ITEM 1. BUSINESS
We are currently not conducting any business and have had no operating revenues since the sale of our wholly owned subsidiary.
Completion of Acquisition or Disposition of Assets
Prior to October 2, 2006, Proguard Acquisition, through our wholly owned subsidiary, Proguard Protection Services, Inc. provided professional protection to clients through installation and monitoring of fire, intrusion and environmental security systems. Proguard Acquisition was incorporated in Florida in June 2004.
Proguard Protection was incorporated in Colorado on May 24, 2000. On July 1, 2004, the shareholders of Proguard Protection cancelled their 1,000,000 shares of outstanding Proguard Protection no par value common stock and received 395,000 shares of Proguard Acquisition's restricted $0.001 par value common stock. Proguard Acquisition acquired 100 shares of the no par value common stock of Proguard Protection for $100 on July 1, 2004 pursuant to an oral agreement. Effective July 1, 2004, Proguard Protection became a wholly owned subsidiary of Proguard Acquisition. Prior to July 1, 2004, Proguard Protection provided professional protection to clients through installation and monitoring of fire, intrusion and environmental security systems and continues to pursue the same business since its acquisition by Proguard Acquisition.
On October 2, 2006, we entered into a Common Stock Purchase and Sale Agreement with Corrections Systems International, Inc., a privately held Florida corporation in which CSII agreed to purchase and Proguard Acquisition agreed to sell all of the issued and outstanding common stock of its wholly-owned subsidiary, Proguard Protection Services, Inc. The purchase and sale transaction was completed on October 4, 2006 with the sale, transfer and conveyance of all of the issued and outstanding PPSI capital stock to CSII in exchange for cash in the amount of $250,000. With completion of the purchase and sale transaction, Proguard Acquisition terminated its material operations in exchange for the cash purchase price.
The Purchaser in this disposition of assets transaction, is related to Proguard Acquisition in that Proguard Acquisition's President and Director, Mr. Frank Bauer, is also a Vice President and Director of the Purchaser, CSII. In addition, Mr. Norman Becker is the President of CSII, a member of CSII's Board of Directors and is also a Vice President and Director of Proguard Acquisition. Neither Mr. Becker nor Mr. Bauer received any direct or indirect remuneration or compensation in Proguard Acquisition's disposition of its wholly-owned subsidiary, PPSI, through purchase and sale of all of its capital stock to CSII.
In addition to the cross-relationship of the officers and directors, Messrs. Becker and Bauer, to Proguard Acquisition and the Purchaser in this transaction, the Purchaser, CSII, has been a long-term loan creditor of the purchased subsidiary, holding, prior to the purchase and sale transaction, an interest-only loan obligation of PPSI in the
unpaid principal amount of $100,000. At completion of the subsidiary purchase and sale transaction, the loan obligation of PPSI to the Purchaser, CSII, was current. Following closing of the transaction on October 4, 2006, the subsidiary's loan obligation to the Purchaser, CSII, was extinguished upon consolidation of CSII's financial accounting.
In determining the purchase price of the subsidiary, PPSI, to be paid by CSII and to be received by Proguard Acquisition, their respective managements considered the original purchase price paid by Proguard Acquisition to acquire PPSI in July of 2004, $100; the book value of the subsidiary at the time of the transaction; the outstanding unpaid principal loan amount owed by the subsidiary to the Purchaser and the circumstance that the unpaid loan obligation would be extinguished with completion of the purchase and sale transaction. Following consideration of all of those factors, the parties agreed to disposition, sale and purchase of the subsidiary for a purchase price amounting to book value plus an additional sum of approximately $100,000. Proguard Acquisition was informed that the source of funds used by the Purchaser, CSII, to acquire Proguard Acquisition's subsidiary was the Purchaser's working capital. No part of the consideration used was borrowed from a bank or otherwise.
Employees - --------- We presently have no full-time employees and no part-time employees.
ITEM 1A.
ITEM 1A. RISK FACTORS
Not applicable
ITEM 1B.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable
ITEM 2.
ITEM 2. PROPERTIES.
Our executive offices located at 2501 E. Commercial Boulevard, Suite 207, Fort Lauderdale, FL 33308 consist of 900 square feet and are verbally leased from Financial Communications, Inc., an affiliated entity, at the rate of $1,750 per month on a month-to-month basis.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS.
