ebig_10q.htm
UNITED STATES SECURITIES AND EXCHANGE
COMMISSION
Washington,
D.C. 20549
FORM
10-Q
þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the
quarterly period ended March 31,
2010
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the
transition period from _______ to ________
Commission
File Number: 0-52282
|
EastBridge
Investment Group Corporation |
|
|
(Exact name of registrant as
specified in its charter) |
|
Arizona
|
|
86-1032927
|
(State
or Other Jurisdiction of
|
|
(I.R.S.
Employer
|
Incorporation)
|
|
Identification
No.)
|
8040
E. Morgan Trail, Unit 18, Scottsdale, Arizona 85258
(Address
of Principal Executive Offices)
(480)
966-2020
(Registrant’s
telephone number)
Securities
registered under Section 12(b) of the Exchange Act:
None
Securities
registered under Section 12(g) of the Exchange Act:
Common
Stock, no par value per share
(Title
of Class)
Indicate
by check mark whether the Registrant (1) has filed all reports required by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 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 o No þ
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 þ No o
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
definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b–2 of the Exchange Act. (Check
one):
Large
accelerated filer o Accelerated
filer o Non–Accelerated
filer o
Smaller Reporting Company þ
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b–2 of the Exchange Act). Yes o No þ
Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date.
Class
|
|
Outstanding
at April 30, 2010
|
Common
stock, no par value
|
|
147,335,048
|
EastBridge
Investment Group Corporation
TABLE
OF CONTENTS
|
|
|
|
|
|
|
|
Page Numbers
|
|
PART
I - FINANCIAL INFORMATION
|
|
|
|
|
|
|
|
Item 1.
|
Condensed
Consolidated Financial Statements (unaudited)
|
|
|
|
|
Condensed
Consolidated Balance Sheets
|
|
|
1 |
|
|
Condensed
Consolidated Statements of Operations
|
|
|
2 |
|
|
Condensed
Consolidated Statement of Cash Flows
|
|
|
3 |
|
|
Notes
to Condensed Consolidated Financial Statements
|
|
|
4 |
|
Item 2.
|
Management’s
Discussion & Analysis of Financial Condition & Results of
Operations
|
|
|
12 |
|
Item 3
|
Quantitative
and Qualitative Disclosures About Market Risk
|
|
|
16 |
|
Item 4.
|
Controls
and Procedures
|
|
|
17 |
|
|
|
|
|
|
PART
II - OTHER INFORMATION
|
|
|
|
|
|
|
|
|
|
|
Item 1.
|
Legal
Proceedings
|
|
|
18 |
|
Item1a
|
Risk
Factors
|
|
|
18 |
|
Item 2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
|
|
18 |
|
Item 3.
|
Defaults
Upon Senior Securities
|
|
|
18 |
|
Item 4.
|
[Removed
and Reserved]
|
|
|
18 |
|
Item 5
|
Other
Information
|
|
|
18 |
|
Item 6.
|
Exhibits
|
|
|
18 |
|
|
|
|
|
|
|
SIGNATURES |
|
|
|
19 |
|
PART
I – FINANCIAL INFORMATION
ITEM
1. FINANCIAL STATEMENTS
EASTBRIDGE
INVESTMENT GROUP CORPORATION
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
March
31,
|
|
|
December
31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(unaudited)
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Cash
|
|
$ |
110,382 |
|
|
$ |
162,609 |
|
Total
current assets
|
|
|
110,382 |
|
|
|
162,609 |
|
|
|
|
|
|
|
|
|
|
Advances
receivable from related parties
|
|
|
23,322 |
|
|
|
23,322 |
|
Total
assets
|
|
$ |
133,704 |
|
|
$ |
185,931 |
|
|
|
|
|
|
|
|
|
|
Liabilities
and Stockholders' Deficit
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
|
140,034 |
|
|
|
119,987 |
|
Disputed
accounts payable
|
|
|
213,799 |
|
|
|
213,799 |
|
Accrued
expenses
|
|
|
360,728 |
|
|
|
291,358 |
|
Line
of credit
|
|
|
52,500 |
|
|
|
63,750 |
|
Deferred
revenue
|
|
|
253,231 |
|
|
|
203,271 |
|
Advances
payable to related party
|
|
|
59,800 |
|
|
|
71,840 |
|
Other
current liabilities
|
|
|
100,000 |
|
|
|
100,000 |
|
Total
current liabilities
|
|
|
1,180,092 |
|
|
|
1,064,005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
1,180,092 |
|
|
|
1,064,005 |
|
|
|
|
|
|
|
|
|
|
Commitments
and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
deficit:
|
|
|
|
|
|
|
|
|
Preferred
stock series A, no par value, 50,000,000 shares authorized; none issued
and outstanding as of March 31, 2010 and December 31, 2009,
respectively
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Preferred
stock series B, no par value, 50,000,000 shares authorized; none
issued and outstanding as of March 31, 2010 and December 31, 2009,
respectively
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Common
stock, no par value, 300,000,000 shares authorized; 145,863,354 and
140,377,339 issued and outstanding as of March 31, 2010 and
December 31, 2009, respectively
|
|
|
5,381,511 |
|
|
|
4,560,350 |
|
|
|
|
|
|
|
|
|
|
Accumulated
deficit
|
|
|
(6,427,899 |
) |
|
|
(5,438,424 |
) |
Total
stockholders' deficit
|
|
|
(1,046,388 |
) |
|
|
(878,074 |
) |
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders' deficit
|
|
$ |
133,704 |
|
|
$ |
185,931 |
|
The
accompanying notes are an integral part of these consolidated financial
statements.
