the FASB issued FSP No. FAS 142-3,“Determination of the Useful Life of
Intangible Assets”. This FSP amends the factors that should be considered
in developing renewal or extension assumptions used to determine the useful life
of a recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible
Assets”. The Company is required to adopt FSP 142-3 on January
1, 2009, earlier adoption is prohibited. The guidance in FSP 142-3
for determining the useful life of a recognized intangible asset shall be
applied prospectively to intangible assets acquired after adoption, and the
disclosure requirements shall be applied prospectively to all intangible assets
recognized as of, and subsequent to, adoption. The Company did not have a
material impact with the adoption of FSP No. FAS 142-3 in 2009 on its
consolidated financial position, results of operations or cash
flows
In May
2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
Accounting Principles" ("SFAS No. 162"). SFAS No.
162 identifies the sources of accounting principles and the framework for
selecting the principles used in the preparation of financial statements of
nongovernmental entities that are presented in conformity with generally
accepted accounting principles (the GAAP hierarchy). SFAS No.
162 will become effective 60 days following the SEC's approval of the
Public Company Accounting Oversight Board amendments to
AU Section 411, "The Meaning of Present Fairly in Conformity With
Generally Accepted Accounting Principles." The Company does not
expect the adoption of SFAS No. 162 to have a material effect on its
consolidated financial position, results of operations or cash
flows.
In May
2008, the FASB issued FSP Accounting Principles Board ("APB") 14-1 "Accounting for Convertible Debt
Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash
Settlement) " ("FSP APB 14-1"). FSP APB 14-1
requires the issuer of certain convertible debt instruments that may be settled
in cash (or other assets) on conversion to separately account for the liability
(debt) and equity (conversion option) components of the instrument in a manner
that reflects the issuer's non-convertible debt borrowing rate. FSP
APB 14-1 is effective for fiscal years beginning after December 15,
2008 on a retroactive basis. The Company did not have a material impact with the
adoption of FSP Accounting Principles Board in 2009 on its consolidated
financial position, results of operations or cash flows
In May
2008, the FASB issued FASB Statement No. 163, “Accounting for Financial
Guarantee Insurance Contracts”, which clarifies how FASB Statement No. 60,
“Accounting and Reporting by Insurance Enterprises”, applies to financial
guarantee insurance contracts issued by insurance enterprises.
The standard is effective for financial statements issued for fiscal
years beginning after December 15, 2008, including interim periods in that year.
The Company did not have a material impact with the adoption of SFAS No. 163 in
2009 on its consolidated financial position, results of operations or cash
flows.
In
June 2008, the FASB issued FSP Emerging Issues Task Force
(EITF) No. 03-6-1, “Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating
Securities.” Under the FSP, unvested share-based payment awards that
contain rights to receive non-forfeitable dividends (whether paid or unpaid) are
participating securities, and should be included in the two-class method of
computing EPS. The FSP is effective for fiscal years beginning after
December 15, 2008, and interim periods within those years. The Company did
not have a material impact with the adoption of EITF No, 03-6-1 in 2009 on its
consolidated financial position, results of operations or cash flows. The
Company does not expect the adoption of FSP EITF No. 03-6-1 to have a
material effect on its consolidated financial position, results of operations or
cash flows.
46
In
October 2008, the FASB issued FSP SFAS No. 157-3, “Determining the
Fair Value of a Financial Asset When the Market for That Asset Is Not Active.”
This position clarifies the application of SFAS No. 157 in a market
that is not active and provides an example to illustrate key considerations in
determining the fair value of a financial asset when the market for that
financial asset is not active. It also reaffirms the notion of fair value as an
exit price as of the measurement date. This position was effective upon
issuance, including prior periods for which financial statements have not been
issued. The adoption had no impact on the Company’s consolidated financial
statements.
In
December 2008, the FASB issued FSP 132(R)-1, Employers’ Disclosures about
Postretirement Benefit Plan Assets, which is effective for fiscal years ending
after December 15, 2009. FSP 132(R)-1 requires disclosures about fair value
measurements of plan assets that would be similar to the disclosures about fair
value measurements required by SFAS 157. . The Company does not
expect the adoption of FSP 132(R)-1 to have a material effect on its
consolidated financial position, results of operations or cash
flows.
In
December 2008, the FASB issued FSP SFAS 140-4 and FIN 46(R)-8,
Disclosures about Transfers of Financial Assets and Interests in Variable
Interest Entities. The FSP requires extensive additional disclosure by public
entities with continuing involvement in transfers of financial assets to
special-purpose entities and with variable interest entities (VIEs), including
sponsors that have a variable interest in a VIE. This FSP became effective for
the first reporting period ending after December 15, 2008 and did not have
any material impact on the Company's consolidated financial
statements.
