FLORIDA
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59-2291344
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(State or other jurisdiction of
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||
Incorporation or Organization)
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(I.R.S. Employer Identification No.)
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Large Accelerated Filer
¨
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Accelerated Filer
¨
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Non-Accelerated Filer
þ
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Smaller reporting company
¨
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Part I.
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Financial Information
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Item 1.
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Financial Statements
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||
Unaudited Condensed Consolidated Balance Sheets as of June 30, 2011 and December 31, 2010
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3
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||
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income for the three and six months ended June 30, 2011 and 2010
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4
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||
Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity for the period ended June 30, 2011
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5
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||
Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2011 and 2010
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6
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||
Notes to Unaudited Condensed Consolidated Financial Statements
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7
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||
Item 2.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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20
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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29
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Item 4.
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Controls and Procedures
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29
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Part II.
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Other Information
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||
Item 1.
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Legal Proceedings
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30
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Item 1A.
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Risk Factors
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30
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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30
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Item 3.
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Defaults Upon Senior Securities
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30
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Item 4.
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Removed and Reserved
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30
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Item 5.
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Other Information
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30
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Item 6.
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Exhibits
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31
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As of
June 30,
2011
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As of
December 31,
2010
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|||||||
ASSETS
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||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 7,374 | $ | 2,608 | ||||
Amounts receivable (net of allowance for doubtful accounts of $186; 2010 - $168)
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890 | 203 | ||||||
Receivable from a related party
|
— | 392 | ||||||
Deposits
|
645 | 771 | ||||||
Inventory – equipment
|
1,384 | 2,594 | ||||||
Deferred income tax
|
2,088 | 2,228 | ||||||
Other current assets
|
167 | 63 | ||||||
Total current assets
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12,548 | 8,859 | ||||||
Other assets:
|
||||||||
Inventory – real estate
|
1,073 | 1,573 | ||||||
Asset liquidation investments
|
1,471 | 3,548 | ||||||
Investments
|
2,784 | 2,706 | ||||||
Property, plant and equipment
|
20 | — | ||||||
Goodwill
|
226 | — | ||||||
Total assets
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$ | 18,122 | $ | 16,686 | ||||
LIABILITIES AND EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable and accrued liabilities
|
$ | 1,062 | $ | 2,555 | ||||
Income taxes payable
|
363 | 198 | ||||||
Debt payable to third parties
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921 | 4,485 | ||||||
Debt payable to a related party
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67 | — | ||||||
Total liabilities
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2,413 | 7,238 | ||||||
Commitments and contingencies
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||||||||
Equity:
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||||||||
Preferred stock, $10.00 par value, authorized 10,000,000 shares; issued and outstanding 592 Class N shares at June 30, 2011 and December 31, 2010, liquidation preference of $592 at June 30, 2011 and December 31, 2010
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6 | 6 | ||||||
Common stock, $0.01 par value, authorized 300,000,000 shares; issued and outstanding 27,083,030 shares at June 30, 2011 and 25,960,080 shares at December 31, 2010
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270 | 259 | ||||||
Additional paid-in capital
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278,162 | 275,641 | ||||||
Accumulated deficit
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(262,729 | ) | (266,458 | ) | ||||
Total equity
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15,709 | 9,448 | ||||||
Total liabilities and equity
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$ | 18,122 | $ | 16,686 |
Three Months Ended
June 30,
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Six Months Ended
June 30,
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|||||||||||||||