EASTBRIDGE INVESTMENT GROUP
CORPORATION
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS
|
|
|
Three
Months Ended
|
|
|
|
March
31,
|
|
|
|
2010
|
|
|
2009
|
|
Revenues
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Cost
of services
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
General
and administrative
|
|
|
469,954 |
|
|
|
190,327 |
|
Selling
and marketing
|
|
|
40,284 |
|
|
|
15,779 |
|
Total
operating expenses
|
|
|
510,238 |
|
|
|
206,106 |
|
Operating
loss
|
|
|
(510,238 |
) |
|
|
(206,106 |
) |
|
|
|
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
479,237 |
|
|
|
1,697 |
|
Interest
income
|
|
|
- |
|
|
|
(582 |
) |
Total
other (income) expense
|
|
|
479,237 |
|
|
|
1,115 |
|
Loss
before taxes, minority interest, discontinued operations
|
|
$ |
(989,475 |
) |
|
$ |
(207,222 |
) |
|
|
|
|
|
|
|
|
|
Income
tax provision
|
|
|
- |
|
|
|
- |
|
Discontinued
operations
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$ |
(989,475 |
) |
|
$ |
(207,222 |
) |
|
|
|
|
|
|
|
|
|
Earnings
per share:
|
|
|
|
|
|
|
|
|
Basic
and diluted:
|
|
$ |
(0.01 |
) |
|
$ |
(0.00 |
) |
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
and diluted:
|
|
|
141,828,925 |
|
|
|
127,537,061 |
|
The
accompanying notes are an integral part of these consolidated financial
statements.
EASTBRIDGE
INVESTMENT GROUP CORPORATION
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
|
|
Three
Months Ended March 31,
|
|
|
|
2010
|
|
|
2009
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net
loss
|
|
$ |
(989,475 |
) |
|
$ |
(207,221 |
) |
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
Common
stock issued for services
|
|
|
294,161 |
|
|
|
1,200 |
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Prepaid
expenses
|
|
|
- |
|
|
|
(882 |
) |
Accounts
payables
|
|
|
20,047 |
|
|
|
47,567 |
|
Accrued
liabilities
|
|
|
69,370 |
|
|
|
105,521 |
|
Deferred
revenue
|
|
|
49,960 |
|
|
|
25,000 |
|
Net
cash used in operating activities
|
|
|
(555,937 |
) |
|
|
(28,815 |
) |
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Stock
issued from payment of debt
|
|
|
527,000 |
|
|
|
20,000 |
|
Repayment
of line of credit
|
|
|
(11,250 |
) |
|
|
- |
|
Repayment
of advances from affiliate
|
|
|
(50,040 |
) |
|
|
(3,700 |
) |
Advances
from affiliate
|
|
|
38,000 |
|
|
|
29,200 |
|
Net
cash provided by (used in) financing activities
|
|
|
503,710 |
|
|
|
45,500 |
|
|
|
|
|
|
|
|
|
|
(DECREASE)
INCREASE IN CASH
|
|
|
(52,227 |
) |
|
|
16,685 |
|
CASH,
BEGINNING OF PERIOD
|
|
|
162,609 |
|
|
|
4,347 |
|
CASH,
END OF PERIOD
|
|
$ |
110,382 |
|
|
$ |
21,032 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
paid
|
|
$ |
479,237 |
|
|
$ |
420 |
|
Issuance
of company stock for accrued liabilities
|
|
$ |
71,840 |
|
|
$ |
20,000 |
|
The
accompanying notes are an integral part of these consolidated financial
statements.
EASTBRIDGE
INVESTMENT GROUP CORPORATION
FOR
THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1 – DESCRIPTION OF BUSINESS
EastBridge
Investment Group Corporation (formally ATC Technology Corporation) was
incorporated in the State of Arizona on June 25, 2001. The Company's
principal activity through June 30, 2005 was to manufacture mobile entertainment
products that provided a means to play video game consoles made by Sony,
Microsoft and Nintendo in a customer's car, RV, SUV, van or boat with attachable
viewing monitors.
In 2005,
EastBridge decided to exit the mobile video game market and dedicate its
activities to providing consulting services in Asia. EastBridge is
one of a small group of United States companies solely concentrated in marketing
consulting services to closely held small to mid-size Asian companies that
require these services for expansion. EastBridge had nine clients as of the date
of this filing, that it is assisting in becoming public companies, reporting
pursuant to the Securities Exchange Act of 1934, as amended, in the United
States and obtaining listings for their stock on a U.S. stock exchange or
over-the-counter market. All clients are located in
Asia-Pacifica.
EastBridge
has formed three subsidiaries which have been consolidated with EastBridge from
the date of formation as further described below. These subsidiaries
are inactive.
