AAA CENTURY GROUP USA, INC. - FORM 10-Q/A

Attached files

file	filename
EX-31.2 - AAA CENTURY GROUP USA, INC.	v166055_ex31-2.htm
EX-32.1 - AAA CENTURY GROUP USA, INC.	v166055_ex32-1.htm
EX-31.1 - AAA CENTURY GROUP USA, INC.	v166055_ex31-1.htm

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Amendment No. 2)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: June 30, 2009

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 000-52769

	VINYL PRODUCTS, INC.
(Exact name of registrant as specified in its charter)

Nevada		26-0295367
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2210 South Ritchey Street, Santa Ana, California 92705

(Address of principal executive offices)

(714) 210-8888

(Registrant's telephone number)


	(Former name, former address and former
	fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed 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. x Yes ¨ No

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 ¨ No

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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨	Accelerated filer ¨

Non-accelerated filer ¨ (Do not check if a smaller reporting company)	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes x No

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

¨ Yes ¨ No

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: At August 13, 2009 there were 22,863,200 shares of common stock outstanding.

EXPLANATORY NOTE

On November 10, 2009, the board of directors Vinyl Products, Inc. (“we,” “us,” “our” or the “Company”), upon the identification by and recommendation of management, concluded that the previously issued financial statements contained in our Annual Report on Form 10-K ("2008 Annual Report") for the year ended December 31, 2008, and our quarterly reports on Form 10-Q for the quarters ended March 31, 2009 and June 30, 2009 should no longer be relied upon because of errors in those financial statements, and that we would amend and restate these consolidated financial statements to make the necessary accounting corrections.

We are filing this Form 10-Q/A to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 ("Amended June 2009 10-Q") as originally filed with the Securities and Exchange Commission on August 13, 2009 ("Original June 2009 10-Q") to:

amend and restate the consolidated financial statements included the Original June 2009 10-Q to reflect the effect of the amendment and restatement of the audited consolidated financial statements for the years ended December 31, 2008 and 2007, as filed in an amendment on Form 10-K/A to the Annual Report on Form 10-K for the year ended December 31, 2009 on the date hereof (the “Amended 2008 10-K”);

reclassify certain financial information included in the financial statements filed with Original June 2009 10-Q to reflect the effect of the reclassification of the audited consolidated financial statements filed with the Amended 2008 10-K;

amend and restate the "Management's Discussion and Analysis of Financial Condition and Results of Operations"; and

amend Item 4(T), Controls and Procedures.

Concurrent herewith, we are filing the Amended 2008 10-K and a Form 10-Q/A to our quarterly report on Form 10-Q for the three months ended March 31, 2009, both of which include amended, restated and reclassified consolidated financial statements and certain other amendments required to be made to such reports to reflect the amendment, restatement and reclassification of the financial statements filed with such reports.

Restatement. The audited consolidated financial statements for the year ended December 31, 2008 contained in the 2008 Annual Report (the "Original 2007/2008 Financial Statements") understated the reported amount of our federal and state corporate income tax returns for the year ended December 31, 2008 by approximately $30,000. The additional amount of federal and state corporate income taxes to be paid is material to our financial statements.

The restatement of the Original 2007/2008 Financial Statements to report the accurate amount of federal and state corporate income taxes owed affected individual components of our Consolidated Balance Sheets as of December 31, 2008 and the Consolidated Statement of Operations Consolidated Statements of Shareholders’ Equity, and Consolidated of Cash Flows for the year ended December 31, 2008 and subsequent interim periods. However, this restatement had no effect on reported consolidated earnings per share for the years ended December 31, 2008 and 2007. For the period ended June 30, 2009, the restatement affected individual components of the Company's unaudited Consolidated Balance Sheets as of June 30, 2009, Consolidated Statement of Operations, and Consolidated Statement of Cash Flows. The restatement had no effect on earnings per share for the period ended June 30, 2009. We have added a restatement footnote as Note J to the financial statements filed herewith, titled "Reclassification and Restatement."

Reclassification. Our board of directors has concluded that the Original 2007/2008 Financial Statements improperly classified certain expenses as required in accordance with generally accepted accounting principles. Specifically, in the Original 2007/2008 Financial Statements, we had included credit card fees and financing discounts as an "interest expense" (a line item in the Statement of Operations portion of our consolidated financial statements) when such expenses are more properly classified as selling, general and administrative expenses. In October 2009, the board of directors, upon the recommendation of management, resolved to amend the Original 2007/2008 Financial Statements and the financial statements for all subsequent interim periods to reclassify credit card fees and financing discounts as selling, general and administrative expenses.

The reclassification of the Original 2007/2008 Financial Statements affected individual components of the Company’s audited Consolidated Statements of Operations for each of the years in the two-year period ended December 31, 2008 and subsequent interim periods. This reclassification did not result in any change to our reported Consolidated Balance Sheets as of December 31, 2008 and 2007 or the Consolidated Statements of Cash Flows or Consolidated Statements of Operations for either of the years in the two-year period ended December 31, 2008 and had no effect on the reported consolidated net income or earnings per share for either period (though it did affect net operating income and net other income in each of 2007 and 2008 periods). For the period ended June 30, 2008, the reclassification affected individual components of the Company's unaudited Consolidated Statements of Operations. The reclassification affected individual components of our Consolidated Statements of Operations for the period ended June 30, 2009. The reclassification did not result in any change to our reported Consolidated Balance Sheets as of June 30, 2009 or the Consolidated Statement of Cash Flows for the three months and six months then ended and had no effect on the reported consolidated net income or earnings per share for the periods (though it did affect net operating income and net other income in each of 2007 and 2008 periods). We have added a reclassification footnote as Note J to the financial statements filed herewith, titled "Reclassification and Restatement."

Amendment of Management's Discussion and Analysis of Financial Condition and Results of Operations. We are revising the data and information in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 2 of Part I of this report to reflect the effects of the restatement and reclassification of expenses included in our unaudited consolidated financial statements.

Amendment of Item 4(T). As a result of discovering the errors in the Company's financial statements giving rise to the restatement, we are amending the disclosure under Item 4(T) of this report to disclose the material weaknesses in our internal control over financial reporting that existed as of the end of the period covered by this report.

In accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended, each item of the Original June 2009 10-Q that is amended by this Form 10-Q/A is restated in its entirety, and this Form 10-Q/A is accompanied by currently dated certifications on Exhibits 31.1 and 31.2 by our Chief Executive Officer and Chief Financial Officer, respectively, and Exhibit 32.1 by our Chief Executive Officer and Chief Financial Officer.

Except as expressly set forth in this Amendment, we are not amending any other part of the Original Filing. This amendment continues to speak as of the date of the Original June 2009 10-Q, and does not reflect events occurring after the filing of the Original June 2009 10-Q or modify or update any related or other disclosures, including forward-looking statements, unless expressly noted otherwise. Accordingly, this amendment should be read in conjunction with the Original June 2009 10-Q and with our other filings made with the Securities and Exchange Commission subsequent to the filing of the Original June 2009 10-Q, including any amendments to those filings. The filing of this amendment shall not be deemed an admission that the Original June 2009 10-Q when made included any untrue statement of a material fact or omitted to state a material fact necessary to make a statement not misleading.

The following sections in this report have been amended as a result of the restatement and reclassification:

Part II:

Item 1. Financial Statements and Supplementary Data		4
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		5
Item 4(T). Controls and Procedures		15

Item 1. Financial Statements and Supplementary Data

Financial Statement Index

Unaudited Consolidated Financial Statements

for the Three Months and Six Months Ended June 30, 2009

	Page

Consolidated Balance Sheets as of June 30, 2009 (unaudited) and December 31, 2008 (audited)	F–1

Consolidated Statements of Operations for the three months and six months ended June 30, 2009 and 2008 (unaudited)	F–2

Consolidated Statements of Stockholders’ Deficit for the six months ended June 30, 2009 and 2008 (unaudited)	F-3

Consolidated Statements of Cash Flows for the six months ended June 30, 2009 and 2008 (unaudited)	F–4

Notes to the Financial Statements	F–5

VINYL PRODUCTS, INC. (fka RED OAK CONCEPTS, INC.)