(In thousands of US dollars, except per share amounts)
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2011
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2010
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2011
|
2010
|
||||||||||||
Revenue:
|
||||||||||||||||
Asset liquidation
|
||||||||||||||||
Asset sale proceeds
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$ | 11,626 | $ | 342 | $ | 12,224 | $ | 2,500 | ||||||||
Commissions and other
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109 | 146 | 245 | 221 | ||||||||||||
Total asset liquidation revenue
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11,735 | 488 | 12,469 | 2,721 | ||||||||||||
Operating costs and expenses:
|
||||||||||||||||
Asset liquidation
|
5,697 | 298 | 6,136 | 1,836 | ||||||||||||
Inventory maintenance
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383 | (17 | ) | 1,553 | (16 | ) | ||||||||||
Patent licensing and maintenance
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13 | — | 70 | 7 | ||||||||||||
Selling, general and administrative
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1,140 | 501 | 1,961 | 1,016 | ||||||||||||
Expenses paid to related parties
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138 | 109 | 285 | 220 | ||||||||||||
Total operating costs and expenses
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7,371 | 891 | 10,005 | 3,063 | ||||||||||||
4,364 | (403 | ) | 2,464 | (342 | ) | |||||||||||
Earnings of equity accounted asset liquidation investments
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157 | 2,601 | 1,717 | 3,038 | ||||||||||||
Operating income
|
4,521 | 2,198 | 4,181 | 2,696 | ||||||||||||
Other income (expenses):
|
||||||||||||||||
Other income (expenses)
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16 | (125 | ) | 16 | (125 | ) | ||||||||||
Interest expense – third party
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(52 | ) | (97 | ) | (136 | ) | (198 | ) | ||||||||
Interest expense – related party
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— | (35 | ) | — | (64 | ) | ||||||||||
Total other income (expenses)
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(36 | ) | (257 | ) | (120 | ) | (387 | ) | ||||||||
Income from continuing operations before the undernoted
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4,485 | 1,941 | 4,061 | 2,309 | ||||||||||||
Income tax expense
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978 | 314 | 380 | 381 | ||||||||||||
Earnings of other equity accounted investments (net of $0 tax)
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33 | 73 | 48 | 151 | ||||||||||||
Net income and comprehensive income
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3,540 | 1,700 | 3,729 | 2,079 | ||||||||||||
Net income and comprehensive income attributable to non-controlling interest
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— | (551 | ) | — | (707 | ) | ||||||||||
Net income and comprehensive income attributable to controlling interest
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$ | 3,540 | $ | 1,149 | $ | 3,729 | $ | 1,372 | ||||||||
Weighted average common shares outstanding (in thousands)
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26,997 | 22,718 | 26,562 | 22,718 | ||||||||||||
Weighted average preferred shares outstanding (in thousands)
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1 | 1 | 1 | 1 | ||||||||||||
Earnings per share – basic and diluted:
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||||||||||||||||
Common shares
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$ | 0.13 | $ | 0.05 | $ | 0.14 | $ | 0.06 | ||||||||
Preferred shares
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$ | 5.24 | $ | 2.02 | $ | 5.61 | $ | 2.41 |
Preferred stock
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Common stock
|
Additional
paid-in
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Accumulated
|
Non-
controlling
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||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
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Amount
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capital
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(Deficit)
|
interest
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Total
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|||||||||||||||||||||||||
Balance at December 31, 2008
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594 | $ | 6 | 22,745,536 | $ | 227 | $ | 274,761 | $ | (270,023 | ) | $ | — | $ | 4,971 | |||||||||||||||||
Capital contribution
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— | — | — | — | — | — | 237 | 237 | ||||||||||||||||||||||||
Purchase and cancellation of preferred and common stock
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(2 | ) | — | (27,456 | ) | — | (126 | ) | — | — | (126 | ) | ||||||||||||||||||||
Compensation cost related to stock options
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— | — | — | — | 71 | — | — | 71 | ||||||||||||||||||||||||
Net loss
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— | — | — | — | — | (1,264 | ) | 65 | (1,199 | ) | ||||||||||||||||||||||
Balance at December 31, 2009
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592 | 6 | 22,718,080 | 227 | 274,706 | (271,287 | ) | 302 | 3,954 | |||||||||||||||||||||||
Issuance of common stock
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— | — | 3,242,000 | 32 | — | — | (32 | ) | — | |||||||||||||||||||||||
Distribution to non-controlling interest
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— | — | — | — | — | — | (766 | ) | (766 | ) | ||||||||||||||||||||||
Transfer from non-controlling interest to controlling interest
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— | — | — | — | 889 | — | (889 | ) | — | |||||||||||||||||||||||
Compensation cost related to stock options
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— | — | — | — | 46 | — | — | 46 | ||||||||||||||||||||||||
Net income
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— | — | — | — | — | 4,829 | 1,385 | 6,214 | ||||||||||||||||||||||||
Balance at December 31, 2010
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592 | 6 | 25,960,080 | 259 | 275,641 | (266,458 | ) | — | 9,448 | |||||||||||||||||||||||
Issuance of common stock
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— | — | 1,122,950 | 11 | 1,995 | — | — | 2,006 | ||||||||||||||||||||||||
Issuance of options
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— | — | — | — | 460 | — | — | 460 | ||||||||||||||||||||||||
Compensation cost related to stock options