Proguard Acquisition management is aware of no pending or threatened litigation. During the fourth quarter of the fiscal year ended December 31, 2009, Proguard Acquisition was not a party to any legal proceedings.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
During the fourth quarter of the fiscal year ended December 31, 2009, no matters were submitted to a vote of Proguard Acquisition's security holders, through the solicitation of proxies.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
	Item 5(a)	Market Information
a) Market Information. The registrant's common shares are listed on the NASD Over the Counter Bulletin Board under the symbol PGRD. As of December 31, 2009, there was only a limited market for registrant's common shares.
The following table sets forth the range of high and low bid quotations for the registrant's common stock. The quotations represent inter- dealer prices without retail markup, markdown or commission, and may not necessarily represent actual transactions.
Quarter Ended High Bid Low Bid 3/31/08 .95 .25 6/30/08 .95 .50 9/30/08 .72 .26 12/31/08 .90 .25 3/31/09 .25 .40 6/30/09 .20 .35 9/30/09 .25 .40 12/31/09 .18 .35
b) Holders. At February 28, 2010, there were approximately 90 shareholders and ten warrant holders of the registrant.
c) Dividends. Holders of the registrant's common stock are entitled to receive such dividends as may be declared by its board of directors. No dividends on the registrant's common stock have ever been paid, and the registrant does not anticipate that dividends will be paid on its common stock in the foreseeable future.
d) Securities authorized for issuance under equity compensation plans. No securities are authorized for issuance by the registrant under equity compensation plans.
e) Performance graph. Not applicable.
f) Sale of unregistered securities. None.
Item 5(b) Use of Proceeds. Not applicable.
Item 5(c) Purchases of Equity Securities by the issuer and affiliated purchasers.
Not applicable
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Effective July 1, 2004, Proguard Protection became a wholly owned subsidiary of Proguard Acquisition. The outstanding shares of Proguard Protection, no par value common stock were canceled and Proguard Acquisition acquired 100 shares of the no par value common stock of Proguard Protection for $100 on July 1, 2004.
On October 2, 2006, we entered into a Common Stock Purchase and Sale Agreement with Corrections Systems International, Inc., a privately held Florida corporation in which CSII agreed to purchase and Proguard Acquisition agreed to sell all of the issued and outstanding common stock of its wholly-owned subsidiary, Proguard Protection Services, Inc. The purchase and sale transaction was completed on October 4, 2006 with the sale, transfer and conveyance of all of the issued and outstanding PPSI capital stock to CSII in exchange for cash in the amount of $250,000. With completion of the purchase and sale transaction, Proguard Acquisition terminated its material operations in exchange for the cash purchase price.
Trends and Uncertainties. We are no longer conducting any material operations since the sale of our wholly owned subsidiary on October 4, 2006. We have not yet determined what operations, if any, we intend to pursue.
Financing Activities. For the year ended December 31, 2009 and 2008, Proguard Acquisition received proceeds from sales of common stock of $7,500 and received net proceeds of $8,000 from affiliates, respectively.
Investing Activities. For the year ended December 31, 2009 and 2008, Proguard Acquisition did not pursue any investing activities.
Results of Operations. For the years ended December 31, 2009 and 2008, we did not receive any revenues from continuing operations. We earned interest income of $5,350 for the year ended December 31, 2009 compared to $13,141 for the year ended December 31, 2008.
For the year ended December 31, 2009, we had a loss from continuing operations of $(225,168) compared to ($85,284) for the year ended December 31, 2008.
General and administrative expenses for the year ended December 31, 2009 were $230,518 compared to $98,425 for the prior year. These expenses principally consisted of professional and consulting fees, and office expense. The increase in general and administrative expenses was largely due to a bad debt.
As a result, we incurred a net loss of $(225,158) for the year ended December 31, 2009 compared to net loss of $(85,284) for the year ended December 31, 2008.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
PROGUARD ACQUISITION CORP.
