Attached files
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EX-32.1 - CERTIFICATION - LianDi Clean Technology Inc. | ex32one.htm |
EX-31.2 - CERTIFICATION - LianDi Clean Technology Inc. | ex31two.htm |
EX-31.1 - CERTIFICATION - LianDi Clean Technology Inc. | ex31one.htm |
CURRENT
REPORT FOR ISSUERS SUBJECT TO THE
1934
ACT REPORTING REQUIREMENTS
FORM
10-K
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
Annual
Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act
For the
Fiscal Year Ended December 31, 2009
REMEDIATION
SERVICES, INC.
(Exact
name of registrant as specified in its charter)
Nevada
|
000-52235
|
75-2834498
|
(State
or other jurisdiction of incorporation)
|
(Commission
File Number)
|
(IRS
Employer Identification
|
1111
Hughes Court Wylie, Texas 75098
(Address
of principal executive offices (zip code))
(972)
442-4314
(Registrant’s
telephone number, including area code)
(Former
address)
Securities
registered pursuant to Section 12(b) of the Act: NONE
Securities
registered pursuant to Section 12(g) of the Act: Common
Stock
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 Act of 1934 during the past 12 months and (2) has
been subject to such filing requirement for the
past 90 days Yes [X] 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 [ ].
|
Smaller
Reporting Company [X]
|
Indicate
by a check mark whether the company is a shell company (as defined by Rule 12b-2
of the Exchange Act: Yes [ X ] No
[ ].
Aggregate
market value of the voting stock held by non-affiliates of the registrant as of
December 31, 2009: $226,738.
Shares of
common stock outstanding at February 19, 2010: 5,906,950
PART I.
FORWARD-LOOKING
STATEMENTS
This
annual report on Form 10-K includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, which we refer
to in this annual report as the Securities Act, and Section 21E of the
Securities Exchange Act of 1934, as amended, which we refer to in this annual
report as the Exchange Act. Forward-looking statements are not statements of
historical fact but rather reflect our current expectations, estimates and
predictions about future results and events. These statements may use words such
as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “predict,” “project”
and similar expressions as they relate to us or our management. When we make
forward-looking statements, we are basing them on our management’s beliefs and
assumptions, using information currently available to us. These forward-looking
statements are subject to risks, uncertainties and assumptions, including but
not limited to, risks, uncertainties and assumptions discussed in this annual
report. Factors that can cause or contribute to these differences include those
described under the headings “Risk Factors” and “Management Discussion and
Analysis and Plan of Operation.”
If one or
more of these or other risks or uncertainties materialize, or if our underlying
assumptions prove to be incorrect, actual results may vary materially from what
we projected. Any forward-looking statement you read in this annual report
reflects our current views with respect to future events and is subject to these
and other risks, uncertainties and assumptions relating to our operations,
results of operations, growth strategy and liquidity. All subsequent written and
oral forward-looking statements attributable to us or individuals acting on our
behalf are expressly qualified in their entirety by this paragraph. You should
specifically consider the factors identified in this annual report which would
cause actual results to differ before making an investment decision. We are
under no duty to update any of the forward-looking statements after the date of
this annual report or to conform these statements to actual results.
ITEM
1. DESCRIPTION
OF BUSINESS
We were
incorporated on June 25, 1999 as Slopestyle Corporation in the State of Texas
and redomiciled to become a Nevada corporation on December 12, 2007 and renamed
Remediation Services, Inc. (herein referred to as “Remediation”, “the Company”,
“We” or “Us”.) Our executive offices are located at 1111
Hughes Court, Wylie, Texas. We are engaged in the home restoration and mold
remediation business.
General
In
response to the decline in the housing market and the result of the Company’s
Properties Held for Remediation assets not selling within a year, as originally
anticipated, the Company has decided to search for a merger candidate
and therefore is electing to file as a shell company in all future
filings. The Company’s operations have been nominal in the twelve
months ending December 31, 2009 with sales of $76,011 versus $159,261 in the
twelve months ended December 31, 2008. For the quarter ended December
31, 2009, the Company had $186,873 in assets, of which $185,088 are classified
as Properties Held for Investment; and $210,963 in liabilities. The Company’s
cash balance at December 31, 2009 was $1,785. Furthermore, the
Company has not generated positive cash flow from operations (backing out
advances from shareholders). These factors raise substantial doubt about the
Registrant's ability to continue as a going concern as discussed in Footnote
9.
The
Company filed an 8-K on November 16, 2009 making this election.
The
Company’s business is split into the following segments:
2
Restoration:
|
·
|
Hurricanes,
tornadoes, hail storms, floods and fires, along with a host of other
natural and man-made perils, combine to generate a year-round stream of
potential customers without regard for the state of the
economy.
|
|
·
|
We
generate revenue through a number of strategies. These strategies include
referrals by insurance companies, relationships with general contractors,
and relationships with local business and municipal
leaders.
|
|
·
|
Our
restoration business concentrates on the restoration of single and
multi-family dwellings that can be restored through the contracting with
local contractors and subcontractors. We have made the strategic decision
to focus our restoration business on moderately to substantially damaged
structures, staying away from “total loss” situations as defined by
insurance companies. This strategy allows us to more quickly restore
structures. This strategy allows us to either contract
with the home owner or purchase of the
home.
|
|
·
|
Home
restoration typically involves the replacement of structural components,
specifically, load bearing beams, walls, roofs, ceilings, floors, and
other structural necessities.
|
Remediation:
|
·
|
When
mold in a structure has been identified, the basic concepts of cleaning
are no longer pertinent and restoration is
necessary.
|
|
o
|
Identify
and stop the moisture source
|
|
o
|
Dry
the area
|
|
o
|
Perform
remediation (this may consist of either the removal of or cleaning of
water damaged and/or mold damaged
materials)
|
Specialty Rug
Cleaning:
|
·
|
The
Company also provides services for specialty rug cleaning. Rugs are highly
susceptible to damage due to water, fire, or general dirty conditions. The
first step in the cleaning process is to know what you are cleaning and
what damage the object has sustained. We perform a fiber ID test to
determine the content of the rug. This is because different fibers and
materials require different cleaning
solutions
|
During 2009, the Company had no sales
in this service segment.
BUSINESS
OPERATIONS:
Restoration
and Remediation:
The
Company employs a strict four-step remediation process. This
includes:
|
1.
|
Project
sequence planning
|
3
|
2.
|
Containment
and exposure control
|
|
3.
|
Removal
and disposal of contaminated
material
|
|
4.
|
Hygienic
cleaning of surfaces
|
The
importance of constructing proper containments cannot be over-emphasized. These
containments control the environment/air flow and eliminate cross-contamination,
restricting expansion of the problem and curbing the associated cost. Standards
such as the New York City Department of Health Guidelines on Assessment and
Remediation of Fungi in an Indoor Environment are valuable and followed by the
Company. The standards and testing utilized by the New York City Department of
Health include:
Systemic
Analysis:
|
·
|
Health
effects such as runny nose, eye irritation, cough, congestion, asthma
aggravation, headache and fatigue
|
|
·
|
Immunological
effects such as allergies and lung
damage
|
|
·
|
Toxic
effects including respiratory and eye irritations and the inability to
concentrate
|
|
·
|
Infectious
disease such as aspergillosis
|
|
·
|
Medical
evaluation
|
|
·
|
Medical
relocation
|
Remediation
Analysis:
|
·
|
Visual
inspection
|
|
·
|
Bulk/Surface
sampling
|
|
·
|
Air
monitoring
|
|
·
|
Analysis
of environmental samples
|
|
·
|
Remediation
as needed. This includes small isolated areas, mid-sized
isolated areas, large isolated areas, and extensive contamination
remediation.
