Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Mark One)
[ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended
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[ X ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from January 1, 2010 to September 30, 2010
000-28323
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Commission File Number
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
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(Exact name of registrant as specified in its charter)
NEVADA 98-0368586
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(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
1620 CYPRESS GARDENS RD, MONCKS CORNER, SC 29461
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(Address of principal executive offices) (Zip Code)
(843) 761-7955
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(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
N/A N/A
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Securities registered pursuant to Section 12(g) of the Exchange Act:
Title of class
COMMON STOCK, $0.001 PAR VALUE
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Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.
Yes[ ] No[X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or 15(d) of the Act.
Yes[ ] No[X]
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.
Yes[X] No[ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Website, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files).
Yes[ ] No[ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.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.
Yes[ ] No[X]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ]
Accelerated filer [ ]
Non-accelerated filer [ ]
(Do not check if a smaller reporting company)
Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes[X] No[ ]
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.
AS OF JUNE 30, 2010, THE LAST BUSINESS DAY OF THE REGISTRANT'S MOST RECENTLY
COMPLETED SECOND FISCAL QUARTER, THE AGGREGATE MARKET VALUE OF VOTING COMMON
STOCK HELD BY NON-AFFILIATES OF THE REGISTRANT IS $6,608,337 BASED ON THE
AVERAGE HIGH AND LOW BID PRICE OF THE REGISTRANT'S VOTING COMMON STOCK ON SUCH
DATE.
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PAST 5 YEARS:
Indicate by check mark whether the issuer 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.
26,543,185 COMMON SHARES OUTSTANDING AS OF AUGUST 18, 2011
2
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and the Part
of the Form 10-K (e.g. Part I, Part II, etc.) into which the document is
incorporated: (1) Any annual report to security holders; (2) Any proxy or
information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or
(c) of the Securities Act of 1933. The listed documents should be clearly
described for identification purposes.
NONE
3
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
TABLE OF CONTENTS
Page
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PART I
Item 1 Business 04
Item 1A Risk Factors 11
Item 1B Staff Comments 11
Item 2 Properties 11
Item 3 Legal Proceedings 11
Item 4 Submission of Matters to a Vote of Security Holders 11
PART II
Item 5 Market for Registrant's Common Equity, Related Stockholder 12
Matters and Issuer Purchases of Equity Securities
Item 6 Selected Financial Data 13
Item 7 Management's Discussion and Analysis of Financial Condition 14
and Results of Operations
Item 7A Quantitative and Qualitative Disclosures About Market Risk 15
Item 8 Financial Statements and Supplementary Data 15
Item 9 Changes in and Disagreements with Accountants on 16
Accounting and Financial Disclosure
Item 9A(T) Controls and Procedures 16
Item 9B Other Information 16
PART III
Item 10 Directors, Executive Officers and Corporate Governance 17
Item 11 Executive Compensation 19
Item 12 Security Ownership of Certain Beneficial Owners and 21
Management and Related Stockholder Matters
Item 13 Certain Relationships and Related Transactions, 22
and Director Independence
Item 14 Principal Accounting Fees and Services 23
PART IV
Item 15 Exhibits, Financial Statement Schedules 24
SIGNATURES 25
================================================================================
i
PART I
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
(A Development Stage Company)
REPORT AND FINANCIAL STATEMENTS
December 31, 2009
and the Nine Months Ended September 30, 2010
(Stated in US Dollars)
--------------------
F-1
PAGE
Report of Independent Registered Public Accounting Firm F-3
Balance Sheets as of December 31, 2009 and September 30, 2010 F-4
Statements of Operations for the years ended F-5
December 31, 2009 and the nine months ended September 30, 2010
Statements of Changes In Stockholders' Deficiency for the F-6 to F-7
years ended December 31, 2009 and the nine months ended
September 30, 2010
Statements of Cash Flows for the years ended December 31, 2009 F-8
and the nine months ended September 30, 2010
Notes to Financial Statements F-9 to F-16
F-2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To The Board of Directors
Tire International Environmental Solutions, Inc.
1530-9th Ave. S.E.
Calgary, Alberta T2G 0T7
We have audited the accompanying balance sheets of Tire International
Environmental Solutions, Inc. (a development stage company ) (the Company) as of
September 30, 2010 and December 31, 2009, and the related statements of
operations and other comprehensive income (loss), changes in stockholders'
equity (deficit), and cash flows for the nine months ended September 30, 2010
and the year ended December 31, 2009, and for the period from inception to
September 30, 2010. 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 audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States of America). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting, as a basis for designing audit procedures that
are appropriate in the circumstances but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. 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 audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Tire International
Environmental Solutions, Inc. as of September 30, 2010 and December 31, 2009,
and the results of its operations and its cash flows for the nine months ended
September 30, 2010 and the year ended December 31, 2009, and for the period from
inception to September 30, 2010, 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 1 to the
financial statements, the Company is in the development stage, and has suffered
losses from operations. These factors, along with other matters as set forth in
Note 1, raise substantial doubt that the Company will be able to continue as a
going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