Page ----------
Report of Independent Registered Public Accounting Firm 10
Balance Sheets at December 31, 2009 and 2008 11
Statements of Operations for the years ended December 31, 2009 and 2008 12
Statement of Changes in Stockholders' Equity for the years ended December 31, 2009 and 2008 13
Statements of Cash Flows for the years ended December 31, 2009 and 2008 14
Notes to Financial Statements 15
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders Proguard Acquisition Corp. Ft. Lauderdale, Florida
We have audited the balance sheets of Proguard Acquisition Corp. as of December 31, 2009 and 2008, and the accompanying related statements of operations, changes in stockholders' equity and cash flows for the years ended December 31, 2009 and 2008. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Proguard Acquisition Corp. as of December 31, 2009 and 2008 and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has an accumulated deficit as of December 31, 2009 and no source of revenue, which raises substantial doubt about its ability to continue as a going concern. Management's plans concerning these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Sherb & Co., LLP March 12, 2010 Certified Public Accountants Boca Raton, Florida
PROGUARD ACQUISITION CORP. Balance Sheets
ASSETS December 31, December 31, 2009 2008 ----------- ----------- Current assets: Cash $ 31,852 $ 124,156 Due from affiliates 6,189 120,540 --------- --------- Total current assets $ 38,041 $ 244,696 ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable $ 2,363 $ 3,350 --------- --------- Stockholders' equity: Preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued or outstanding - - Common stock, $0.001 par value, 50,000,000 shares authorized, 3,300,000 shares issued and outstanding in 2009 and 3,000,000 shares issued and outstanding in 2008 3,300 3,000 Additional paid-in capital 720,847 701,647 Accumulated deficit (688,469) (463,301) --------- --------- 35,678 241,346 --------- --------- Total liabilities and stockholders' equity $ 38,041 $ 244,696 ========= =========
See accompanying notes to the financial statements.
PROGUARD ACQUISITION CORP. STATEMENTS OF OPERATIONS
For the years ended December 31, 2009 2008 ---------- ---------- Interest Income $ 5,350 $ 13,141 ---------- ---------- General and administrative expenses (230,518) (98,425) ---------- ---------- NET (LOSS) $ (225,168) $ (85,284) ========== ========== Net (loss) per common share: Basic and diluted (loss) per common share $ (.07) $ (.03) ========== ========== Weighted average number of common shares and common equivalent shares Basic 3,163,562 3,000,000 ========== ========== Diluted 3,163,562 3,000,000 ========== ==========
See accompanying notes to the financial statements.
PROGUARD ACQUISITION CORP. STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2009 and 2008
See accompanying notes to the financial statements.
PROGUARD ACQUISITION CORP. STATEMENTS OF CASH FLOWS
For the years ended December 31, 2009 2008 ------ ------ Cash flows from operating activities: Net (loss) $ (225,168) $ (85,284) ---------- ---------- Adjustments to reconcile net (loss) to net cash (used in) operating activities: Stock based compensation 12,000 - Elimination of notes receivable 100,000 - Accrued interest due from affiliates 14,351 (8,066) Increase (decrease) in accounts payable (987) 1,100 ---------- ---------- Total adjustments to net (loss) 125,364 (6,966) ---------- ---------- Net cash (used in) operating activities (99,804) (92,250) ---------- ---------- Cash flows from investing activities - - ---------- ---------- Cash flows from financing activities: Issuance of common stock, net 7,500 - Advances to affiliates - (4,000) Repaid by affiliates - 12,000 ----------- ---------- Net cash provided by financing activities 7,500 8,000 ---------- ---------- Net (decrease) in cash (92,304) (84,250)
Cash, beginning of year 124,156 208,406 ---------- ---------- Cash, end of year $ 31,852 $ 124,156 ========== ==========
Supplemental cash flow information: Cash paid for interest $ - $ - ========== ========== Cash paid for income taxes $ - $ - ========== ==========
See accompanying notes to the financial statements.
PROGUARD ACQUISITION CORP. NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Nature of Operations.
The accompanying financial statements present the accounts of Proguard Acquisition Corp. (the Company), formed in Florida in June 2004.
Cash and Cash Equivalents.
The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.
Net Income (Loss) Per Common Share.
