Attached files
| file | filename |
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| EX-31.1 - AAA CENTURY GROUP USA, INC. | v170933_ex31-1.htm |
| EX-32.1 - AAA CENTURY GROUP USA, INC. | v170933_ex32-1.htm |
| EX-31.2 - AAA CENTURY GROUP USA, INC. | v170933_ex31-2.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K/1
(Amendment
No. 2)
(Mark
One)
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ý
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ANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For the
fiscal year ended: December
31, 2008
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o TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For the
transition period from ________ to ________
Commission
file number: 000-52769
VINYL PRODUCTS,
INC.
(Name of
Small Business Issuer in its charter)
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Nevada
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26-0295367
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(State
or other jurisdiction of Identification No.)
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(I.R.S.
Employer incorporation or
organization)
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2210 South Ritchey Street, Santa Ana,
California
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92705
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code: (714)
210-8888
Securities
registered under Section 12(b) of the Exchange Act:
None
Securities
registered under Section 12(g) of the Exchange Act:
Common Stock, par value
$0.0001 per share
(Title of
Class)
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
Yes ý No
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Exchange Act.
Yes ý No
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.
ý Yes No
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.
ý 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.
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Large
accelerated filer □
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Accelerated
filer □
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Non-accelerated
filer □
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Smaller
reporting company ý
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(Do
not check if a smaller reporting company)
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Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Yes
ý No
State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant’s most recently completed second fiscal
quarter. $0
APPLICABLE
ONLY TO REGISTRANTS 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 REGISTRANTS)
Indicate
the number of shares outstanding of each of the registrant’s classes of common
stock, as of the latest practicable date.At March 30, 2009 there were 22,263,200
shares of common stock outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
None
EXPLANATORY
NOTE
In this
Amendment to Annual Report on Form 10-K (this “Form 10K/A”), we refer to Vinyl
Products, Inc., a Nevada corporation, as “we,” “us,” “our” or “our
company.”
We are
filing this Amendment No. 2 on Form 10-K/A ("Amendment No. 2") to our Annual
Report on Form 10-K for the year ended December 31, 2008 as originally filed
with the Securities and Exchange Commission (the “SEC”) on March 31, 2009 (the
“Original Filing”), and as thereafter amended upon the filing of Amendment No. 1
to Form 10-K/A as filed with the SEC on November 13, 2009 ("Amendment No. 1"),
to amend "Item 9A. Controls and Procedures," as set forth in Amendment No. 1, to
state management's conclusion as to the effectiveness of the Company's internal
control over financial reporting.
In
accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), each item of Amendment No. 1 that is amended by
this Amendment No. 2 is restated in its entirety, and this Amendment No. 2 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 No. 2, we are not amending any other part
of the Original Filing or Amendment No. 1. This Amendment No. 2
continues to speak as of the date of the Original Filing, except as such
disclosure was amended by Amendment No. 1, and does not reflect events occurring
after the filing of the Original Filing, other than as described in Amendment
No. 1, or modify or update any related or other disclosures, including
forward-looking statements, unless expressly noted
otherwise. Accordingly, this Amendment No. 2 should be read in
conjunction with the Original Filing and Amendment No.1 and with our other
filings made with the SEC subsequent to the filing of the Original Filing and
Amendment No. 1, including any amendments to those filings. The
filing of this Amendment No. 2 shall not be deemed an admission that the
Original Filing or Amendment No. 1 when made included any untrue statement of a
material fact or omitted to state a material fact necessary to make a statement
not misleading.
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 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
December 31, 2008, 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 a result of our evaluation we identified the following
material weaknesses in our disclosure controls and procedures, which are more
fully described below under the heading "Identification of Material
Weakness":
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·
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failure
to implement entity level controls;
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·
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failure
to institute adequate inventory and labor utilization
controls;
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·
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failure
to institute procedures to accurately compute taxes;
and
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·
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undue
reliance on third party
professionals.
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In view
of the results of our evaluation, the Company’s PEO and PFO concluded that the
Company's disclosure controls and procedures were not effective as of December
31, 2008.