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— | — | — | — | 66 | — | — | 66 | ||||||||||||||||||||||||
Net income
|
— | — | — | — | — | 3,729 | — | 3,729 | ||||||||||||||||||||||||
Balance at June 30, 2011
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592 | $ | 6 | 27,083,030 | $ | 270 | $ | 278,162 | $ | (262,729 | ) | $ | — | $ | 15,709 |
(In thousands of US dollars)
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Six months ended
June30,
|
|||||||
2011
|
2010
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$ | 3,729 | $ | 2,079 | ||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Accrued interest added to principal of third party debt
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7 | 9 | ||||||
Amortization of financing costs on debt payable to third party
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18 | 80 | ||||||
Accrued interest added to principal of related party debt
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— | 64 | ||||||
Stock-based compensation expense
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66 | 35 | ||||||
Earnings of equity accounted investments
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(48 | ) | (151 | ) | ||||
Provision for doubtful accounts
|
40 | — | ||||||
Writedown of inventory
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— | (123 | ) | |||||
Changes in operating assets and liabilities:
|
||||||||
Decrease in accounts receivable
|
77 | 880 | ||||||
Decrease in note receivable
|
— | 653 | ||||||
Increase in lease receivable
|
(214 | ) | — | |||||
Decrease in deposits
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126 | 175 | ||||||
Decrease in inventory
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1,710 | 382 | ||||||
Decrease (increase) in asset liquidation investments
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2,077 | (807 | ) | |||||
Increase in other assets
|
(140 | ) | (6 | ) | ||||
Decrease in deferred income tax assets
|
140 | 276 | ||||||
Decrease in accounts payable and accrued liabilities
|
(1,493 | ) | (48 | ) | ||||
Increase in income taxes payable
|
165 | 100 | ||||||
Net cash provided by operating activities
|
6,260 | 3,598 | ||||||
Cash flows from investing activities:
|
||||||||
Investment in other equity accounted investments
|
(32 | ) | (286 | ) | ||||
Cash distributions from other equity accounted investments
|
2 | 292 | ||||||
Cash portion of business acquisition
|
(175 | ) | — | |||||
Net cash provided by (used in) investing activities
|
(205 | ) | 6 | |||||
Cash flows from financing activities:
|
||||||||
Proceeds from issuance of common shares, net of share issuance costs
|
1,823 | — | ||||||
Proceeds of debt payable to third parties
|
1,932 | 5,228 | ||||||
Repayment of debt payable to third parties
|
(5,503 | ) | (5,562 | ) | ||||
Proceeds of debt payable to a related party
|
864 | 1,312 | ||||||
Repayment of debt payable to a related party
|
(405 | ) | (2,819 | ) | ||||
Net cash used in financing activities
|
(1,289 | ) | (1,841 | ) | ||||
Increase in cash and cash equivalents
|
4,766 | 1,763 | ||||||
Cash and cash equivalents at beginning of period
|
2,608 | 93 | ||||||
Cash and cash equivalents at end of period
|
$ | 7,374 | $ | 1,856 | ||||
Supplemental schedule of non-cash investing and financing activities:
|
||||||||
Issuance of common stock in exchange for assets of acquired business
|
$ | 184 | $ | — | ||||
Issuance of options to purchase common stock in exchange for assets of acquired business
|
460 | — | ||||||
Supplemental cash flow information:
|
||||||||
Taxes paid
|
109 | 21 | ||||||
Interest paid
|
91 | 79 |
At June 23, 2011
|
||||
$
|
||||
Consideration
|
||||
Cash
|
175 | |||
Equity instruments:
|
||||
122,950 CRBCI common shares
|
184 | |||
230,000 options to purchase CRBCI common shares
|
460 | |||
Fair value of total consideration
|
819 | |||
Acquisition related costs
(included in selling, general, and administrative expenses in CRBCI’s condensed consolidated statement of operations for the six months ended June 30, 2011)
|
41 | |||
Recognized amounts of identifiable assets acquired and liabilities assumed
|
||||
Accounts receivable
|
591 | |||
Property, plant and equipment
|
2 | |||
Goodwill
|
226 | |||
Total identifiable net assets
|
819 |
June 30,
2011
|
December 31,
2010
|
|||||||
Accounts receivable (net of allowance for doubtful accounts of $0; 2010 - $22)
|
$ | 637 | $ | 124 | ||||
Notes receivable (net of allowance for doubtful accounts of $186; 2010 - $146)
|
39 | 79 | ||||||
Lease receivable
|
214 | — | ||||||
$ | 890 | $ | 203 |
Options
|
Weighted
Average
Exercise
Price
|
|||||||
Outstanding at December 31, 2010
|
728,246 | $ | 0.89 | |||||
Granted
|
2,420,000 | $ | 1.85 | |||||
Expired
|
(6,215 | ) | $ | 8.29 | ||||
Outstanding at June 30, 2011
|
3,142,031 | $ | 1.62 | |||||
Options exercisable at June 30, 2011
|
892,031 | $ | 1.12 |
|
Options
|
Weighted
Average
Exercise
Price
|
||||||
Outstanding at December 31, 2009
|
994,027 | $ | 6.02 | |||||
Granted
|
40,000 | $ | 0.08 | |||||
Expired
|
(80,781 | ) | $ | 59.25 | ||||
Outstanding at June 30, 2010
|
953,246 | $ | 1.26 | |||||
Options exercisable at June 30, 2010
|
749,496 | $ | 1.44 |
June 30,
|
||||||||
2011
|
2010
|
|||||||
Assumed exercise of options to purchase shares of common stock
|
2,727,031 | 873,246 |
June 30,
2011
|
December 31,
2010
|
|||||||
Regulatory and legal fees
|
$ | 285 | $ | 612 | ||||
Distributions payable to former non-controlling interest
|
— | 766 | ||||||
Accounting, auditing and tax consulting
|
169 | 118 | ||||||
Due to Joint Venture partners
|
47 | 178 | ||||||
Asset liquidation expense
|
18 | — | ||||||
Customer deposits
|
25 | 313 | ||||||
Patent licensing and maintenance
|
70 | 118 | ||||||
Sales and other taxes
|
78 | 81 | ||||||
Remuneration and benefits
|
317 | 228 | ||||||
Other
|
53 | 141 | ||||||
Total accounts payable and accrued liabilities
|
$ | 1,062 | $ | 2,555 |
June 30,
2011
|
December 31,
2010
|
|||||||
Knight’s Bridge Capital Partners Internet Fund No. 1 GP LLC
|
$ | 18 | $ | 18 | ||||
Polaroid
|
2,766 | 2,688 | ||||||
Total investments
|
$ | 2,784 | $ | 2,706 |
|
·
|
CRBCI invested $530 to acquire Class D units. These units are subject to a 2% annual management fee, payable to the General Partner. The units have a 10% per annum preferred return; any profits generated in addition to the preferred return, subsequent to the return of invested capital, are subject to the Management LP’s 20% carried interest. Following cash distributions of $46 in 2009 and $56 in 2010, and additional investments of $54 in 2010 and $11 in 2011, the Company’s cumulative cash investment totals $493.