Basic earnings per share are calculated by dividing income available to stockholders by the weighted-average number of common shares outstanding during each period. Diluted earnings per share are computed using the weighted average number of common and dilutive common share equivalents outstanding during the period. Dilutive common share equivalents consist of shares issuable upon conversion of preferred shares, exercise of stock options and warrants (calculated using the reverse treasury stock method). The dilutive common shares equivalents, including convertible notes, preferred stock and warrants, are not included in the computation of diluted earnings per share, because the inclusion would be anti-dilutive.
For the net-loss period ended December 31, 2008, we excluded any effect of the 289,250 warrants as their effect would be anti-dilutive. As of December 31, 2009, the warrants have expired.
Income Taxes.
Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax asset and liabilities for the expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns. In estimating future tax consequences, the Company generally considers all expected future events other than changes in the tax law or rates. A valuation allowance is recorded when it is deemed more likely than not that a deferred tax asset will be not realized.
Concentrations.
The Company maintains cash in financial institutions insured by the Federal Deposit Insurance Corporation ("FDIC") up to $250,000.
Use of Estimates.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Share-Based Payments.
Effective January 1, 2006, the Company has fully adopted the provisions of ASC Topic 718 "Compensation - Stock Compensation" and related interpretations. As such, compensation amounts, if any, are amortized over the respective vesting periods of the option grant.
Going Concern.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The amounts of assets and liabilities in the financial statements do not purport to represent realizable or settlement values. However, the Company has incurred an operating loss. Such loss may impair its ability to obtain additional financing.
This factor raises substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company has met its historical working capital requirements from sale of capital shares. However, there can be no assurance that such financial support shall be ongoing or available on terms or conditions acceptable to the Company.
Recent Accounting Pronouncements.
In May 2009, the FASB issued an accounting standard update, which establishes the accounting for and disclosures of subsequent events. The Company adopted this accounting standard update during the three months ended June 30, 2009. The adoption of this accounting standard update did not have material impact on the Company's consolidated financial statements.
In June 2009, the FASB issued Accounting Standards Update No. 2009-01 ("ASU 2009-01"), which establishes the FASB Accounting Standards CodificationTM as the source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. The Company adopted ASU 2009-01 during the three months ended September 30, 2009 and its adoption did not have any impact on the Company's consolidated financial statements.
Accounting Standards Codification In June 2009, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Codification ("ASC") 1-5, FASB Accounting Standards Codification ("ASC 105"). The statement confirmed that the FASB Accounting Standards Codification (the "Codification") is the single official source of authoritative GAAP (other than guidance issued by the SEC), superseding existing FASB, American Institute of Certified Public Accountants, Emerging Issues Task Force, and related literature. The Codification does not change GAAP. Instead, it introduces a new structure that is organized in an easily accessible, user-friendly online research.
In May 2009, the FASB issued ASC 855, Subsequent Events ("ASC 855"), which established the principles and requirements for the recognition and disclosure of events or transactions occurring after the balance sheet date in the financial statements. In particular, ASC 855: (i) identifies the period after the balance sheet date during which management of the Company should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, (ii) identifies the circumstances under which the Company should recognize events or transactions occurring after the balance sheet date in its financial statements and (iii) requires certain expanded disclosures in the financial statements about events or transactions that occurred after the balance sheet date. ASC 855 is effective for the Company's financial statements for the period beginning on April 1, 2009. The adoption of ASC 855 had no effect on the Company's financial condition or results of operations.
In August 2009, the FASB issued Accounting Standards Update ("ASU") No. 2009-05, Fair Value Measurements and Disclosures (Topic 820) - Measuring Liabilities at Fair Value. This update provides clarification for the fair value measurement of liabilities in circumstances in which a quoted price in an active market for an identical liability is not available. This update is effect for interim periods beginning after August 28, 2009. The Company does not expect the adoption of this standard to have a material effect on its financial position or results of operations.
NOTE 2. ACQUISITION AND SALE OF PROGUARD PROTECTION SERVICES, INC.
On July 1, 2004, the shareholders of Protection exchanged their 1,000,000 shares of outstanding Protection no par value common stock and received 395,000 shares of the Company's restricted $0.001 par value common stock. Effective July 1, 2004, Protection became a wholly owned subsidiary of the Company.