/s/ Child, Van Wagoner & Bradshaw, PLLC
Child, Van Wagoner & Bradshaw, PLLC
Salt Lake City, Utah
February 21, 2011
F-3
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
-----------------------------------------------
(A Development Stage Company)
BALANCE SHEETS
(Stated in U.S. Dollars)
As of September 30, As of December 31,
2010 2009
-------------------- ------------------
ASSETS
Current Assets
Cash $ 10,448 $ -
---------------------- --------------------
TOTAL ASSETS $ 10,448 $ -
====================== ====================
LIABILITIES and STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable and accrued liabilities $ 71,613 $ 74,580
Accounts payable - related parties 24,880 -
Loan payable - related parties 51,023 417,822
Convertible notes-related party 161,956 -
(net discount of $295,755)
------------ ------------
TOTAL CURRENT LIABILITIES 309,472 492,402
STOCKHOLDERS' DEFICIT
Preferred stock, $0.10 Par value
1,000,000 shares authorized, none issued - -
Common Stock $0.001 par value, authorized 100,000,000 shares
Issued and outstanding 8,930,185 shares at
September 30, 2010 and December 31, 2009 8,930 8,930
Additional paid in capital 3,797,697 3,350,619
Accumulated deficit during the development (4,105,651) (3,851,951)
----------- -----------
TOTAL STOCKHOLDERS' DEFICIT (299,024) (492,402)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 10,448 $ -
=========== ===========
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS
F-4
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
-----------------------------------------------
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Stated in U.S. Dollars)
Nine months Year Ended December 15, 1998
Ended December 31, (Date of Inception) to
September 30, 2010 2009 September 30, 2010
----------- ----------- -----------
REVENUE $ - $ - $ -
----------- ----------- -----------
EXPENSES
General and Administrative 17,245 2,474 1,046,499
Professional fees 10,261 15,994 52,578
Salaries and consulting 55,876 4,296 71,768
----------- ----------- -----------
NET INCOME (LOSS) (83,382) (22,764) (1,170,845)
FROM OPERATIONS
OTHER INCOME AND EXPENSES
Interest expense (170,318) (8,538) (182,569)
----------- ----------- -----------
(170,318) (8,538) (182,569)
Income( tax) benefit - - 2,235
----------- ----------- -----------
Discontinued Operations (253,700) (31,302) (1,351,179)
Discontinued operations - - (2,754,472)
of Subsidiary
----------- ----------- -----------
NET LOSS $ (253,700) $ (31,302) $(4,105,651)
=========== =========== ============
BASIC AND DILUTED
LOSS PER SHARE $ (0.03) $ (0.00)
=========== ===========
Basic and diluted weighted
average number of shares 8,930,185 8,930,185
============ ===========
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS
F-5
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCY
(Stated in U.S. Dollars)
Deficit
Accumulated
During Total
Additional '
Common Stock Paid Development Stockholders
----------------------------
Shares Amount in Capital Stage Deficiency
--------- -- ----------- --- ------------- --- --- ------------
--------------
Balance, December 15, 1998 23,674 $24 $66,776 $ (68,000) $ (1,200)
(Date of Inception)
--------- -- ----------- --- ------------- --- -------------- --- ------------
BALANCE, DECEMBER 31, 1998 23,674 24 66,776 (68,000) (1,200)
Issuance of common stock 80
for all stock of iVision USA, Inc.
January 27, 1999 80,000 (56,516) 393,899 337,463
Issuance of common stock
for services at $1.00 February 8, 1999 6,700 7 6,693 6,700
Issuance of common stock as part
payment for all stock of Bergeron
Conseils Et Inc. and La Societe De
Services September 1, 1999 340 - 51,000 51,000
Issuance of common stock for all stock
of Xiem Productions Inc. September 15,
1999 2,000 2 299,998 300,000
Issuance of common stock for services -
at $1.00 November 15, 1999 410 410 410
Issuance of common stock for services 2
at $1.00 December 2, 1999 2,000 1,998 2,000
Capital contributed 1,248,774 1,248,774
Net income (loss) (1,653,806) (1,653,806)
--------- -- ----------- --- ------------- --- -------------- --- ------------
BALANCE, DECEMBER 31, 1999 115,124 115 1,619,133 (1,327,907) 291,341
Issuance of common stock for services
at $62.97 March 3, 2000 1,095 1 68,949 68,950
Issuance of common stock for cash at
$150.00 August 21, 2000 6,000 6 899,994 900,000
Issuance of common stock for cash at
$0.10 August 21, 2000 500 - 50 50
Net income (loss) (1,744,015) (1,744,015)
--------- -- ----------- --- ------------- --- -------------- --- ------------
BALANCE, DECEMBER 31, 2000 122,719 122 2,588,126 (3,071,922) (483,674)
Issuance of common stock for services
at $10.00 June 11, 2001 550 1 5,499 5,500
Net income (loss) (376,719) (376,719)
--------- -- ----------- --- ------------- --- -------------- --- ------------
BALANCE, DECEMBER 31, 2001 123,269 123 2,593,625 (3,448,641) (854,893)
Issuance of common stock for services
at $0.10 June 3, 2002 4,000 4 396 400
Issuance of common stock for services
at $0.265 July 22, 2002 90,000 90 23,760 23,850
Issuance of common stock to cancel debt
at $2.76 July 22, 2002 209,776 210 577,907 578,117
Net income (loss) (35,700) (35,700)
--------- -- ----------- --- ------------- --- -------------- --- ------------
BALANCE, DECEMBER 31, 2002 427,045 427 3,195,688 (3,484,341) (288,226)
Issuance of common stock for cash at
$10.03 on June 18, 2003. 7,140 7 71,627 71,634
F-6
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
-----------------------------------------------
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCY
(Stated in U.S. Dollars)
Deficit
Accumulated
During Total
Additional '
Common Stock Paid Development Stockholders
----------------------------
--------- --- -- -----------
Shares Amount in Capital Stage Deficit
--------- --- -- ----------- --- ------------- --- -------------- --- ------------
--------- -- ----------- --- ------------- ---
Net income (loss) $ $ $ (63,877) $ (63,877)
--------- -- ----------- --- ------------- --- -------------- --- ------------
--------- -- ----------- --- ------------- ---
BALANCE, DECEMBER 31, 2003 434,185 434 3,267,315 (3,548,218) (280,469)
Net income (loss) 206,969 206,969
--------- -- ----------- --- ------------- --- -------------- --- ------------
BALANCE, DECEMBER 31, 2004 434,185 434 3,267,315 (3,341,249) (73,500)
Net income (loss) (62,000) (62,000)
--------- -- ----------- --- ------------- --- -------------- --- ------------
BALANCE, DECEMBER 31, 2005 434,185 434 3,267,315 (3,403,249) (135,500)
Issuance of Stock to retire Debt at
$0.01 on December 21, 2006 500,000 500 4,500 5,000
Net income (loss) (233,955) (233,955)
--------- -- ----------- --- ------------- --- -------------- --- ------------
