Delaware | 0001-22563 | 65-0949535 | ||
(State or other jurisdiction of incorporation or organization) |
Commission File Number | (I.R.S. Employer Identification No.) |
o Large accelerated filer
|
o Accelerated filer | |
o Non-accelerated filer
|
x Smaller reporting company |
June 30, | December 31, | |||||||
2009 | 2008 | |||||||
Assets: |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 19,319 | $ | 19,698 | ||||
Total assets |
$ | 19.319 | $ | 19,698 | ||||
Liabilities and Stockholders (Deficiency) Equity: |
||||||||
Current liabilities: |
||||||||
Accounts payable and accrued expenses |
$ | 6,927 | $ | 11,650 | ||||
Total current liabilities |
6,927 | 11,650 | ||||||
Revolving credit promissory note |
20,000 | | ||||||
Commitments and contingencies |
| | ||||||
Stockholders (deficiency) equity: |
||||||||
Preferred stock, $.01 par value. Authorized 5,000,000
shares; no shares issued and outstanding |
| | ||||||
Common stock, $.01 par value. Authorized 25,000,000
shares; 3,120,000 shares issued and outstanding |
31,200 | 31,200 | ||||||
Additional paid-in capital |
8,209,944 | 8,209,944 | ||||||
Accumulated deficit |
(8,248,752 | ) | (8,233,096 | ) | ||||
Accumulated other comprehensive income |
| | ||||||
Total stockholders (deficiency) equity |
(7,608 | ) | 8,048 | |||||
Total liabilities and stockholders (deficiency) equity |
$ | 19,319 | $ | 19,698 | ||||
2
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | June 30, | June 30, | |||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Revenues |
$ | | $ | | $ | | $ | | ||||||||
Cost and expenses: |
||||||||||||||||
General and administrative |
8,773 | 7,805 | 15,380 | 19,915 | ||||||||||||
8,773 | 7,805 | 15,380 | 19,915 | |||||||||||||
Operating loss |
(8,773 | ) | (7,805 | ) | (15,380 | ) | (19,915 | ) | ||||||||
Other income (expense): |
||||||||||||||||
Interest income |
| 105 | 1 | 364 | ||||||||||||
Interest expense |
(277 | ) | | (277 | ) | | ||||||||||
Total other (expense) income |
(277 | ) | 105 | (276 | ) | 364 | ||||||||||
Net loss |
$ | (9,050 | ) | $ | (7,700 | ) | $ | (15,656 | ) | $ | (19,551 | ) | ||||
Net loss per share (basic and diluted) |
$ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.01 | ) | ||||
Shares used in computing net loss per share |
3,120,000 | 3,120,000 | 3,120,000 | 3,120,000 | ||||||||||||
3
Six Months Ended | ||||||||
June 30, | June 30, | |||||||
2009 | 2008 | |||||||
Cash flows from operating activities: |
||||||||
Net loss |
$ | (15,656 | ) | $ | (19,551 | ) | ||
Changes in assets and liabilities: |
||||||||
Decrease in accounts payable and accrued expenses |
(4,723 | ) | (1,399 | ) | ||||
Net cash used in operating activities |
(20,379 | ) | (20,950 | ) | ||||
Net cash provided by investing activities |
| | ||||||
Net cash flows provided by financing activities: |
||||||||
Borrowings under revolving credit promissory note |
20,000 | | ||||||
Net provided by financing activities |
20,000 | | ||||||
Net decrease in cash and cash equivalents |
(379 | ) | (20,950 | ) | ||||
Cash and cash equivalents at beginning of period |
19,698 | 50,288 | ||||||
Cash and cash equivalents at end of period |
$ | 19,319 | $ | 29,338 | ||||
4
(1) | Business and Organization | |
CDSI Holdings Inc. (the Company or CDSI) was incorporated in Delaware on December 29, 1993 and is a shell company as defined in Rule 12b-2 of the Securities Exchange Act of 1934. On January 12, 1999, the Companys stockholders voted to change the corporate name of the Company from PC411, Inc. to CDSI Holdings Inc. Prior to May 1998, the Companys principal business was an on-line electronic delivery information service that transmits name, address, telephone number and other related information digitally to users of personal computers (the PC411 Service). In May 1998, the Company acquired Controlled Distribution Systems, Inc. (CDS), a company engaged in the marketing and leasing of an inventory control system for tobacco products. In February 2000, CDSI announced CDS will no longer actively engage in the business of marketing and leasing the inventory control system. In November 2003, the Company and its wholly-owned subsidiary CDS merged with the Company as the surviving corporation. | ||
At June 30, 2009, the Company had an accumulated deficit of approximately $8,248,752. The Company has reported an operating loss in each of its fiscal quarters since inception and it expects to continue to incur operating losses in the immediate future. The Company has reduced operating expenses and is seeking acquisition and investment opportunities. There is a risk the Company will continue to incur operating losses. | ||
CDSI intends to seek new business opportunities. As CDSI has only limited cash resources, CDSIs ability to complete any acquisition or investment opportunities it may identify will depend on its ability to raise additional financing, as to which there can be no assurance. There can be no assurance that the Company will successfully identify, complete or integrate any future acquisition or investment, or that acquisitions or investments, if completed, will contribute favorably to its operations and future financial condition. | ||
(2) | Principles of Reporting | |
The condensed financial statements of the Company as of June 30, 2009 presented herein have been prepared by the Company and are unaudited. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position as of June 30, 2009 and the results of operations and cash flows for all periods presented have been made. Results for the interim periods are not necessarily indicative of the results for the entire year. | ||
These condensed financial statements should be read in conjunction with the audited financial
statements and notes thereto for the year ended December 31, 2008 included in the Companys
Form 10-K, filed with the Securities and Exchange Commission (Commission File No. 0001-22563). |
5
Use of Estimates | ||
The preparation of the condensed 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 condensed financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. | ||
Subsequent Events | ||