In
January 2009, the FASB issued Financial Statement of Position (“FSP”) Issue
No. EITF 99-20-1, “Amendments to the Impairment Guidance of EITF Issue
No. 99-20” (“FSP EITF No. 99-20-1”). FSP EITF No. 99-20-1 amends
the impairment guidance in EITF Issue No. 99-20, “Recognition of Interest
Income and Impairment on Purchased Beneficial Interests and Beneficial Interests
that Continue to be Held by a Transferor in Securitized Financial Assets” to
achieve more consistent determination of whether an other-than-temporary
impairment has occurred. The Company adopted FSP EITF No. 99-20-1 and it
did not have a material impact on the consolidated financial
statements.
In April
2009, the FASB issued FSP FAS 157-4, Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly , provides
guidelines for making fair value measurements more consistent with the
principles presented in FASB Statement No. 157 (“SFAS 157”), Fair Value Measurements .
FSP FAS 157-4 reaffirms what SFAS 157 states is the objective of fair value
measurement, to reflect how much an asset would be sold for in an orderly
transaction at the date of the financial statements under current market
conditions. Specifically, it reaffirms the need to use judgment to ascertain if
a formerly active market has become inactive and in determining fair values when
markets have become inactive. The Company does not expect this pronouncement to
have a material impact on its consolidated results of operations, financial
position, or cash flows.
In April
2009, the FASB issued FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair
Value of Financial Instruments, enhances consistency in financial
reporting by increasing the frequency of fair value disclosures. This relates to
fair value disclosures for any financial instruments that are not currently
reflected on the consolidated balance sheet at fair value. FSP FAS 107-1 and APB
28-1 now require that fair value disclosures be made on a quarterly basis,
providing qualitative and quantitative information about fair value estimates
for all those financial instruments not measured on the balance sheet at fair
value. The Company does not expect this pronouncement to have a material impact
on its consolidated results of operations, financial position, or cash
flows.
47
In April
2009, the FASB issued FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of
Other-Than-Temporary Impairments, provides additional guidance designed
to create greater clarity and consistency in accounting for and presenting
impairment losses on securities. This FSP is intended to bring greater
consistency to the timing of impairment recognition and to provide greater
clarity to investors about the credit and noncredit components of impaired debt
securities that are not expected to be sold. This FSP also requires increased
and timelier disclosures sought by investors regarding expected cash flows,
credit losses, and an aging of securities with unrealized losses. The Company
does not expect this pronouncement to have a material impact on its consolidated
results of operations, financial position, or cash flows.
In May
2009, the FASB issued SFAS No. 165, Subsequent Events (“SFAS
No. 165”). SFAS No. 165 establishes general standards of accounting
for and disclosure of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. It requires the
disclosure of the date through which an entity has evaluated subsequent events
and the basis for that date, that is, whether that date represents the date the
financial statements were issued or were available to be issued. SFAS
No. 165 is effective for interim or annual financial periods ending after
June 15, 2009. The Company did not have a material impact with the adoption
of SFAS No. 165 in 2009 on its consolidated financial position, results of
operations or cash flows.
In
June 2009 the FASB issued SFAS 166, “Accounting for Transfers of financial
Assets — an amendment of FASB Statement No. 140” (SFAS 166). SFAS 166
eliminates the concept of a qualifying special-purpose entity, creates more
stringent conditions for reporting a transfer of a portion of a financial asset
as a sale, clarifies other sale-accounting criteria, and changes the initial
measurement of a transferor’s interest in transferred financial assets. SFAS No.
166 is applicable for annual periods after November 15, 2009 and interim periods
therein and thereafter. The Company does not expect this pronouncement to have a
material impact on its consolidated results of operations, financial position,
or cash flows.
In
June 2009 the FASB issued SFAS 167, “Amendments to FASB Interpretation
No. 46(R)” (SFAS 167). SFAS 167 eliminates Interpretation 46(R)’s
exceptions to consolidating qualifying special-purpose entities, contains new
criteria for determining the primary beneficiary, and increases the frequency of
required reassessments to determine whether a company is the primary beneficiary
of a variable interest entity. SFAS 167 also contains a new requirement that any
term, transaction, or arrangement that does not have a substantive effect on an
entity’s status as a variable interest entity, a company’s power over a variable
interest entity, or a company’s obligation to absorb losses or its right to
receive benefits of an entity must be disregarded in applying Interpretation
46(R)’s provisions. SFAS No. 167 is applicable for annual periods after November
15, 2009 and interim periods thereafter. The Company does not expect this
pronouncement to have a material impact on its consolidated results of
operations, financial position, or cash flows.