BALANCE, DECEMBER 31, 2006 934,185 934 3,271,815 (3,637,204) (364,455)
Shares issued to pay for expenses at 4
$0.01 on March 13, 2007 ,900,000 4,900 44,100 49,000
Shares issued to pay for expenses at 2
$0.01 on December 7, 2007 ,805,000 2,805 25,245 28,050
Net income (loss) (145,487) (145,487)
--------- -- ----------- --- ------------- --- -------------- --- ------------
BALANCE, DECEMBER 31, 2007 8,639,185 8,639 3,341,160 (3,782,691) (432,892)
Issuance of common stock for services 291,000 291 9,459 9,750
Net income (loss) (37,958) (37,958)
--------- -- ----------- --- ------------- --- -------------- --- ------------
BALANCE, DECEMBER 31, 2008 8,930,185 8,930 3,350,619 (3,820,649) (461,100)
Net income (loss) (31,302) (31,302)
--------- -- ----------- --- ------------- --- -------------- --- ------------
BALANCE, DECEMBER 31, 2009 8,930 3,350,619 (3,851,951) (492,402)
8,930,185
Issuance of convertible notes 443,024 443,024
Stock-based compensation 4,054 4,054
Net income (loss) (253,700) (253,700)
--------- -- ----------- --- ------------- --- -------------- --- ------------
BALANCE, SEPTEMBER 30, 2010 8,930,185 $ 8,930 $ 3,797,697 $ (4,105,651) $ (299,024)
========= == =========== === ============= === ============== === ============
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS
F-7
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
-----------------------------------------------
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Stated in U.S. Dollars)
December 15, 1998
Nine months Ended Year Ended (Date of Inception)
September 30, 2010 December 31, 2009 To September 30, 2010
------------------ ----------------- ---------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period $ (253,700) $ (31,302) $ (1,351,179)
Adjustment to reconcile net loss to cash used in
operating activities
Consulting fees settled with stock - - 8,250
Expenses paid with stock - - 59,205
Stock-based compensation on consulting services 4,054 4,054
Amortization of convertible notes discount 147,269 - 147,269
Imputed interest on the promissory notes 16,241 - 16,241
Changes in assets and liabilities:
Accounts payable and accrued liabilities (4,521) 17,010 70,059
Accounts payable - related parties 24,880 - 24,880
------------------ ------------------- ------------------
Cash used in operating activities - continued operations (65,777) (14,292) (1,021,221)
Cash used in operating activities - discontinued operations - - (1,977,551)
------------------ ------------------- ------------------
NET CASH FLOWS USED IN OPERATING ACTIVITIES (65,777) (14,292) (2,998,772)
CASH FLOWS FROM INVESTING ACTIVITIES
Cash used in investing activities - continued operations - - -
Cash used in investing activities - discontinued operations - - (708,390)
------------------ ------------------- ------------------
NET CASH FLOWS USED IN INVESTING ACTIVITIES - - (708,390)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from related parties promissory notes 76,225 8,775 494,047
Proceeds from issuance of common stock - - 3,359,549
------------------ ------------------- ------------------
Cash provided by financing activities - continued operations 76,225 8,775 3,853,596
Cash used in financing activities - discontinued operations - - (135,986)
------------------ ------------------- ------------------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 76,225 8,775 3,717,610
Net increase (decrease) in cash and cash equivalents 10,448 (5,517) 10,448
Cash and cash equivalents at beginning of period - 5,517 -
------------------ ------------------- -------------------
Cash and cash equivalents at end of period $ 10,448 $ - $ 10,448
================== =================== ===================
SUPPLEMENTAL DISCLOSURES:
Cash paid during the period for
Interest $ - $ - $ 21,981
================== =================== ===================
Income taxes $ - $ - $ -
================== =================== ===================
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING AND
INVESTING ACTIVITIES:
Convert loan payable - related parties to Convertible
notes $ 443,024 $ - $ 443,024
================== =================== ===================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-8
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1- NATURE AND CONTINENCE OF OPERATIONS
a) Organization
The Company was incorporated under the laws of the State of Nevada on
February 19, 1986 with authorized common stock of 10,000,000 shares with a
par value of $0.0025. On April 25, 1998 the authorized common stock was
increased to 100,000,000 shares with a change in par value to $0.001 and
on February 9, 1999 the Company changed its name to IVision Group Ltd. On
April 15, 1998 the Company completed a reverse common stock split of two
shares of its outstanding stock for one share and on January 8, 1999, a
forward common stock split of one share of outstanding stock for four
shares. This report has been prepared showing after-stock-split shares
with a par value of $0.001 from inception. On January 27, 1999, the
Company acquired all of the outstanding stock of I Vision USA Inc. through
a stock-for-stock exchange in which the stockholders of I Vision USA Inc.
received 8,000,000 common shares of the Company in exchange for all of the
stock of I Vision USA Inc. I Vision USA Inc. was organized in the state of
Delaware on December 15, 1998 and had purchased all of the outstanding
stock of I Vision Integral Inc. which was organized in Canada during March
1998. I Vision USA Inc. and I Vision Integral Inc. were organized for the
purpose of conducting electronic commerce on the World Wide Web. For
reporting purposes, the acquisition was treated as an acquisition of the
Company by I Vision USA Inc. (reverse acquisition) and a recapitalization
of I Vision USA Inc. The historical financial statements prior to January
27, 1999 are those of I Vision USA Inc. and its subsidiary I Vision
Integral Inc. During September 1999, the Company acquired all of the
outstanding stock of La Societe De Services, Bergeron Conseils Et
Realisation Inc., and Ixiem Production Inc. by the issuance of 234,000
shares of its common stock and a promissory note of $150,000 CDN. This
debt was settled for stock and the companies have since been discontinued
or abandoned.
The financial statements shown in this report include the accounts of the
Company and its wholly-owned subsidiaries as outlined in the notes above.
All material intercompany accounts and transactions have been eliminated.
These financial statements are presented from the inception date of
December 15, 1998 which was the date of incorporation of I Vision U.S.A,
Inc. as this company was the last operating entity.