|
|
·
|
CRBCI invested $2,091 to acquire Counsel’s rights and obligations as an indirect limited partner (but not Counsel’s limited partnership interest) in Knight’s Bridge Capital Partners Fund I, L.P. (“Knight’s Bridge Fund”), a related party, with respect to the Polaroid investment. The investment in these units is held by Knight’s Bridge Fund in the name of a Canadian limited partnership (the “LP”) comprised of Counsel (95.24%) and several parties related to Counsel. The $2,091 was Counsel’s share of the LP’s investment and was funded by Counsel. Subsequent to making the investment in the LP, Counsel sold, to CRBCI, the economic benefit of its indirect investment in Polaroid. CRBCI is also responsible for reimbursing Counsel for its share of the management fees, which are 2% of the investment. The economic interest entitles CRBCI to an 8% per annum preferred return. Any profits generated in addition to the preferred return, subsequent to the return of invested capital, are subject to the general partner of the Knight’s Bridge Fund’s 20% carried interest. Following additional investments of $11 in 2009, $263 in 2010, and $21 in the first six months of 2011, and cash distributions of $186 and $233 in 2009 and 2010, respectively, the Company’s cumulative cash investment totals $1,967.
|
2011
|
2010
|
|||||||
Gross revenues
|
$ | 2,023 | $ | 9,985 | ||||
Gross profit
|
$ | 1,620 | $ | 3,065 | ||||
Income from continuing operations
|
$ | 1,717 | $ | 3,038 | ||||
Net income
|
$ | 1,717 | $ | 3,038 | ||||
Net income after non-controlling interest
|
$ | 1,717 | $ | 2,278 |
June 30,
2011
|
December 31,
2010
|
|||||||
Revolving credit facility
|
$ | 921 | $ | 4,485 | ||||
Related party debt
|
67 | — | ||||||
988 | 4,485 | |||||||
Less current portion
|
988 | 4,485 | ||||||
Long-term debt, less current portion
|
$ | — | $ | — |
For the Three Months Ended
|
||||||||
June 30, 2011
|
June 30, 2010
|
|||||||
Asset
Liquidation
|
Asset
Liquidation
|
|||||||
Revenues from external customers
|
$ | 11,735 | $ | 488 | ||||
Earnings of equity accounted asset liquidation investments
|
157 | 2,601 | ||||||
Other income (expense)
|
14 | (125 | ) | |||||
Interest expense
|
(52 | ) | (97 | ) | ||||
Segment income (pre-tax)
|
4,816 | 2,208 | ||||||
Investment in equity accounted asset liquidation investments
|
1,471 | 4,750 | ||||||
Segment assets
|
5,869 | 8,891 |
For the Six Months Ended
|
||||||||
June 30, 2011
|
June 30, 2010
|
|||||||
Asset
|
Asset
|
|||||||
Liquidation
|
Liquidation
|
|||||||
Revenues from external customers
|
$ | 12,469 | $ | 2,721 | ||||
Earnings from equity accounted asset liquidation investments
|
1,717 | 3,038 | ||||||
Other income (expense)
|
14 | (125 | ) | |||||
Interest expense
|
(136 | ) | (198 | ) | ||||
Segment income (pre-tax)
|
4,454 | 2,856 |
Three months
ended
June 30,
2011
|
Three months
ended
June 30,
2010
|
Six months
ended
June 30,
2011
|
Six months
ended
June 30,
2010
|
|||||||||||||
Total other income and earnings from equity accounted investments for reportable segments
|
$ | 171 | $ | 2,476 | $ | 1,731 | $ | 2,913 | ||||||||
Unallocated other income and earnings from equity investments from corporate accounts
|
35 | 73 | 50 | 151 | ||||||||||||
$ | 206 | $ | 2,549 | $ | 1,781 | $ | 3,064 | |||||||||
Total interest expense for reportable segments
|
$ | 52 | $ | 97 | $ | 136 | $ | 198 | ||||||||
Unallocated interest expense from related party debt
|
— | 35 | — | 64 | ||||||||||||
$ | 52 | $ | 132 | $ | 136 | $ | 262 | |||||||||
Total depreciation and amortization for reportable segments
|
$ | — | $ | — | $ | — | $ | — | ||||||||
Other unallocated depreciation from corporate assets
|
— | — | — | — | ||||||||||||
$ | — | $ | — | $ | — | $ | — | |||||||||
Total segment income (pre-tax)
|
$ | 4,816 | $ | 2,208 | $ | 4,454 | $ | 2,856 | ||||||||
Other income
|
35 | 73 | 50 | 151 | ||||||||||||
Other corporate expenses (primarily corporate level interest, general and administrative expenses)
|
(333 | ) | (267 | ) | (395 | ) | (547 | ) | ||||||||
