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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period Ended March 31, 2010
 
 CDSI HOLDINGS INC.
  Delaware
    
    000-22563
    
    95-4463937(State or other jurisdiction of
incorporation or organization)
    
    Commission File Number
    
    (I.R.S. Employer Identification No.)
 
 
 x o
 o o
   o Large accelerated filer
    
    o Accelerated filero Non-accelerated filer
    
    x Smaller reporting company
 x o




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CDSI HOLDINGS INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2010
 TABLE OF CONTENTS
 PagePART I.
    
    FINANCIAL INFORMATIONItem 1.
    
    Condensed Financial Statements (Unaudited):Condensed Balance Sheets as of March 31, 2010 and December 31, 2009
    
    
    2Condensed Statements of Operations for the three months ended March 31, 2010 and 2009
    
    
    3Condensed Statements of Cash Flows for the three months ended March 31, 2010 and 2009
    
    
    4Notes to the Condensed Financial Statements
    
    
    5Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    7Item 3.
    
    Controls and Procedures
    
    
    10PART II.
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    11Item 6.
    
    Exhibits
    
    
    11SIGNATURE
    
    
    12EX-31.1EX-31.2EX-32.1EX-32.2




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PART I. FINANCIAL INFORMATION
 
 Item 1. Condensed Financial Statements (Unaudited):
 CDSI HOLDINGS INC.
 
 CONDENSED BALANCE SHEETS
(Unaudited)
 March 31,
    
    
    December 31,2010
    
    
    2009Assets:Current assets:Cash and cash equivalents
    
    $
    17,296
    
    
    $
    9,004Total assets
    
    $
    17,296
    
    
    $
    9,004Liabilities and Stockholders Deficiency:Current liabilities:Accounts payable and accrued expenses
    
    $
    11,013
    
    
    $
    9,800Accrued interest on revolving credit promissory note
    
    
    2,040
    
    
    
    1,420Total current liabilities
    
    
    13,053
    
    
    
    11,220Revolving credit promissory note from related party
    
    
    37,500
    
    
    
    22,500Commitments and contingencies
    
    
    
    
    
    
    Stockholders deficiency:Preferred stock, $.01 par value. Authorized 5,000,000
shares; no shares issued and outstanding
    
    
    
    
    
    
    Common stock, $.01 par value. Authorized 25,000,000
shares; 3,120,000 shares issued and outstanding
    
    
    31,200
    
    
    
    31,200Additional paid-in capital
    
    
    8,209,944
    
    
    
    8,209,944Accumulated deficit
    
    
    (8,274,401
    )
    
    
    (8,265,860
    )Accumulated other comprehensive income
    
    
    
    
    
    
    Total stockholders deficiency
    
    
    (33,257
    )
    
    
    (24,716
    )Total liabilities and stockholders deficiency.
    
    $
    17,296
    
    
    $
    9,004
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CDSI HOLDINGS INC.
 
 CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
 Three Months EndedMarch 31,
    
    
    March 31,2010
    
    
    2009Revenues
    
    $
    
    
    
    $
    Cost and expenses:General and administrative
    
    
    7,920
    
    
    
    6,6077,920
    
    
    
    6,607Operating loss
    
    
    (7,920
    )
    
    
    (6,607
    )Other income (expense):Interest income
    
    
    
    
    
    
    1Interest expense
    
    
    (621
    )
    
    
    Total other (expense) income
    
    
    (621
    )
    
    
    1Net loss
    
    $
    (8,541
    )
    
    $
    (6,606
    )Net loss per share (basic and diluted)
    
    $
    (0.00
    )
    
    $
    (0.00
    )Shares used in computing net
loss per share
    
    
    3,120,000
    
    
    
    3,120,000
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CDSI HOLDINGS INC.
 
 CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
 Three Months EndedMarch 31,
    
    
    March 31,2010
    
    
    2009Cash flows from operating activities:Net loss
    
    $
    (8,541
    )
    
    $
    (6,606
    )Changes in assets and liabilities:Increase in accounts payable and accrued expenses
    
    
    1,213
    
    
    
    911Increase in accrued interest on revolving credit promissory note
    
    
    620
    
    
    
    Net cash used in operating activities
    
    
    (6,708
    )
    
    
    (5,695
    )Net cash from investing activities
    
    
    
    
    
    
    Net cash from financing activitiesBorrowings under revolving credit promissory note
    
    
    15,000
    
    
    
    Net cash provided by financing activities
    
    
    15,000
    
    
    
    Net increase (decrease) in cash and cash equivalents
    
    
    8,292
    
    
    
    (5,695
    )Cash and cash equivalents at beginning of period
    
    
    9,004
    
    
    
    19,698Cash and cash equivalents at end of period
    
    $
    17,296
    
    
    $
    14,003
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CDSI HOLDINGS INC.
 
 NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
 (1)
    
    Business and OrganizationCDSI Holdings Inc. (the Company or CDSI) was incorporated in Delaware on December 29, 1993
and is a shell company as defined in Rule 12b-2 of the Securities Exchange Act of 1934. On
January 12, 1999, the Companys stockholders voted to change the corporate name of the Company
from PC411, Inc. to CDSI Holdings Inc. Prior to May 1998, the Companys principal business
was an on-line electronic delivery information service that transmitted name, address,
telephone number and other related information digitally to users of personal computers (the
PC411 Service). In May 1998, the Company acquired Controlled Distribution Systems, Inc.
(CDS), a company engaged in the marketing and leasing of an inventory control system for
tobacco products. In February 2000, CDSI announced CDS will no longer actively engage in the
business of marketing and leasing the inventory control system. In November 2003, the Company
and its wholly-owned subsidiary CDS merged with the Company as the surviving corporation.At March 31, 2010, the Company had an accumulated deficit of $8,274,401. The Company has
reported an operating loss in each of its fiscal quarters since inception and it expects to
continue to incur operating losses in the immediate future. The Company has reduced operating
expenses and is seeking acquisition and investment opportunities. There is a risk the Company
will continue to incur operating losses.CDSI intends to seek new business opportunities. As CDSI has only limited cash resources,
CDSIs ability to complete any acquisition or investment opportunities it may identify will
depend on its ability to raise additional financing, as to which there can be no assurance.
There can be no assurance that the Company will successfully identify, complete or integrate
any future acquisition or investment, or that acquisitions or investments, if completed, will
contribute favorably to its operations and future financial condition.(2)
    
    Principles of ReportingThe condensed financial statements of the Company as of March 31, 2010 presented herein have
been prepared by the Company and are unaudited. In the opinion of management, all
adjustments, consisting only of normal recurring adjustments, necessary to present fairly the
financial position as of March 31, 2010 and the results of operations and cash flows for all
periods presented have been made. Results for the interim periods are not necessarily
indicative of the results for the entire year.These unaudited condensed financial statements should be read in conjunction with the audited
financial statements and notes thereto for the year ended December 31, 2009 included in the
Companys Annual Report on Form 10-K filed with the Securities and Exchange Commission
(Commission File No. 0001-22563).
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CDSI HOLDINGS INC.
 NOTES TO CONDENSED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 Use of EstimatesThe preparation of the unaudited condensed financial statements in conformity with U.S.
generally accepted accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the unaudited condensed financial statements and the reported
amounts of revenue and expenses during the reporting period. Actual results could differ from
those estimates.Basis of PresentationCertain reclassifications have been made to the 2009 financial information to conform to
the 2010 presentation.(3)
    
    Related Party TransactionsThere was a balance of $37,500 and $22,500 outstanding under the 11% Revolving Credit
Promissory Note due 2012 at March 31, 2010 and December 31, 2009, respectively. Interest
expense on the Revolver was $621 and $0 for the three months ended March 31, 2010 and 2009,
respectively.(4)
    
    Investments and Fair Value MeasurementsThe Companys population of recurring financial assets and liabilities subject to fair value
measurements and the necessary disclosures consists of approximately $7,096 of cash
investments in a money market fund as of March 31, 2010 and December 31, 2009, respectively.
The fair value determination of the money market fund is a Level 1 asset under the fair value
authoritative guidance. The money market fund is invested in Treasury Funds with quoted
prices in active markets.(5)
    
    Subsequent EventsOn April 23, 2010, the Company entered into a stock purchase agreement with Glenn Halpryn,
pursuant to which the Company sold to Mr. Halpryn 150,000 shares of the Companys common
stock, par value $0.01 per share (the Shares), for an aggregate purchase price of $15,000,
or $0.10 per Share. The Shares are restricted securities and no registration rights have been
granted. The issuance of the Shares is exempt from the registration requirements under the
Securities Act of 1933, as amended, pursuant to Section 4(2) thereof, because the transaction
does not involve a public offering.
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CDSI HOLDINGS INC.
 
 Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Overview
  Recent Developments
 Sale of Equity Shares.
 Results of Operations
 Revenues
  Expenses
  Other income (expenses)
  Liquidity and Capital Resources
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CDSI HOLDINGS INC.
          8




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CDSI HOLDINGS INC.
 Special Note Regarding Forward-Looking Statements
   9




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CDSI HOLDINGS INC.
 
 Item 3. CONTROLS AND PROCEDURES
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CDSI HOLDINGS INC.
 
 PART II. OTHER INFORMATION
 
 Legal Proceedings
  
 Exhibits
 31.1
    
    Certification of Chief Executive Officer, Pursuant to Exchange Act Rule
13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer, Pursuant to Exchange Act Rule
13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer, Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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SIGNATURE
  CDSI HOLDINGS INC.
(Registrant)Date: May 17, 2010
    By:
    /s/ J. Bryant Kirkland IIIJ. Bryant Kirkland IIIVice President, Treasurer
and Chief Financial Officer
(Duly Authorized Officer and
Chief Accounting Officer) 12