During fiscal year 2003, the Company and its subsidiaries ceased
operations and on April 1, 2004, the Company divested itself of all of its
subsidiaries by way of a divestiture agreement whereby the Company
transferred all of the shares of the subsidiaries in exchange for the
assumption of all of the outstanding debt of the subsidiaries. The impact
of these divestitures on the balance sheet of the Company was to
substantially reduce the outstanding liabilities.
On December 21, 2006, the Company issued a total of 500,000 post split
common shares pursuant to a debt settlement agreement between the Company
and Mr. Antonio Care. This issuance of shares effected a change in control
of the Company.
On February 8, 2007, the Company effected a reverse split of its shares of
common stock on the basis of 1 new share for every 100 shares held at the
time of the reverse split. Concurrent with the reverse split of its shares
the Company changed its name to Tire International Environmental Solutions
Inc.
On March 13, 2007, the Company issued a total of 4,900,000 common shares
at a deemed price of $0.001 per share in settlement of a total of $49,000
in related party debt. The related party required the shares be issued to
a total of 14 stockholders.
On December 7, 2007, the Company issued a total of 2,805,000 common shares
at a deemed price of $0.001 per common share in settlement of a total of
$28,050 in related party debt. The related party required the shares be
issued to a total of 14 stockholders.
The Company has been seeking acquisitions since it discontinued
operations. During the period covered by this report the Company has
determined to enter into the tire recycling industry and has signed a
Joint Venture Agreement more particularly described under Note 8.
F-9
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1- NATURE AND CONTINUES OF OPERATIONS
(CONTINUED)
b) Basis of presentation
On November 3, 2010, the Board of Directors of the Company, by quorum,
approved a change of the fiscal year end from December 31 to September 30
effective as of November 3, 2010. The change was made to align its fiscal
periods more closely with the seasonality of its business and improve
comparability with industry peers.
c) Going Concern
As of September 30, 2010, the Company has an accumulated deficit of
$4,105,651 and remains in the development stage due to its lack of
business operations. While the Company has entered into a Joint Venture
agreement and determined to pursue opportunities in the tire recycling
industry. It will be required to raise substantial capital to pursue its
business plan and complete its joint venture agreement. At the time of
this report no capital has been raised for operations. These factors
create an uncertainty about the Company's ability to continue as a going
concern.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Revenue Recognition
Revenues are recognized in accordance with SEC Staff Accounting Bulletin
(SAB) No. 104, "Revenue Recognition in Financial Statements." Under SAB
104, product revenues (or service revenues) are recognized when
persuasive evidence of an arrangement exists, delivery has occurred (or
service has been performed), the sales price is fixed and determinable
and collectability is reasonably assured.
b) Cash and Cash Equivalents
The Company considers all highly liquid instruments purchased with
original maturities of less than three months to be cash equivalents.
c) Comprehensive Income
Since 1999, the Company adopted ASC 220, "Comprehensive Income", for the
reporting of comprehensive income and its components.
d) Income Taxes
Income taxes are computed using the asset and liability method. Under
this method, deferred income tax assets and liabilities are determined
based on the differences between the financial and tax bases of assets
and liabilities and are measured using the currently enacted tax rates
and laws. ASC 740 requires recording a valuation allowance against
deferred tax assets if based on the weight of available evidence, it is
more likely than not that some or all of its deferred tax assets will
not be realized.
e) Depreciation and Amortization
Property and equipment are stated at cost. Depreciation is calculated on
a diminishing balance basis over the estimated useful lives of the
assets, generally five to seven years. Trademarks and patents are
depreciated on a straight-line basis over a period of twenty years.
Maintenance and repairs are charged to operations when incurred.
Betterments and renewals are capitalized
F-10
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
f) Estimates and Assumptions
Management uses estimates and assumptions in preparing financial
statements in accordance with generally accepted accounting principles.
Those estimates and assumptions affect the reported amounts of assets
and liabilities, the disclosure of contingent assets and liabilities,
and the reported revenues and expenses. Actual results could vary from
the estimates that were assumed in preparing the financial statements.
g) Basic and Diluted Net Income (Loss) Per Share
Basic net income (loss) per share is computed by dividing net loss
available to common stockholders by the weighted average number of
shares outstanding during the period. Diluted net income (loss) per
share is computed using the weighted average number of common shares and
common equivalent shares outstanding during the period. Common
equivalent shares consist of shares issuable upon the exercise of stock
warrants.
h) Allowance for Doubtful Accounts
The Company provides an allowance for uncollectible accounts. The
allowance is based upon management's periodic analysis of receivables,
evaluation of current economic conditions and other pertinent factors.
Ultimate losses may vary from current estimates and, as additions to the
allowance become necessary, they are charged against earnings in the
period they become known. Losses are charged and recoveries are credited
to the allowance.
i) Impairment of Long-Lived Assets
The Company evaluates the recoverability of long-lived assets using
future undiscounted cash flows attributed to such assets. The Company
recognizes impairment of long-lived assets in the event the net book
value of such assets exceeds the future undiscounted cash flows
attributable to such assets.
j) Advertising Costs
The Company recognizes advertising expense on the cost of communication
advertising in the period in which the advertising space or airtime is
used. There were no advertising costs for the periods ended September
30, 2010 and December 31, 2009.
k) Concentration of Credit Risk
Financial instruments that potentially subject the Company to
significant concentration of credit risk consist primarily of cash and
accounts receivable. Cash is deposited with high credit, quality
financial institutions. Accounts receivable are typically unsecured and
are derived from revenues earned from customers located throughout the
United States. The Company performs ongoing credit evaluations of its
customers and maintains reserves for potential credit losses;
historically, such losses have been within management's expectations.
l) Fair Value of Financial Instruments
The Company's financial instruments, including cash, accounts
receivable, accounts payable, notes payable and long-term obligations
are carried at cost, which approximates their fair value because of the
short-term maturity of these instruments.
F-11
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
NOTE 3 - NEW ACCOUNTING STANDARDS-
Recent Accounting Pronouncements
In April 2010, the FASB codified the consensus reached in Emerging Issues Task
Force Issue No. 08-09, "Milestone Method of Revenue Recognition." FASB ASU No.