|
|
·
|
Demolition
and removal of contaminated
materials
|
The
standards set forth by the New York Department of Health were the first in the
nation and are acting as a basic guide for all mold remediation. We believe the
above standards are comprehensive and provide a solid plan in executing
operations. We believe adhering to these standards will ensure a complete and
successful remediation process. In each of our jobs, we review these guidelines
and determine which ones apply to our particular job and then follow
them. We ensure the adherence by subcontractors to standards
determined by the company through a specific and detailed Scope of Work and Work
Plan designed for each job site. The Scope of Work and Work Plan itemizes and
details the specific job functions and duties to be performed and is reviewed on
a daily basis by a job foreman responsible to our management. Summary reports
are transferred by fax or email to our corporate offices with progress reports
and digital pictures identifying work progression. Through this policing
activity and specific job requirements we are able to maintain subcontractor
compliance with our performance standards.
In
addition to the foregoing, the Company augments the remediation process with lab
testing, consultation, final testing and reconstruction where
required.
4
GOVERNMENT
REGULATION:
At the
present time there are no federal government regulations for mold remediators.
We believe any legislation requiring licensing and certification to be in our
favor as we have numerous licenses and certifications as detailed in the section
below. On January 1, 2005, the State of Texas Department of Health adopted rules
for the testing, licensing and registration of mold remediators. The
rules, as they have been adopted, require potential
licensees to take a course approved by the Texas Department of Health, take an
exam given by them, and then pay a license fee. We believe that as of this date,
we are in compliance with all the new rules, having taken the required
exam. All licenses are current and all related fees are paid up to
current requirements. Additionally, all subcontractors that require licensing to
perform mold remediation are confirmed by us through submission of relevant
certification and licensing requirements. These documents and licenses are then
confirmed by us through state records.
OUR
QUALIFICATIONS:
We
presently have several certification and licenses pertinent to our industry and
anticipate qualifying for the new license without further issues since we
already have all the qualifications as outlined in Legislative Update on HB 329,
the act that relates to Texas state regulation of mold assessors and
remediators, which can be seen at
http://www.texasboma.org/legislative_update_4_22_03.htm. The licenses we
currently hold are:
Institute
of Inspection, Cleaning and Restoration (“IIRC”)
IIRC - Carpet Cleaning
IIRC - Upholstery & Fabric
Cleaning
IIRC - Journeyman Textile
Cleaner
IIRC - Odor Control
GEBCO
Associates:
Mold Remediation Contractor | Certificate No. 05077 |
Texas
Department of Health Services:
Mold Remediation Contractor | License No. MRC0329 |
INDUSTRY
& COMPETITION:
The mold
remediation industry is not highly competitive. Most of the companies have
developed their mold remediation business as a progression and add-on to their
restoration business or their air quality business, having much experience
leading up to their involvement in the mold remediation industry. We believe our
major competitors to be specialty remediation and cleaning companies, some of
which are national in scope. Most companies, however, are either local or
regional in scope. The nature of the restoration and remediation
business is labor intensive and therefore is performed more accurately by people
in a standardized environment. However, the company has a competitive advantage
in standardized processes, training and services and can duplicate this system
in any part of the country.
5
We
believe our greatest competition is from nationally franchised operators, the
three largest of which are Service Master, Blackmon Mooring, and Serve Pro.
However, their success is based not only upon the nationally-known name but upon
the franchisee and the reputation he/she is able to establish. Since the
industry is relatively new and much of the work is localized, we don’t see
having a national franchise name as that much of an advantage. We have been able
to concentrate our marketing and sales on companies that have ongoing business,
for example, home builders and developers.
Our
methods of competing are through establishing relationships with builders and
developers where we can solicit business from those who can give us continual
referrals.
Future
products and services: At the present time, we do not have plans to develop or
market additional products or services.
Sources
and Availability of Raw Material:
We are a
service business and do not use raw materials. We use products in performing our
service that are readily available from many sources.
Dependence
on One or a Few Major Customers:
We are
not dependent on any one or a few major customers.
Costs and
Effects of Compliance with Environmental Laws:
We are
not aware of nor do we anticipate any environmental laws with which we will have
to comply.
ITEM
2. DESCRIPTION
OF PROPERTY
Our
corporate and retail facilities are located in a 2,400 square foot warehouse
building which was rented from the CEO’s spouse at a percentage of revenue,
which approximates fair market rent. The lease during 2009 has
been on a month-to-month agreement and from January to September the amount
invoiced varied between $500 and $700 per month. For the final three
months of 2009, the total amount invoiced was $809 (lowered due to
the low sales level). Total rent expense for 2009 was
$6,639. There are no future lease obligations.
ITEM
3. LEGAL
PROCEEDINGS
As of
December 31, 2009, the Company is not involved in any legal
proceedings.
ITEM
4. SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
On
December 22, 2009, at the annual meeting of shareholders, a majority of our
shareholders approved the following actions, all as proposed in our Proxy
Statement:
|
1.
|
To
re-elect Reed Buley as our sole
director.
|
|
2.
|
To
retain The Hall Group, CPAs, as the Company’s independent auditors for the
year-ending December 31, 2009
|
6
PART
II
ITEM
5.
|
MARKET
FOR REGISTRANT’S COMMON EQUITY AND RELATED
STOCKHOLDERS’ MATTERS
|
The
common stock is currently quoted on
the over-the-counter Bulletin Board under the
symbol "RMSI."
The
following table sets forth the quarterly high
and low bid prices for the common stock since the
quarter ended March 31, 2008. The prices set
forth below
represent inter-dealer quotations, without
retail markup, markdown or commission and may not be reflective of
actual transactions.
High
|
Low
|
|
Quarter
ended March 31, 2008
|
$.45
|
$.45
|
Quarter
ended June 30, 2008
|
$.45
|
$.45
|
Quarter
ended September 30,2008
|
$.45
|
$.25
|
Quarter
ended December 31, 2008
|
$.25
|
$.25
|
Quarter
ended March 31, 2009
|
$.25
|
$.25
|
Quarter
ended June 30, 2009
|
$.25
|
$.25
|
Quarter
ended September 30, 2009
|
$.25
|
$.25
|
Quarter
ended December 31, 2009
|
$.25
|
$.25
|
At
December 31, 2009, the closing price of the common stock was $.25 and we had
approximately 60 exclusive record holders of our common stock. This
number excludes any estimate by us of the number of beneficial owners of shares
held in street name, the accuracy of which cannot be guaranteed.
Dividends:
We have
not paid cash dividends on any class of common equity since formation and we do
not anticipate paying any dividends on our outstanding common stock in the
foreseeable future.
Warrants:
The
Company has no warrants outstanding.
ITEM
6. SELECTED
FINANCIAL DATA
Not applicable for smaller reporting
companies.