NOTE
2 – BASIS OF PRESENTATION
The
accompanying condensed consolidated balance sheet as of December 31, 2009, which
has been derived from audited consolidated financial statements, and the
accompanying unaudited condensed consolidated financial statements as of March
31, 2010 and for the three months ended March 31, 2010 and March 31, 2009, have
been prepared in accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not include all
of the information and footnotes required by generally accepted accounting
principles for audited financial statements. In the opinion of the Company’s
management, the interim information includes all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of the results
for the interim periods. The results of operations for the three
months ended March 31, 2010 are not necessarily indicative of the results to be
expected for the year ending December 31, 2010. The footnote
disclosures related to the interim financial information included herein are
also unaudited. Such financial information should be read in
conjunction with the consolidated financial statements and related notes thereto
as of December 31, 2009 and for the year then ended included in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2009.
The
preparation of financial statements in accordance with U.S. generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities at the date of the
financial statements and the reported amount of revenues and expenses during the
reporting period. Significant estimates and assumptions have been
used by management throughout the preparation of the condensed consolidated
financial statements including in conjunction with establishing allowances for
customer refunds, non-paying customers, dilution and fees, analyzing the
recoverability of the carrying amount of intangible assets, estimating
forfeitures of stock-based compensation and evaluating the recoverability of
deferred tax assets. Actual results could differ from these
estimates.
NOTE
3 – GOING CONCERN
As
indicated in the accompanying financial statements, the Company has incurred
cumulative net operating losses of $6,427,899 since inception. We place no
assurance on the on going operations of our new subsidiaries. So far,
most of the working capital has been provided by the Company's management team
members. They have done so since EastBridge's inception and have indicated their
continued support for EastBridge; however, there is no assurance that additional
funds will be advanced. These matters raise substantial doubt about the
Company’s ability to continue as a going concern. The accompanying
financial statements have been prepared on a going concern basis, which
contemplates the realization of assets and satisfaction of liabilities in the
normal course of business. These financial statements do not include
any adjustments relating to the recovery of the recorded assets or the
classification of the liabilities that might be necessary should the Company be
unable to continue as a going concern.
Management
plans to successfully achieve milestones in the near future with respect to the
Company's client engagements which will provide them with some liquidity;
however, there is no assurance that the Company will be successful.
The
Company's ability to meet its obligations and continue as a going concern is
dependent upon its ability to obtain additional financing, achievement of
profitable operations and/or ability to achieve client listing
obligations. Although the Company plans to pursue additional
financing, there can be no assurance that the Company will be able to secure
financing when needed or to obtain such financing on terms satisfactory to the
Company, if at all.
NOTE
4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The
Company prepares its financial statements in accordance with accounting
principles generally accepted in the United States of
America. Significant accounting policies are as follows:
Principles of
Consolidation
We
prepare our consolidated financial statements in accordance with accounting
principles generally accepted in the United States of America.
Use of
Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements.
These
estimates and assumptions also affect the reported amounts of revenues, costs
and expenses during the reporting period. Management evaluates these
estimates and assumptions on a regular basis. Actual results could
differ from those estimates.
Revenue
Recognition
The
Company utilizes the guidance set forth in the Securities and Exchange
Commission's Staff Accounting Bulletin (SAB) No. 104, regarding the recognition,
presentation and disclosure of revenue in its financial statements. The Company engages in
listing contracts with its clients which provide for the payment of fees, either
in cash or equity, upon the achievement of certain milestones including the
successful completion of a financial statement audit, the successful listing on
a national stock exchange and the maintenance of ongoing 1934 Act registration
requirements with the Securities and Exchange Commission. In some
instances, payment may be made in advance of performance; however, such payment
is often refundable in the event that milestones are not
reached. The Company recognizes revenue on a systematic basis
as milestones are reached in accordance with FASB’s Accounting Standards
Codification (“ASC”) 605 “Revenue Recongition” Update No.
2009-13. Such guidance stipulates that revenue be recognized for
individual elements in a multiple deliverable arrangement using the relative
selling price method. The Company relies on internal estimates of the
relative selling price of each element as objective third-party evidence is
unattainable.
Cash and Cash
Equivalents
The
Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents. At March 31, 2010 and
December 31, 2009, respectively, cash and cash equivalents include cash on hand
and cash in the bank. At times, cash deposits may exceed government-insured
limits.
Income
Taxes
Income
taxes are accounted for using the asset and liability method as prescribed by
ASC 740 “Income Taxes”. Under this method, deferred income tax assets and
liabilities are recognized for the future tax consequences attributable to
temporary differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred income
tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which these temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date. A valuation allowance would be provided for those
deferred tax assets for which if it is more likely than not that the related
benefit will not be realized.
A full
valuation allowance has been established against all net deferred tax assets as
of March 31, 2010 based on estimates of recoverability. While the
Company has optimistic plans for its business strategy, we determined that such
a valuation allowance was necessary given the current and expected near term
losses and the uncertainty with respect to our ability to generate sufficient
profits from our business model.
Share-Based
Compensation
The
Company periodically uses stock-based awards, consisting of shares of common
stock, to compensate certain officers and consultants. Shares are
expensed on a straight line basis over the requisite service period based on the
grant date fair value, net of estimated forfeitures, if
any. Typically, stock awards are fully vested at the date of grant,
so forfeitures are not applicable.