2010-29 "Revenue Recognition - Milestone Method (Topic 605)" provides guidance
on defining a milestone and determining when it may be appropriate to apply the
milestone method of revenue recognition for research and development
transactions. FASB ASU No. 2010 - 29 is effective for fiscal years beginning on
or after June 15, 2010, and is effective on a prospective basis for milestones
achieved after the adoption date. The Company does not expect this ASU will have
a material impact on its financial position or results of operations when it
adopts this update for the fiscal year beginning October 1, 2010.
NOTE 4 - RELATED PARTY TRANSACTIONS
I. Stockholder loans:
On June 12, 2010, pursuant to a letter of default on accounts payable owed
to a Director and Officer of the Company, the Company restructured its
related party outstanding accounts payable totaling $443,024 as of March
31, 2010. The accounts payable was restructured to a one year, 10%
interest bearing convertible promissory note ('Note") dated June 1, 2010
and due on May 31, 2011. The conversion price of the Note is $0.01. As of
June 12, 2010, using the guidance provided in ASC 470-20-25, we evaluated
the Note and concluded that the convertible promissory note did have an
embedded beneficial conversion feature. The embedded beneficial conversion
feature was valued and had been recognized as additional paid-in-capital
by allocating a portion of the proceeds equal to the intrinsic value of
the feature. The resulting discount on the Note is amortized to interest
expense using the effective interest method over the life of the Note.
The carrying value and terms of the Note is as following:
September 30, 2010
-------------------
Face value due May 31, 2011 $ 443,024
Less: Unamortized discount (295,755)
-------------------
Carrying value: $ 147,269
=======
During the nine months ended September 30, 2010, the Company accrued
interest of $14,687 related to the Note. An amount of $161,956 is
reflected on the Company's balance sheets as Convertible note - related
parties including the carrying value of $147,269 disclosed above, as well
as accrued interest to September 30, 2010 totaling $14,687.
During the nine months ended September 30, 2010, Mr. Care, an officer and
Director of the Company, made loans to the Company in the amount of
$40,023. The loans bear 10% interest and are due on demand. As of
September 30, 2010, the Company accrued interest in the amount of $1,431.
During the nine months ended September 30, 2010, the Company received
operating funds from two of our shareholders in the amount of $11,000. The
loans bear 10% interest and are due on demand. As of September 30, 2010,
the Company accrued interest in the amount of $123. Subsequent to the
period ended September 30, 2010, the Company paid principal in the amount
of $10,000 in cash.
F-11
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
NOTE 4 - RELATED PARTY TRANSACTIONS (CONTINUED)
II. Consulting Services
On April 16, 2010, Mr. Dean Petkanas joined the Board of Directors of the
Company and on June 11, 2010, Mr. Dean Petkanas was appointed Interim
Chief Operating Officer and Acting Chief Financial Officer of the Company.
During the two month period from April 1, 2010 to June 1, 2010, Mr.
Petkanas invoiced, and was paid, consulting fees by the Company in the
amount of $10,000.
On June 12, 2010, the Company entered into an engagement agreement (the
"Engagement") with Mr. Petkanas. This Engagement became effective on June
1, 2010 and expired on September 30, 2010 (the "Interim Period") subject
to an additional six month renewal upon the mutual written consent of the
parties (the "Remaining Period"). The Remaining Period shall begin on
October 1, 2010 and end on March 31, 2011 and shall be subject to an
additional twelve month renewal upon mutual written consent of the
parties. Pursuant to the Engagement, (i) the Company shall pay Mr.
Petkanas a fee at the annual base rate of Sixty Thousand Dollars
($60,000); (ii) the annual base rate will be increased to One Hundred and
Forty Thousand Dollars ($140,000) upon the Company securing financing of
at least Two and One Half Million Dollars ($2,500,000) during the Interim
Period and Remaining Period; (iii) upon the Company completing any merger
that provides a going concern value to the Company whereby financing of at
least Two and One Half Million Dollars ($2,500,000) is placed for the
purposes of internal growth, a merger, or consolidation with another going
concern. The Company will pay Mr. Petkanas an additional bonus
compensation in the sum of One Hundred Thousand Dollars ($100,000); (iv)
the Company shall issue Mr. Petkanas options to purchase One Hundred and
Fifty Thousand (150,000) shares of common stock of the Company with an
exercise price equal to Thirty cents ($.30) and expiring in five (5) years
from the date of issue for the Engagement during the Interim Period, which
date of issue is June 1, 2010, and in the event the Interim Period is
extended through the Remaining Period, the Company shall issue to Mr.
Petkanas options to purchase Three Hundred and Fifty Thousand (350,000)
shares of common stock of the Company with an exercise price equal to
Thirty cents ($.30) and expiring in five (5) years from date of issue of
the Engagement.
As of September 30, 2010, the Company owed Mr. Petkanas $15,000 in fees
pursuant to the Engagement, which amount is reflected on the balance sheet
as accounts payable-related parties. These fees were paid in full in
December subsequent to the period ended September 30, 2010.
Subsequent to the period ended September 30, 2010, Mr. Petkanas resigned
as Interim Chief Operating Officer and Acting Chief Financial Officer of
the Company. As part of the settlement, the Company entered into a
non-qualified stock incentive plan stock option agreement with Dean
Petkanas.(refer to Note 10 - Subsequent Events)
NOTE 5 - COMMON STOCK
The Company is authorized to issue 100,000,000 shares of $.001 par value common
stock.
On February 8, 2007, the Company effected a 100 for 1 reverse stock split. All
share and per share amounts have been restated to reflect the split as if it had
occurred at the beginning of the earliest period presented. As of September 30,
2010, December 31, 2009 and 2008, the Company had 8,930,185 shares of common
stock outstanding.
On April 1, 2008, the Company issued a total of 141,000 common shares in
settlement of $8,250 of outstanding debt relating to consulting fees for fiscal
2007 which were invoiced from the consultants during fiscal 2008.