ITEM
7. MANAGEMENT
DISCUSSIONS AND ANALYSIS OR PLAN OF OPERATION
SUMMARY
OF 2009
EXECUTIVE
OVERVIEW:
In
response to the decline in the housing market and the result of the Company’s
Properties Held for Remediation assets not turning in over a year, the Company
has decided to search for a merger candidate and therefore is electing to file
as a shell company in all future filings. The Company’s operations
have been nominal in the year ending December 31, 2009 with sales of about
$76,000 versus $159,300 in the year ended December31, 2008. For the
period ended December 31, 2009, the Company had about $186,900 in assets, of
which $185,100 are classified as Properties Held for Investment; and $131,600 in
liabilities. The Company’s cash balance at December 31, 2009 was
$1,785. Furthermore, the Company has not generated positive cash flow
from operations. These factors raise substantial doubt the Registrant's ability
to continue as a going concern as discussed in Footnote 9.
The
Company filed an 8-K on November 16, 2009 making this election.
7
Our
fourth fiscal quarter and fiscal year ended on December 31, 2009.
REVENUE: Revenue
for the year ended December 31, 2009, was $76,011 compared with revenues for the
twelve months ended December 31, 2008 of $159,261. The decrease in revenue for
the year was due to the sale of a
Property Held for
Remediation in 2008 for
$104,000 whereas in 2009 there have been no such
sales. Backing out this sale, revenue increased by $24,200 due
to rental income of the properties under contract of $15,000 and increased
carpet cleaning / remediation work of $9,000.
DIRECT
COSTS: Direct costs were $32,197 for the year ended December 31, 2009 compared
to $131,177 for the same period in 2008. The decrease in cost of
sales is related to reduction of properties held for remediation that were sold
in 2009 (none) versus 2008 (one), impacting costs approximately
$80,000.
EXPENSES.
Total expenses without depreciation (and without direct costs) for the year
ended December 31, 2009 were $36,259 compared with expenses for the year ended
December 31, 2008 of $114,261. The expense decrease was mainly due to three
significant components: first, a dispute with an advertising company in 2008 was
settled and $33,000 was charged to expense; two, decreased professional fees of
$10,000 for business consulting; and three, reduced accounting & audit fees
of about $10,000 versus 2008. This is exclusive of depreciation
expense, which was $14,389 and $7,332 for the twelve months ended December 31,
2009 and 2008 respectively.
NET
INCOME (LOSS). Net loss for the year ended December 31, 2009 was $17,743
compared to a net loss of $97,314 for the year ended December 31,
2008. The loss reduced year-over-year is due to the reduced costs as
discussed above and non-cost of sale revenue (rental income).
LIQUIDITY
AND CAPITAL RESOURCES. Remediation filed a Form SB-1, a
registration statement with the U.S. Securities & Exchange Commission in
order to raise funds to develop their business. The registration statement
became effective on September 14, 2006 and Remediation has raised funds under
that registration statement at $0.50 per share, all after September 30, 2006.
As of December 31, 2009, Remediation has raised $188,475 by selling
376,950 shares.
In
addition to the preceding, the Company plans for liquidity needs on a short term
and long term basis as follows:
Short Term
Liquidity:
The
company relies on funding operations through operating cash flows and
supplemented by shareholder advances when necessary. At December 31,
2009 the Company had positive Net Cash from Operating Activities of $26,336 that
was subsidized by shareholders to the amount of $33,775. Therefore,
from operations, cash flows were negative $7,439. No interest
is paid on the shareholder advances.
Long Term
Liquidity:
In
response to the decline in the housing market and the result of the Company’s
Properties Held for Remediation assets not turning in over a year, the Company
has decided to search for a merger candidate and therefore is electing to file
as a shell company in all future filings. On November 16, 2009 the
Company filed an 8-K noting that it has elected to be classified as a Shell
Company in all future filings pursuant to the Securities and Exchange
Commission's definition of a shell company, as defined in Rule 12b-2 of the
Exchange Act.
8
Critical Accounting
Policies
The
Company’s critical accounting policies and estimates are depreciation expense,
reserve for doubtful accounts and interest expense accruals on related party
mortgages. Please reference footnotes one, two and
four.
Capital
Resources
During
2008 the Company entered into three separate notes with two different debt
holders.
The first
note has an original principal balance of $26,000. The note bears interest at
12% per annum and is due and payable when the property at 3108 Mimosa, Rowlett,
Texas, sells. There are no payments required under the note until the maturity
date. This note is classified as current as the Company is attempting to sell
the property within one year of the balance sheet date.
The
second note has an original principal balance of $15,000. The note bears
interest at 12% per annum and is due and payable on July 30, 2010. There are no
payments required under the note until the maturity date. This note is
classified as current due to the maturity date occurring within one year of the
balance sheet date.
In
December 2008, the Company executed a mortgage payable secured by one of the
properties held for investment. The original principal balance was $87,200. The
mortgage bears an interest rate of 6.75% and has a fifteen year term which
matures in November 2023. The mortgage requires monthly principal and interest
payment of $772. The current portion of the mortgage is
$3,764.
Material Changes in
Financial Condition
WORKING
CAPITAL: Working Capital decreased by $42,337 to ($129,825). This
reduction is due, in a large part, to the increase in related party
liabilities of $33,775 and the line-of-credit of $6,000. As noted in
the Liquidity section, a merger candidate is being sought due to decline in the
housing market which is impacting cash flow and the ability to pay
liabilities.
STOCKHOLDER’S
EQUITY (DEFICIT): Stockholder’s Equity (Deficit) decreased by $17,743 due to the
net loss in the twelve months ended December 31, 2009.
Future Financial
Condition
As
discussed above in the Executive Overview the Company is seeking merger
candidates due to sales being nominal, the recession and its negative working
capital. One of the Company’s properties held for investment is under
contract and is scheduled to close on February 25, 2010.
ITEM
7A. QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
Not
applicable for smaller reporting companies.
ITEM
8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements of the Company,
together with the independent auditors' report thereon of The Hall Group, CPAs
appear on pages F-1 through F-14 of this report.
9
ITEM
9. CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None
ITEM
9A. CONTROLS
AND PROCEDURES
Evaluation of Disclosure
Controls and Procedures
We
carried out an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) as of December 31, 2009. This
evaluation was accomplished under the supervision and with the participation of
our chief executive officer / principal executive officer, and chief financial
officer / principal financial officer who concluded that our disclosure controls
and procedures are not effective to ensure that all material information
required to be filed in the annual Form 10-K has been made known to
them.
For
purposes of this section, the term disclosure controls and procedures means
controls and other procedures of an issuer that are designed to ensure that
information required to be disclosed by the issuer in the reports that it files
or submits under the Act (15 U.S.C. 78a et seg.) is recorded, processed,
summarized and reported, within the time periods specified in the Commission’s
rules and forms. Disclosure, controls and procedures include, without
limitation, controls and procedures designed to ensure that information required
to be disclosed by in our reports filed under the Securities Exchange Act of
1934, as amended (the "Act") is accumulated and communicated to the issuer's
management, including its principal executive and principal financial officers,
or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure.
Based
upon an evaluation conducted for the period ended December 31, 2009, our Chief
Executive and Chief Financial Officer as of December 31, 2009 and as of the date
of this Report, has concluded that as of the end of the periods covered by this
report, we have identified the following material weaknesses in our internal
controls:
|
●
|
Reliance
upon independent financial reporting consultants for review of critical
accounting areas and disclosures and material non-standard
transaction.
|
|
●
|
Lack
of sufficient accounting staff which results in a lack of segregation of
duties necessary for a good system of internal
control.
|
In order
to remedy our existing internal control deficiencies, as our finances allow, we
will hire additional accounting staff.