Income tax expense (recovery)
|
978 | 314 | 380 | 381 | ||||||||||||
Net income from continuing operations
|
$ | 3,540 | $ | 1,700 | $ | 3,729 | $ | 2,079 | ||||||||
As at
|
As at
|
|||||||||||||||
June 30, 2011
|
June 30, 2010
|
|||||||||||||||
Segment assets
|
$ | 5,869 | $ | 8,891 | ||||||||||||
Intangible assets not allocated to segments
|
— | — | ||||||||||||||
Other assets not allocated to segments
(1)
|
12,253 | 3,134 | ||||||||||||||
$ | 18,122 | $ | 12,025 |
|
(1)
|
Other assets not allocated to segments are corporate assets such as cash, non-trade accounts receivable, prepaid insurance, investments and deferred income tax assets.
|
2011
|
$82 | |||
2012
|
$159 | |||
2013
|
$154 | |||
2014
|
$141 | |||
2015
|
$148 |
|
·
|
At June 30, 2011 the Company had stockholders’ equity of $15,709, as compared to $9,448 at December 31, 2010.
|
|
·
|
The Company is 76.2% owned by Counsel. At December 31, 2010 the Company was 79.5% owned by Counsel, the Co-CEOs of Counsel RB each owned 6.25% of the Company, and the remaining 8.0% was owned by public stockholders. On March 15, 2011 the Company issued one million common shares through a private placement, representing 3.7% of the then-outstanding common shares. On June 23, in connection with its acquisition of Equity Partners, the Company issued 122,950 common shares. Counsel’s ownership thereby decreased to 76.2%, that of the Co-CEOs to 5.98% each, and that of the remaining public stockholders to 7.65%.
|
Payment due by period
|
||||||||||||||||||||
Contractual obligations
:
|
Total
|
Less than 1
year
|
1-3
years
|
3-5
years
|
More than
5 years
|
|||||||||||||||
Revolving credit facility
|
$ | 962 | $ | 962 | $ | — | $ | — | $ | — | ||||||||||
Debt payable to a related party
|
67 | 67 | — | — | — | |||||||||||||||
Operating leases
|
685 | 164 | 302 | 219 | — | |||||||||||||||
Total
|
$ | 1,714 | $ | 1,193 | $ | 302 | $ | 219 | $ | — |
|
·
|
Compensation expense was $674 in the second quarter of 2011, compared to $342 in the second quarter of 2010. The primary expense in both years was salary and benefits related to Counsel RB, which were $592 in 2011 and $290 in 2010. The increase is due to the growth of Counsel RB’s operations over the past year. With respect to CRBCI’s operations, the salary earned by the President remained unchanged at $34. Stock based compensation was $48 in the second quarter of 2011 and $17 during the second quarter of 2010. This expense increased due to option grants during 2011. During the first quarter, 1,500,000 options were issued to officers and employees of the Company, and during the second quarter, 650,000 options were issued to the Company’s President and two officers of Counsel. There were no similar stock option grants during 2010.
|
|
·
|
Legal expense was $70 in the second quarter of 2011, primarily due to the stock option grants referenced above and the acquisition of Equity Partners. Legal expense was $8 in the second quarter of 2010.
|
|
·
|
Accounting and tax consulting expenses were $45 in the second quarter of 2011, compared to $37 in the second quarter of 2010.
|
|
·
|
Directors’ fees were $34 in the second quarter of 2011 and $32 in the second quarter of 2010.
|
|
·
|
Consulting expense was $93 in the second quarter of 2011 as compared to $13 in the second quarter of 2010, and related solely to the operations of Counsel RB. The increase of $80 is due to the growth of Counsel RB’s operations.
|
|
·
|
Management fees and salary allocations charged by our controlling stockholder, Counsel, were $108 in the second quarter of 2011 and $90 in the second quarter of 2010.
|
|
·
|
Uncompleted asset liquidation deal expenses were $19 in the second quarter of 2011 as compared to $1 in the second quarter of 2010. The increase is due to the growth of Counsel RB’s operations and the greater number of potential transactions.
|
|
·
|
Insurance expense, including directors and officers liability insurance expense was $24 in the second quarter of 2011 as compared to $22 in the second quarter of 2010.