Changes
in Internal Controls
We
believe that the material weaknesses we identified with respect to our
disclosure controls and procedures also represented weaknesses in our internal
control over financial reporting. During the three months ended
December 31, 2008, we made changes to our internal control over financial
reporting (as defined in Rules 13a-15 and 15d-15 under the Exchange Act) that
have materially affected, or are reasonably likely to materially affect, the
Company’s internal control over financial reporting, as more fully described
below under the heading "Identification of Material
Weakness."
Identification
of Material Weaknesses in Controls and Procedures
In the
course of preparing the audited consolidated financial statements we filed with
the Form 10-K for the year ended December 31, 2008 (the "Original Filing") and
the periods thereafter, and in connection with the evaluation of our controls
and procedures, we discovered the material weaknesses in our controls and
procedures enumerated above under the heading "Evaluation of Disclosure Controls
and Procedures."
A
material weakness in internal control over financial reporting 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. A
significant deficiency is a deficiency, or a combination of deficiencies, in
internal control over financial reporting that is less severe than a material
weakness, yet important enough to merit attention by those responsible for
oversight of the Company's financial reporting.
Prior to
our acquisition of The Vinyl Fence Company, Inc. ("TVFC") in November 2008, we
were a "shell" company that had no operations and TVFC had operated its business
as a private company. Accordingly, we were not subject to the
rigorous rules and regulations relating to controls and procedures under the
Sarbanes Oxley Act of 2002 or the Exchange Act.
A. Failure
to Implement Entity Level Controls and Inventory and Labor Utilization
Controls
In
connection with the preparation of unaudited financial statements for the
quarter ended September 30, 2008, management of TVFC, which became our
subsidiary after the share exchange transaction consummated on November 20,
2008, determined that TVFC had material weaknesses in its internal controls over
financial reporting and, consequently, weaknesses in our disclosure controls and
procedures. We are reporting the weaknesses in this Form 10-K because
it is the first periodic report we are filing under the Exchange
Act.
Management
became aware of the accounting irregularities in the course of reviewing monthly
financial operations reports for the month ended September 30, 2008 that
demonstrated a significant decline in TVFC's gross profit percentage over the
previous several months. In an itemized review of the monthly
financial information for the several prior quarters, management of TVFC was
unable to 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 in September 2008, 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 equipment and vehicles.
We
reported the loss resulting from the theft of inventory in our unaudited
financial statements for the quarter ended September 30, 2008 and the numerical
information included in those financial statements is
accurate. However, the notes to the financial statements did not
discuss the theft or provide an explanation for the declining financial
performance, as we continued to investigate the circumstances surrounding the
incidents. Furthermore, while the management's discussion and
analysis portion of the Current Report on Form 8-K (filed with the SEC on
November 26, 2008) made reference to a decline in our gross profit resulting
from personnel problems in our fabricating and installation departments, noting
that we addressed these issues by re-defining the roles of our staff responsible
for fabrication and installation and by restructuring our work force, it did not
make reference to the theft or the weaknesses in our internal controls and
procedures.
In
connection with its investigation of the unaccounted for inventory, management
of TVFC identified the following material weaknesses to TVFC’s (and, after
consummation of share exchange on November 20, 2008, the Company's) internal
control over financial reporting:
Entity
Level
Controls: The
Company failed to develop and maintain a company-wide anti-fraud program over
the initiating and processing of financial transactions, as well as other
company-wide procedures which may have an impact on internal controls over
financial reporting.
Inventory
and Labor Utilization Control: Senior management failed to maintain sufficient
oversight over inventory usage and labor utilization. As an example,
this lack of proper oversight allowed certain trusted employees to fabricate
ship and install products for fraudulent jobs.
During
the last fiscal quarter of 2008, management implemented measures to address
these material weaknesses in our internal control over financial
reporting. These actions have materially affected the Company’s
internal control over financial reporting for that period, and
included:
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·
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Personnel
Changes: Our primary responses to rooting out the fraud were to
terminate those identified as the perpetrators and to redefine the roles
of the managers of our accounting department, customer service department
and installation department. The underlying premise of the
changes in our managers' roles is to distribute accountability for
transactions within each of the core elements of our operations among
multiple departments. These changes are intended to ensure that
each material transaction is examined by more than one individual; a
safeguard that we believe will significantly reduce the possibility that a
fraudulent transaction would go undetected or unreported to senior
management.