CONSOLIDATED BALANCE SHEET—UNAUDITED

(Restated – Note J)

	As of
	June 30, 2009			December 31, 2008
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents	$	171,149		$	114,901
Accounts Receivable		34,200			57,575
Stock Receivable		-			5,000
Inventory		148,347			156,865
Prepaid Expenses		55,060			38,651
Total Current Assets		408,756			372,992
PROPERTY AND EQUIPMENT:
Property and Equipment		430,163			429,255
Less Accumulated Depreciation		173,284			148,084
Net Property and Equipment		256,879			281,171
OTHER ASSETS:
Security Deposits		8,690			8,690
Total Other Assets		8,690			8,690
TOTAL ASSETS	$	674,325		$	662,853

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current Portion of Long-Term Liabilities	$	16,700		$	18,646
Bank Line of Credit		36,493			-
Accounts Payable and Accruals		298,073			255,401
Customer Deposits		260,607			161,658
Income Taxes Payable		21,600			21,200
Total Current Liabilities		633,473			456,905
LONG-TERM LIABILITIES:
Vehicle and Installment Purchase Contracts		40,870			48,824
Less Current Portion Shown Above		16,700			18,646
Net Long-Term Liabilities		24,170			30,178
Total Liabilities		657,643			487,083
SHAREHOLDERS' EQUITY:
Preferred Stock ($.0.0001 par value; 10,000,000 shares authorized;
no shares issued and outstanding at June 30, 2009 and December 31, 2008)		-			-
Common Stock ($0.0001 par value; 100,000,00 shares authorized;
22,863,200 shares issued and outstanding at June 30, 2009 and 22,859,000 shares issued and outstanding at December 31, 2008)		2,286			2,286
Paid in Capital		92,914			90,814
Retained Earnings (Deficit)		(78,518	)		82,670
Total Shareholders' Equity		16,682			175,770
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	674,325		$	662,853

The accompanying unaudited notes are an integral part of these unaudited financial statements.

F-1

VINYL PRODUCTS, INC.

Consolidated Statements of Operations

For the Three Months and Six Months Ended June 30, 2009

(Restated and Reclassified – Note J)

	For the Three Months Ended						For the Six Months Ended
	June 30, 2009			June 30, 2008			June 30, 2009			June 30, 2008

Income	$	800,403		$	1,189,776		$	1,484,911		$	2,071,455
Cost of Goods Sold:
Labor		127,598			214,404			265,578			402,481
Materials, net of discounts		236,813			363,318			394,630			654,061
Other		6,005			13,582			13,296			20,420
Total Cost of Goods Sold		370,416			591,304			673,504			1,076,962
Gross Profit		429,987			598,472			811,407			994,493
Expenses:
Advertising and Marketing		46,397			57,929			81,137			96,116
Selling, General and Administrative		89,033			108,365			181,614			208,764
Payroll		267,898			195,558			520,046			509,759
Professional Fees		50,785			58,961			134,654			87,102
Rent		26,070			26,070			52,140			51,650
Total Expenses		480,183			446,883			969,591			953,391
Net Operating Income		(50,196	)		151,589			(158,184	)		41,102
Other Income (Expense):
Interest Income		92			3,662			349			5,245
Interest Expense		(1,671	)		(4,404	)		(2,952	)		(5,358	)
Net Other Income (Expense)		(1,579	)		(742	)		(2,603	)		(113	)

Income Before Income Taxes		(51,775	)		150,847			(160,787	)		40,989

Income Taxes		(200	)		(23,800	)		(400	)		(24,000	)
Net Income	$	(51,975	)	$	127,047		$	(161,187	)	$	16,989,
Earnings per share:
Basic	$	(.00	)	$	.00		$	.00	)	$	.00
Diluted	$	(.00	)	$	.00		$	(.00	)	$	.00

Weighted average shares outstanding - basic		22,862,481			22,802,112			22,862,481			22,802,112
Weighted average shares outstanding - diluted		22,969,387			22,802,112			22,969,387			22,802,112

The accompanying unaudited notes are an integral part of these unaudited financial statements.

F-2

VINYL PRODUCTS, INC. (f/k/a RED OAK CONCEPTS, INC.)

CONSOLIDATED STATEMENT OF SHAREHOLDERS' DEFICIT—UNAUDITED

(Restated – Note J)

	Preferred Stock				Common Stock				Paid-In		Retained
	Shares		Stock		Shares		Stock		Capital		Earnings

Balances, December 31, 2008		-	$	-		22,859,000	$	2,286	$	90,814	$	82,669

Issuance of Common Stock		-		-		4,200		-		2,100		-

Net Income/(Loss) for the Period		-		-		-		-		-		(161,187	)

Balances, June 30, 2009		-	$	-		22,863,200	$	2,286	$	92,914	$	(78,518	)

The accompanying unaudited notes are an integral part of these unaudited financial statements.

F-3

VINYL PRODUCTS, INC. (f/k/a RED OAKS CONCEPTS, INC.)

CONSOLIDATED STATEMENTS OF CASH FLOWS—UNAUDITED

(Restated – Note J)

	For the Six Months Ended
	June 30, 2009			June 30, 2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income/(Loss)	$	(161,187	)	$	16,989
Adjustments to Reconcile Net Income to Net Cash Provided by Operations:
Depreciation		25,200			22,928
Changes in Assets and Liabilities:
Decrease (Increase) in Accounts Receivable		23,375			(6,659	)

Decrease (Increase) in Inventory		8,517			(1,152	)
Decrease (Increase) in Prepaid Expenses		(18,807	)		4,102

Increase in Accounts Payable and Accrued Expenses		49,713			76,648
Decrease in Customer Deposits		98,948			130,376
Increase (Decrease) in Credit Card Balances		(4,641	)		(14,304	)
Increase (Decrease) in Income Taxes Payable		400			(10,132	)
Net Cash Provided (Used) by Operating Activities		21,518			218,796

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Fixed Assets		(908	)		(28,041	)
Net Cash Provided (Used) by Investing Activities		(908	)		(28,041	)

CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Common Stock		2,100			2,100
Collection of Stock Receivable		5,000			-
Proceeds from Line of Credit Borrowings, net of repayments		36,493			-
Vehicle Loan Proceeds, net of Principal Payments		(7,954	)		(10,115	)
Increase (Decrease) in Note Payable to Shareholder		-			152,000
Dividends		-			(230,000	)
Net Cash Provided by (Used in) Financing Activities		35,639			(86,015	)

NET CASH INCREASE FOR THE PERIOD		56,249			104,740

Cash at Beginning of Period		114,900			134,252

CASH AT END OF PERIOD	$	171,149		$	238,992

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
CASH PAID DURING THE PERIOD FOR:
INTEREST	$	19,662		$	20,523
TAXES	$	-		$	34,132

The accompanying unaudited notes are an integral part of these unaudited financial statements.

F-4

VINYL PRODUCTS, INC.

Notes to Unaudited Consolidated Financial Statements

For the Six Months Ended June 30, 2009

(Reclassified and Restated – Note J)

NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization – Vinyl Products, Inc. (“the Company”) was incorporated in the State of Delaware on May 24, 2007 under the name Red Oak Concepts, Inc. to serve as a vehicle for a business combination through a merger, capital stock exchange, asset acquisition or other similar business combination. The Company filed a registration statement on Form 10 under the Securities Exchange Act of 1934, as amended, to register its class of common stock on September 15, 2007 that was effective as of November 14, 2007. On December 4, 2007, the Company changed its jurisdiction of domicile by merging with a Nevada corporation titled Red Oak Concepts, Inc. On November 21, 2008, the Company changed its name to Vinyl Products, Inc. in connection with a reverse acquisition transaction with The Vinyl Fence Company, Inc. (“TVFC”), a California corporation.

On November 20, 2008, the Company entered into a Share Exchange Agreement (the “Exchange Agreement”) with The Vinyl Fence Company, Inc. (“TVFC”), a company incorporated under the laws of the State of California. Pursuant to the terms of the Exchange Agreement, the Company acquired all of the outstanding capital stock of TVFC from the TVFC shareholders in exchange for 22,100,000 shares of the Company’s common stock. Because the acquisition is treated as a reverse acquisition, the financial statements of the Company have been retroactively adjusted to reflect the acquisition from the beginning of the reported periods. The stock exchange transaction has been accounted as a reverse acquisition and recapitalization of the Company whereby TVFC is deemed to be the accounting acquirer (legal acquiree) and the Company to be the accounting acquiree (legal acquirer). The basis of the assets, liabilities and retained earnings of TVFC has been carried over in the recapitalization, and earnings per share have been retroactively restated to reflect the reverse acquisition.