Basic and Diluted Net Loss
Per Share
Net loss
per share was computed by dividing the net loss by the weighted average number
of common shares outstanding during the period. The weighted average
number of shares was calculated by taking the number of shares outstanding and
weighting them by the amount of time that they were outstanding. Diluted
net loss per share for the Company is the same as basic net loss per share, as
the inclusion of common stock equivalents would be anti-dilutive.
Fair Value of Financial
Instruments
The fair
value of a financial instrument is the amount at which the instrument could be
exchanged in a current transaction between willing parties other than in a
forced sale or liquidation.
The
carrying amounts of the Company’s financial instruments, including cash,
accounts payable and accrued liabilities, income tax payable and related party
payable approximate fair value due to their short maturities.
Reclassification
Certain
prior period amounts have been reclassified to conform to current year
presentations.
Recent Accounting
Pronouncements
Recent
accounting pronouncements that the Company has adopted or that it will be
required to adopt in the future are summarized below.
In
October 2009, the Financial Accounting Standards Board (“FASB”) issued FASB
Accounting Standards Update 2009-13, Revenue Recognition (Topic
605)—Multiple-Deliverable Revenue Arrangements. FASB Accounting Standards
Update 2009-13 addresses the accounting for multiple-deliverable arrangements to
enable vendors to account for products or services (deliverables) separately
rather than as a combined unit. Specifically, this guidance amends the criteria
in Accounting Standards Codification (“ASC”) Subtopic 605-25, Revenue
Recognition-Multiple-Element Arrangements, for separating consideration in
multiple-deliverable arrangements. This guidance establishes a selling price
hierarchy for determining the selling price of a deliverable, which is based on:
(a) vendor-specific objective evidence; (b) third-party evidence; or
(c) estimates. This guidance also eliminates the residual method of
allocation and requires that arrangement consideration be allocated at the
inception of the arrangement to all deliverables using the relative selling
price method. In addition, this guidance significantly expands required
disclosures related to a vendor’s multiple-deliverable revenue arrangements.
FASB Accounting Standards Update 2009-13 is effective prospectively for revenue
arrangements entered into or materially modified in fiscal years beginning on or
after June 15, 2010. Early adoption is permitted. The Company is in the
process of developing relative selling price estimates of its deliverables for
use in future revenue recognition of listing agreements. The Company
is currently evaluating the impact of adopting this pronouncement.
In August
2009, the Financial Accounting Standards Board (“FASB”) issued FASB Accounting
Standards Update 2009-05, Fair
Value Measurements and Disclosures (Topic 820)—Measuring Liabilities at Fair
Value includes amendments to Subtopic 820-10, Fair Value Measurements and
Disclosures—Overall, for the fair value measurement of liabilities and
provides clarification that in circumstances in which a quoted price in an
active market for the identical liability is not available, a reporting entity
is required to measure fair value using one or more of the techniques provided
for in this update. The adoption of Accounting Standards Update 2009-05 did not
have a material impact on the consolidated financial statements.
During
June 2009, the Financial Accounting Standards Board (“FASB”) issued
FAS No. 168, FASB
Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles, a replacement of FASB Statement
No. 162 (“SFAS 168”) and is incorporated in ASC Topic 105,
which establishes the FASB Accounting Standards Codification as the single
official source of authoritative US GAAP (other than guidance issued by the
SEC), superseding existing FASB, American Institute of Certified Public
Accountants, Emerging Issues Task Force, and related literature. SFAS 168
became effective as of the beginning of the first annual reporting period that
begins after September 15, 2009 and for interim periods within that period.
The adoption of SFAS 168 did not have an impact on the Company’s results of
operations or financial position.
NOTE
5 – OTHER LIABILITIES
Disputed Accounts
Payable
At March
31, 2010, the Company carried balances totaling $213,799 owed to various vendors
relating to EastBridge’s former business called ATC Technology. The
Company currently considers these balances as in dispute with the vendors and is
working on a resolution.
Other Current
Liabities
Other
current liabilities at March 31, 2010 consisted of a $100,000 deposit received
from a trust which has agreed to purchase from Eastbridge a fixed number of
shares of common stock in one of Eastbridge’s clients that is expected to be
earned by Eastbridge as part of a fee arrangement once this client's shares are
publicly registered.
NOTE
6 – LINE OF CREDIT / NOTES PAYABLE
In May
2009, the Company converted the line of credit with Goldwater Bank into a two
year promissory note unsecured with a variable interest rate of Wall Street
Journal Prime plus 4.0%. The interest rate cannot be less than 8%
which is the rate as of March 31, 2010. The balance of this
promissory note as of March 31, 2010 and 2009, was $52,500 and $100,000
respectively.
NOTE
7 – LEASES
The
Company is leasing office space in Scottsdale, Arizona, under a non-cancelable
operating lease agreement, which expires in August 2011. Rent expense
for the periods ended March 31, 2010 and 2009 was $7,514 and $3,343,
respectively.
As of
March 31, 2010, future minimum lease payments due under the foregoing lease
agreement are as follows:
Year
ending December 31,
|
|
Amount
|
|
2010
|
|
$ |
5,976 |
|
2011
|
|
|
5,312 |
|
|
|
$ |
11,288 |
|
NOTE
8 – RELATED PARTY TRANSACTIONS
The
Company advanced funds to its CEO for accrued and unpaid compensation during the
course of business at a rate of 4.5% annual interest which is the federal long
term interest rate. As of March 31, 2010 and 2009 advances receivable from the
CEO were $0 and $54,257, respectively. As of March 31, 2010 and 2009
the accrued compensation liability to the officers was $292,026 and $200,000,
respectively. In 2009, the Company recorded a payroll tax liability
in connection with accrued compensation paid with stock and resulting from this
payroll tax liability an advance receivable from the CEO and CFO in the amounts
of $14,039 and $9,283 are outstanding as of March 31, 2010.