On April 25, 2008 the Company issued a total of 150,000 shares to officers and
directors as compensation for officers' and directors' fees of $1,500 for fiscal
2008.
There were no new common shares issued in 2009 and 2010.
F-12
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
NOTE 6 - STOCK OPTION
As discussed in Note 4 above, effective June 1, 2010, the Company granted
options for One Hundred and Fifty Thousand (150,000) shares of common stock of
the Company with an exercise price equal to thirty cents ($.30) per common share
and expiring in five (5) years from the date of issue for the Agreement. Under
ASC 718, the grant date fair value of the options, which has been determined
based upon the fair value (using the Black Sholes method) of the Company's
shares on the grant date, is expensed over the Interim Period. The Company has
recognized stock-based expense as consulting fee of $4,054 with respect to the
vested portion at September 30, 2010, and unrecognized compensation expense
totaling $805 is expected to be recognized in the fiscal year 2011.
The following table summarized information on the Company's option:
Weighted Average
Number Granted Date
Fair Value
Options Outstanding at December 31, 2009 - $ -
Granted Options 150,000 $ 0.03
Vested 150,000 $ 0.03
---------- ----------------
Options Outstanding and Vested 150,000 $ 0.03
at September 30, 2010 ========== ================
NOTE 7 - INCOME TAXES
No provision was made for federal income tax, since the Company had a
significant net operating loss. Net operating loss carryforwards may be used to
reduce taxable income through the year 2030. The availability of the Company's
net operating loss carryforwards are subject to limitation if there is a 50% or
more positive change in the ownership of the Company's stock, unless the same or
similar business is carried on. The Company has recorded a 100% valuation
allowance for the deferred tax asset due to the uncertainty of its realization.
The components of the net deferred tax asset are summarized below for the years
ended September 30, 2010 and December 31, 2009:
September 30, December 31,
2010 2009
---- ----
Deferred tax asset $ 264,399 $ 175,604
Less valuation allowance (88,795) (175,604)
------------------ ----------------
Net deferred tax assets $ - $ -
================== ================
The net operating loss carryforward for federal and state income tax purposes
was approximately $755,425. The carryforwards begin to expire in fiscal year
2019. Deferred tax assets have been reduced by a valuation allowance because of
uncertainties as to future recognition of taxable income to assure realization.
The net change in the valuation allowance for the year ended September 30, 2010
was $88,795, for the year ended December 31, 2009 was $10,956. The figures for
2010 and 2009 reflect those of the Company only, as all subsidiaries are now
gone.
The Company adopted the provisions of uncertain tax positions as addressed in
ASC 740-10-65-1on January 1, 2007. As a result of the implementation of ASC 740,
the Company recognized approximately no increase in the liability for
unrecognized tax benefits.
The Company has no tax positions at September 30, 2010 and December 31, 2009 for
which the ultimate deductibility is highly certain but for which there is
uncertainty about the timing of such deductibility.
F-13
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Effective June 16, 2010, the Company has signed a Joint Venture Agreement (the
"Agreement") with Tires SpA.("TIRES"), an Italian manufacturer of heavy
industrial processing and recycling equipment. Under the terms of the Agreement,
as part of a purchase order by the Company the terms of which are detailed
below, the Company will own fifty percent (50%) of the TIRES U.S. patent pending
for the TIRES state-of-the-art tire recycling plant, which patent covers the
method and installation of recycling of used tires for conversion into finished
products (the "Waste to Value Technology") for the North American market. The
Agreement between the Company and TIRES calls for a payment of (euro)11,100,000
($14,476,000 million USD), of which (euro)7,700,000 ($10,041,900 USD) is to be
paid by way of cash and the remaining balance of (euro)3,400,000 shall be paid
via the issuance of common shares of the Company. For the purpose of calculating
the issuance price of the shares, the parties have agreed to a Euro to USD rate
of 1.2 bringing the amount due to $4,080,000 in USD. The parties have further
agreed to issue the shares at a deemed price of $0.50 per share. Therefore the
Company will be required to issue a total of 8,160,000 shares of common stock to
TIRES.
(euro)o 1,000,000 ($1,304,140 USD) and the issuance of a total of
1,140,000 shares of common stock of the Company to be paid by
July 30, 2010, on the same date of the delivery of the first
module of the "Refiner Full" plant;
(euro)o 1,000,000 ($1,304,140 USD) and the issuance of a total of
1,140,000 shares of common stock of the Company to be paid by
November 30, 2010, on the same date of delivery of the second
module of the "Refiner Full" plant;
(euro)o 1,000,000 ($1,304,140 USD) and the issuance of a total of
1,140,000 shares of common stock of the Company to be paid by
December 31, 2010, on the same date of delivery of the third
module of the "Refiner Full" plant;
(euro)o 1,000,000 ($1,304,140 USD) and the issuance of a total of
1,140,000 shares of common stock of the Company to be paid by
January 31, 2011, on the same date of delivery of the fourth and
last module of the "Refiner Full" plant;
(euro)o 925,000 ($1,206,330 USD) and the issuance of a total of 900,000
shares of common stock of the Company to be paid by
February 28, 2011, on the on the same date of delivery of the
first module of the "Quadruple Rubber Tiles" plant;
(euro)o 925,000 ($1,206,330 USD) and the issuance of a total of 900,000
shares of common stock of the Company to be paid March 31, 2011,
on the on the same date of delivery of the second module of the
"Quadruple Rubber Tiles" plant;
(euro)o 925,000 ($1,206,330 USD) and the issuance of a total of 900,000
shares of common stock of the Company to be paid by March 31,
2011, on the on the same date of delivery of the third module of
the "Quadruple Rubber Tiles" plant;
(euro)o 925,000 ($1,206,330 USD) and the issuance of a total of 900,000
shares of common stock of the Company to be paid by March 31,
2011, on the on the same date of delivery of the fourth and last
module of the "Quadruple Rubber Tiles" plant;
Upon the issuance of the first shares to TIRES, TIRES shall have the right to
appoint a representative to the Board of Directors of the Company.