Pursuant to the Exchange Agreement, on November 21, 2008, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Secretary of State for the State of Nevada to change its corporate name to “Vinyl Products, Inc.” to better reflect its business.

Business Activity — The Vinyl Fence Company, Inc. designs, fabricates and installs fencing, patio covers, gates and railing made of co-extruded vinyl from its location in Santa Ana, California. The Company operates in one reportable segment, the domestic vinyl products industry.

Cash and Cash Equivalents — The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. The Company routinely has deposits at a financial institution that exceed federal depository insurance

coverage. Management believes that maintaining the deposits at a large reputable institution mitigates risks associated with these excess deposits.

Management’s 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, the disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

F-5

VINYL PRODUCTS, INC.

Notes to Unaudited Consolidated Financial Statements

For the Six Months Ended June 30, 2009

(Reclassified and Restated – Note J)

NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

Revenue Recognition — Customer deposits are recorded as a current liability when received. Under California law, the customer has three days in which to cancel the contract. Revenues are recognized when the installations of the products are complete.

The related cost of goods sold includes materials, installation labor, and miscellaneous other costs.

Comprehensive Income – The Company adopted Financial Accounting Standards Board Statement of Financial Accounting Standards (SFAS) No. 130, “Reporting Comprehensive Income”, which establishes standards for the reporting and display of comprehensive income and its components in the financial statements. There were no items of comprehensive income applicable to the Company during the periods covered in the financial statements.

Advertising and Marketing Expense — The Company expenses all advertising and marketing costs as incurred. Advertising and marketing expense was $81,137 in the six months ended June 30, 2009, and $96,116 in the six months ended June 30, 2008.

Fair Value of Financial Instruments — The carrying value of cash and cash equivalents, accounts receivables, accounts payable and accrued expenses approximate their fair value based on the short-term nature of these accounts. Long-term debt obligations bear fixed interest rates, and their fair value was estimated using a discounted cash flow analysis

based on the Company’s current incremental borrowing rate for similar types of borrowing arrangements. The estimated fair value of the Company’s long-term debt obligations approximates the fair value at June 30, 2009 and 2008.

Accounts Receivable — The Company sells to individual homeowners and homeowner associations. Accounts receivable are minimized by requiring a down payment at the time a sales agreement is signed, and the balance at completion of installation. Bad debt losses are recorded as incurred. Bad debt expense was $-0- in the six months ended June 30, 2009, and the six months ended June 30, 2008. Accounts receivable were $34,200 at June 30, 2009.

Inventory — Inventory is stated at the lower of average cost or market value. Inventory consists of raw materials (approximately 80%) and fabricated materials awaiting installation (approximately 20%). Under the terms of its agreement with its vinyl supplier, the Company receives substantial discounts to product prices.

Impairment of Long-Lived Assets – Using the guidance of Statement of Financial Accounting Standards (SFAS) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, the Company reviews the carrying value of property, plant, and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition, and other economic factors.

F-6

VINYL PRODUCTS, INC.

Notes to Unaudited Consolidated Financial Statements

For the Six Months Ended June 30, 2009

(Reclassified and Restated – Note J)

NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

Property and Equipment — Property and equipment are carried at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the following estimated useful lives:

Vehicles	2 – 7 years
Furniture and Fixtures	7 – 15 years
Machinery and Equipment	5 – 15 years
Office and Computer Equipment	3 – 20 years
Signs	7 years

Leasehold improvements are classified as property and equipment and are amortized using the straight-line method over 15 years and 39 years. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in operations for the period. The cost of maintenance and repairs is charged to operations as incurred. Significant renewals and betterments are capitalized. Depreciation expense was $25,200 in the six months ended June 30, 2009 and $22,928 in the six months ended June 30, 2008.

Recent Accounting Pronouncements – In February 2007, the FASB issued Statement of Financial Standards No. 159, “The Fair Value for Financial Assets and Financial Liabilities – including an amendment of FASB Statement No. 115”. This statement permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This Statement is expected to expand the use of fair value measurement, which is consistent with the Board’s long-term measurement objectives for accounting for financial instruments, and is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 17, 2007, provided the entity also elects to apply the provisions of FASB Statement No. 157, “Fair Value Measurements”. No entity is permitted to apply the Statement retrospectively to fiscal years preceding the effective date unless the entity chooses early adoption. Early adoption of the standard is not expected to have a material effect on the Company’s results of operations or its financial position.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations (“SFAS 141R”). SFAS 141R will significantly change the accounting for business combinations in a number of areas, including the treatment of contingent considerations, contingencies, acquisition costs, IPR&D and restructuring costs. In additions, under SFAS 141R, changes in deferred tax asset valuation allowances and acquired income tax uncertainties in a business combination after the measurement period will impact income tax expense. SFAS 141R is effective for fiscal years beginning after December 15, 2008. The Company has not yet determined the impact, if any, of SFAS 141R on its financial statements.

F-7

VINYL PRODUCTS, INC.

Notes to Unaudited Consolidated Financial Statements

For the Six Months Ended June 30, 2009

(Reclassified and Restated – Note J)

NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

In December 2007, the FASB issued SFAS No. 160, “Non Controlling Interests in Financial Statements, an amendment of ARB No. 51”. SFAS 160 will change the accounting and reporting of minority interests, which will be re-characterized as non-controlling interests (NCI) and classified as a component of equity. This new consolidation method will significantly change the account with minority interest holders. SFAS 160 is effective for fiscal years beginning after December 15, 2008. The Company has not yet determined the impact, if any, of SFAS 160 on its financial statements.

NOTE B – SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental disclosures of cash flow information for the six months ended June 30, 2009 and 2008 are summarized as follows:

Cash paid for interest and income taxes during the six months ended June 30:

	2009		2008
Interest	$	19,662	$	20,523
Income Taxes	$	-0-	$	34,132

NOTE C – COMMITMENTS/LEASES

The Company leases its 10,000 square foot facility under a non-cancellable lease arrangement that expires on March 31, 2011, with an option to renew for an additional two-year period. The lease is guaranteed by one of the Company’s shareholders. Future minimum payments under the current operating lease are $52,140 in 2009, $106,629 in 2010, and $26,833 in 2011.

The Company has an available $100,000 line of credit which it opened in January 2006. Borrowings under the line of credit were paid off in 2007. The interest rate is prime plus 3 percentage points. In 2009, the Company drew down $52,000 under its line of credit; the balance owed as of June 30, 2009 was $36,493.

NOTE D — LONG-TERM DEBT OBLIGATIONS

The Company acquired four vehicles under installment sales contracts with interest rates varying from 4.9% to 6.9%. Future payments under these agreements are as follows:

2009	$	8,209
2010	$	17,052
2011	$	12,038
2012	$	3,571

F-8

VINYL PRODUCTS, INC.

Notes to Unaudited Consolidated Financial Statements

For the Six Months Ended June 30, 2009

(Reclassified and Restated – Note J)

NOTE E – INCOME TAXES

Prior to 2008, the Company had elected to be taxed as a Subchapter S corporation, and as such the net income of the Company was passed through to the Company’s two shareholders. The Company is now a Subchapter C corporation and is subject to Federal and State income taxes.

Income tax expense for the six months ended June 30, 2009 and June 30, 2008 is as follows:

	2009		2008
Federal	$	-0-	$	18,000
California	$	400	$	6,000

As of December 31, 2008, the Company had a net operating loss carryforward for federal tax purposes of $56,025 and a net operating loss carryforward for state tax purposes of $42,209.

NOTE F – NET INCOME PER COMMON SHARE

The Company’s reconciliation of the numerators and denominators of the basic and fully diluted income per share is as follows for the six months ended June 30, 2008 and 2009:

	For the Six Months Ended June 30, 2008
	Income		Shares			Per-Share
	(Numerator)		(Denominator)			Amount
Net Income (Loss)	$	16,989

Basic EPS
Income available to Common shareholders	$	16,989		22,802,112	(A)	$	(.00	)

Effect of Dilutive Securities
Stock Options				-0-

Diluted EPS
Income available to Common shareholders	$	16,989		22,802,112		$	(.00	)

	For the Six Months Ended June 30, 2009
	Income			Shares			Per-Share
	(Numerator)			(Denominator)			Amount
Net Income (Loss)	$	(161,187	)
Basic EPS
Income available to Common shareholders	$	(161,187	)		22,862,481	(A)	$	(.00	)

Effect of Dilutive Securities
Stock Options - antidilutive					106,906

Diluted EPS
Income available to Common shareholders	$	(161,187	)		22,969,387		$	(.00	)

(A) See Note A

F-9

VINYL PRODUCTS, INC.