The
Company received advances from its two officers and a shareholder during the
course of business at a rate of 4.5% interest which is the federal long term
interest rate. As of March 31, 2010 and 2009 advances payable to the Company’s
two officers and a shareholder were $59,800 and $59,347,
respectively.
The
Company entered into a employment agreement with the CEO on June 1, 2005. Under
the terms of the agreement the CEO will receive compensation in the amount of
$240,000 annually. The Company entered into a employment agreement with its CFO
on June 1, 2005. Under the terms of its agreement the CFO was to receive $84,000
in compensation annually from the inception of the agreement through January 1,
2007 at which point the consulting compensation was to increase to
$180,000.
NOTE
9 – EQUITY
As
of March 31, 2010,
EastBridge had 145,863,354 shares of no par common stock issued and outstanding
with 300,000,000 shares authorized.
During
the three months ended March 31, 2010, the Company issued 2,386,015 shares of
common stock to consultants for services rendered. The Company
expensed $294,161 in connection with these issuances based on the quoted market
prices on the dates of grant.
During
the three months ended March 31, 2010, the Company issued 3,100,000 shares of
common stock to individuals for $50,040 of debt owed by the
Company. The Company expensed $476,961 in connection with these
issuances based on the quoted market prices on the date of grant.
During
the three months ended March 31, 2009, the Company issued 500,000 shares of
common stock to each of our two officers, respectively. The
common shares were issued and accepted by the Company’s officers at $.02 per
share for a cumulative value of $20,000. The Company reduced the value of the
accrued balance due to the two officers by $20,000.
During
the three months ended March 31, 2009, the Company issued 60,000 shares of
common stock to a consultant for services rendered. The Company
shares were issued at $.02 per which was the trading value of the stock at the
date of issuance. The Company expensed $1,200.
NOTE
11 – DEFERRED REVENUE
The
following table represents the balance of deferred revenue that has not yet been
recognized under the Company’s revenue recognition policies:
|
|
March
31,
|
|
|
March
31,
|
|
|
|
2010
|
|
|
2009
|
|
Jinkuizi
Science & Technology Company
|
|
|
(45,000 |
) |
|
|
(25,000 |
) |
|
|
|
|
|
|
|
|
|
Alpha
Green Energy Company
|
|
|
(75,712 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
Kadia
|
|
|
(73,000 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
Huang
Wei
|
|
|
(9,559 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
Tsinda
|
|
|
(49,960 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
Deferred
Revenue
|
|
|
(253,231 |
) |
|
|
(25,000 |
) |
NOTE
12 – COMMITMENTS AND CONTINGENCIES
Employment
Agreements
On June
1, 2005, we entered into the employment agreement with Keith Wong, our President
and Chief Executive Officer. The agreement provides for annual compensation in
the amount of $240,000, effective June 1, 2005. Mr. Wong’s agreement
contains confidentiality, non-compete, and good faith cooperation covenants. The
agreement may not be terminated by either party except with cause on the part of
the Company, upon the occurrence of Mr. Wong's death, disability, bankruptcy or
incompetency, lack of performance, officer integrity, or with the mutual consent
of both parties.
On June
1, 2005, we entered into the employment agreement with Norm Klein, our Chief
Financial Officer, Chief Operating Officer and Investor Relations Officer. The
agreement provides for annual compensation in the amount of $84,000, effective
on June 1, 2005 and was increased to an annual compensation of $180,000,
effective January 1, 2007. Mr. Klein’s agreement contains confidentiality,
non-compete and good faith cooperation covenants. The agreement may not be
terminated by either party except with cause on the part of the Company, upon
the occurrence of Mr. Klein's death, disability, bankruptcy or incompetency,
lack of performance, officer integrity, or with the mutual consent of both
parties.
NOTE
13 – STOCK BASED COMPENSATION
2009
Stock Option Plan
During
the first quarter of 2009, the Company's Board of Directors approved and adopted
the 2009 Stock Option Plan (the "Plan") and designated 10,000,000 of
our no par common stock for issuance under the Plan to employees, directors or
consultants for EastBridge through either the issuance of shares or stock option
grants. Under the terms of the Plan, stock option grants shall be
made with exercise prices not less than 100% of the fair market value of the
shares of Common Stock on the grant date. Since adoption, the Company
issued an aggregate of approximately 5.2 million shares of Common Stock under
the plan. These grants were not stock options but instead represent
fully vested shares at the date of grant.
|
|
Total
shares
reserved
under
the
plan
|
|
|
Remaining
shares
available
for
issuance
under
the
plan
|
|
2009
Stock Option Plan
|
|
|
10,000,000
|
|
|
|
4,801,485
|
|
NOTE
14 – SEGMENT INFORMATION
The
Company operates only one reporting segment. Substantially all assets
are contained in the United States. Although the Company’s business
is assisting foreign companies with accessing the US capital markets,
substantially all revenue generating activities are conducted in the United
States.