The Company has evaluated events that occurred subsequent to June 30, 2009, through the financial statement issue date of August 14, 2009, and determined that there were no recordable or reportable subsequent events. | ||
(3) | Related Party Transactions | |
Certain accounting and related finance functions are performed on behalf of the Company by employees of the parent of the Companys principal stockholder, Vector Group Ltd. (Vector). Expenses incurred relating to these functions are allocated to the Company and paid as incurred to Vector based on managements best estimate of the cost involved. The amounts allocated were immaterial for all periods presented herein. | ||
On March 26, 2009, the Company and Vector entered into a $50,000 Revolving Credit Promissory Note (the Revolver) due December 31, 2012. The loan bears interest at 11% per annum and is due on December 31, 2012. There was a balance of $20,000 outstanding under the Revolver at June 30, 2009 and August 14, 2009. | ||
(4) | Net Loss Per Share | |
Basic loss per share of common stock is computed by dividing net loss applicable to common stockholders by the weighted average shares of common stock outstanding during the period (3,120,000 shares). Diluted per share results reflect the potential dilution from the exercise or conversion of securities into common stock. | ||
Stock options and warrants (both vested and non-vested) totaling 18,000 shares for the three and six months ended June 30, 2008 and 9,000 shares for the six months ended June 30, 2009 were excluded from the calculation of diluted per share results presented because their effect was anti-dilutive. All remaining stock options and warrants (both vested and non-vested) expired in January 2009. Accordingly, diluted net loss per common share is the same as basic net loss per common share. |
6
(5) | Investments and Fair Value Measurements | |
As of January 1, 2009, SFAS No. 157, Fair Value Measurements, applies to both the Companys financial assets and liabilities and non-financial assets and liabilities. SFAS No. 157 provides guidance for using fair value to measure assets and liabilities and only applies when other standards require or permit the fair value measurement of assets and liabilities. SFAS No. 157 does not require any new fair value measurements but rather introduces a framework for measuring fair value and expands required disclosure about fair value measurements of assets and liabilities. | ||
SFAS No. 157 discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The statement clarifies that fair value is an exit price, representing amounts that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. | ||
SFAS No. 157 utilizes a three-tier fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels: |
Level 1 | Observable inputs such as quoted prices (unadjusted) in active
markets for identical assets or liabilities. |
|
Level 2 | Inputs other than quoted prices that are observable for the assets
or liability, either directory or indirectly. These include
quoted prices for similar assets or liabilities in active markets
and quoted prices for identical or similar assets or liabilities
in markets that are not active. |
|
Level 3 | Unobservable inputs in which there is little market data, which
requires the reporting entity to develop their own assumptions |
This hierarchy requires the use of observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. | ||
The Company did not have any fair value measurements for its non-financial assets and liabilities during the first quarter. | ||
The Companys population of recurring financial assets and liabilities subject to fair value measurements and the necessary disclosures consists of approximately $7,095 and $19,394 of cash invested in a money market fund as of June 30, 2009 and December 31, 2008, respectively. The fair value determination of the money market fund is a Level I asset under the SFAS 157 hierarchy. The money market fund is invested in Treasury Funds with quoted prices in active markets. |
7
(6) | Comprehensive Loss | |
Comprehensive loss applicable to Common Shares for the three months ended June 30, 2009 and 2008 was $9,050 and $7,700, respectively. Comprehensive loss applicable to Common Shares for the six months ended June 30, 2009 and 2008 was $15,656 and $19,551, respectively. | ||
(7) | Contingencies | |
As of June 30, 2009, the Company was not authorized to transact business in any state other than Delaware, which is its state of incorporation. The Company received an inquiry from the Florida Department of State (the FDS) inquiring whether the Company should have registered with the FDS in previous years, beginning in 1998. In March 2006, the Company responded to the inquiry and stated it believes its activities in previous years did not meet the requirements for such registration; however, no assurance can be provided that the Companys position will be accepted by the FDS. The Company is unable to quantify the amount of any registration fees and other costs attributable to any failure to register and has not accrued any amounts in its condensed financial statements related to such inquiry. |
8
9
10
11
12
No securities of ours which were not registered under the Securities Act of 1933 have been issued or sold by us during the three months ended June 30, 2009. |
No securities of ours were repurchased by us or our affiliated purchasers during the three months ended June 30, 2009. |
31.1 | Certification of Chief Executive Officer, Pursuant to Exchange Act Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
31.2 | Certification of Chief Financial Officer, Pursuant to Exchange Act Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
32.1 | Certification of Chief 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 Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
13
CDSI HOLDINGS INC. (Registrant) |
||||
Date: August 14, 2009 | By: | /s/ J. Bryant Kirkland III | ||
J. Bryant Kirkland III | ||||
Vice President, Treasurer
and Chief Financial Officer (Duly Authorized Officer and Chief Accounting Officer) |
||||
14