Notes to Unaudited Consolidated Financial Statements

For the Six Months Ended June 30, 2009

(Reclassified and Restated – Note J)

NOTE G – EMPLOYEE STOCK OPTION PLAN

On September 24, 2008, the Company granted stock options to employees to purchase 133,800 shares of common stock at $.50 a share. Three employees subsequently left the Company and their options for 600 shares were terminated. The options expire on September 23, 2009. As of June 30, 2009, options to purchase 4,200 shares had been exercised.

NOTE H – THEFT LOSS

In connection with the preparation of unaudited financial statements for the quarter ended September 30, 2008, management of TVFC became aware of accounting irregularities that resulted in being unable account for approximately $200,000 of inventory that TVFC had purchased that was not the subject of corresponding sales orders. During the course of TVFC's preliminary investigation of the matter, management discovered that certain employees were committing fraud against the company by stealing inventory and reselling it pursuant to fraudulent sales orders that were never submitted to the company. These employees were retaining the sale price of the inventory and, in some cases, using company employees to fabricate and install the products on company time using company vehicles.

During the last quarter of 2008, management believed that it had identified most if not all of the perpetrators of the fraud, and some of the instances in which inventory was stolen and the jobs to which the inventory was allocated. The fraud extended not only to the loss of the inventory and man hours for the labor associated with the jobs at which the inventory was applied, but also some degree of lost income that

TVFC might have recognized if it had completed the jobs. However, since the sales prices for these fraudulent jobs were substantially below TVFC’s normal sales prices, management believes that it would not have been able to obtain many of these fraudulent sales as company sales.

Management has taken what it believes to be appropriate action to address the material weaknesses in internal control over financial reporting, including terminating three employees, making other personnel changes, and implementing improved physical and documentary controls and procedures. However, management does not expect that its disclosure controls and procedures or internal control over financial reporting will prevent all errors or all instances of fraud in the future. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Inherent limitations in all control systems include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple errors or mistakes. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and any design may not succeed in achieving its stated goals under all potential future conditions.

On December 5, 2008, one of the terminated employees referred to above filed a complaint in Superior Court against the company and its principals, seeking compensatory damages, attorneys' fees, punitive damages and equitable relief. On April 28, 2009, the Court granted Company counsel’s motion to compel arbitration. The parties are currently in the process of selecting an arbiter. The Company is advised by the insurance carrier that all the claims made by the plaintiff are covered by an insurance policy maintained for the benefit of the Company and its PEO and that any amount awarded the plaintiff, either by way of court decision, arbitration or other settlement, are covered by such policy. Accordingly, the Company has no exposure or monetary damages that may be awarded the plaintiff.

F-10

VINYL PRODUCTS, INC.

Notes to Unaudited Consolidated Financial Statements

For the Six Months Ended June 30, 2009

(Reclassified and Restated – Note J)

NOTE I – EQUITY

Common Shares

The Company is authorized to issue 100,000,000 shares of $.0001 par value common stock, and as of June 30, 2009, the Company had 22,863,200 shares outstanding. During the six months ended June 30, 2009, the Company employees exercised options for 4,200 shares for cash in the amount of $2,100 ($.50 per share).

Preferred Shares

The Company is authorized to issue 10,000,000 shares of $.0001 par value preferred stock. The Company has never issues any preferred shares of preferred stock.

NOTE J – RECLASSIFICATION AND RESTATEMENT

(A)

RECLASSIFICATION: In prior years, the Company had included as a component of Interest Expense credit card fees charged by credit card companies to our Company for accepting payments from our customers by credit card, and financing discounts representing the amount we receive from companies that finance a customer's purchase of our products, which is less than the amount of our invoice to the customer. The Company subsequently concluded that these two items were more appropriately classified as selling, general and administrative expenses. Accordingly, the 2009 and 2008 audited Statements of Operations have been reclassified to include these items in Selling, General and Administrative Expenses.

The following line items in the Statements of Operation were affected:

	Three Months Ended June 30, 2009 As Originally Reported			Three Months Ended June 30, 2009 As Reclassified			Effect of Change		Three Months Ended June 30, 2008 As Originally Reported			Three Months Ended June 30, 2008 As Reclassified			Effect of Change
Selling, General and Administrative		79,253			89,033			9,780		98,677			108,365			9,688
Total Expenses		470,403			480,183			9,780		437,195			446,883			9,688
Net Operating Income		(40,416	)		(50,196	)		9,780		161,277			151,589			9,688
Interest Expense		(11,451	)		(1,671	)		9,780		(14,092	)		(4,404	)		9,688
Net Other Income (Expense)		(11,359	)		(1,579	)		9,780		(10,430	)		(742	)		9,688

F-11

VINYL PRODUCTS, INC.

Notes to Unaudited Consolidated Financial Statements

For the Six Months Ended June 30, 2009

(Reclassified and Restated – Note J)

	Six Months Ended June 30, 2009 As Originally Reported			Six Months Ended June 30, 2009 As Reclassified			Effect of Change		Six Months Ended June 30, 2008 As Originally Reported			Six Months Ended June 30, 2008 As Reclassified			Effect of Change
Selling, General and Administrative		164,904			181,614			16,710		193,599			208,764			15,165
Total Expenses		952,881			969,591			16,710		938,226			953,391			15,165
Net Operating Income		(141,474	)		(158,184	)		16,710		56,267			41,102			15,165
Interest Expense		(19,662	)		(2,952	)		16,710		(20,523	)		(5,358	)		15,165
Net Other Income (Expense)		(19,313	)		(2,603	)		16,710		(15,278	)		(113	)		15,165

(B)

RESTATEMENT: Income Taxes for 2008 were previously reported as $50,000; the correct amount was $80,000. Accordingly, the 2008 financial statements have been restated to reflect the correction of this error.

The following line items in the June 30, 2009, and December 31, 2008 Balance Sheets were affected:

	As Originally Reported			As Restated			Effect of Change
June 30, 2009 Balance Sheet:
Prepaid Expenses		63,860			55,060			(8,800	)
Total Current Assets		417,556			408,756			(8,800	)
Total Assets		683,125			674,325			(8,800	)
Income Taxes Payable		400			21,600			21,200
Total Current Liabilities		612,273			633,473			21,200
Total Liabilities		636,443			657,643			21,200
Retained Earnings		(48,518	)		(78,518	)		(30,000	)
Total Shareholders’ Equity		46,682			16,682			(30,000	)
Total Liabilities and Shareholders’ Equity		683,125			674,325			(8,800	)

December 31, 2008 Balance Sheet:
Prepaid Expenses		47,451			38,651			(8,800	)
Total Current Assets		381,792			372,992			(8,800	)
Total Assets		671,653			662,853			(8,800	)
Income Taxes Payable		0			21,200			21,200
Total Current Liabilities		435,705			456,905			21,200
Total Liabilities		465,883			487,083			21,200
Retained Earnings		112,670			82,670			(30,000	)
Total Shareholders’ Equity		205,770			175,770			(30,000	)
Total Liabilities and Shareholders’ Equity		671,653			662,853			(8,800	)

F-12

VINYL PRODUCTS, INC.

Notes to Unaudited Consolidated Financial Statements

For the Six Months Ended June 30, 2009

(Reclassified and Restated – Note J)

The following line items in the Statement of Operations for the three months and six months ended June 30, 2008 were affected:

	As Originally Reported			As Restated			Effect of Change
3 Months Ended June 30, 2008:
Income Taxes		(27,500	)		(23,800	)		3,700
Net Income		123,347			127,047			3,700

6 Months Ended June 30, 2008:
Income Taxes		(27,700	)		(24,000	)		3,700
Net Income		13,289			16,989			3,700

The following table demonstrates the changes in certain line items in the Consolidated Statements of Cash Flows for the six months ended June 30, 2008, that were affected by the restatement and the amount of the change in the period:

	As Originally Reported			As Restated			Effect of Change
6 Months Ended June 30, 2008:
Net Income		13,289			16,989			3,700
Increase (Decrease) In Income Taxes Payable		(6,432	)		(10,132	)		(3,700	)

F-13

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of financial condition and results of operations, together with our consolidated financial statements and related notes thereto appearing elsewhere in this report. In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this report, particularly in the section entitled “Risk Factors.”