Management’s Annual Report
on Internal Control Over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in
Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control
system was designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes, in accordance with generally accepted accounting principles in the
United States of America. Our internal control over financial
reporting includes those policies and procedures that (i) pertain to the
maintenance records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the Company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America, and that receipts and
expenditures of the Company are being made only in accordance with
authorizations of management of the Company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of the Company’s assets that could have a material effect on
the financial statements.
10
Because
of inherent limitations, a system of internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate due to change in conditions, or that the degree of compliance with
the policies or procedures may deteriorate.
Our
management conducted an evaluation of the effectiveness of our internal control
over financial reporting using the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in Internal
Control—Integrated Framework at December 31, 2009. Based on its
evaluation, our management concluded that, as of December 31, 2009, our internal
control over financial reporting was not effective because of limited staff and
a need for a full-time chief financial officer. A material weakness
is a deficiency, or a combination of control deficiencies, in internal control
over financial reporting such that there is a reasonable possibility that a
material misstatement of the Company’s annual or interim financial statements
will not be prevented or detected on a timely basis.
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 the attestation by the
Company’s registered public accounting firm pursuant to temporary rules of the
SEC that permit the Company to provide only management’s report in this annual
report.
Changes in Internal Controls
over Financial Reporting
We have
not yet made any changes in our internal controls over financial reporting that
occurred during the period covered by this report on Form 10-K that has
materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.
11
PART
III
ITEM
10. DIRECTORS
AND EXECUTIVE OFFICERS OF REGISTRANT
Name
|
Age
|
Position
|
Reed
T, Buley
|
51
|
Chief
Executive Officer, Chief Financial Officer, President,
Secretary and Director
|
Background
of the Director and Executive Officer:
Mr. Buley
graduated from Trinity Valley Community College in 1992, Since graduation he has
held various management and operations positions before moving into the
restoration business. In the course of the restoration business, he added the
remediation and other specialty services. He was the manager of a water and fire
restoration company serving the Dallas/Fort Worth metroplex from 2000 until 2002
when he became President of Slopestyle Corporation (now Remediation Services,
Inc.). He has been the President of Slopestyle Corporation (now Remediation
Services, Inc.) since December 2002.
ITEM
11. EXECUTIVE
COMPENSATION
Following
is what our officers received in 2009 and 2008 as
cash and non-cash compensation.
Name
|
Capacity
Served
|
Aggregate
Remuneration
|
Reed
T. Buley
|
Chief
Executive Officer, Chief Financial Officer, President,
Secretary and Director
|
2009:
$0
2008:
$30,863
|
As of the
date of this filing, our sole officer is our only employee. We have no
employment agreements with any officer, director or employee.
ITEM
12.
|
SECURITY
OWNERSHIP OF MANANGEMENT AND BENEFICIAL
OWNERS
|
As of
December 31, 2009 the following person is known to the Company to own 5% or more
of the Company's Voting Stock:
Title
/ Relationship to Issuer
|
Name
of Owner
|
Number
of Shares Owned
|
Percent
of Total
|
Director,
President, Secretary and Director
|
Reed
T. Buley
|
5,000,000
|
84.65%
|
.
12
ITEM
13.
|
CERTAIN
RELATIONSHIPS AND RELATED PARTY
TRANSACTION
|
As of the
date of this filing, the following are agreements or proposed transactions,
whether direct or indirect, with related parties:
|
·
|
Warehouse
space and a truck are rented from the CEO’s wife, who is also a
shareholder of the Company at a percentage of revenues, which is intended
to approximate fair market value.
|
|
·
|
The
Company owes the Company’s CEO $23,847 as of December 31, 2009 for
operating expenses paid on the Company’s
behalf.
|
|
·
|
The
Company owes $27,560 as of December 31, 2009, to a consultant, who is also
a shareholder, for professional fees paid on the Company’s
behalf.
|
|
·
|
As
of December 31, 2009, the Company has two notes payable totaling $41,000
due to the CEO’s father.
|
There are
no other agreements or proposed transactions with related parties.
ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(1) AUDIT
FEES
The
aggregate fees billed for professional services rendered by our auditors, for
the audit of the registrant's annual financial statements and review of the
financial statements included in the registrant's Form 10-K or services that are
normally provided by the accountant in connection with statutory and regulatory
filings or engagements for fiscal year 2009 was $20,637 and in 2008 was
$14,500.
(2)
AUDIT-RELATED FEES
The
aggregate audit fees billed for professional services rendered by our auditors,
which are included in the Audit fees above, for the review of the quarterly
unaudited financial statements included in the registrant’s Form 10-Q were
approximately $2,750 per quarter and $2,500 per quarter for 2009 and 2008
respectively.
(3) TAX
FEES
NONE
(4) ALL
OTHER FEES
NONE
(5) AUDIT
COMMITTEE POLICIES AND PROCEDURES
Audit
Committee Financial Expert
The
Securities and Exchange Commission has adopted rules implementing
Section 407 of the Sarbanes-Oxley Act of 2002 requiring public companies to
disclose information about “audit committee financial experts.” As of the
date of this Annual report, we do not have a standing Audit Committee. The functions of the
Audit Committee are currently assumed by our Board of Directors.
Additionally, we do not have a member of our Board of Directors that qualifies
as an “audit committee financial expert.” For that reason, we do not have
an audit committee financial expert.
Policies
and Procedures:
13
The Board
of Directors policies and procedures for hiring Independent Principal
Accountants are summarized as follows:
|
·
|
The
Board ensures that the accountants are qualified by reviewing their valid
license information as filed with the Texas State Board of Public
Accountancy.
|
|
·
|
The
Board ensures that the firm is registered with the
PCAOB.
|
|
·
|
The
Board ensures that the accountants are independent by reviewing Regulation
S-X, section 210.2-01(b).
|
(6)
If greater than 50 percent, disclose the percentage of hours expended on the
principal accountant's engagement to audit the registrant's financial statements
for the most recent fiscal year that were attributed to work performed by
persons other than the principal accountant's full-time, permanent
employees.
Not
applicable.
14
PART IV
ITEM
15.
|
EXHIBITS,
FINANICAL STATEMENTS AND REPORTS ON FORM
8-K
|
(a) The
following documents are filed as part of this report: Included in
Part II, Item 7 of this report:
Report of Independent Registered
Accounting Firm
Consolidated Balance Sheets as of
December 31, 2009 and 2008
Consolidated
Statements of Operations for the Years Ended December 31, 2009 and
2008
Consolidated
Statement of Changes in Stockholders’ Equity for the Years Ended December 31,
2009 and 2008
Consolidated
Statements of Cash Flows for the Years Ended December 31, 2009 and
2008
Notes to
the Consolidated Financial Statements
(b) The
Company did file one Form 8-K in 2009.
On
November 16, 2009 – Selection to be a Shell Reporting Company
(c) Exhibits
No.
|
Description
|
31.1
|
Certification
of the Company’s Principal Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
|
31.2
|
Certification
of the Company’s Principal Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
|
32.1
|
Certification
of the Company’s Principal Executive Officer and Principal Financial
Officer pursuant to 18 U.S.C. Section 1350, as adopted to Section 906 of
the Sarbanes-Oxley Act of 2002.
|
15
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this Annual Report on Form 10-K to be signed on its behalf by the
undersigned hereunto duly authorized.
REMEDIATION
SERVICES, INC.
By: /s/ Reed T.