According to the agreement between the parties, if the initial payment is not
made by July 30, 2010, the contract shall be null and void. The Company is
currently negotiating with several potential funders but was not be able to make
the payment date of July 30, 2010. Currently, there is an amended agreement to
extend the payment date to March 18, 2011.
NOTE 9 - RECLASSIFICATION
During the nine months ended September 30, 2010, the Company reclassified
certain items on the financial statements in the column showing December 15,
1998 (Date of Inception) to September 30, 2010 and in the column showing the
year end December 31, 2009 to conform to the presentation in the September 30,
2010 financial statements.
F-14
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
NOTE 10 - SUBSEQUENT EVENTS
Subsequent to the period covered by this report, the Company received further
loans totaling $329,191 from several shareholders of the Company. The loans bear
10% interest and are due on demand.
On December 1, 2010, the Company entered into a three-month term
consulting contract with HAWK Associates Inc. ("HAWK), an investor relations and
consulting firm. HAWK will provide investor relations, financial media
relations and other appropriate consulting and advisory services. In
consideration for such services, the Company: (i) will pay a retainer fee of
$8,000 per month; (ii) will pay a one-time cash setup fee of $2,000; and HAWK
will accept payment of the $8,000 per month retainer fee as follows: (i) $2,000
in cash payment and (ii) $6,000 in restricted 144 stock, priced at the closing
price of the stock onthe effective date of the contract. On December 1, the
Company paid $4,000 in cash and issued a total of 18,000 shares of restricted
common stock of the Company for cash consideration valued at $18,000.
On December 1, 2010, the Company entered into a consulting contract with
Aquiline Group Inc.("AQUILINE), a full service public relations and consulting
firm dedicated to the peak performance of private & public companies. AQUILINE
will provide services for consulting, business advisory, shareholder information
and public/investor relations. In consideration for such services, the Company:
(i) will pay a retainer fee of $50,000 per month; (ii) will issue a total of
120,000 shares of restricted common stock of the Company per quarter; and (iii)
the term of the contract is for the period beginning December 1, 2010 and ending
December 15, 2010, services were minimized from December 18, 2010 and resumed
January 3, 2011 in observation of national holidays. The contract shall continue
and renew quarterly until terminated in accordance with certain terms. On
December 1, the Company paid $50,000 in cash and issued a total of 120,000
shares of restricted common stock of the Company.
On December 1, 2010, the Company entered into an employment agreement
with Mr. Antonio Care, a Chief Executive Officer of the Company. In
consideration of his performance of duties and responsibilities, the Company
shall pay to Mr. Care a base salary at the rate of $10,000 per month and an
allowance of up to $333 per month for the purpose of leasing, owning and /or
maintaining a vehicle for use in connection with the services for the Company.
On December 1, 2010, the Company entered into an employment agreement
with Mr. Marco Alfonsi, a Chief Operating Officer of the Company. In
consideration of his performance of duties and responsibilities, the Company
shall pay to Mr. Alfonsi a base salary at the rate of $10,000 per month and an
allowance of up to $333 per month for the purpose of leasing, owning and /or
maintaining a vehicle for use in connection with the services for the Company.
On December 1, 2010, the Company entered into an employment agreement
with Mr. Cosimo Care, a Marketing Director and Manager of IT of the Company. In
consideration of his performance of duties and responsibilities, the Company
shall pay to Mr. Care a base salary at the rate of $2,500 per month and an
allowance of up to $333 per month for the purpose of leasing, owning and /or
maintaining a vehicle for use in connection with the services for the Company.
On December 1, 2010, the Company entered into an employment agreement
with Mr. Martin Sergi, a Chief Financial Officer of the Company. In
consideration of hisperformance of duties and responsibilities, the Company
shall pay to Mr. Sergi a base salary at the rate of $10,000 per month and an
allowance of up to $333 per month for the purpose of leasing, owning and /or
maintaining a vehicle for use in connection with the services for the Company.
On December 1, 2010, the Company paid $10,000 in cash pursuant to the contract.
On December 8, 2010, Mr. Dean Petkanas, Interim Chief Operating Officer
and Acting Chief Financial Officer of the Company, informed the Board of
Directors of the Company after the Board did not be renew his agreement that he
was resigning as Interim Chief Operating Officer and Acting Chief Financial
Officer effective December 8, 2010. As part of the settlement, Mr. Petkanas
received $15,452.71 with respect to the consulting fees of $15,000 owing to him
pursuant to his contract described in Note 4 above and reimbursement expense in
the amount of $452.71 and 150,000 unregistered non-qualifying common stock
options that can be exercised during the next 5 years at $.30 per share.
Subsequent to September 30, 2010 the Company amended its Joint Venture
Agreement with Tires SpA (refer to Note 8-Commitments and Contingency) allowing
the deferring all required payments under the agreement. The payments under this
amendment are required to commence on March 18, 2011.
F-15
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
NOTE 10 - SUBSEQUENT EVENTS-CONTINUED
On December 14, 2010 the Company completed a Financial Advisory and Investment
Banking Engagement Agreement with CIM Securities, LLC of Centennial, Colorado
("CIM"). Under the agreement, the Company has retained CIM to provide the
Company financial advisory services in its effort to raise capital, identify
Merger and Acquisition targets and negotiate license agreements. Compensation
under the agreement is based on the successful completion by the Company of
privately placed capital financings, mergers, acquisitions or licensing
agreements in which CIM provided financial advisory services. The Company has
paid CIM a non-refundable deposit of $25,000 against fees and expenses incurred
under the agreement. The term of the agreement is for six months which, upon
certain circumstances, can be reduced to 2 months or extended to 30 months.