Restatement

The following discussion and analysis of our financial condition and results of operations includes the effects of the restated and reclassified amounts as disclosed herein under the heading "Restatement and Reclassification" and in "Note J" to our audited consolidated financial statements for the years ended December 31, 2008 and 2007, titled "Restatement and Reclassification," which are included in Part II, Item 8 of the Form 10-K/A we filed with the SEC on November 13, 2009. For this reason, the data set forth in this section may not be comparable to discussions and data in our previously filed in other reports or filings we have made with the SEC.

General

We market and install a wide variety of attractive, durable, low-maintenance vinyl products, including fencing, patio covers, decking, railing and trim categories from our retail location in Santa Ana, California. Our products are used largely in renovation and remodeling by our customers who include homeowners and homeowner associations.

We differentiate our Company from others in the industry on the basis of the manner in which we market and sell our products and the level of service we offer our customers. Given that the purchase of our products represents a substantial investment in a customer's home, typically their most significant capital asset, we seek to connect with home owners' intrinsic desire to take the time to make an informed, value-driven purchasing decision. Throughout the sales process, we invest the time and effort to develop a relationship with a prospect, as opposed to home centers, specialized retail distributors and independent contractors that typically employ a hard-sell pitch and seek to make a sale only when a consumer is prepared to make a purchase.

Our marketing efforts are designed to capture information about prospective purchasers of exterior vinyl products early in the buying cycle. We maintain contact with them over the course of the decision-making process to educate and consult with them about vinyl products generally, the purchasing and installation process and the ownership experience. We seek to demonstrate to prospects that purchasing from us represents the best value for their money in that we provide a worry-free ownership experience that we believe is not available from other independent retailers, contractors or the national home improvement chains.

Our business is subject to numerous substantial risks, including, among others, that we purchase all of our vinyl products from a single source; our future growth is dependent upon the success of our planned franchise program and there are numerous risks associated with such program; the availability of disposable income to homeowners; the availability of consumer credit; the availability of credit to prospective purchasers of our franchises; the seasonality of our business, which ebbs prior to the year-end holidays and during the first quarter of each calendar year, corresponding to the rainy season in California, and general economic conditions. These risks and other important factors relating to our current and proposed business are detailed in our Annual Report on Form 10-K for the year ended December 31, 2008 that we filed with the Securities and Exchange Commission on March 31, 2009 (the "2008 10-K").

Summary Financial Report

Sales for the second quarter of 2009 were $1,079,000, a decrease of 21% compared to sales of $1,360.000 during the second quarter of 2008. Sales for the first two quarters of 2009 were $1,723,000. A decrease of 25% compared to sales of $2,291,000 during the first two quarters of 2008. We believe that national economic conditions affected our financial and operating results during the last quarter. Over the last year, consumer confidence has been down, consumer financing has been difficult to obtain, home equity values have deteriorated, the amount available for home equity loan withdrawals has declined and it has been our experience that many homeowners have elected not to use their disposable income to undertake home renovation projects. Accordingly, orders for our products were down and sales, income and profits declined commensurately. In response, we laid-off one of our installer crews and reduced certain selling, general and administrative expenses.

Notwithstanding our lackluster financial performance for each of the first two quarters as compared to the corresponding 2008 periods, we believe that the accounting controls and procedures we implemented during the fourth quarter of 2008 have remediated the material weaknesses in our internal controls over financial reporting that we discovered in the third quarter of 2008, as reported in the 2008 10-K. We base our conclusion on the significant increase in gross profit as a percentage of revenue in the first two quarters of 2009 over the prior four quarters, which we have determined demonstrates that we are recognizing revenue on all the raw materials we purchase. We continue to fine-tune our disclosure controls as we gain greater fluency with the nuances of our public company obligations and our personnel develop the skills and expertise with respect to financial reporting under federal securities laws. As described below under Item 4(T). Controls and Procedures, we did not made any material changes to our internal control over financial reporting during the six months ended June 30, 2009.

Business Strategy

The retail outdoor vinyl products is dominated by (i) manufacturers of fencing products, including all of the product material groups, numbering in the hundreds, (ii) distributors, including lumber yards and home centers that carry wood and vinyl fencing and (iii) independent sellers, contractors and installers of all sizes, such as our company. Manufacturers sell their products to all segments of the downstream supply chain. Home centers and lumber yards generally sell products to contractors and homeowners. Typically, homebuilders and home centers subcontract the installation of fencing to contractors. Most product-specific retailer and general contractors install or arrange for installation of products.

In the retail space in which we operate, retailers that sell and install only fence, decks and related products and in which marketing and sales are directed to retail consumers, the market is typified by numerous small companies that seek to gain market share only in their limited geographic operating areas. It is our experience that these entities typically employ rudimentary marketing and advertising programs and tend to be concerned with immediate product sales rather than building a business. We are not aware of any participant in the exterior vinyl products industry that operates on a national basis and believe that a significant opportunity exists for us to develop a national franchise to establish our products and company as a unique brand.

We believe that our business model can be replicated throughout the country and that the fundamental elements of our proprietary sales and marketing techniques, which we believe are sophisticated when compared to our direct competitors, can be conveyed effectively through written materials and training to motivated entrepreneurs. We will seek to leverage our business model by initiating a franchise organization and establishing our Company and brand as the first national vinyl products retail chain. We recently engaged a franchise consultant to assist with the development of the program. We are only beginning to establish the parameters of our organization, but we believe that we can complete the document preparation process and develop a general program design over the next two to three months. Thereafter, we will file documents to register our organization in the States of California and Washington. We hope to be able to offer franchises to the public in early 2010.

Critical Accounting Policies and Estimates

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States, which require us 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 and the reported amounts of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made; however actual results could differ materially from those estimates (See Note A in the Notes to Financial Statements).

Revenue recognition

We record customer deposits on sales as a current liability when received, and we recognize revenues (i.e., income) when installations of the products are complete.

Accounts Receivable

We require a down payment at the time a sales agreement is signed and the balance at completion of installation, which minimizes our accounts receivable. Bad debt losses have been minimal (less than .3% of revenue since inception of the Company), and we record them as they are incurred.

Inventory

Inventory is stated at the lower of average cost or market value. Inventory consists of raw materials (approximately 80%) and fabricated materials awaiting installation (approximately 20%).

Reclassification and Restatement

On November 10, 2009, our board of directors, upon the identification by and recommendation of management, concluded that the previously issued financial statements contained in our Annual Report on Form 10-K ("2008 Annual Report") for the year ended December 31, 2008, and our quarterly reports on Form 10-Q for the quarters ended March 31, 2009 and June 30, 2009 should no longer be relied upon because of errors in those financial statements, and that we would amend and restate these consolidated financial statements to make the necessary accounting corrections. The board also concluded that certain financial information included in the financial statements filed with those reports should be reclassified

Set forth below is a discussion of the reasons for the restatement and the reclassification and a presentation of the specific financial information that was amended and restated as a result thereof.

Reclassification: In prior years, we had included as a component of Interest Expense, a line item in the statement of operations portion of our consolidated financial statements, the amount of credit card fees charged by credit card companies to our Company for accepting payments from our customers by credit card, and the amount of financing discounts, which represents the amount we receive from companies that finance a customer’s purchase of our products, which is less than the amount of our invoice to the customer (the difference being the financing discount). By letter dated April 22, 2009, the staff of the SEC provided us with comments to a filing we made in which it alerted us to the fact that we may not have classified these two items correctly in accordance with generally accepted accounting principles in the Consolidated Statement of Operations we filed as part of the financial statements included in that filing. In response to these comments, the board of directors, upon the recommendation of management, concluded that credit card fees and financing discounts were more appropriately classified as selling, general and administrative expenses.

The reclassification of the audited consolidated financial statements for the years ended December 31, 2007 and 2008 to include credit card fees and financing discounts as selling, general and administrative expenses affected individual components of the Company’s Consolidated Statements of Operations for each of the years in the two-year period ended December 31, 2008. This reclassification did not result in any change to our reported Consolidated Balance Sheets as of December 31, 2008 and 2007 or the Consolidated Statements of Cash Flows for either of the years in the two-year period ended December 31, 2008 and had no effect on the reported consolidated net income or net earnings per share for either period (thought it did affect net operating income and net other income in each of 2007 and 2008 periods). The reclassification affected components of our Consolidated Statements of Operations for the period ended June 30, 2009. The reclassification did not result in any change to our reported Consolidated Balance Sheets as of June 30, 2009 or the Consolidated Statements of Cash Flows for the three months and six months then ended and had no effect on the reported consolidated net income or net earnings per share for the period (though it did affect net operating income and net other income in each of 2007 and 2008 periods). The Company has added a reclassification footnote as Note J to the financial statements filed herewith, titled "Reclassification and Restatement."