Buley
Reed T. Buley
Reed T. Buley
Chief
Executive Officer & Chief Financial Officer
Dated:
February 22, 2010
16
REMEDIATION
SERVICES, INC.
CONSOLIDATED
FINANCIAL STATEMENTS
DECEMBER
31, 2009
CONTENTS
Report
of Independent Registered Public Accounting Firm
|
F-2
|
Consolidated
Balance Sheets as of December 31, 2009 and 2008
|
F-3
|
Consolidated
Statements of Operations for the Years Ended December 31, 2009 and
2008
|
F-4
|
Consolidated
Statement of Changes in Stockholders’ Equity for the Years Ended December
31, 2009 and 2008
|
F-5
|
Consolidated
Statements of Cash Flows for the Years Ended December 31, 2009 and
2008
|
F-6
|
Notes
to the Consolidated Financial Statements
|
F-7
to F-14
|
F-1
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and Management of
Remediation
Services, Inc.
Wylie,
Texas
We have
audited the accompanying consolidated balance sheets of Remediation Services,
Inc. (formerly Slopestyle Corporation) as of December 31, 2009 and 2008 and the
related consolidated statements of operations, cash flows and changes in
stockholders’ equity for the years then ended. These financial
statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We
conducted our audits of these financial statements in accordance with the
standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
We were
not engaged to examine management’s assertion about the effectiveness of
Remediation Services, Inc.’s internal control over financial reporting as of
December 31, 2009 and 2008 and, accordingly, we do not express an opinion
thereon.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Remediation Services, Inc. as of
December 31, 2009 and 2008, and the results of its operations and its cash flows
for the years then ended, in conformity with accounting principles generally
accepted in the United States of America.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 10 to the
consolidated financial statements, the Company has suffered significant losses
and will require additional capital to develop its business until the Company
either (1) achieves a level of revenues adequate to generate sufficient cash
flows from operations; or (2) obtains additional financing necessary to support
its working capital requirements. These conditions raise substantial
doubt about the Company’s ability to continue as a going
concern. Management’s plans in regard to these matters are also
described in Note 10. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ The Hall
Group, CPAs
The Hall
Group, CPAs
Dallas,
Texas
February
19, 2010
F-2
REMEDIATION
SERVICES, INC.
(FORMERLY
SLOPESTYLE CORPORATION)
Consolidated
Balance Sheets
December
31, 2009 and 2008
2009
|
2008
|
|||||||
ASSETS
|
||||||||
Current
Assets
|
||||||||
Cash
and Cash Equivalents
|
$ | 1,785 | $ | 8,147 | ||||
Accounts
Receivable, Net of Allowance
|
||||||||
for
Doubtful Accounts of $10,530 and $1,851
|
0 | 200 | ||||||
Total
Current Assets
|
1,785 | 8,347 | ||||||
Fixed
Assets, Net of Accumulated Depreciation of $80,448 and
$71,591
|
0 | 8,857 | ||||||
Property
Held for Investment, Net of Accumulated Depreciation of $5,492 and
$0
|
185,088 | 155,401 | ||||||
TOTAL
ASSETS
|
$ | 186,873 | $ | 172,605 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
Liabilities
|
||||||||
Accounts
Payable
|
$ | 15,022 | $ | 9,621 | ||||
Accrued
Expenses
|
7,467 | 20,563 | ||||||
Due
to Related Parties
|
51,407 | 17,632 | ||||||
Line of Credit --Related Party | 6,000 | 0 | ||||||
Customer
Deposits
|
6,950 | 3,500 | ||||||
Notes
Payable to Related Party
|
41,000 | 41,000 | ||||||
Current
Portion of Mortgage Payable
|
3,764 | 3,519 | ||||||
Total
Current Liabilities
|
131,610 | 95,835 | ||||||
Long
Term Liabilities
|
||||||||
Mortgage
Payable
|
79,353 | 83,117 | ||||||
Total
Long Term Liabilities
|
79,353 | 83,117 | ||||||
Total
Liabilities
|
210,963 | 178,952 | ||||||
Stockholders'
Equity (Deficit)
|
||||||||
Preferred
Stock, $.001 par value, 25,000,000 shares authorized,
|
||||||||
0
and 0 shares issued and outstanding
|
0 | 0 | ||||||
Common
Stock, $.001 par value, 50,000,000 shares authorized,
|
||||||||
5,906,950
and 5,906,950 shares issued and outstanding
|
5,907 | 5,907 | ||||||
Additional
Paid-In Capital
|
262,218 | 262,218 | ||||||
Retained
Earnings (Deficit)
|
(292,215 | ) | (274,472 | ) | ||||
Total
Stockholders' Equity (Deficit)
|
(24,090 | ) | (6,347 | ) | ||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ | 186,873 | $ | 172,605 |
The
Accompanying Notes are an Integral Part of these Consolidated Financial
Statements.
F-3
REMEDIATION
SERVICES, INC.
(FORMERLY
SLOPESTYLE CORPORATION)
Consolidated
Statements of Operations
For
the Years Ended December 31, 2009 and 2008
2009
|
2008
|
|||||||
REVENUE
|
$ | 76,011 | $ | 159,261 | ||||
DIRECT
COSTS
|
32,197 | 131,177 | ||||||
GROSS
MARGIN
|
43,814 | 28,084 | ||||||
OPERATING
EXPENSES
|
||||||||
Advertising
|
479 | 3,019 | ||||||
Labor
|
0 | 19,613 | ||||||
General
and Administrative
|
35,779 | 91,629 | ||||||
Depreciation
|
14,349 | 7,332 | ||||||
TOTAL
OPERATING EXPENSES
|
50,607 | 121,593 | ||||||
NET
OPERATING INCOME (LOSS)
|
(6,793 | ) | (93,509 | ) | ||||
OTHER
INCOME (EXPENSE)
|
||||||||
Interest
Income
|
3 | 119 | ||||||
Interest
Expense
|
(10,953 | ) | (3,924 | ) | ||||
TOTAL
OTHER INCOME (EXPENSE)
|
(10,950 | ) | (3,805 | ) | ||||
NET
INCOME (LOSS) BEFORE INCOME TAXES
|
(17,743 | ) | (97,314 | ) | ||||
Provision
for Income Taxes (Expense) Benefit
|
0 | 0 | ||||||
NET
INCOME (LOSS)
|
$ | (17,743 | ) | $ | (97,314 | ) | ||
EARNINGS
PER SHARE, Basic and Diluted
|
||||||||
Weighted
Average of Outstanding Shares
|
5,906,950 | 5,878,454 | ||||||
Income
(Loss) for Common Stockholders
|
$ | (0.00 | ) | $ | (0.02 | ) |
The
Accompanying Notes are an Integral Part of these Consolidated Financial
Statements.
F-4
REMEDIATION
SERVICES, INC.