|
|
·
|
Office rent was $43 in the second quarter of 2011 as compared to $22 in the second quarter of 2010, and related solely to the operations of Counsel RB. The increase of $21 is due to the growth of Counsel RB’s operations.
|
|
·
|
Franchise tax was $8 in the second quarter of 2011 as compared to $6 in the second quarter of 2010.
|
|
·
|
Travel expense was $62 in the second quarter of 2011, as compared to $21 in the second quarter of 2010. The majority of the travel related to Counsel RB’s operations, and the increase of $41 is due to the growth of those operations.
|
|
·
|
In the second quarter of 2011, the Company recorded a provision of $39 on accounts and notes receivable related to Counsel RB’s operations. There were no similar transactions during 2010.
|
|
·
|
Other income was $16 in the second quarter of 2011, as compared to other expense of $125 in the second quarter of 2010. In 2011, $12 was the refund of a retainer, and the remainder was interest income. In 2010 the expense primarily consisted of a $123 writedown of Counsel RB’s real estate inventory.
|
|
·
|
Third party interest expense was $52 in the second quarter of 2011, as compared to $97 in the second quarter of 2010. All of the expense related to the third party debt owed by Counsel RB.
|
|
·
|
Related party interest expense was $0 in the second quarter of 2011, as compared to $35 in the second quarter of 2010. All of the 2010 expense related to the Company’s loan from its parent, Counsel, which was repaid in full during the third quarter of 2010.
|
|
·
|
In the second quarter of 2011, the Company recorded income of $33 from its other equity accounted investments, as compared to income of $73 in the second quarter of 2010. In 2011 the amount consisted of $32 from Polaroid and $1 from Knight’s Bridge GP. In 2010 the income consisted of $72 from Polaroid and $1 from Knight’s Bridge GP.
|
|
·
|
Compensation expense was $1,404 in the first half of 2011, compared to $694 in the first half of 2010. The primary expense in both years was salary and benefits related to Counsel RB, which were $1,269 in 2011 and $590 in 2010. The increase is due to the growth of Counsel RB’s operations over the past year. With respect to CRBCI’s operations, the salary earned by the President remained unchanged at $69. Stock based compensation was $66 in the first half of 2011 as compared to $35 during the first half of 2010. During the first half of 2011, 1,750,000 options were issued to officers and employees of the Company, and 400,000 options were issued to officers of Counsel. There were no similar stock option grants during the first half of 2010.
|
|
·
|
Legal expense was a credit of $182 in the first half of 2011, due to negotiated reductions in fees that were billed during 2010. Legal expense was $19 in the first half of 2010.
|
|
·
|
Accounting and tax consulting expenses were $92 in the first half of 2011, compared to $70 in the first half of 2010.
|
|
·
|
Directors’ fees were $67 in the first half of 2011and $65 in the first half of 2010.
|
|
·
|
Consulting expense was $189 in the first half of 2011 as compared to $19 in the first half of 2010, and related solely to the operations of Counsel RB. The increase of $170 is due to the growth of Counsel RB’s operations.
|
|
·
|
Management fees and salary allocations charged by our controlling stockholder, Counsel, were $215 in the first half of 2011 and $180 in the first half of 2010.
|
|
·
|
Uncompleted asset liquidation deal expenses were $45 in the first half of 2011 as compared to $5 in the first half of 2010. The increase is due to the growth of Counsel RB’s operations and the greater number of potential transactions.
|
|
·
|
Insurance expense, including directors and officers liability insurance expense was $46 in the first half of 2011 as compared to $42 in the first half of 2010.
|
|
·
|
Office rent was $91 in the first half of 2011 as compared to $44 in the first half of 2010, and related solely to the operations of Counsel RB. The increase of $47 is due to the growth of Counsel RB’s operations.
|
|
·
|
Franchise tax was $30 in the first half of 2011 as compared to $23 in the first half of 2010.
|
|
·
|
Travel expense was $109 in the first half of 2011, as compared to $28 in the first half of 2010. The majority of the travel related to Counsel RB’s operations, and the increase of $81 is due to the growth of those operations.
|
|
·
|
In the second quarter of 2011, the Company recorded a provision of $39 on accounts and notes receivable related to Counsel RB’s operations. There were no similar transactions during 2010.
|
|
·
|
Other income was $16 in the first half of 2011, as compared to other expense of $125 in the first half of 2010. In 2011, $12 was the refund of retainer, and the remainder was interest income. In 2010 the expense primarily consisted of a $123 writedown of Counsel RB’s real estate inventory.
|
|
·
|
Third party interest expense was $136 in the first half of 2011, as compared to $198 in the first half of 2010. All of the expense related to the third party debt owed by Counsel RB.
|
|
·
|
Related party interest expense was $0 in the first half of 2011, as compared to $64 in the first half of 2010. All of the 2010 expense related to the Company’s loan from its parent, Counsel, which was repaid in full during the third quarter of 2010.
