Service Team Inc. - FORM 10-Q

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EXCEL - IDEA: XBRL DOCUMENT - Service Team Inc.	Financial_Report.xls
EX-31.1 - EXHIBIT 31.1 - Service Team Inc.	ex31x1.htm
EX-32.1 - EXHIBIT 32.1 - Service Team Inc.	ex32x1.htm
EX-32.2 - EXHIBIT 32.2 - Service Team Inc.	ex32x2.htm
EX-31.2 - EXHIBIT 31.2 - Service Team Inc.	ex31x2.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended May 31, 2013

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

For the transition period from _________ to __________

Commission file number: 333-178210

SERVICE TEAM INC.

(Exact name of registrant as specified in its charter)

Nevada	61-1653214
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

18482 Park Villa Place, Villa Park, California 92861

(Address of principal executive offices) (Zip Code)

(714) 538-5214

(Registrant's telephone number, including area code)

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 o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

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 o Accelerated filer o Non-accelerated filer o 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 o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 12,047,314 common shares and no preferred stock as of May 31, 2013.

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

TABLE OF CONTENTS

		Page
Financial Statements

	Balance Sheets as of May 31, 2013 (unaudited) and August 31, 2012 (restated)	2
	Statements of Operations for the three and nine month periods ended May 31, 2013 and May 31, 2012, and the period from June 6, 2011 (Inception) to May 31, 2013 (unaudited)	3
	Statement of Shareholders’ Deficit from June 6, 2011 (Inception) to May 31, 2013 (unaudited)	4
	Statements of Cash Flows for the nine month periods ended May 31, 2013 and May 31, 2012 (unaudited) , and the period from June 6, 2011 (Inception) to May 31, 2013 (unaudited)	5
	Notes to Financial Statements	6-14

SERVICE TEAM INC
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
AS OF MAY 31, 2013 AND AUGUST 31, 2012


	5/31/13 (unaudited)			8/31/12 (restated)
ASSETS
Cash		-			71,621
Accounts Receivable		10,500			-
Total Current Assets		10,500			71,621


TOTAL ASSETS		10,500			71,621

LIABILITIES & SHAREHOLDERS' (DEFICIT)
Accounts Payable		9,017			-
Due Hallmark Venture Group Inc *		219,215			106,764
Contingent Liability		54,100			54,100
Accrued Payroll		20,038			50,259
TOTAL LIABILITIES		302,370			211,123

Common stock, $0.001 par value, 74,000,000 authorized, 12,047,314 and 7,707,500 issued and outstanding as of May 31, 2013 and August 31, 2012, respectively.		12,048			7,708
Additional paid in capital		670,166			256,044
Subscriptions receivable		-			(28,700)
(Deficit) accumulated during development stage		(974,084	)		(374,554	)
TOTAL SHAREHOLDERS' (DEFICIT)		(291,870	)		(139,502	)

TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT)		10,500			71,621

* Related Party

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

SERVICE TEAM INC.

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTH PERIODS ENDING MAY 31, 2013 AND

MAY 31, 2012 AND FOR THE PERIOD FROM JUNE 6, 2011 (INCEPTION)

TO MAY 31, 2013 (UNAUDITED)

	3 Months Ended 5/31/13		3 Months Ended 5/31/12		9 Months Ended 5/31/13			9 Months Ended 5/31/12			Inception To 5/31/13
REVENUES
Sales	$	10,500	$	8,664	$	10,811		$	68,001		$	82,147

COST OF SALES
Cost of sales		37,302		45,080		126,761			158,935			256,772
Gross Margin		(26,802)		(36,416)		(115,950	)		(90,934	)		(174,625	)

OPERATING EXPENSES
General & administrative expenses		393,974		56,763		474,195			172,617			782,665
Total Operating Expenses		393,974		56,763		474,195			172,617			782,665

LOSS FROM OPERATIONS		(420,776)		(93,179)		(590,145	)		(263,551	)		(957,290	)

OTHER INCOME (EXPENSE)
Interest expense		(2,672)		(1,833)		(9,385	)		(5,095)			(16,794	)
Total Other Income (Expense)		(2,672)		(1,833)		(9,385	)		(5,095)			(16,794	)

NET INCOME (LOSS)	$	(423,448)	$	(95,012)	$	(599,530	)	$	(268,646	)	$	(974,084	)

Weighted average number of common shares outstanding - basic and fully diluted		7,970,526		7,334,348		7,794,212			6,638,984

Net (loss) per share - basic and fully diluted	$	(0.05)	$	(0.01)	$	(0.08	)	$	(0.04	)

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

SERVICE TEAM INC.