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·
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Inventory
Control Procedures: We developed a series of controls and
procedures to monitor the flow of inventory through each stage of our
operations. Inventory is reconciled with materials purchased
and received against jobs scheduled and the analysis reports are reviewed
by senior management. Material variances between inventory
inspected and inventory requirements for booked orders are reported to
management immediately. We also are developing returned goods
procedures that will account for materials returned from jobsites (for
scrap or reuse) which will allow us to determine the true material usage
and gross profit.
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In
addition to the foregoing, management more closely oversees all aspects of
operations. More importantly, management reviews gross profit
components and percentages on a monthly basis to ensure that we properly account
for all inventory.
There can
be no assurance at this time that the actions taken to date will effectively
remediate the material weakness described above. We are continuing to closely
monitor and assess the effectiveness of our processes, procedures and controls,
and our board of directors (which serves as our audit committee) will make
adjustments as and when necessary.
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B.
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Failure
to Institute Procedures to Accurately Compute Taxes; Reliance on Third
Party Professionals
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We
determined that our failure to accurately compute our federal and state
corporate income tax liability for the year ended December 31, 2008, as
described under the heading "Management's Discussion and Analysis of Financial
Condition and Results of Operations – Reclassification and Restatement," was a
result of the following weaknesses in our internal control over financial
reporting:
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·
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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.
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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.
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Our
failure to accurately compute our federal and state corporate income taxes for
the year ended December 31, 2008 resulted in an understatement of our tax
liability at December 31, 2008, which impacted our financial statements in
each subsequent interim period through June 30, 2009. As further
described in Note L to the audited consolidated financial statements
accompanying this report, this error resulted in the restatement of the
Company’s financial statements for the year ended December 31,
2008.
We have not yet taken any action to
remediate the material weaknesses identified above. We currently are
exploring all of the options available to us and will consider each option
carefully before taking any action. The remediation of these material
weaknesses will be among our highest priorities.
We cannot
assure you at this time that the actions and remediation efforts we ultimately
implement will effectively remediate the material weakness described
above.
Management’s
Report on Internal Control over Financial Reporting
We are
required to evaluate our internal control over financial reporting in order to
allow management to report on their effectiveness on an annual basis, as
required by Section 404 of the Sarbanes-Oxley Act of 2002 and the rules and
regulations of the SEC. These laws and regulations provide that
management's evaluation of the effectiveness of our internal control over
financial reporting is based on a suitable, recognized control framework that is
established by a body or group that has followed due-process procedures,
including the broad distribution of the framework for public
comment. We are in the process of implementing the components and
principles presented in "Internal Control — Integrated Framework," issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO), as the
basis for our internal control over financial reporting. We
expect to base assessments of and reports on our internal control over financial
reporting on the COSO framework commencing with the year ending December 31,
2009. In view of the material weaknesses in the Company's internal
control over financial reporting that existed as of December 31, 2008,
management has concluded that the Company's internal control over financial
reporting was not effective as of said date.
This
Annual Report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial
reporting. Management’s report was not subject to attestation by the
Company’s registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the Company to provide only
management’s report in this annual report.
Item
15. Exhibits, Financial Statement Schedules.
(b) Exhibits.
The
exhibits listed below are either included or incorporated by reference as
indicated:
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Exhibit No.
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Exhibit Description
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2.1#
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Agreement
and Plan of Merger October 10, 2007, among Red Oak Concepts, Inc., a
Delaware corporation, Red Oak Concepts, Inc., a Nevada corporation, and
the holders of all of the outstanding shares of common stock of each such
corporation.
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2.2*
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Share
Exchange Agreement dated November 20, 2008
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3.1^
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Certificate
of Incorporation of Red Oak Concepts, Inc., a Delaware
corporation.
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3.2^
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By-laws
of Red Oak Concepts, Inc., a Delaware corporation.
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3.3#
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Articles
of Incorporation of Red Oak Concepts, Inc., a Nevada
corporation.