|
|
·
|
In the first half of 2011, the Company recorded income of $48 from its other equity accounted investments, as compared to income of $151 in the first half of 2010. In 2011 the income consisted of $46 from Polaroid and $2 from Knight’s Bridge GP. In 2010 the income consisted of $148 from Polaroid and $3 from Knight’s Bridge GP.
|
Exhibit No.
|
Identification of Exhibit
|
||
10.1
|
Asset Purchase Agreement among EP USA, LLC (as Company), Equity Partners, Inc. of Maryland, The Rexford Company, LLC and Cross Concepts, LLC (as Sellers) and Equity Partners CRB LLC (as Buyer), dated June 23, 2011.
|
||
10.2
|
Put Option Agreement between Counsel RB Capital Inc. and The Rexford Company, LLC, dated June 23, 2011.
|
||
10.3
|
Lock-Up Agreement among Counsel RB Capital Inc., Kenneth Mann and Equity Partners, Inc., dated June 23, 2011.
|
||
10.4
|
Promissory Note for $66,544.13 dated June 30, 2011 between Counsel RB Capital Inc. and Counsel Corporation.
|
||
31.1
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) as adopted under Section 302 of the Sarbanes-Oxley Act of 2002
|
||
31.2
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) as adopted under Section 302 of the Sarbanes-Oxley Act of 2002 | ||
32.1
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||
32.2
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||
101.INS**
|
XBRL Instance Document | ||
101.SCH**
|
XBRL Taxonomy Extension Schema | ||
101.CAL**
|
XBRL Taxonomy Extension Calculation Linkbase | ||
101.DEF**
|
XBRL Taxonomy Extension Definition Linkbase | ||
101.LAB**
|
XBRL Taxonomy Extension Label Linkbase | ||
101.PRE**
|
XBRL Taxonomy Extension Presentation Linkbase |
Counsel RB Capital Inc
.
|
||
Date: August 15, 2011
|
By:
|
/s/ Allan C. Silber
|
Allan C. Silber
|
||
Chairman of the Board and President
|
||
(Principal Executive Officer)
|
||
Date: August 15, 2011
|
By:
|
/s/ Stephen A. Weintraub
|
Stephen A. Weintraub
|
||
Chief Financial Officer and Corporate Secretary
|
||
(Principal Financial Officer)
|
1.
|
SALE OF ASSETS
|
1
|
|
1.1
|
Sale of the Assets
|
1
|
|
1.2
|
Excluded Assets
|
2
|
|
1.3
|
Liabilities
|
2
|
|
1.4
|
Purchase Price
|
2
|
|
2.
|
CLOSING
|
3
|
|
2.1
|
Closing
|
3
|
|
2.2
|
Actions of Company, Sellers and Owners at Closing
|
3
|
|
2.3
|
Actions of Buyer at Closing
|
4
|
|
3.
|
REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY
|
4
|
|
3.1
|
Organization
|
4
|
|
3.2
|
Powers; Consents; Absence of Conflicts With Other Agreements, Etc
|
5
|
|
3.3
|
Binding Agreement
|
5
|
|
3.4
|
Compliance With Laws; Permits
|
5
|
|
3.5
|
Property
|
6
|
|
3.6
|
Litigation or Proceedings
|
6
|
|
3.7
|
Environmental Matters
|
7
|
|
3.8
|
Taxes
|
7
|
|
3.9
|
Employee Relations
|
8
|
|
3.10
|
Employee Benefit Matters
|
8
|
|
3.11
|
Contracts
|
8
|
|
3.12
|
Inventory
|
9
|
|
3.13
|
Insurance
|
9
|
|
3.14
|
Books and Records
|
9
|
|
3.15
|
Broker’s or Finder’s Fees
|
9
|
|
3.16
|
No Undisclosed Liabilities
|
9
|
|
3.17
|
Intellectual Property
|
9
|
|
3.18
|
No Misleading Statements
|
10
|
|
3.19
|
Operations
|
10
|
|
4.
|
REPRESENTATIONS AND WARRANTIES REGARDING SELLERS
|
10
|
|
4.1
|
Authorization
|
10
|
|
4.2
|
No Violations
|
11
|
|
4.3
|
Brokers, Finders and Investment Bankers
|
11
|
|
4.4
|
Ownership
|
11
|
|
5.
|
REPRESENTATIONS AND WARRANTIES OF BUYER
|
11
|
|
5.1
|
Organization
|
11
|
|
5.2
|
Powers; Consents; Absence of Conflicts With Other Agreements, Etc
|
11
|
|
5.3
|
Binding Agreement
|
12
|
|
5.4
|
Proceedings
|
12
|
|
5.5
|
No Brokers
|
12
|
6.
|
REPRESENTATIONS AND WARRANTIES REGARDING PARENT
|
12
|
|
6.1
|
Incorporation; Authorization
|
12
|
|
6.2
|
Capitalization; Structure
|
13
|
|
6.3
|
Litigation
|
13
|
|
6.4
|
SEC Reports; Material Adverse Effect
|
13
|
|
6.5
|
Disclosure
|
13
|
|
7.