The following tables demonstrate the changes in certain line items in the Statements of Operations for the three and six months ended June 30, 2009 and the year ended December 31, 2008 that were affected by the reclassification and the amount of the change in each such year:

Three months ended June 30, 2009:

	Three Months Ended June 30, 2009 As Originally Reported			Three Months Ended June 30, 2009 As Reclassified			Effect of Change		Three Months Ended June 30, 2008 As Originally Reported			Three Months Ended June 30, 2008 As Reclassified			Effect of Change
Selling, General and Administrative		79,251			89,033			9,780		98,677			108,365			9,688
Total Expenses		470,403			480,183			9,780		437,195			446,883			9,688
Net Operating Income		(40,416	)		(50,196	)		9,780		161,277			151,589			9,688
Interest Expense		(11,451	)		(1,671	)		9,780		(14,092	)		(4,404	)		9,688
Net Other Income (Expense)		(11,359	)		(1,579	)		9,780		(10,430	)		(742	)		9,688

Six Months Ended June 30, 2009:

	Six Months Ended June 30, 2009 As Originally Reported			Six Months Ended June 30, 2009 As Reclassified			Effect of Change		Six Months Ended June 30, 2008 As Originally Reported			Six Months Ended June 30, 2008 As Reclassified			Effect of Change
Selling, General and Administrative		164,904			181,614			16,710		193,599			208,764			15,165
Total Expenses		952,881			969,591			16,710		938,226			953,391			15,165
Net Operating Income		(141,474	)		(158,184	)		16,710		56,267			41,102			15,165
Interest Expense		(19,662	)		(2,952	)		16,710		(20,523	)		(5,358	)		15,165
Net Other Income (Expense)		(19,313	)		(2,603	)		16,710		(15,278	)		(2,490	)		15,165

Restatement: In February 2009, we calculated our federal and state corporate income taxes for the year ended December 31, 2008 in reliance on advice from our professional tax preparer that we could compute the taxes due on a consolidated basis after giving effect to the acquisition of The Vinyl Fence Company, Inc. ("TVFC"), which became our wholly owned subsidiary in November 2008. The Original 2007/2008 Financial Statements included the amount of the federal and state taxes on a consolidated basis, which we reported as aggregating approximately $50,000. In March 2009, we filed for extensions of the time in which to pay the taxes with the Internal Revenue Service and the California Franchise Tax Board to defer payment of the taxes until September 2009. In the course of finalizing our tax returns, which we were required to file by September 15, 2009, we were advised by our tax preparer that we could not file the returns of the parent (us) and our subsidiary, TVFC, on a consolidated basis because we did not file the appropriate notification forms in connection with our acquisition of TVFC and change in fiscal year end of our Company. As a result, we were required to file individual returns for each entity. The prohibition against preparing tax returns that consolidated the operations of our Company and TVFC results in higher federal and states corporate income taxes owed, the total amount of which is approximately $80,000, representing a $30,000 difference between the amount of the taxes we originally calculated and reported and the amount we actually owed. The additional amount of federal and state corporate income taxes to be paid is material to our financial statements.

The restatement of the audited consolidated financial statements for the years ended December 31, 2007 and 2008 to report the accurate amount of federal and state corporate income taxes owed affected individual components of our Consolidated Balance Sheets as of December 31, 2008 and on our Consolidated Statement of Operations, Consolidated Statement of Shareholders’ Equity, and Consolidated Statement of Cash Flows for the year ended December 31, 2008. The restatement had no effect on reported earnings per share for that period. The audited consolidated financial statements for the 2007 fiscal year will not be affected in any way. For the period ended June 30, 2009, the restatement affected individual components of the Company's unaudited Consolidated Balance Sheet, Consolidated Statement of Operations, and Consolidated Statement of Cash Flows. The restatement had no effect on earnings per share for the period ended June 30, 2009. The Company has added a restatement footnote as "Note J" to the financial statements filed herewith, titled "Reclassification and Restatement."

The following table demonstrates the changes in certain line items in the Consolidated Balance Sheets as of June 30, 2009 and December 31, 2008 that were affected by the reclassification and the amount of the change in each period:

	As Originally Reported			As Restated			Effect of Change

June 30, 2009 Balance Sheet:
Prepaid Expenses		63,860			55,060			(8,800	)
Total Current Assets		417,556			408,756			(8,800	)
Total Assets		683,125			674,325			(8,800	)
Income Taxes Payable		400			21,600			21,200
Total Current Liabilities		612,273			632,973			21,200
Total Liabilities		636,443			657,643			21,200
Retained Earnings		(48,518	)		(78,518	)		(30,000	)
Total Shareholders’ Equity		46,682			16,682			(30,000	)
Total Liabilities and Shareholders’ Equity		683,125			674,325			(8,800	)

December 31, 2008 Balance Sheet:
Prepaid Expenses		47,451			38,651			(8,800	)
Total Current Assets		381,792			372,992			(8,800	)
Total Assets		671,653			662,853			(8,800	)
Income Taxes Payable		0			21,200			21,200
Total Current Liabilities		435,705			456,905			21,200
Total Liabilities		465,883			487,083			21,200
Retained Earnings		112,670			82,670			(30,000	)
Total Shareholders’ Equity		205,770			175,853			(30,000	)
Total Liabilities and Shareholders’ Equity		671,653			662,853			(8,800	)

The following table demonstrates the changes in certain line items in the Consolidated Statements of Operations for the three and six months ended June 30, 2008 that were affected by the restatement and the amount of the change in each period:

	As Originally Reported			As Restated			Effect of Change
3 Months Ended June 30, 2008:
Income Taxes		(27,500	)		(23,800	)		3,700
Net Income		123,347			127,047			3,700

6 Months Ended June 30, 2008:
Income Taxes		(27,700	)		(24,000	)		3,700
Net Income		13,289			16,989			3,700

	As Originally Reported			As Restated			Effect of Change
6 Months Ended June 30, 2008:
Net Income		13,289			16,989			3,700
Increase (Decrease) In Income Taxes Payable		(6,432	)		(10,132	)		(3,700	)

Results of Operations

Comparison of the Three Months Ended June 30, 2009 and 2008

Income: Income for the second quarter covered by this report was $800,403, a decrease of 33% compared to sales of $1,189,776 during the second quarter of 2008. We believe that such decrease is directly correlated to the general weakness in the national economy, the fact that homeowners either do not have the disposable income to allocate to home renovation projects or have elected not to spend their disposable income on fence or decking projects at this time, and tight consumer credit conditions.

Cost of Goods Sold: During 2008 and 2009, the contract with our vinyl supplier provided for significant discounts on raw materials we purchased upon achieving certain specified purchase quotas, which we met. We benefitted materially from the discount for the 2008 and 2009 fiscal years. Our cost of goods sold for all periods reported in this Quarterly Report on Form 10-Q is net of the discount we receive on the cost of raw materials. (In 2009, the supplier eliminated the specified purchase quotas.)

Gross Profit: Gross profit decreased from $598,472 for the 2008 period to $429,987 for the 2009 period, a decrease of 28%; however, the gross profit percentage increased from 50.3% in 2008 to 53.7% in 2009. We attribute the increase in the gross profit percentage directly to the various personnel adjustments we made when we learned that certain employees had been defrauding the Company by stealing materials and reselling and installing them for their own benefit. These adjustments included terminating the employees involved, re-defining the roles of our staff responsible for fabrication and installation, improving control procedures, restructuring our work force and increasing the involvement of our accounting manager in inventory control. These issues and our reaction and remediation efforts are more fully described in our annual report on Form 10-K for the year ended December 31, 2008.

Expenses:

Advertising and marketing expense during the second quarter of 2009 was $46,397, a decrease of $11,532, or 20%, from the second quarter of 2008 in which we expended $57,929. The decrease represents modifications to our advertising and marketing programs resulting from our ongoing effort to identify and adjust the proper mix of advertising media to maximize the effectiveness of the advertising media we select and the return on advertising investment.