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3.4#
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By-laws
of Red Oak Concepts, Inc., a Nevada corporation.
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3.5*
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Certificate
of Amendment to Articles of Incorporation of Red Oak Concepts,
Inc.
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4.1#
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Specimen
common stock certificate of Vinyl Products, Inc.
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4.2*
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Form
of Option Agreement issued by The Vinyl Fence Company, Inc., the
obligations of which were assumed by the registrant pursuant to the Share
Exchange Agreement.
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4.3*
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Registration
Rights Agreement dated November 20, 2008 among the registrant and the
recipients of the common stock received pursuant to the Share Exchange
Agreement filed as Exhibit 2.1 hereto, the holders of the registrant's
common stock immediately prior to the closing of the Share Exchange
Agreement, the holders of certain options assumed by the registrant under
the Share Exchange Agreement and the purchasers of shares of common stock
in the registrant's private placement completed on November 24,
2008.
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4.4*
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Lock
Up/Leak Out Agreement dated November 20, 2008 between the registrant and
each of Susan D. Zachmann, Katherine Daniels and Barbara
Deadwiley.
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4.5*
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Form
of Lock Up/Leak Out dated November 20, 2008 between the registrant and
each of Haber LLC, Themis LLC and Tailor Made Financial
LLC.
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4.6*
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Form
of Subscription Agreement between the Registrant and the purchasers in the
private offering of securities completed on November 24,
2008.
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4.7*
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Registration
Rights Agreement dated November 24, 2008 among the registrant and the
purchasers of shares of common stock in the registrant's private placement
completed on November 24, 2008.
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10.1#
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Form
of demand promissory note dated June 17, 2007 executed by Red Oak
Concepts, Inc. in favor each of Susan Zachmann and Katherine Daniels each
in the principal amount of $14,950.
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10.2*
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Lease
agreement between AGA Partners and The Vinyl Fence Company, Inc., a
California corporation dated January 31, 2005.
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10.3*
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Fabricator
Agreement dated November 11, 2003 between U.S. Polymers, Inc., and The
Vinyl Fence Company, Inc. as amended and extended on August 29,
2008.
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10.4†
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Professional
Employer Agreement dated June 23, 2005 between Better Business Systems,
Inc. (now Avitus Group) and The Vinyl Fence Company,
Inc.
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10.5◊
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Lease
Renewal dated February 10, 2009 between AGA Partners and The Vinyl Fence
Company, Inc.
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14.1*
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Code
of Business and Ethical Conduct
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31.1+
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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 Annual
Report on Form 10-K/A for the year ended December 31,
2009.
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31.2+
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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 Annual
Report on Form 10-K/A for the year ended December 31,
2009.
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32.1+
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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.
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#
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Incorporated
by reference to the registrant's filing on Form 10-SB as filed with the
Securities and Exchange Commission on August 15,
2007.
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^
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Incorporated
by reference to the registrant's filing on Amendment No. 1 to Form 10-SB
as filed with the Securities and Exchange Commission on September 4,
2007.
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*
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Incorporated
by reference to the registrant's Current Report on Form 8K as filed with
the Securities and Exchange Commission on November 26,
2008.
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†
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Incorporated
by reference to the registrant's registration statement on Form S-1 as
filed with the Securities and Exchange Commission on March 27,
2009.
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◊
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Incorporated
by reference to the registrant's Annual Report on Form 10-K as filed with
the Securities and Exchange Commission on March 31,
2009.
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+
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Filed
herewith.
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SIGNATURES
Pursuant to the requirements of
Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized on January 8, 2010.
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VINYL
PRODUCTS, INC.
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By:
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/s/ Gordon
Knott
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Gordon
Knott
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Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities indicated on January 8, 2010.
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Signature
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Title
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/s/ Gordon
Knott
Gordon
Knott
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President,
Principal Executive Officer and Director
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/s/ Douglas E.
Wells
Douglas
E. Wells
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Chief
Financial Officer and Principal Financial Officer
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/s/ Garabed
Khatchoyan
Garabed
Khatchoyan
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Secretary
and Director
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