|
REPRESENTATIONS AND WARRANTIES OF INVESTORS
|
13
|
|
7.1
|
Access
|
14
|
|
7.2
|
Investment Intent
|
14
|
|
7.3
|
Ability to Bear Economic Loss
|
14
|
|
7.4
|
Independent Investigations
|
14
|
|
7.5
|
Accredited Investor
|
14
|
|
7.6
|
State of Domicile
|
14
|
|
8.
|
COVENANTS |
14
|
|
8.1
|
Tax Matters.
|
14
|
|
8.2
|
Sales Tax
|
15
|
|
8.3
|
Prorations
|
15
|
|
8.4
|
Confidentiality
|
16
|
|
8.5
|
Winding Up
|
16
|
|
8.6
|
Assignment of Name Under Certain Conditions
|
16
|
|
9.
|
MISCELLANEOUS
|
16
|
|
9.1
|
Definitions
|
16
|
|
9.2
|
Additional Assurances
|
21
|
|
9.3
|
Cost of Transaction
|
21
|
|
9.4
|
Choice of Law; Venue
|
21
|
|
9.5
|
Waiver of Jury Trial
|
21
|
|
9.6
|
Enforcement of Agreement
|
21
|
|
9.7
|
Survival
|
21
|
|
9.8
|
Notice
|
21
|
|
9.9
|
Benefit/Assignment
|
22
|
|
9.10
|
Third Party Beneficiaries
|
22
|
|
9.11
|
Waiver of Breach
|
23
|
|
9.12
|
Interpretation
|
23
|
|
9.13
|
Tax Advice and Reliance
|
23
|
|
9.14
|
Severability
|
23
|
|
9.15
|
Gender and Number
|
23
|
|
9.16
|
Divisions and Headings
|
23
|
|
9.17
|
Entire Agreement
|
23
|
|
9.18
|
Amendment
|
23
|
|
9.19
|
Counterparts
|
23
|
COMPANY:
|
|
EP USA, LLC
|
|
By:
|
|
Name:
|
|
Title:
|
|
SELLERS:
|
|
EQUITY PARTNERS, INC. OF MARYLAND
|
|
By:
|
|
Name:
|
|
Title:
|
|
THE REXFORD COMPANY, LLC
|
|
By:
|
|
Name:
|
|
Title:
|
|
CROSS CONCEPTS, LLC
|
|
By:
|
|
Name:
|
|
Title:
|
|
OWNERS:
|
|
|
|
Ken Mann
|
|
|
|
Dan Rexford
|
|
|
|
Fred Cross
|
BUYER:
|
|
EQUITY PARTNERS CRB LLC
|
|
By:
|
|
Jonathan Reich, Co-CEO
|
To the Corporation:
|
Counsel RB Capital Inc.
|
Attn: Jonathan Reich
|
267 Central Avenue
|
White Plains, New York 10606
|
Phone: 914.614.1800
|
With a copy to:
|
Counsel Corporation
|
Attn: R. Adam Levy
|
1 Toronto Street, Suite 700
|
Toronto ON M5C 2V6
|
Canada
|
Phone: 416.866.3000
|
and
|
Harwell Howard Hyne Gabbert & Manner, P.C.
|
Attn: Curtis Capeling
|
315 Deaderick Street, Suite 1800
|
Nashville, Tennessee 37238
|
Phone: 615.256.0500
|
Fax: 615-251-1059
|
To Optionee:
|
The Rexford Company, LLC
|
Attn: Dan Rexford
|
Address:
|
Phone:
|
Fax:
|
CORPORATION:
|
|
COUNSEL RB CAPITAL INC.
|
|
By:
|
|
Name:
|
|
Title:
|
|
OPTIONEE:
|
|
THE REXFORD COMPANY, LLC
|
|
By:
|
|
Name:
|
|
Title:
|
|
Counsel RB Capital Inc.
|
|
By:
|
|
Title:
|
|
Equity Partners, Inc. of Maryland
|
|
By:
|
|
Name: Kenneth W. Mann
|
|
Title: President
|
|
Kenneth W. Mann
|
|
|
$66,544.13
|
June 30, 2011
|
COUNSEL RB CAPITAL INC.
|
|
By:
|
|
Name:
|
|
Title:
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Counsel RB Capital Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors:
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
By:
|
/s/ Allan C. Silber
|
Allan C. Silber
|
|
Chairman of the Board and President
(Principal Executive Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Counsel RB Capital Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors:
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
By:
|
/s/ Stephen A. Weintraub
|
Stephen A. Weintraub
|
|
Chief Financial Officer and Corporate Secretary
(Principal Financial Officer)
|
1.
|
The Report is in full compliance with reporting requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.
|
August 15, 2011
|
/s/ Allan C. Silber
|
Allan C. Silber
|
Chairman of the Board and President
|
1.
|
The Report is in full compliance with reporting requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.
|
August 15, 2011
|
/s/ Stephen A. Weintraub
|
Stephen A. Weintraub
|
Chief Financial Officer and Corporate Secretary
|