(A DEVELOPMENT STAGE COMPANY)

Statement of Shareholders' Deficit

June 6, 2011 (Inception) to May 31, 2013

(Unaudited)

					Additional Paid In Capital			Subscriptions Receivable			Deficit Accumulated During Development Stage
	Common Stock
	Shares		Amount											Total
June 6, 2011 (Inception) Founders' Shares		6,000,000	$	6,000	$	-		$	-		$	-		$	6,000
Contributed Capital		-		-		23,027			-			-			23,027
Net Loss		-		-		-			-			(50,997	)		(50,997	)
Balance, August 31, 2011 (audited)		6,000,000		6,000		23,027			-			(50,997	)		(21,970	)

Imputed Interest on Related Party Debt		-		-		7,409			-			-			7,409
Imputed Rent Expense		-		-		2,000			-			-			2,000
Contributed Capital from Related Party		-		-		8,640			-			-			8,640
Rescission Liability for Unregistered Sales		-		-		(54,100	)		-			-			(54,100	)
Shares Issued for Cash		1,580,500		1,581		138,525			-			-			140,106
Shares Issued for Subscription Receivable		127,000		127		28,573			(28,700	)		-			-
Stock Based Compensation		-		-		101,970			-			-			101,970
Net Loss		-		-		-			-			(323,557	)		(323,557	)
Balance, August 31, 2012 (restated)		7,707,500	$	7,708	$	256,044		$	(28,700	)	$	(374,554	)	$	(139,502	)

Imputed Interest on Related Party Debt		-		-		9,385			-			-			9,385
Shares Issued for Services		300,000		300		194,700			-			-			195,000
Shares Issued for Cash		39,814		40		19,037			-			-			19,077
Shares Issued into Escrow		4,000,000		4,000		(4,000)			-			-			-
Contributed Capital		-		-		195,000			-			-			195,000
Cash Received from Stock Receivables		-		-		-			28,700			-			28,700
Net Loss		-		-		-			-			(599,530	)		(599,530	)
Balance, May 31, 2013 (unaudited)		12,047,314	$	12,048	$	670,166		$	-		$	(974,084	)	$	(291,870	)

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

SERVICE TEAM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTH PERIODS ENDED MAY 31, 2013 AND MAY 31, 2012,
AND FOR THE PERIOD FROM JUNE 6, 2011 (INCEPTION) TO MAY 31, 2013 (UNAUDITED)

							Inception to
	5/31/13			5/31/12			5/31/13
CASH FLOWS FROM OPERATING ACTIVITIES

Net Loss	$	(599,530	)	$	(268,646	)	$	(974,084	)

Adjustments to reconcile net loss with cash used in operations:
Stock based compensation expense		195,000			97,020			296,970
Stock capital contributions		195,000			-			195,000
Imputed rent expense		-			-			2,000
Imputed interest		9,385			5,095			16,794

CHANGE IN OPERATING ASSETS AND LIABILITIES

Accounts Receivable		(10,500	)		2,722			(10,500	)
Accrued Payroll		(30,221	)		30,322			20,038
Deposits & Prepaid Expenses		-			1,638			-
Accounts Payable		6,722			7,081			6,722
Net Cash (Used in) Operating Activities		(234,144	)		(124,768	)		(447,060	)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from sale of stock		47,777			40,931			193,883
Bank overdrafts		2,295			-			2,295
Proceeds from loans with Hallmark Venture Group, Inc. *		123,643			83,950			230,407
Repayments of loans with Hallmark Venture Group, Inc. *		(11,192	)		-			(11,192	)
Capital Contributions *		-			-			31,667
Net Cash Provided From Financing Activities		162,523			124,881			447,060

Net Increase (decrease) In Cash and Cash Equivalents		(71,621	)		113			-

Cash at Beginning of Period		71,621			-			-

Cash at End of Period	$	-		$	113		$	-

Supplemental Disclosures
Interest Paid	$	-		$	-		$	-
Taxes Paid	$	-		$	-		$	-

Non-cash transactions:
Stock issued into escrow	$	4,000		$	-		$	4,000
Shares issued for subscriptions receivable	$	-		$	8,700		$	-
Contingent Liability	$	-		$	-		$	54,100

* Related Party

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

SERVICE TEAM INC.