This acquisition of Protection, the accounting acquirer, by the Company a non-operating entity, is considered in substance a capital transaction by the issuance of 200,000 shares of common stock by Protection for the net assets of the Company which consisted of cash of $9,889 and accounts payable of $900 and was accounted for as a reverse acquisition. No goodwill or other intangible assets were recorded. On this basis, the historical financial statements, except share capital, as of and prior to the acquisition date represent the operations of Protection.
On October 2, 2006, Proguard Acquisition entered into a Common Stock Purchase and Sale Agreement with Corrections Systems International, Inc., a privately held Florida corporation in which CSII agreed to purchase and Proguard Acquisition agreed to sell all of the issued and outstanding common stock of its wholly-owned subsidiary, Proguard Protection Services, Inc. The purchase and sale transaction was completed on October 4, 2006 with the sale, transfer and conveyance of all of the issued and outstanding Proguard Protection capital stock to CSII in exchange for cash in the amount of $250,000. With completion of the purchase and sale transaction, Proguard Acquisition terminated its material operations in exchange for the cash purchase price.
Accordingly, all the assets, liabilities and operations of the subsidiary have been reclassified as discontinued operations.
CSII, in this disposition of assets transaction, is related to Proguard Acquisition in that Proguard Acquisition's President and Director, Mr. Frank Bauer, is also a Vice President and Director of the Purchaser, CSII. In addition, Mr. Norman Becker is the president of CSII, a member of CSII's board of directors and is also a vice president and director of Proguard Acquisition. Neither Mr. Becker nor Mr. Bauer received any direct or indirect remuneration or compensation in the disposition of its wholly-owned subsidiary, Proguard Protection, through purchase and sale of all of its capital stock to CSII.
In addition to the cross-relationship of the officers and directors, Messrs. Becker and Bauer, to Proguard Acquisition and CSII in this transaction, CSII has been a long-term loan creditor of Proguard Protection, holding, prior to the purchase and sale transaction, an interest-only loan obligation of Proguard Protection in the unpaid principal amount of $100,000. At completion of the subsidiary purchase, and sale transaction, the loan obligation of Proguard Protection to the Purchaser, CSII, was current. Following closing of the transaction on October 4, 2006, the subsidiary's loan obligation to the Purchaser, CSII, was extinguished upon consolidation of CSII's financial accounting.
NOTE 3. RELATED PARTY TRANSACTIONS
During the year ended December 31, 2009 and 2008, the Company paid an affiliated entity $29,800 and $35,000, respectively, in rent, administration and taxes.
NOTE 4. DUE FROM AFFILIATE
Due from affiliates consists of $6,189 due from affiliates, including accrued interest of $1,189. The note is payable on demand and bears interest at 8% per annum.
At December 31, 2008, due from affiliates consists of $100,000 from a former subsidiary, $20,540 due from affiliates, including interest of $15,540. The notes bear interest at 8% per annum and are due on demand.
NOTE 5. INCOME TAXES
The Company accounts for income taxes under SFAS 109, which requires use of the liability method. SFAS 109 provides that deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, referred to as temporary differences.
Deferred tax assets and liabilities at the end of each period are determined using the currently enacted tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities are expected to be settled or realized.
The income tax expense (benefit) differs from the amount computed by applying the U.S. federal income tax rate to net income (loss) before income taxes for the years ended December 31, 2009 and 2008, as shown:
2009 2008 ------ ------ Tax expense (benefit) at the federal statutory rate $(78,750) $(29,750) State taxes, net of federal benefit (8,325) (3,250) Increase (decrease) in valuation allowance 87,075 33,000 -------- ------- Tax expense (benefit) $ - $ - ======== =======
The components of the deferred tax asset and deferred tax liability at December 31, 2009 and 2008 are as follows:
2009 2008 ------ ------ Deferred tax asset: Federal net operating loss carry forwards $265,000 $178,000 State net operating loss carry forwards - - Valuation allowance (265,000) (178,000) -------- -------- $ - $ - ======== ========
As of December 31, 2009, the Company has a net operating loss carryforward of approximately $688,000. This loss will be available to offset future taxable income. If not used, this carryforward will expire through 2028 subject to IRS Code Section 382 limits.