NOTE
15 – SUBSEQUENT EVENTS
On April
11, 2010, EastBridge executed a Listing Agreement with StrayArrow International
Limited (ie SAIL). SAIL is located in Shanghai, China. SAIL is in the
luxury lifestyle business including high end restaurants, nightclubs, ultra
lounges, hotels and boutique retail merchandising. EastBridge has
been retained by SAIL to assist their management to become listed on a United
States stock exchange. Eastbridge has begun to prepare SAIL for the
SEC auditing and legal processes. For its services, EastBridge will
receive a cash fee plus an equity position once SAIL is listed on a U.S. stock
exchange. As of the date of this report, EastBridge has not declared
a stock dividend record date for this client.
On April
29, 2010, the Company issued 426,239 and 818,182 shares of common stock to our
CEO and CFO, respectively. The common shares were issued and
accepted by the Company’s officers at the closing trading price of the date of
issue for a cumulative value of $161,775. The Company will reduce the value of
the accrued compensation balance due to the two officers by
$161,775.
On April
29, 2010, the Company issued 227,273 shares of common stock to a consultant for
services rendered. The Company will expense $29,545 in connection
with these issuances based on the quoted market prices on the dates of
grant.
The
Company evaluated subsequent events through May 10, 2010 which is the date the
financial statements were issued.
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
In this
Quarterly Report on Form 10-Q, “Company,” “our company,” “us,” and “our” refer
to EastBridge Investment Group Corporation and its subsidiaries unless the
context requires otherwise.
The
Company's Form 10-K, this and any other Form 10-Q or any Form 8-K of the Company
or any other written or oral statements made by or on behalf of the Company may
contain forward-looking statements which reflect the Company's current views
with respect to future events and financial performance. The words "believe,"
"expect," "anticipate," "intends," "estimate," "forecast," "project," and
similar expressions identify forward-looking statements. All
statements other than statements of historical fact are statements that could be
deemed forward-looking statements, including any statements of the plans,
strategies and objectives of management for future operations; any statements
concerning proposed new products, services, developments or industry rankings;
any statements regarding future economic conditions or performance; any
statements of belief; and any statements of assumptions underlying any of the
foregoing. Such "forward-looking statements" are subject to risks and
uncertainties set forth from time to time in the Company's SEC reports and
include, among others, the Risk Factors set forth under Item 1A
below.
The
risks included herein are not exhaustive. The Company's annual report on Form
10-K, this and other quarterly reports on Form 10-Q, current reports on Form 8-K
and other documents filed with the SEC include additional factors which could
impact EastBridge Investment Group Corporation's business and financial
performance. Moreover, EastBridge Investment Group Corporation operates in a
rapidly changing and competitive environment. New risk factors emerge from time
to time and it is not possible for management to predict all such risk factors.
Further, it is not possible to assess the impact of all risk factors on
EastBridge Investment Group Corporation's business or the extent to which any
factor, or combination of factors, may cause actual results to differ materially
from those contained in any forward-looking statements.
Readers
are cautioned not to place undue reliance on such forward-looking statements as
they speak only of the Company's views as of the date the statement was
made. The Company undertakes no obligation to publicly update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise.
Overview
EastBridge
Investment Group Corporation (formally ATC Technology Corporation) was
incorporated in the State of Arizona on June 25, 2001. The Company's
principal activity through June 30, 2005 was to manufacture mobile entertainment
products that provided a means to play video game consoles made by Sony,
Microsoft and Nintendo in a customer's car, RV, SUV, van or boat with attachable
viewing monitors.
In 2005,
EastBridge decided to exit the mobile video game market and dedicate its
activities to providing investment related services in Asia, with a strong focus
on the high GDP growth countries, such as China and India. EastBridge is
initially concentrating its efforts in China (Hong Kong, mainland China, Macao
and Taiwan). We provide consulting services to provide viable corporate
infrastructure necessary for small to medium-size companies to obtain capital to
grow their business. EastBridge structures its clients as joint ventures,
wholly owned foreign enterprises, or guaranteed return ventures, and assists in
locating investment banking, financial advisory and other financial services as
allowed by the local government. EastBridge locates consultants which assist
with marketing, sales and strategic planning services for its clients to prepare
them to enter the United States market.
EastBridge
is one of a small group of United States companies solely concentrated in
marketing business consulting services to closely held, small to mid-size Asian
companies that require these services for expansion. In business sectors where
EastBridge sees a unique opportunity for growth, EastBridge may form its own
foreign subsidiaries with local partners to capture the
opportunity.
EastBridge
is currently assisting nine clients with consulting services to prepare them for
listing on a U.S. stock exchange. A description of eight of these
nine clients can be found in the recently filed Form 10-K (filed in April 2010
with the SEC) for EastBridge. To learn more about our newest (ninth)
client, please refer to Note 15 of the financial statement footnotes in this
10-Q report.EastBridge has formed three subsidiaries which have been
consolidated with EastBridge from the date of formation. These
subsidiaries are inactive.
Results
of Operations
Revenues
The
Company did not have any recordable revenue in the three months ending March 31,
2010 and 2009.