(A Development Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

June 6, 2011 (Inception) to May 31, 2013 and

the Nine Month Periods Ending May 31, 2013, and May 31, 2012

(Unaudited)

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION

Background

Service Team Inc. was incorporated pursuant to the laws of the State of Nevada on June 6, 2011. The Company intends to commence business operations by service and repair of electrical appliances to fulfill the warranty obligations of manufacturers and insurance companies. It is a development stage company that has limited operating history and has earned minimal revenues. Since the inception, the Company has been primarily devoting its activities to the following: developing a business plan, determining the market for the Company’s services, developing standardized procedures for repairing the appliances, a computerized tracking system for tracking work in progress in the repair facility and capital formation. Service Team Inc. (“Company”) is in the initial development stage and has incurred losses since inception that total $974,084.

The Company has established a fiscal year end of August 31.

Basis of Presentation

The financial statements present the balance sheet, statements of operations, shareholders’ deficit and cash flows of the Company. These financial statements are presented in United States dollars and have been prepared in accordance with accounting principles generally accepted in the United States. The accompanying unaudited, condensed financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements.

All adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations for the interim periods have been made and are of a recurring nature unless otherwise disclosed herein. The results of operations for such interim periods are not necessarily indicative of operations for a full year.

Development Stage Company

The Company is currently considered a development stage company. As a development stage enterprise, the Company discloses the deficit accumulated during the development stage and the cumulative statements of operation and cash flows from inception to the current balance sheet date. An entity remains in the development stage until such a time as, among other factors, revenues have been realized. To date, the development stage of the Company’s operations consist of developing the business model, marketing concepts and beginning sales efforts.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Going Concern

The Company’s financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern. This contemplates the realization of assets and the liquidation of liabilities in the normal course of business. Currently, the Company does not have sufficient cash or material assets, nor does it have operations or a source of revenue sufficient to cover its operation costs and allow it to continue as a going concern. The Company has a negative equity since inception (June 6, 2011) through May 31, 2013, of $291,870. The Company will be dependent upon the raising of additional capital through placement of our common stock in order to implement its business plan. There can be no assurance that the Company will be successful in order to continue as a going concern. The Company is funding its initial operations by issuing common shares and debt. As of May 31, 2013, the Company had sold 6,000,000 shares to Hallmark Venture Group, Inc. at $0.001 per share for net funds to the Company of $6,000. The Company has also sold 1,747,314 shares to various individuals and received net funds of $280,829. Hallmark Venture Group, Inc. has also loaned the Company $219,215. The major shareholder, Hallmark Venture Group, Inc., has committed to advancing additional funds as may be required for the operation of the Company. We cannot be certain that capital will be provided when it is required.

Property and Equipment

The Company does not own any property or equipment. The Company leases furniture and equipment from Hallmark Venture Group, Inc., a related party. Hallmark Venture Group, Inc., a related party, is also supplying working capital for continued operations. Both leases are considered to be operating leases for reporting purposes.

Inventory

The Company does not own inventory. Parts are supplied to the Company without charge by the manufacturers of the electrical appliance for use in making the warranty repairs as needed. Any unused parts are considered to be immaterial.

Lease Commitments

None.

Revenue Recognition

Service Team Inc.’s business is to repair or replace electrical appliances, mostly televisions, covered by warranties or insurance companies. The Company currently does business with one warranty insurance company and is soliciting business from several warranty insurance companies and Asian electronic manufacturers. The Company has a price list of its services that sets forth a menu of charges for various repairs or replacements. We do not do business with individual customers.

When an order is received to repair a television or other electrical appliance from the manufacturer or the warranty insurance company, the item is picked up and transported to our service facility by a parcel delivery service. We examine it, determine what must be repaired, and repair it. The decision to repair or replace the television, video recorder, laptop computer or cell phone is made by Service Team technicians. The repaired or replaced appliance is then shipped back to the customer. At the time of shipment, an invoice is prepared itemizing the charges and costs to the customer. This invoice is entered into our accounting system and is recognized as revenue at that time. Our invoice is paid by the warranty insurance companies or the television manufacturer. We do not take title to the product.

As described above, in accordance with the requirements of ASC 605-10-599, the Company recognizes revenue when (1) persuasive evidence of an arrangement exists (contracts); (2) delivery has occurred; (3) the seller’s price is fixed or determinable (per the customer’s contract); and (4) collectability is reasonably assured (based upon our credit policy).

Use of Estimates and Assumptions

Preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents. There were no cash equivalents on May 31, 2013 or August 31, 2012.

Accounts Receivable Policy

All accounts receivable are due thirty (30) days from the date billed. If the funds are not received within thirty (30) days the customer is contacted to arrange payment. The Company uses the allowance method to account for uncollectable accounts receivable. All accounts were considered collectable at period end and no allowance for bad debts was considered necessary.