NOTE 6. COMMON STOCK
In April 2005, the Company filed a Form SB-2 registration statement offering 800,000 units at $1.00 per unit. Each unit consists of one common share and one warrant to purchase one common share at $1.75 per share. The warrants are exercisable for 36 months and may be called at $.01 per warrant after 24 months from the date of the prospectus. As of December 31, 2006, the Company has sold 360,400 units for a total of $360,400. Warrants to purchase 60,000 common shares for a total consideration of $105,000 were exercised during the year ended December 31, 2006.
During the quarter ended March 31, 2007, 11,150 warrants were exercised at a price of $1.75 per warrant and converted into 11,150 shares of common stock for a total price of $19,513.
No warrants were exercised during the year ended December 31, 2009. At December 31, 2008, there were 289,250 warrants outstanding.
Sale of Stock to Related Party 2009: 300,000 shares were sold to a related party for gross proceeds of $7,500. In conjunction with the stock purchases during the year ended December 31, 2009, pursuant to accounting rules and principles applicable to stock sales in related party transactions, the Company recorded a $12,000 non-cash increase in its "additional paid in capital" account and recorded non-cash transaction expense for the same amount. The accounting rules require that in related party transactions, a non-cash expense be recorded for the difference between "fair value" (as defined in the rules) and the selling price. Further, the transaction with the related party cannot be considered to represent "fair value" and cannot be viewed as an "arms-length transaction" for purposes of the application of the rule and for the related computation.
In the first quarter of 2007, the Company acted as an agent between a potential buyer and its shareholders on a sale of stock. The potential buyer did not execute in a timely manner, so the funds received were forfeited and distributed to the shareholders.
NOTE 7. SUBSEQUENT EVENTS
We have evaluated events and transactions that occurred through March 12, 2010, the date the financial statements were available to be issued, for potential recognition or disclosure in the accompanying financial statements. Other than the disclosures show, we did not identify any events or transactions that should be recognized or disclosed in the accompanying financial statements.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
ITEM 9A.
ITEM 9A. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures:
We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act that are designed to insure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the periods specified in the Securities and Exchange Commission's rules and forms and that such information is accumulated and communicated to our management, including our CEO and CFO, or the persons performing similar functions, to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our CEO and CFO, or the persons performing similar functions, our management has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this annual report. Based on that evaluation, our CEO and CFO, or the persons performing similar functions, concluded that our disclosure controls and procedures were effective as of December 31, 2009.
Management's Annual Report on Internal Control over Financial Reporting:
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is the process designed by and under the supervision of our CEO and CFO, or the persons performing similar functions, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external reporting in accordance with accounting principles generally accepted in the United States of America. Management has evaluated the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control over Financial Reporting - Guidance for Smaller Public Companies.
Under the supervision and with the participation of our CEO and CFO, or the persons performing similar functions, our management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2009, and concluded that it is effective.
This annual report does not include an attestation report of the registrant's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the registrant's registered public accounting firm
pursuant to temporary rules of the Securities and Exchange Commission that permit the registrant to provide only management's report in this annual report.
Evaluation of Changes in Internal Control over Financial Reporting:
Under the supervision and with the participation of our CEO and CFO, or those persons performing similar functions, our management has evaluated changes in our internal controls over financial reporting that occurred during the fourth quarter of 2009. Based on that evaluation, our CEO and CFO, or those persons performing similar functions, did not identify any change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Important Considerations:
The effectiveness of our disclosure controls and procedures and our internal control over financial reporting is subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the soundness of our systems, the possibility of human error, and the risk of fraud. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and the risk that the degree of compliance with policies or procedures may deteriorate over time. Because of these limitations, there can be no assurance that any system of disclosure controls and procedures or internal control over financial reporting will be successful in preventing all errors or fraud or in making all material information known in a timely manner to the appropriate levels of management.
ITEM 9B.
ITEM 9B. OTHER INFORMATION.
None
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Our bylaws provide that the number of directors who shall constitute the whole board shall be such number as the board of directors shall at the time have designated. We confirm that the number of authorized directors has been set at three pursuant to our bylaws. Each director shall be selected for a term of one year and until his successor is elected and qualified. Vacancies are filled by a majority vote of the remaining directors then in office with the successor elected for the unexpired term and until the successor is elected and qualified.