Off-Balance
Sheet Arrangements
The
Company does not have any off balance sheet arrangements that are reasonably
likely to have a current or future effect on our financial condition, revenues,
results of operations, liquidity or capital expenditures.
ITEM
3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
We are a
smaller reporting company as defined by Rule 12b-2 of the Securities Exchange
Act of 1934 and, as such, are not required to provide the information under this
item.
48
ITEM
4T – CONTROLS AND PROCEDURES
Disclosure
Control and Procedures
We
maintain “disclosure controls and procedures,” as such term is defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act ”), that are
designed to ensure that information required to be disclosed by us in reports that we
file or submit under the Exchange Act is recorded, processed, summarized, and
reported,
within the time periods specified in Securities
and Exchange Commission rules and forms, and that such information is
accumulated and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure. In designing and evaluating our disclosure
controls and procedures, management recognized that disclosure controls and
procedures, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the disclosure
controls and procedures are met. Additionally, in designing disclosure controls
and procedures, our management necessarily was required to apply its judgment in
evaluating the cost-benefit relationship of possible disclosure controls and
procedures. The design of any disclosure controls and procedures also is based
in part upon certain assumptions about the likelihood of future events, and
there can be no assurance that any design will succeed in achieving its stated
goals under all potential future conditions.
As of
June 30, 2009, we carried out an evaluation, under the supervision and with the
participation of our Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures. Based on this evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls and procedures were
effective in ensuring that information required to be disclosed by
us in our periodic reports is recorded, processed, summarized and reported,
within the time periods specified for each report and that such information is
accumulated and communicated to our management, including our principal
executive and principal financial officers, or persons performing similar
functions, as appropriate to allow timely decisions regarding required
disclosure.
Changed
in Internal Control Over Financial Reporting
There has
been no change in our internal control over financial reporting that occurred
during our last fiscal quarter that has materially affected, or is reasonably
likely to material affect, our internal control over financial
reporting.
PART
II – OTHER INFORMATION
ITEM
1 – LEGAL PROCEEDINGS
On
July 16, 2009, a petition for judgment was filed with the Civil Court of the
City of New York naming the Company as a defendant relating to property leased
by the Company from the defendant for recovery of past due rent payments,
interest and legal costs totally $82,732. As of June 30, 2009, the
Company has accrued their obligation under the lease.
ITEM
1A – Risk Factors.
We are a
smaller reporting company as defined by Rule 12b-2 of the Securities Exchange
Act of 1934 and, as such, are not required to provide the information under this
item.
ITEM
2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
In April
2009, the Company issued an aggregate of 400,000 shares of its common stock for
services rendered.
In April
2009, the Company issued an aggregate of 1,600,000 shares of its common stock in
exchange for outstanding accounts payable.
In May
2009, the Company issued an aggregate of 1,100,000 shares of its common stock
for services rendered.
In July
2009, the Company issued an aggregate of 4,425,000 shares of its common stock in
connection with previously issued convertible debentures and related accrued
interest.
In July
2009, the Company issued 400,000 shares of its common stock for services
rendered.
On July
31, 2009, the Company entered into a securities purchase agreement (the “July
2009 Agreement”) with accredited investors (the “July 2009 Investors”) pursuant
to which the July 2009 Investors purchased an aggregate principal amount of
$850,000 of 8% Convertible Promissory Notes for an aggregate purchase price of
$850,000 (the “July 2009 Notes”). In addition, for every $1.00 in
July 2009 Notes purchased, the July 2009 Investors received a common stock
purchase warrant to acquire approximately sixteen and two thirds (16 2/3) shares
of common stock (the “July 2009 Warrants”) resulting in the issuance of July
2009 Warrant to purchase an aggregate of 14,166,677 shares of common stock of
the Company.
The July
2009 Notes are convertible at the option of the holder at any time into shares
of common stock at a conversion price equal to $0.03 per share. The
conversion price of the July 2009 Notes is subject to weighted average
anti-dilution adjustment for subsequent lower price issuances by the Company, as
well as customary adjustments provisions for stock splits, stock dividends,
recapitalizations and the like. The full principal amount of
the July 2009 Notes is due upon a default under the terms of the July 2009
Notes. The July 2009 Notes is secured by all of the assets of the Company,
including, but not limited to, the list of the Company’s subscribers, contracts
with the subscribers and all intellectual property and source
codes. The July 2009 Notes bear interest at 8% and mature three
years from the date of issuance. The Company may pay interest in cash or shares
of common stock of the Company, at the option of the holder. If the
Company pays interest in shares of common stock, then the amount of
shares to be delivered shall be equal to the dollar amount of the interest owed
divided by the average closing price for the Company’s common stock during the
30 calendar days immediately prior to the interest due date of the July 2009
Notes.