On January 18, 2011 the Company completed a Purchase Agreement with Antonio
Care, the Company's Chief Executive Officer. Under the Agreement, the Company is
acquiring all of the outstanding stock of Tonmik Import/Export Solutions, Inc
("Tonmik") in exchange for the Company's $1.7 million cash flow note. Tonmik is
a Montreal based distributor of recycled rubber products to big box retailers
that are currently manufactured using purchased recycled crumb rubber at its
facility in China. Tonmik has been operating its Chinese manufacturing facility
for 6 years. The Company expects to develop a fully integrated
scrap-tire-to-finished product business capitalizing on the consumer demand for
Tonmik finished product order flow that could not be maximized with the Tonmik
Chinese facilities. The note is payable in quarterly installments of interest at
10% per annum and principal to the extent of 50% of Tonmik's free cash flow
after all of its operating, debt and any new equipment costs are satisfied with
a final installment due on December 31, 2015. The purchase of the Tonmik shares
will be completed upon the delivery of the Tonmik December 31, 2010 financial
statements, certificates of corporate good standing and the delivery of all of
the Tonmik shares. Upon completion of the acquisition of Tonmik, the Company
will become an operating company. Based on Tonmik's unaudited financial
statements, it reported for the nine months ended September 30, 2010 $2.7
million in revenue and $442,000 in Earnings Before Interest, Taxes, Depreciation
and Amortization ("EBITDA") and $1.1 million in revenue and $207,000 in EBITDA
is for year ended December 31, 2009.
Subsequent to September 30, 2010 the Company, Tonmik and Mr. Antonio Care
entered a settlement agreement with a Company and Tonmik creditor requiring the
Company, Tonmik and Mr. Care to pay $25,000 on or before March 15, 2011, as of
February 21, 2011 $12,500 was paid and $12,500 remains outstanding. A judgment
in Canada was entered against the Company, Tonmik and Mr. Care to record the
obligations under the settlement.
On February 10, 2011 the Company completed an Investment Banking Engagement
Agreement with Stone & Youngberg, LLC ("Stone"). Under the Agreement, the
Company has retained Stone to act as sole manager for the anticipated debt
financing for the Company's new US tire recycling and finished product
manufacturing project (the "Project"). Compensation under the Agreement is based
on the successful completion by Stone of a privately placed corporate obligation
non-rated debt financing with net proceeds of $20 million for the Project. The
debt financing may qualify for tax exempt status in the Project state. The
Company, as part of the Project, is arranging for $10 million in new equity
capital to support the debt financing. The Company will also pay Stone for
expenses incurred under the Agreement.
The Company has evaluated subsequent events from the balance sheet date through
the date of issue of these financial statements and has determined there are no
additional events to disclose.
F-16
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
There are not currently and have not been any disagreements between us
and our accountants on any matter of accounting principles, practices or
financial statement disclosure.
ITEM 9A(T). CONTROLS AND PROCEDURES.
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Under the supervision and with the participation of our management,
including our principal executive officer and principal financial officer, we
conducted an evaluation of our disclosure controls and procedures, as of
September 30, 2010. Based on this evaluation, our principal executive officer
and principal financial officer concluded that our disclosure controls and
procedures are effective in alerting them on a timely basis to material
information relating to our Company required to be included in our reports filed
or submitted under the Exchange Act.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting. Our internal control over financial reporting
is 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.
All internal control systems, no matter how well designed, have inherent
limitations and may not prevent or detect misstatements. Therefore, even those
systems determined to be effective can only provide reasonable assurance with
respect to financial reporting reliability and financial statement preparation
and presentation. In addition, projections of any evaluation of effectiveness to
future periods are subject to risk that controls become inadequate because of
changes in conditions and that the degree of compliance with the policies or
procedures may deteriorate.
Management assessed the effectiveness of the Company's internal control over
financial reporting as of September 30, 2010. In making the assessment,
management used the criteria issued by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO) in Internal Control-Integrated Framework.
Based on its assessment, management concluded that, as of September 30, 2010,
the Company's internal control over financial reporting was effective to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation f financial statements for external purposes in accordance with
generally accepted accounting principles.
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 the rules of the Securities and
Exchange Commission that permit the Company to provide only management's report
in this annual report.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes (including corrective actions with regard to significant
deficiencies or material weaknesses) in our internal controls over financial
reporting that occurred during the quarter ended September, that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
ITEM 9B. OTHER INFORMATION
There are no items that required disclosure in a Form 8-K during the
fourth quarter of the year covered by this Form 10-K that were not reported by
the Company.
16
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
FINANCIAL STATEMENTS
The following financial statements of the Company are filed as part of this
Annual Report on Form 10-K as follows:
--------------------------------------------------------------------------------
Report of Independent Registered Public Accounting Firm F-3
--------------------------------------------------------------------------------
Balance Sheets F-4
--------------------------------------------------------------------------------
Statements of Operations and Comprehensive Loss F-5
--------------------------------------------------------------------------------
Statement of Changes in Stockholders' Deficiency F-6 and F-7
--------------------------------------------------------------------------------
Statements of Cash Flows F-8
--------------------------------------------------------------------------------
Notes to the Financial Statements F-9 to F-15
--------------------------------------------------------------------------------
All other schedules have been omitted because they are not applicable, not
required under the instructions, or the information requested is set forth in
the consolidated financial statements or related notes there to. EXHIBITS
NUMBER EXHIBIT REFERENCE
--------------------------------------------------------------------------------
31.1 Section 302 Certification - Principal Filed herewith
Executive Officer
31.2 Section 302 Certification - Principal Filed herewith
Financial Officer
32.1 Certification Pursuant to 18 U.S.C. Filed herewith
Section 1350 as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of
2002
32.2 Certification Pursuant to 18 U.S.C. Filed herewith
Section 1350 as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of
2002
================================================================================
24
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
By: /s/ Antonio Care
Name: Antonio Care
Title: President, Principal Executive Officer and
Member of the Board of Directors
Date: August 18, 2011
By: /s/ Martin Sergi
Name: Martin Sergi
Title: Principal Financial Officer, Secretary,
Treasurer and Member of the Board of Directors
Date: August 18, 2011
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated, who constitute the entire board of directors:
By: /s/ Antonio Care
Name: Antonio Care
Title: President, Principal Executive Officer and
Member of the Board of Directors
Date: August 18, 2011
By: /s/ Martin Sergi
Name: Martin Sergi
Title: Principal Financial Officer and Member of the Board of Directors
Date: August 18, 2011
25