General
and Administrative Expenses
Three
Months
Ended March
31,
|
|
General &
Administrative
Expenses
|
|
|
Change
from
Prior
Year
|
|
|
Percent
Change
from
Prior Year
|
|
2010 |
|
$ |
469,954 |
|
|
$ |
279,627 |
|
|
|
146.9 |
% |
2009 |
|
$ |
190,327 |
|
|
|
|
|
|
|
|
|
General
and administrative expenses increased in three months ending March 31, 2010 as
compared to the three months ending March 31, 2009 due to the
following: an increase in consulting expense of approximately
$268,000 as we issued stock for consulting expenses at a higher than anticipated
value and an increase in legal fees of approximately $31,000, partially offset
by decreases in other expenses of approximately $20,000.
Sales
and Marketing Expenses
Three
Months
Ended
March
31,
|
|
Sales &
Marketing
Expenses
|
|
|
Change
from
Prior
Year
|
|
|
Percent
Change
from
Prior Year
|
|
2010 |
|
$ |
40,284 |
|
|
$ |
24,505 |
|
|
|
155.3 |
% |
2009 |
|
$ |
15,779 |
|
|
|
|
|
|
|
|
|
Sales and
marketing expenses increased by approximately $24,500 in the three months ended
March 31, 2010 as compared to the three months ended March 31, 2009 due to
increased travel of approximately $23,000 and minor changes in other marketing
related expenses.
Operating
Loss
Three
Months
Ended
March
31,
|
|
Operating
Loss
|
|
|
Change
from
Prior
Year
|
|
|
Percent
Change
from
Prior Year
|
|
2010 |
|
$ |
(510,238) |
|
|
$ |
(304,132)
|
|
|
|
147.6 |
% |
2009 |
|
$ |
(206,106) |
|
|
|
|
|
|
|
|
|
The
increase in our operating loss for the three months ended March 31, 2010 as
compared to the three months ended March 31, 2009 is primarily due to the
increases in general and administrative expenses and sales & marketing
expenses, each of which is described above.
Total
Other Income (Expense)
Three
Months
Ended
March
31,
|
|
Total Other
Income
(Expense)
|
|
|
Change
from
Prior
Year
|
|
|
Percent
Change
from
Prior Year
|
|
2010 |
|
$ |
(479,237) |
|
|
$ |
(478,122)
|
|
|
|
42880.9 |
% |
2009 |
|
$ |
(1,115) |
|
|
|
|
|
|
|
|
|
In the
three months ended March 31, 2010, we incurred additional interest expense of
approximately $478,000 as compared to the three months ended March
31, 2009, related to the issuance of common stock in exchange for
debt.
Income
Tax Provision (Benefit)
Three
Months
Ended
March
31,
|
|
Income Tax
Provision
(Benefit)
|
|
|
Change
from
Prior
Year
|
|
|
Percent
Change
from
Prior Year
|
|
2010 |
|
$ |
- |
|
|
$ |
- |
|
|
|
0.0 |
% |
2009 |
|
$ |
- |
|
|
|
|
|
|
|
|
|
While we
have optimistic plans for our business strategy, we determined that a valuation
allowance was necessary given the current and expected near term losses and the
uncertainty with respect to our ability to generate sufficient profits from our
business model. Therefore, we established a valuation allowance for
all deferred tax assets.
Net
Loss
Three
Months
Ended
March
31,
|
|
Net Loss
|
|
|
Change
from
Prior
Year
|
|
|
Percent
Change
from
Prior Year
|
|
2010 |
|
$ |
(989,475) |
|
|
$ |
(782,253) |
|
|
|
377.5 |
% |
2009 |
|
$ |
(207,222) |
|
|
|
|
|
|
|
|
|
Changes
in net loss are primarily attributable to changes in operating income, other
income (expense) and discontinued operations, each of which is described
above.
LIQUIDITY
AND CAPITAL RESOURCES
Net cash
used in operating activities was $555,937 and $28,815 for the three months ended
March 31, 2010 and 2009, respectively. The increase is mainly attributable
to the increase in our net loss and increase in stock issued for
services.
Our
primary source of cash inflows has historically been from listing agreement
customers. In late 2009 we received an advance payment for shares of
a listed company that is expected to be completed in the first half of
2010. As of March 31, 2010 and 2009, no single customer accounted for
greater than 10% of accounts receivable as part of the agreements require
deposits in advance rather than billing after the fact.
Cash
provided by financing activities was $503,710 and $45,500 for the three months
ended March 31, 2010 and 2009, respectively. The increase is due to payment of
debt with common stock.
We had
working capital of $(1,069,710) as of March 31, 2010 compared to $(901,396) as
of December 31, 2009. Our cash position decreased to $110,382 at
March 31, 2010 compared to $162,609 at December 31, 2009, as we had a decrease
in cash flows from operations, offset by cash provided by investing
activities.
Our
monthly cash requirement amount is approximately $15,000, and as of March 31,
2010, cash on hand would fund operations for approximately seven
months. For the three months ended March 31, 2010, we have increased
deferred revenue by approximately $228,000 as compared to the three months ended
March 31, 2009, as a result of cash deposits on listing agreements.