(FORMERLY
SLOPESTYLE CORPORATION)
Consolidated
Statement of Changes in Stockholder’s Equity
For
the Years Ended December 31, 2009 and 2008
Common Stock
|
||||||||||||||||||||
Shares | Amount |
Paid-In
Capital
|
Retained
Earnings
(Deficit)
|
Totals | ||||||||||||||||
Stockholders'
Equity (Deficit), January
1, 2008
|
5,876,950 | $ | 5,877 | $ | 252,248 | $ | (177,158 | ) | $ | 80,967 | ||||||||||
Issuance
of Common Stock for Cash
|
10,000 | 10 | 4,990 | 0 | 5,000 | |||||||||||||||
Issuance
of Common Stock for Services
|
20,000 | 20 | 4,980 | 0 | 5,000 | |||||||||||||||
Net
(Loss)
|
(97,314 | ) | (97,314 | ) | ||||||||||||||||
Stockholders'
Equity (Deficit), December 31, 2008
|
5,906,950 | $ | 5,907 | $ | 262,218 | $ | (274,472 | ) | $ | (6,347 | ) | |||||||||
Net
(Loss)
|
(17,743 | ) | (17,743 | ) | ||||||||||||||||
Stockholders'
Equity (Deficit), December 31, 2009
|
5,906,950 | $ | 5,907 | $ | 262,218 | $ | (292,215 | ) | $ | (24,090 | ) |
The
Accompanying Notes are an Integral Part of these Consolidated Financial
Statements.
F-5
REMEDIATION
SERVICES, INC.
(FORMERLY
SLOPESTYLE CORPORATION)
Consolidated
Statements of Cash Flows
For
the Years Ended December 31, 2009 and 2008
2009
|
2008
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net (Loss)
|
$ | (17,743 | ) | $ | (97,314 | ) | ||
Adjustments
to reconcile net loss to net cash
|
||||||||
provided
by operating activities:
|
||||||||
Issuance
of Common Stock for Services
|
0 | 5,000 | ||||||
Depreciation
and Amortization
|
14,349 | 7,332 | ||||||
Bad
Debt Expense
|
8,679 | 0 | ||||||
Decrease/(Increase)
in Accounts Receivable
|
(8,479 | ) | (145 | ) | ||||
Decrease
in Receivable from Related Parties
|
0 | 6,000 | ||||||
Increase
in Accounts Payable
|
5,401 | 8,998 | ||||||
(Decrease)
in Accounts Payable - Related Parties
|
0 | (4,500 | ) | |||||
Increase/(Decrease)
in Due to Related Parties
|
33,775 | (3,025 | ) | |||||
Increase
in Customer Deposit
|
3,450 | 3,500 | ||||||
Increase/(Decrease) in
Accrued Expenses
|
(13,096 | ) | 20,563 | |||||
Net
Cash Provided/(Used) by Operating Activities
|
26,336 | (53,591 | ) | |||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Proceeds
from Line of Credit-Related Party
|
6,000 | 0 | ||||||
Purchase
of Properties Held for Remediation
|
0 | (126,000 | ) | |||||
Capital
Expenditures on Properties Held for Investment
|
(35,179 | ) | (29,401 | ) | ||||
Net
Cash (Used) by Investing Activities
|
(29,179 | ) | (155,401 | ) | ||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Proceeds
from Sale of Common Stock
|
0 | 5,000 | ||||||
Proceeds
from Notes Payable
|
0 | 41,000 | ||||||
Proceeds
from Mortgages Payable
|
0 | 87,200 | ||||||
Principal
Payments on Mortgages Payable
|
(3,519 | ) | (564 | ) | ||||
Net
Cash Provided/(Used) by Financing Activities
|
(3,519 | ) | 132,636 | |||||
NET
(DECREASE) IN CASH AND CASH EQUIVALENTS
|
(6,362 | ) | (76,356 | ) | ||||
CASH
AND CASH EQUIVALENTS AT BEGINNING OF YEAR
|
8,147 | 84,503 | ||||||
CASH
AND CASH EQUIVALENTS AT END OF YEAR
|
$ | 1,785 | $ | 8,147 | ||||
SUPPLEMENTAL
DISCLOSURES
|
||||||||
Cash
Paid During the Year for Interest Expense
|
$ | 5,740 | $ | 979 | ||||
Non-Cash
Investing Activities:
|
||||||||
Stock
issued for Services
|
$ | 0 | $ | 5,000 |
The
Accompanying Notes are an Integral Part of these Consolidated Financial
Statements.
F-6
REMEDIATION
SERVICES, INC.
(FORMERLY
SLOPESTYLE CORPORATION)
Notes to
the Consolidated Financial Statements
December
31, 2009 and 2008
NOTE
1 – NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Activities,
History and Organization:
Remediation
Services, Inc. (herein referred to as “the Company” or “RMI”) operated during
2007 under the names Slopestyle Corporation, Carpet Star of Texas and Absolute
Remediation as a carpet cleaning, home restoration, and mold remediation
business for residential and commercial real estate. The company is
located in Wylie, Texas and was incorporated on June 25, 1999, under the laws of
the State of Texas.
On
December 12, 2007, the Company changed its name from Slopestyle Corporation to
Remediation Services, Inc. and re-domiciled from Texas to Nevada.
During
2008, the Company purchased three residential properties which were remediated
and now are being held for investment. Two of the properties are
being leased and the third is currently marketed to be
sold. The Company is making the necessary improvements for the
properties to be leased and/or sold. One property was purchased and
sold during the year.
On
November 16, 2009 the Company filed an 8-K noting that it has elected to be
classified as a Shell Company in all future filings pursuant to the Securities
and Exchange Commission's (“SEC”) definition of a shell company, as
defined in Rule 12b-2 of the Exchange Act.
Significant Accounting
Policies:
The
Company’s management selects accounting principles generally accepted in the
United States of America and adopts methods for their
application. The application of accounting principles requires the
estimating, matching and timing of revenue and expense. The accounting policies
used conform to generally accepted accounting principles which have been
consistently applied in the preparation of these financial
statements.
The
financial statements and notes are representations of the Company’s management
which is responsible for their integrity and objectivity. Management further
acknowledges that it is solely responsible for adopting sound accounting
practices, establishing and maintaining a system of internal accounting control
and preventing and detecting fraud. The Company's system of
internal accounting control is designed to assure, among other items,
that 1) recorded transactions are
valid; 2) valid transactions are
recorded; and 3)
transactions are recorded in the proper period
in a timely manner to produce financial statements which
present fairly the financial condition, results of
operations and cash flows of
the Company for
the respective periods being
presented.
FASB Accounting Standards
Codification:
In June
2009, the Financial Accounting Standards Board (“FASB”) issued new guidance
concerning the organization of authoritative guidance under U.S. Generally
Accepted Accounting Principles (“GAAP”). This new guidance created the FASB
Accounting Standards Codification (“Codification”). The Codification
has become the source of authoritative U.S. GAAP recognized by the FASB to be
applied by nongovernmental entities. Rules and interpretive releases of the SEC
under authority of federal securities laws are also sources of authoritative
U.S. GAAP for SEC registrants. The Codification became effective for the Company
in its quarter ended September 30, 2009. As the Codification is not intended to
change or alter existing U.S. GAAP, it did not have any impact on the Company’s
consolidated financial statements. On its effective date, the Codification
superseded all then-existing non-SEC accounting and reporting standards. All
other non-grandfathered non-SEC accounting literature not included in the
Codification will become non-authoritative.
F-7
Basis of
Presentation:
The
Company prepares its financial statements on the accrual basis of
accounting. All intercompany balances and transactions are
eliminated. The Company’s subsidiaries are
consolidated with the parent company.
Cash and Cash
Equivalents:
Cash and
cash equivalents includes cash in banks with original maturities of three months
or less and are stated at cost which approximates market value, which in the
opinion of management, are subject to an insignificant risk of loss in
value.