Selling, general and administrative expenses decreased from $108,365 during the second quarter of 2008 to $89,033, or 18%, during the second quarter of 2009. The decrease was due primarily to decreases in travel, meals and entertainment expenses.

Payroll expenses increased from $195,558 to $267, 898, an increase of $72,340, or 37%, due primarily to officer pay increases.

Professional fees decreased from $58,961 during the 2008 period to $50,785 during the corresponding 2009 period, or 14%. The decrease was due primarily to decreases in legal and auditing fees, offset by franchise consulting of $9,500.

Income taxes decreased from $27,500 in 2008 to $200 in 2009, due to the Company making a profit in 2008 and recording a loss in 2009.

For the three years ended June 30, 2009, inflation and changing prices have had little impact on revenues and net income. As our sole vinyl supplier has increased prices, we have been able to increase our prices correspondingly.

Comparison of the Six Months Ended June 30, 2009 and 2008

Income: Income for the first two quarters covered by this report was $1,484,911, a decrease of 28% compared to sales of $2,071,455 during the first two quarters of 2008.

We believe that such decrease is directly correlated to the general weakness in the national economy, the fact that homeowners either do not have the disposable income to allocate to home renovation projects or have elected not to spend their disposable income on fence or decking projects at this time, and tight consumer credit conditions.

Gross Profit: Gross profit decreased from $994,493 for the 2008 period to $811,407 for the 2009 period, a decrease of 18%; however, the gross profit percentage increased from 48.0% in 2008 to 54.6% in 2009. We attribute the increase in the gross profit percentage directly to the various personnel adjustments we made when we learned that certain employees had been defrauding the Company by stealing materials and reselling and installing them for their own benefit. These adjustments included terminating the employees involved, re-defining the roles of our staff responsible for fabrication and installation, improving control procedures, restructuring our work force and increasing the involvement of our accounting manager in inventory control. These issues and our reaction and remediation efforts are more fully described in our annual report on Form 10-K for the year ended December 31, 2008.

Expenses:

Advertising and marketing expense during the first two quarters of 2009 was $81,137, a decrease of $14,979, or 16%, from the first two quarters of 2008 in which we expended $96,116. The decrease represents modifications to our advertising and marketing programs resulting from our ongoing effort to identify and adjust the proper mix of advertising media to maximize the effectiveness of the advertising media we select and the return on advertising investment.

Selling, general and administrative expenses decreased from $208,764 during the first two quarters of 2008 to $181,614, or 13%, during the first two quarters of 2009. The decrease was due primarily to decreases in travel, meals and entertainment expenses.

Payroll expenses increased from $509,759 to $520,046, an increase of $10,287, or 2%, due primarily to employee pay increases.

Professional fees increased from $87,102 during the 2008 period to $134,654 during the corresponding 2009 period, or 55%. The increase was due primarily to increases in franchise consulting of $9,500, legal fees of $26,000, and auditing fees of $15,000, in the latter two cases for the professional services rendered in connection with the share exchange we consummated in November 2008 and the filings made with the SEC as a result thereof.

Income taxes decreased from $24,000 in 2008 to $400 in 2009, due to the Company making a profit in 2008 and a loss in 2009.

For the three years ended June 30, 2009, inflation and changes in prices have had little impact on revenues and net income. As our sole vinyl supplier has increased prices, we have been able to increase our prices correspondingly.

Cash Flows

Three Months Ended June 30, 2009 and June 30, 2008

Cash and Cash Equivalents

Our cash and cash equivalents were $238,992 at June 30, 2008, and decreased to $171,149 by June 30, 2009, due primarily to a decrease in net income in 2009.

Net cash provided by operating activities

Net cash provided by operating activities was $80,216 for the three months ended June 30, 2009, compared to $251,731for the three months ended June 30, 2008. The $171,515 decrease was primarily attributable to a decrease in net income of $179,000.

Net cash used in investing activities

Net cash used in investing activities was $908 for the three months ended June 30, 2009, compared to $26,245 for the three months ended June 30, 2008. The $25,377 decrease was due to the 2008 purchase of leasehold improvements and equipment.

Net cash used in financing activities

Net cash used in financing activities was $18,783 for the three months ended June 30, 2009 compared to $114,829 for the three months ended June 30, 2008, an increase of $96,046, due primarily to the payment of $110,000 of dividends in 2008, offset by debt payments in 2009.

Six Months Ended June 30, 2009 and June 30, 2008

Cash and Cash Equivalents

Our cash and cash equivalents were $238,992 at June 30, 2008, and decreased to $171,149 by June 30, 2009, due primarily to a decrease in net income in 2009.

Net cash provided by operating activities

Net cash provided by operating activities was $21,518 for the six months ended June 30, 2009, compared to $218,796 for the six months ended June 30, 2008. The $197,278 decrease was primarily attributable to a decrease in net income of $179,000 and a decrease in customer deposits of $32,000.

Net cash used in investing activities

Net cash used in investing activities was $$908 for the six months ended June 30, 2009, compared to $28,041 for the six months ended June 30, 2008. The $27,133 decrease was due to the 2008 purchase of leasehold improvements and equipment.

Net cash provided by financing activities

Net cash provided by financing activities was $35,639 for the six months ended June 30, 2009 compared to $86,015 net cash used in the six months ended June 30, 2008, an increase of $121,654, due primarily to the payment of $230,000 of dividends in 2008, offset by an increase in note payable to shareholders of $152,000 in 2008 and net proceeds from line of credit borrowings of $36,000 in 2009..

Liquidity and Capital Resources

Over the next twelve months, we will commence building a franchise program. As described below, we expect that the cost to us to implement the first phase of our franchise program, including the fees of our franchise consultant and franchise license fees and costs for registration of our franchise organization in the States of California and Washington, will not exceed $50,000, as more fully described below.

We recently engaged a franchise consultant to assist us with the development of the program. We are only beginning to establish the parameters of our organization and we cannot estimate the costs associated with its deployment on a national basis. We are advised by our franchise consultant that the costs to develop and implement the program and maintain the organization are highly variable and are a function of numerous factors, such as the number of jurisdictions in which franchisees are located and the specific jurisdictions selected (which will bear on franchise registration fees to be paid); the geographical location of our franchises (close in proximity to each other or widely separated – which will bear on advertising and other costs); the extent of the advertising efforts we may employ and the additional infrastructure we may require to manage the organization.

We expect to implement our franchise program in phases. The first phase will encompass the preparation, with the assistance and guidance of our franchise consultant, of the preponderance of the documentation required to develop and implement the program. This includes documents mandated by the government and internal organizational documentation. We anticipate that this approach will reduce the program's organizational costs significantly. In the second phase, we will apply to register to sell franchises in the States of California and Washington, with the intent of initially selling franchises in relatively close proximity to our principal offices in Orange County, California. We believe that we can more competently and efficiently manage, support and oversee the development of franchises closer to our home office. We expect that the success of our efforts in California and Washington will influence directly our decision as to when to commence offering franchises in other jurisdictions. Success will be measured not only by the number of franchises we sell and their performance but also by our ability to manage our operations and provide the level of support necessary to ensure the success of our franchisees.

We do not currently expect to engage any additional internal personnel to manage the process, and consideration as to future staffing requirements will be dictated by the growth and requirements of the program. We may seek to outsource facets of the development and operation of the franchise program to avoid the burdens of building infrastructure and to take advantage of the expertise of industry professionals. We may engage consultants to assist with franchise organizational matters, such as legal counsel to assist with preparation of franchise registration applications, and professionals who engage in franchisee recruitment, to whom we may pay finders' fees, and advertising.

We hope that we will be in a position to offer franchises in California and Washington in early 2010.

Once a franchise program has been developed, we expect to allocate significant cash resources to advertising (both to recruit franchisees and to fund advertising on behalf of our franchisees), marketing staff, accounting staff and general and administrative expenses, as well as the costs and expenses of any outsourced operations. We cannot currently estimate the costs associated with these elements of the program, as they may vary significantly. We anticipate that these costs will be more than offset by franchise fees and royalties we will earn from franchisees. Future costs will be contingent on the performance of the program, the speed with which we determine to expand into additional jurisdictions into which we will offer franchises and the size of the organization.