The directors and executive officers are as follows:
BUSINESS EXPERIENCE OF OFFICERS AND DIRECTORS - ---------------------------------------------
Allerton Towne. From 1963 to 1975, Mr. Towne held various management positions with Ford Motor Company. They included distribution, sales planning and analysis, business management, and regional management. In 1975, Mr. Towne founded Drexel Leasing Corp. in Philadelphia, PA. He also established several retail ice cream shops in the tri-state area. Mr. Towne sold both businesses in 1981 and moved to Florida joining Conti-Commodity. A fully registered broker since 1983, Mr. Towne worked as a broker for Source Capital from 2000 to October 2006 specializing in IPOs, mergers and acquisitions and private placements. Mr. Towne earned a Bachelor of Science degree in business administration from Suffolk University in 1963.
Frank R. Bauer has been president and director of Proguard Acquisition since inception. From 1988 to April 2004, he was vice president and director of Ram Ventures Holdings Corp., a management, consulting services and financial advisory services company until it was purchased by American Apparel and Accessories, Inc., an apparel company. Mr. Bauer has been vice president and director of Corrections Systems International, Inc., a dormant company without any current operations, since February 1988. Mr. Bauer was also president and chief executive officer of Specialty Device Installers, Inc., a privately held Florida
corporation engaged in outside plant utility and construction contracting. In September of 1996, Specialty Device Installers, Inc. was acquired by Guardian International, Inc. Since 2000, Mr. Bauer has been employed as president of Proguard Protection Services, Inc., a home security corporation and a former wholly owned subsidiary of Proguard Acquisition. Mr. Bauer received a Bachelor of Business Administration Degree from Stetson University in Deland, Florida in 1967.
Norman H. Becker has been treasurer and director of Proguard Acquisition since inception. Mr. Becker was a director of Ram Ventures Holdings Corp from 1987 to the change of control in March 2004. On January 15, 1993, Mr. Becker was appointed Ram Ventures president. Norman H. Becker has been president and director of Corrections Systems International, Inc., a dormant company without any current operations, since February 1988. Since January 1985, Mr. Becker has also been self-employed in the practice of public accounting in Hollywood, Florida. Mr. Becker is a 1959 graduate of City College of New York (Bernard Baruch School of Business) and is a member of a number of professional accounting associations including the American Institute of Certified Public Accountants, the Florida Institute of Certified Public Accountants and the Dade Chapter of the Florida Institute of Certified Public Accountants.
Ricardo A. Rivera has been vice president, secretary and a director of Proguard Acquisition since inception. Mr. Rivera has served as vice president for Professional Programmers, Inc., d/b/a/ Corrections Services, Inc. since January 1999. Once a public company called Corrections Services, Inc., Professional Programmers is now a private Florida corporation headquartered in Ft. Lauderdale, Florida. CSI has been involved in the manufacturing, marketing, implementation and support of electronic monitoring systems since November 1984. CSI has installed and implemented electronic monitoring programs for private and government agencies involved in work release, probation, parole, pre-trial, and juvenile offenders. Mr. Rivera has over 14 years experience in the electronic monitoring industry. Mr. Rivera began as a technician in 1989, repairing electronic monitoring equipment.
Non-Qualified and Incentive Stock Option Plans
The registrant does not currently have any stock option plans.
Section 16(a). Beneficial Ownership Reporting Compliance
To the registrant's knowledge, no director, officer or beneficial owner of more than ten percent of any class of equity securities o the registrant failed to file on a timely basis reports required by Section 16(a) of the Exchange Act during the year ended December 31, 2008.
Code of Ethics Policy
We have not yet adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions.
Corporate Governance
There have been no changes in any state law or other procedures by which security holders may recommend nominees to our board of directors. In addition to having no nominating committee for this purpose, we currently have no specific audit committee financial expert. Based on the fact that our current business affairs are simple, any such committees are exclusive and beyond the scope of our business and needs.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
Executive Compensation
The following shows the annual salaries, bonuses and stock options for our executive officers:
(1) Norman H. Becker P.A., an entity controlled by Mr. Becker, an officer and director, was paid $14,870 for various accounting services during the year ending December 31, 2009.