Fair Value of Financial
Instruments:
The
carrying amounts of cash, cash equivalents, accounts receivable, accounts
payable and notes payable approximate their fair values due to the short-term
maturities of these instruments. The carrying amount of the Company’s
marketable securities and accounts payable approximate fair value due to the
stated interest rates approximating market rates.
Accounts
Receivable:
Accounts
Receivable are carried at their face amount, less an allowance for doubtful
accounts. On a periodic basis, the Company evaluates accounts
receivable and establishes the allowance for doubtful accounts based on a
combination of specific customer circumstances and credit conditions, based on a
history of write offs and collections. The Company’s policy is
generally not to charge interest on trade receivables after the invoice becomes
past due. A receivable is considered past due if payments have not
been received within agreed upon invoice terms. Write-offs are
recorded at a time when a customer receivable is deemed
uncollectible. The Company incurred bad debt expense of $1,454 and
$6,825 in 2009 and 2008, respectively.
Fixed
Assets:
Fixed
Assets are depreciated over their useful lives. Depreciation is
calculated on a straight-line basis over five to seven years. Repairs and
maintenance is charged to expense as incurred. At December 31, 2009,
all fixed assets have been fully depreciated.
Property Held for
Remediation:
Property
held for remediation is carried at historical cost. Additional expenditures for
the purpose of preparing the property for sale are
capitalized. Properties held for remediation are not
depreciated. Depreciation begins once remediation is complete
and the property is either available to be leased or marketed for
sale. The Company evaluates the total basis of each property for
impairment on an annual basis.
Revenue
Recognition:
The
Company recognizes revenue in accordance with ASC 605-10, "Revenue Recognition in Financial
Statements," (formerly Statement of Financial Accounting Standards
(“SFAS”) No. 48). Revenue will be recognized only when all of the following
criteria have been met:
F-8
|
·
|
Persuasive
evidence of an arrangement exists;
|
|
·
|
Ownership
and all risks of loss have been transferred to buyer, which is generally
upon shipment or at the time the service is
provided;
|
|
·
|
The
price is fixed and determinable;
and
|
|
·
|
Collectability
is reasonably assured.
|
Direct
Costs:
Types of
costs included in Direct Costs are:
|
·
|
Carrying
value of real estate sold
|
|
·
|
Equipment
expense
|
|
·
|
Vehicle
expense
|
Advertising
Costs
The
Company incurred $479 and $3,019 advertising costs for the years ended December
31, 2009 and 2008, respectively.
Income Taxes:
Income
from the corporation is taxed at regular corporate rates per the Internal
Revenue Code. There are no provisions for current taxes due to net
available operating losses.
Recent Accounting
Pronouncements:
The
Company does not expect the adoption of recently issued accounting
pronouncements to have a significant impact on the Company’s results of
operations, financial position or cash flow.
Use of
Estimates:
The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual
results could differ from those estimates.
NOTE 2 – FIXED
ASSETS
Fixed
assets at December 31, 2009 and 2008 are as follows:
2009 | 2008 | |||||||
Vans | $ | 27,558 | $ | 27,558 | ||||
Equipment in Vans | 27,146 | 27,146 | ||||||
Computer | 2,249 | 2,249 | ||||||
Trailer | 1,977 | 1,977 | ||||||
Leasehold Improvements | 21,518 | 21,518 | ||||||
Less: Accumulated Depreciation and Amortization | (80,448 | ) | (71,591 | ) | ||||
Total Fixed Assets | $ | 0 | $ | 8,857 |
F-9
Depreciation
expense on fixed assets was $8,857 and $7,332 for the years ended December 31,
2009 and 2008, respectively.
NOTE 3 – PROPERTY HELD FOR
INVESTMENT
As of
December 31, 2009, remediation was complete on all three
properties. Two properties have been leased and the third is
currently listed for sale.
During
2008, the Company purchased three residential properties. The properties are
recorded at historical cost. At December 31, 2009 and 2008, the
Property Held for Investment included the following (as of December 31, 2008,
the account was titled Property Held for Remediation, as the remediation work
was not complete):
2009
|
2008
|
|||||||
Purchase
Price
|
$ | 126,000 | $ | 126,000 | ||||
Capital
Improvements
|
64,580 | 29,401 | ||||||
Property Held for Investment | 190,580 | 155,401 | ||||||
Accumulated Depreciation | (5,492 | ) | 0 | |||||
Net Property Held for Investment | $ | 185,088 | $ | 155,401 |
The
properties are not depreciated during the time they are held for
remediation. Depreciation expense on Properties Held for
Investment was $5,492 and $0 for the years ended December 31, 2009 and
2008.
The
Company had a one year lease agreement and an Option Contract for Sale and
Purchase on one of the properties. The lease expired on August 4,
2009, and is now on a month-to-month basis. Pursuant to the
Option Contract, the Buyer paid a $3,500 option fee to the Company. The Option
expires on August 1, 2010.
NOTE 4 – NOTES AND MORTGAGE
PAYABLE
During
2008, the Company purchased two properties with two promissory notes, payable to
the CEO’s father, who is considered a related party. The notes are not secured
by the properties; however, the notes will become due and payable in the event
the properties are sold.
The first
note has an original principal balance of $26,000. The note bears interest at
12% per annum and is due and payable when the property at 3108 Mimosa, Rowlett,
Texas, sells. There are no payments required under the note until the maturity
date. This note is classified as current as the Company is attempting to sell
the property within one year of the balance sheet date.
The
second note has an original principal balance of $15,000. The note bears
interest at 12% per annum and is due and payable on July 30, 2010. There are no
payments required under the note until the maturity date. This note is
classified as current due to the maturity date occurring within one year of the
balance sheet date.
During
2008, the Company executed a mortgage payable secured by one of the properties
held for investment. The original principal balance was $87,200. The mortgage
bears an interest rate of 6.75% and has a fifteen year term which matures in
November 2023. The mortgage requires monthly principal and interest payment of
$772. The current portion of the mortgage is $3,764.
Interest
expense was $10,952 and $3,924 for the years ended December 31, 2009 and 2008,
respectively.
F-10
NOTE 5 – LINE OF CREDIT –
REALTED PARTY
During
2009, the Company entered into a line of credit with an entity controlled by a
shareholder of the Company. The line of credit has a
credit limit of $6,000 is payable on demand, and bears interest of 5% per
annum.
NOTE 6 –
EQUITY
On
December 12, 2007, the Company authorized 25,000,000 shares of preferred stock
with a par value of $.001, with the terms to be attached by the Board of
Directors at the time of issuance. As of December 31, 2009 and 2008, 0 and 0
shares were outstanding, respectively.
The
Company is authorized to issue 50,000,000 common shares at a par value of $0.001
per share. These shares have full voting rights. At December 31, 2009
and 2008, there were 5,906,950 and 5,906,950 shares outstanding,
respectively.
There
were no stock warrants or options outstanding as of December 31, 2009 and 2008,
respectively.
NOTE 7 – COMMITMENTS AND
CONTINGENCIES
The
Company leases warehouse space under a lease which expires in December
2010. The terms of the lease are to pay anywhere from $0 to $700
depending on the activity in the warehouse. Due to the variable
nature of the lease there are no derterminable future lease payments as of
December 31, 2009.
Rent
expense was $6,639 and $8,400 for the years ended December 31, 2009 and 2008,
respectively. The Company leases the warehouse from the spouse of the
Company’s CEO, who is also a shareholder.