The July
2009 Warrants are exercisable for a period of five years from the date of
issuance at a price of $0.05 per share. In the event that the
Company’s volume weighted average price is greater than $0.25 for a period of 30
consecutive days, then the Company, within 30 days of such event occurring, may
send notice to the July 2009 Investors advising that the warrants must be
exercised within 30 days of such notice. The July 2009 Warrants are
subject to weighted average anti-dilution adjustment for subsequent issuances by
the Company at a price less than the conversion price of the July 2009 Notes, as
well as customary adjustments provisions for stock splits, stock dividends,
recapitalizations and the like.
In August
2009, the Company issued 400,000 shares of its common stock for services
rendered.
49
ITEM
3 – DEFAULTS UPON SENIOR SECURITIES
In May
2007, the Company received $50,000 in exchange for a Convertible Debenture
(Debenture) that matured on August 31, 2007. The Debenture bears an interest
rate of 12% and is convertible into the Company's common stock at the greater of
$0.25 per share or 67.5% of the average 10 previous trade days prior to
conversion. This note was intended to be a short term note with repayment upon
the raising of additional capital in a private offering with American Capital
Partners as the placement agent. This subsequent financing was not
adequate to repay this note as promised, and the company since has not had
sufficient liquidity to repay this note. To date the noteholder has
taken no legal action and has been collecting the default rate of
interest (18% per annum) in restricted common stock. It is the intention
of the Company to repay this note as soon as it is able from excess
cash flow or additional financing.
In May
2007, the Company received $50,000 in exchange for a Convertible Debenture
(Debenture) that matured on August 31, 2007. The Debenture bears an interest
rate of 12% and is convertible into the Company's common stock at the greater of
$0.25 per share or 67.5% of the average 10 previous trade days prior to
conversion. This note was intended to be a short term note with repayment upon
the raising of additional capital in a private offering with American Capital
Partners as the placement agent. This subsequent financing was not
adequate to repay this note as promised, and the company since has not had
sufficient liquidity to repay this note. To date the noteholder has
taken no legal action and has been collecting the default rate of
interest (18% per annum) in restricted common stock. It is the intention
of the Company to repay this note as soon as it is able from excess
cash flow or additional financing.
In May
2007, the Company received $100,000 in exchange for a Convertible Debenture
(Debenture) that originally matured on August 31, 2007. The Company reached a
settlement to issue common stock by no later than December 8, 2008 at the
average price back 90 days. Subsequent to the conversion, the Company agreed to
issue additional shares should the average price per share be lower in the
subsequent 90 days. This note was intended to be a short term note with
repayment upon the raising of additional capital in a private offering with
American Capital Partners as the placement agent. This subsequent
financing was not adequate to repay this note as promised, and the company since
has not had sufficient liquidity to repay this note. To date the
noteholder has taken no legal action and has been collecting the
default rate of interest (18% per annum) in restricted common stock. It is the
intention of the Company to repay this note as soon as it is able
from excess cash flow or additional financing.
ITEM
4 – SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM
5 – OTHER INFORMATION
None
ITEM
6 – EXHIBITS
|
Number
|
Description
|
|
|
31.1
|
Certification
of Principal Executive Officer pursuant to 13a-14(a) under the Securities
Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
|
31.2
|
Certification
of Principal Financial Officer pursuant to 13a-14(a) under the Securities
Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
|
32.1
|
Certification
of the Principal Executive Officer pursuant to 18 U.S.C Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
|
|
32.2
|
Certification
of the Principal Financial Officer pursuant to 18 U.S.C Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
50
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
|
GLOBAL
INVESTOR SERVICES, INC.
|
||
|
Dated:
August 14, 2009
|
By:
|
/s/
Nicholas S. Maturo
|
|
Nicholas
S. Maturo
|
||
|
Chief
Executive Officer
|
||
|
(Principal
Executive Officer)
|
||
|
Date:
August 14, 2009
|
By:
|
/s/
William Kosoff
|
|
William
Kosoff
|
||
|
President
and Chief Financial Officer
|
||
|
(Principal
Financial Officer)
|
||
51