It is our intention to fund the above described first two phases of our franchise organization internally from capital generated from operating revenue from our existing retail location and our line of credit (of which $74,000 is available for use at August 13, 2009). We will seek to develop a program and organization within the constraints of our cash resources and take a conservative approach, growing as conditions, return on investment and available capital, among other factors, warrant. In the event that we have underestimated the costs associated with the development of our franchise program, that we encounter unanticipated costs, delays or difficulties, or that the recession deepens or extends significantly longer than financial experts anticipate, we may be required to seek external funding.

In the event we require capital for any purpose, we may seek to secure third-party financing. The nature of the financing, debt or equity, will be dependent upon current market conditions and availability. We cannot be certain that such capital will be available to us on favorable or acceptable terms, or at all.

Outlook

Demand for our products can be linked to changes in the health of the economy in general and the level of activity in home improvements. These activity levels, in turn, are affected by such factors as consumer confidence, home equity values, home equity loan withdrawals, consumer spending habits, reasonably attainable consumer credit, income, interest rates and inflation. These factors are all currently in poor positions, and indications are that they will remain that way in the near-term. We believe that these factors have resulted in decreased home improvement spending, which caused our sales and results of operations to decline for the quarter ended June 30, 2009. We cannot at this time state with any certainty when significant improvements in market conditions may occur and we are managing our business on that basis.

While we expect that current business conditions will persist or improve only slightly over the remainder of calendar year 2009, we continue to believe that our business model is fundamentally sound. We believe that the range of quality products we offer combined with our marketing approach will continue to attract customers and that we can return quickly to pre-recession sales levels at our retail location as the economy rebounds. We think that these key elements of our business will be attractive factors to franchisees and leads us to believe that our growth strategy, predicated on launching a national franchise program in 2010, will fill a niche that can generate significant growth over the longer term.

The performance of our franchise program may depend, in part, on the availability of credit to prospective franchisees. Most franchises are acquired by franchisees utilizing a combination of personal investment and third-party financing. In light of current adverse economic conditions marked by tight credit, prospective franchisees may have difficulty obtaining the financing required to purchase a franchise from us. If credit is not available to these prospects, franchise sales may be sluggish or we may not sell any franchises, which would adversely affect our results of operations and liquidity and impact our ability to expand the franchise program into additional jurisdictions.

Until the advent of more promising economic conditions, we will take a conservative approach to our business generally and to the development of our franchise program specifically. We will be deliberate in the expansion of our franchise organization, to avoid over-extending our financial resources, and we will carefully plan when and how we penetrate new territories. We are hoping that the credit crisis will have eased by the time we are prepared to launch our franchise program in 2010 and that credit will be more readily available from private sources and from the government sector, such as through the Small Business Investment Company (SBIC), or that the Small Business Administration will be in a position to guarantee more loans to entrepreneurs, which would facilitate the acquisition of loans by our prospects.

Quantitative and Qualitative Disclosures About Market Risk

We do not use derivative financial instruments in our investment portfolio and have no foreign exchange contracts. Our financial instruments consist of cash and cash equivalents, trade accounts receivable and accounts payable.

Recent Accounting Pronouncements

In February 2007, the FASB issued Statement of Financial Standards No. 159, “The Fair Value for Financial Assets and Financial Liabilities – including an amendment of FASB Statement No. 115”. This statement permits entities to choose to measure many financial instruments and certain other items at fair value.

The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This Statement is expected to expand the use of fair value measurement, which is consistent with the Board’s long-term measurement objectives for accounting for financial instruments, and is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 17, 2007, provided the entity also elects to apply the provisions of FASB Statement No. 157, “Fair Value Measurements”. No entity is permitted to apply the Statement retrospectively to fiscal years preceding the effective date unless the entity chooses early adoption. Early adoption of the standard is not expected to have a material effect on the Company’s results of operations or its financial position.

Cautionary Statement Relevant to Forward-Looking Information for the Purpose of “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995

The Company and its representatives may from time to time make written or oral forward-looking statements with respect to long-term goals or anticipated results of the Company, including statements contained in the Company’s filings with the Securities and Exchange Commission and in its reports to stockholders.

Statements, including those in this Quarterly Report on Form 10-Q, which are not historical or current facts, are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. There are certain important factors that could cause our results to differ materially from those anticipated by some of the statements made herein. Investors are cautioned that all forward-looking statements involve risk and uncertainty. Some of the factors that could affect results are the continued uninterrupted availability of raw materials and the cost thereof, our ability to develop a successful franchise program, the availability of capital to us as required to implement our franchise program and other expansion plans, the sensitivity of our industry to prevailing national economic conditions, the seasonal nature of the outdoor remodeling industry, the effectiveness of new product introductions, the amount of sales generated and the profit margins thereon, competition and general economic conditions. For further information regarding these risks and uncertainties, see the “Risk Factors” section in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008.

The Company specifically declines to undertake any obligation to publicly revise any forward-looking statements that have been made to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Item 4(T). Controls and Procedures.

Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information we are required to disclose in the reports we file under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to management, including our President (chief executive officer) and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Our management also is responsible for establishing and maintaining internal control over financial reporting which is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of our financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding the prevention or timely detection of the unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

Our management does not expect that our disclosure controls and procedures or internal control over financial reporting will be effective in all instances. There are inherent limitations in all control systems that reflect both resource constraints and the human factor as it relates to the application of a control system, including the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Controls also can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events and any design may not succeed in achieving its stated goals under all potential future conditions.

Evaluation of Disclosure Controls and Procedures

As of June 30, 2009, the Company’s management carried out an evaluation, under the supervision and with the participation of the Company’s Chief Executive Officer (principal executive officer, or PEO) and Chief Financial Officer (principal financial officer, or PFO), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15 and 15d-15 under the Exchange Act), pursuant to Exchange Act Rule 13a-15.

As previously disclosed under “Item 9A. Controls and Procedures” in our Amended 2008 10-K, our management identified material weaknesses in our internal control over financial reporting at December 31, 2008 and each subsequent interim period through June 30, 2009. A material weakness is defined in Section 210.1-02(4) of Regulation S-X as a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

As a result of our failure to accurately compute our federal and state corporate income tax liability for the year ended December 31, 2008, as described in the Amended 2008 10-K, management concluded that we had the following weaknesses in our internal control over financial reporting:

Inadequate Expertise in the Application of Federal and State Tax Laws as they Impact Financial Reporting: Our internal accounting personnel did not possess sufficient expertise in the application of federal and state tax laws as they apply to consolidation of an acquired business with a different fiscal year end.

Reliance on Third Party Professionals: We retained a certified public accountant to prepare our tax returns for the year ended December 31, 2008. We may not have adequately assessed this person's qualifications to ascertain his level of experience to render the services for which we retained him. Moreover, we did not adequately monitor this person's work and placed undue reliance on his expertise without confirming the accuracy of the finished product.

Based on management’s evaluation and as a result of the identified material weaknesses, our Chief Executive Officer and Chief Financial Officer have concluded that as of June 30, 2009, our disclosure controls and procedures were not effective to ensure that we are able to accumulate and communicate to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure, information that we are required to disclose in the reports that we file with the SEC, and to record, process, summarize and report that information within the required time periods.

Changes in Internal Controls

During the three months ended June 30, 2009, we did not make any changes to our internal control over financial reporting (as defined in Rules 13a-15 and 15d-15 under the Exchange Act) that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Plan of Remediation of Material Weakness

We intend to initiate remediation measures to address the material weakness identified above but did not implement any such measures as of the date of this report. We currently are exploring all of the options available to us and will consider each option carefully before taking any action.

We intend to continue to evaluate our internal controls on an ongoing basis and to upgrade and enhance them as needed.

Item 6. Exhibits.

Exhibit		Description

31.1		Certification of the Company’s Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q/A for the quarter ended June 30, 2009.

31.2		Certification of the Company’s Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q/A for the quarter ended June 30, 2009.

32.1		Certification of the Company’s Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused the report to be signed on its behalf by the undersigned thereunto duly authorized.


	VINYL PRODUCTS, INC.


Date: November 23, 2009	By:	/s/ Gordon Knott
	Name:	Gordon Knott
	Title:	President and Chief Executive Officer



Date: November 23, 2009	By:	/s/ Douglas E. Wells
	Name:	Douglas E. Wells
	Title:	Chief Financial Officer and Principal Financial Officer

AAA CENTURY GROUP USA, INC. - FORM 10-Q/A - November 24, 2009

Attached files

AAA CENTURY GROUP USA, INC. Reports