During
2008, the Company executed an Option Contract for Sale and Purchase for one of
the properties held for investment. The buyer paid a $3,500 deposit for the
right to purchase the property for $107,500. The option expires on August 1,
2010.
Pursuant
to a Settlement Agreement between Southwestern Bell Yellow Pages (“SWBYP”) and
the Company’s CEO, a payment of $1,250 is required to be paid each month to
satisfy amounts due to SWBYP. The Board of Directors of the Company
has agreed to assume the liability for the payment of these
amounts. During 2008, $13,750 had been paid and is included in
General and Administrative Expenses and the expense in 2009 was
$15,000. At December 31, 2009 the balance remaining on the settlement
was $4,583. This amount is included in accrued expenses at December
31, 2009.
NOTE 8 – INCOME
TAXES
The
Company has adopted ASC 740-10 “Income Taxes”, (formerly FASB
Interpretation No. 48, “Accounting for Uncertainty in Income
Taxes” (“FIN 48”), which supplemented SFAS No. 109, “Accounting for Income Taxes”
(“SFAS No. 109”)), which requires the use of the liability method in the
computation of income tax expense and the current and deferred income taxes
payable (deferred tax liability) or benefit (deferred tax asset).
Valuation allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized be recorded directly to retained
earnings and reported as a change in accounting principle.
F-11
Deferred
tax assets at December 31, 2009 and 2008 consisted of the
following:
Deferred
tax asset related to:
|
2009
|
2008
|
||||||
Prior
year
|
$ | 68,618 | $ | 47,794 | ||||
Tax
benefit for current year
|
2,307 | 20,824 | ||||||
Total
deferred tax asset
|
70,925 | 68,618 | ||||||
Less:
valuation allowance
|
(70,925 | ) | (68,618 | ) | ||||
Net
deferred tax asset
|
$ | 0 | $ | 0 |
The net
deferred tax asset generated primarily by the Company’s net operating loss
carryforward has been fully reserved. The cumulative net operating loss
carry-forward is approximately $283,700 at December 31, 2009, and will expire in
the years 2025 through 2029.
The
difference in the income tax benefit not shown in the consolidated statements of
operations and the amount that would result if the U.S. Federal statutory rate
of 25% were applied to pre-tax loss for 2009 and 2008 is attributable to the
valuation allowance.
The
realization of deferred tax benefits is contingent upon future earnings ,
therefore, is fully reserved at December 31, 2009.
Upon
adoption of ASC 740-10, the Company had no gross unrecognized tax benefits that,
if recognized, would favorably affect the effective income tax rate in future
periods. The Company has not accrued any additional interest or
penalties as a result of the adoption of ASC 740-10.
NOTE 9 – RELATED PARTY
TRANSACTIONS
Warehouse
space and a truck are rented at fair market value from the CEO’s spouse, who is
also a shareholder of the Company.
The
Company owes the Company’s CEO $23,847 at December 31, 2009 for operating
expenses paid on the Company’s behalf. This is classified as Due to
Related Parties.
As of
December 31, 2009, the Company owes $27,560 to a Consultant, who is also a
shareholder, for professional fees paid on the Company’s behalf. This
is classified as Due to Related Parties.
As
discussed in Note 4, as of December 31, 2009, the Company has two notes payable
totaling $41,000 due to the CEO’s father.
The
Company’s line-of-credit, discussed in Note is extended from a entity
controlled by a shareholder.
NOTE 10 – FINANCIAL
CONDITION AND GOING CONCERN
The
Company has an accumulated deficit through December 31, 2009 totaling $292,215
and had negative working capital of $129,825. Because of this
accumulated deficit, the Company will require additional working capital to
develop its business operations.
The
Company has experienced no loan defaults, labor stoppages, legal proceedings or
any other operating interruption in 2009 or so far in
2010. Therefore, these items will not factor into whether the
business continues as a going concern, and accordingly, Management has not made
any plans to dispose of assets or factor receivables to assist in generating
working capital.
F-12
The
Company intends to raise additional working capital either through private
placements, public offerings and/or bank financing, or additional loans from
Management if there is need for liquidity. Management may also
consider reducing administrative costs and suspending all bonus and incentive
programs. There are no assurances that the Company will be able to
either (1) achieve a level of revenues adequate to generate sufficient cash flow
from operations; or (2) obtain additional financing through either private
placement, public offerings and/or bank financing necessary to support the
Company’s working capital requirements. To the extent that funds
generated from private placements, public offerings and/or bank financing are
insufficient, the Company will have to raise additional working
capital. No assurance can be given that additional financing will be
available, or if available, will be on terms acceptable to the
Company. If adequate working capital is not generated from
operations, financing is not available, or Management cannot loan sufficient
funds, the Company may not be able to continue its operations.
Management
believes that the efforts it has made to promote its operation will continue for
the foreseeable future. These conditions raise substantial doubt
about the Company’s ability to continue as a going concern. The
financial statements do not include any adjustments relating to the
recoverability and classification of asset carrying amounts or the amount and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.
In
response to the decline in the housing market and the result of the Company’s
Properties Held for Remediation assets not turning in over a year, the Company
has decided to search for a merger candidate and therefore has elected to file
as a shell company in all filings. The Company’s operations have been
nominal in the twelve months ending December 31, 2009 with sales of $76,011
versus $159,261 in the twelve months ended December 31, 2008. For the
quarter ended December 31, 2009, the Company had $186,873 in assets, of which
$185,088 are classified as Properties Held for Remediation; and $210,963 in
liabilities. The Company’s cash balance at December 31, 2009 was
$1,785. Furthermore, the Company has not generated positive cash flow
from operations. These factors raise substantial doubt the Registrant's ability
to continue as a going concern.
NOTE 11 – RECENT ACCOUNTING
PRONOUNCEMENTS
In 2009,
the FASB issued the following guidance;
SFAS No. 166:
"Accounting for Transfers of Financial Assets—an amendment of FASB Statement No.
140", which was codified
into ASC 860, which be effective for the Company as of January 1,
2010.
SFAS No. 167: "Accounting for
Transfers of Financial Assets", which was codified into ASC 810-10, which
will be effective for the Company as of January 1, 2010.
FSP No. FAS 107-1 and APB
28-1: “Interim Disclosures about Fair Value of Financial
Instruments”, which was codified into ASC 825.
FSP No. FAS 115-2 and FAS
124-2: “Recognition and Presentation of Other-Than-Temporary
Impairments”, which was codified into ASC 320-10-65-4.
FSP No. FAS
157-4: “Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly”, which was
codified into ASC 820-10-65-4.
Management
has reviewed these new standards and believes they will have no material impact
on the financial statements of the Company.
F-13
NOTE 12 – SUBSEQUENT
EVENTS
During
2009, the FASB issued ASC 855-10 “Subsequent
Events”, (formerly SFAS No. 165, “Subsequent Events,”) which
establishes general standards for accounting for and disclosure of events that
occur after the balance sheet date but before the financial statements are
issued or are available to be issued. The pronouncement requires the disclosure
of the date through which an entity has evaluated subsequent events and the
basis for that date, whether that date represents the date the financial
statements were issued or were available to be
issued. In conjunction with the preparation of
these financial statements, an evaluation of subsequent events was performed
through February 19, 2010, which is the date the financial statements were
issued.
The
Company has entered into a sales contract on their property that was being
marketed for sale. The sales price is $111,200 and the sale is
scheduled to close on February 25, 2010.
F-14