In the past and current we have
received cash through loans extended by our management to the Company and
through sales of shares of common stock to individual investors. As
we are a consulting company with no proprietary technology it is doubtful we
will obtain capital from institutional or other sources and will need to rely on
our officers for cash infusions. As much of our revenue will come
through sales of equity in our clients it may be several months until we obtain
positive cash flows as this will occur only if and when our clients have
registration statements cleared by the SEC which include client shares of common
stock owned by the Company and these clients become listed on U.S. stock
exchanges or over-the-counter markets.
ITEM 3. QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a
smaller reporting company, the Company is not required to provide Part I, Item 3
disclosure.
ITEM
4. CONTROLS AND PROCEDURES
a)
Evaluation of Disclosure Controls and Procedures
Our Chief
Executive Officer and Chief Financial Officer evaluated the effectiveness of our
disclosure controls and procedures as of the end of the period covered by this
report. Based on that evaluation, Chief Executive Officer and Chief Financial
Officer concluded that our disclosure controls and procedures as of the end of
the period covered by this report were effective such that the information
required to be disclosed by us in reports filed under the Securities Exchange
Act of 1934 is (i) recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms and (ii) accumulated and
communicated to the Chief Executive Officer and Chief Financial Officer, as
appropriate to allow timely decisions regarding disclosure. A controls system
cannot provide absolute assurance, however, that the objectives of the controls
system are met, and no evaluation of controls can provide absolute assurance
that all control issues and instances of fraud, if any, within a company have
been detected.
Our Chief
Executive Officer and Chief Financial Officer are responsible for establishing
and maintaining adequate internal control over financial reporting (as defined
in Rule 13a-15(f) under the Exchange Act). Our internal control over financial
reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with accounting principles generally
accepted in the United States.
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Therefore, even those systems determined to be
effective can provide only reasonable assurance of achieving their control
objectives. Furthermore, smaller reporting companies face additional
limitations. Smaller reporting companies employ fewer individuals and find it
difficult to properly segregate duties. Often, one or two individuals control
every aspect of the Company's operation and are in a position to override any
system of internal control. Additionally, smaller reporting companies tend to
utilize general accounting software packages that lack a rigorous set of
software controls.
b)
Changes in Internal Control over Financial Reporting.
During
the quarter ended March 31, 2010, there was no change in our internal control
over financial reporting (as such term is defined in Rule 13a-15(f) under the
Exchange Act) that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
LACK
OF INDEPENDENT BOARD OF DIRECTORS AND AUDIT COMMITTEE
Management
is aware that an audit committee composed of the requisite number of independent
members along with a qualified financial expert has not yet been
established. Considering the costs associated with procuring and
providing the infrastructure to support an independent audit committee and the
limited number of transactions, Management has concluded that the risks
associated with the lack of an independent audit committee are not
justified. Management will periodically reevaluate this
situation.
LACK
OF SEGREGATION OF DUTIES
Management
is aware that there is a lack of segregation of duties at the Company due to the
small number of employees dealing with general administrative and financial
matters. However, at this time management has decided that considering the
abilities of the employees now involved and the control procedures in place, the
risks associated with such lack of segregation are low and the potential
benefits of adding employees to clearly segregate duties do not justify the
substantial expenses associated with such increases. Management will
periodically reevaluate this situation.
PART
II – OTHER INFORMATION
ITEM
1. LEGAL PROCEEDINGS
Neither
our company nor any of its officers or directors is a party to any material
legal proceeding or litigation and such persons know of no material legal
proceeding or litigation contemplated or threatened. There are no judgments
against the Company or its officers or directors. None of the officers or
directors has been convicted of a felony or misdemeanor relating to securities
or performance in corporate office.
ITEM 1A - RISK
FACTORS
There
have been no material changes for the risk factors disclosed in the “Risk
Factors” section of our Annual Report on Form 10-K for the year ended December
31, 2009.
ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
During
the three months ended March 31, 2010, Company issued 1,700,000 shares of common
stock to three consultants for services rendered. Of those shares,
600,000 were issued at $.11 per share (the trading value of the stock on the
date of issuance) and 1,100,000 shares were issued at $.17 per share (the
trading value of the stock on the date of issuance) for a cumulative value of
$253,000. On March 11, 2010, the Company issued 3,100,000 shares of
common stock in exchange for the cancellation of debt in the principal amount of
$50,040, owed to two individuals. These shares were issued at $.17
per share which was the trading value of the stock on the date of
issuance. The Company expensed $476,961 in addition to the
debt. We have issued the above securities not registered under the
Securities Act by reason of the exemption afforded under Section 4(2) of the
Securities Act of 1933, within the last quarter. No underwriting discounts or
commissions were paid with respect to any of the transactions.
ITEM 3. DEFAULTS UPON
SENIOR SECURITIES
There were no defaults upon
senior securities during the period ended March 31, 2010.
ITEM
4. [REMOVED AND RESERVED]
N/A
ITEM
5. OTHER INFORMATION
None
ITEM
6. EXHIBITS
|
Certification
of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act
|
|
Certification
of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act
|
|
Certification
of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley
Act.
|
|
Certification
of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley
Act.
|
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.
EastBridge
Investment Group Corporation |
|
|
|
|
|
/s/ Keith Wong |
|
Keith
Wong |
|
Chief
Executive Officer |
|
|
|
|
|
/s/
Norman Klein |
|
Norman
Klein |
|
Chief
Financial Officer |
|
|
|
May 14,
2010