Option/SAR Grants in Last Fiscal Year
Option/SAR Grants in Last Fiscal Year
Messrs. Norman H. Becker and Allerton Towne devote approximately 10% of their time, respectively, to Proguard Acquisition's affairs. Frank R. Bauer currently devotes 20% of his time to Proguard Acquisition's and our former subsidiary's affairs. Ricardo A. Rivera currently devotes approximately 50% of his time to Proguard Acquisition. There are no employment agreements in effect or presently contemplated.
We do not have any standard arrangements by which directors are compensated for any services provided as a director. No cash has been paid to the directors in their capacity as such.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following tabulates holdings of shares of Proguard Acquisition by each person or entity who, subject to the above, as of December 31, 2009, holds of record or is known by management to own beneficially more than 5.0% of the common shares and, in addition, by all directors and officers of Proguard Acquisition, individually and as a group. Each named beneficial owner has sole voting and investment power with respect to the shares set forth opposite his name.
Based upon 3,300,000 issued and outstanding as of December 31, 2009.
1. Plymouth Capital, Inc. is controlled by Allerton Towne, an officer and director of Proguard Acquisition.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
During the year ended December 31, 2009 and 2008, Proguard Acquisition paid an affiliated entity $29,800 and $35,000.
As of December 31, 2009, there is a note payable to a related party in the amount of $6,189, including interest. The note is payable on demand and bears interest at 8% per annum. There were no repayments during 2009 and 2008.
Director Independence
The registrant's board of directors consists of Allerton Towne, Frank Bauer, Norman Becker and Ricardo Rivera. None of the directors are independent as such term is defined by a national securities exchange
or an inter-dealer quotation system. During the fiscal years ended December 31, 2009 and December 31, 2008, there were no transactions with related persons other than as described in the section above.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Audit Fees. We incurred aggregate fees and expenses of $14,250 and $14,250 from Sherb & Co., LLP, respectfully for the 2009 and 2008 fiscal years. Such fees included work completed for our annual audit and for the review of our financial statements included in our Forms 10-K and 10-Q.
Tax Fees. We did not incur any aggregate tax fees and expenses from Sherb & Co., LLP for the 2009 and 2008 fiscal years for professional services rendered for tax compliance, tax advice, and tax planning.
All Other Fees. We incurred non-audit related fees of $0 and $0 from Sherb & Co., LLP during fiscal 2009 and 2008. The Board of Directors, acting as the Audit Committee considered whether, and determined that, the auditor's provision of non-audit services was compatible with maintaining the auditor's independence. All of the services described above for fiscal years 2009 and 2008 were approved by the Board of Directors pursuant to its policies and procedures. We intend to continue using Sherb & Co., LLP solely for audit and audit-related services, tax consultation and tax compliance services, and, as needed, for due diligence in acquisitions.
ITEM 15.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)(1) List of financial statements included in Part II hereof:
Report of Independent Registered Public Accounting Firm Balance Sheet at December 31, 2009 and 2008 Statements of Operations for the years ended December 31, 2009 and 2008 Statement of Changes in Stockholders' Equity for the years ended December 31, 2009 and 2008 Statements of Cash Flows for the years ended December 31, 2009 and 2008 Notes to Financial Statements
(a)(2) List of financial statement schedules included in Part IV hereof:
None
(a)(3) Exhibits
All of the following exhibits are incorporated by reference to Form SB- 2 and its amendments, file no: 333-123910.
3.i Articles of Incorporation 3.ii By-Laws 4.i Form of Specimen of common stock 4.ii Form of Warrant
10.1 Lease Agreement 10.2 GE Interlogix Authorized Dealer Agreement 10.3 Promissory Note dated January 31, 2005 10.4 Promissory Note dated March 15, 2004 10.5 Promissory Note dated January 31, 2003
The following exhibits are filed with this report 31 302 certifications 32 906 certifications
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, Proguard Acquisition has duly caused this Report to be signed on its behalf by the undersigned duly authorized person.
Date: March 26, 2010
Proguard Acquisition Corp.
/s/Allerton Towne - ------------------------------ By: Allerton Towne/CEO
In accordance with the requirements of the Securities Exchange Act of 1934, as amendment, this report has been signed by the following persons in the capacities and on the dates stated.