Fair Value

In accordance with the requirements of ASC 825 and ASC 820, the Company has determined the estimated fair value of financial instruments using available market information and appropriate valuation methodologies. The fair value of financial instruments classified as current assets or liabilities approximate their carrying value due to the short-term maturity of the instruments.

Concentrations

At the present time, Service Team Inc. has one customer, the Warrantech division of AmTrust Financial Services, Inc, represents all of our sales. The Company anticipates obtaining additional business from its other customers that will reduce the Company’s dependency on Warrantech.

Income Taxes

The Company has adopted ASC 740 for reporting purposes. For the period from June 6, 2011 to May 31, 2013, the Company had net operating loss carry forwards of approximately $514,317 that may be available to reduce future years’ taxable income and will expire beginning in 2028. Availability of loss usage is subject to change of ownership limitations under Internal Revenue Code 382. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the future tax loss carry forwards.

Contingent Liability

The Company has a contingent liability associated with the rescission offer (as noted below) made to investors due to the sale of unregistered stock. The liability is equal to the number of shares of common stock sold of 541,000 times the selling price of $0.10 per share which equals $54,100. As of May 31, 2013, and August 31, 2012, the estimated dollar value of the contingent liability is $54,100 and $54,100, respectively.

During the period from November 29, 2011 until June 1, 2012, the Company sold 541,000 shares to various individuals for a total cash consideration of $54,100. The funds were used for operating capital of the Company including rent and payroll. These sales of our shares sold after the filing date of our S-1 Registration (November 29, 2011) may not be covered by a valid private placement exemption from the registration requirements due to possible integration with the public offering. To be certain of our position we have elected to offer rescission for all private sales made after November 29, 2011. Our rescission offer covers twenty-five shareholders (25) for a total of 541,000 shares originally sold for $54,100.

Net Loss Per Share

Basic loss per share includes no dilution and is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding for the period. Dilutive loss per share reflects the potential dilution of securities that could share in the losses of the Company. Because the Company does not have any potentially dilutive securities, the accompanying presentation is only of basic loss per share.

Stock Based Compensation

The Company has not adopted a stock option plan and has not granted any stock options. The President and Vice President of Service Team Inc. have purchased shares in the Company at par value, $0.001. See “Related Party Transactions” in Note 5.

Share Based Expenses

In December 2004, the Financial Accounting Standards Board (“FASB”) issued ASC 718 and 505 “Share Based Payment.” This statement requires a public entity to expense the cost of employee services received in exchange for an award of equity instruments. This statement also provides guidance on valuing and expensing these awards, as well as disclosure requirements of these equity arrangements. The Company adopted ASC 718 and 505 upon creation of the company and expenses share based costs in the period incurred.

Recent Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, to improve the transparency of reporting these reclassifications. Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in the ASU do not change the current requirements for reporting net income or other comprehensive income in financial statements. All of the information that this ASU requires already is required to be disclosed elsewhere in the financial statements under U.S. GAAP. The new amendments will require an organization to:

-Present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income - but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period; and

-Cross-reference to other disclosures currently required under U.S. GAAP for other reclassification items (that are not required under U.S. GAAP) to be reclassified directly to net income in their entirety in the same reporting period. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is initially transferred to a balance sheet account (e.g., inventory for pension-related amounts) instead of directly to income or expense.

The amendments apply to all public and private companies that report items of other comprehensive income. Public companies are required to comply with these amendments for all reporting periods (interim and annual). The amendments are effective for reporting periods beginning after December 15, 2012, for public companies. Early adoption is permitted. The adoption of ASU No. 2013-02 is not expected to have a material impact on our financial position or results of operations.

In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarifies which instruments and transactions are subject to the offsetting disclosure requirements originally established by ASU 2011-11. The new ASU addresses preparer concerns that the scope of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to financial statement users. In choosing to narrow the scope of the offsetting disclosures, the Board determined that it could make them more operable and cost effective for preparers while still giving financial statement users sufficient information to analyze the most significant presentation differences between financial statements prepared in accordance with U.S. GAAP and those prepared under IFRSs. Like ASU 2011-11, the amendments in this update will be effective for fiscal periods beginning on, or after January 1, 2013. The adoption of ASU 2013-01 is not expected to have a material impact on our financial position or results of operations.

In October 2012, the FASB issued ASU 2012-04, “Technical Corrections and Improvements” in Accounting Standards Update No. 2012-04. The amendments in this update cover a wide range of Topics in the Accounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this update will be effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 is not expected to have a material impact on our financial position or results of operations.

In August 2012, the FASB issued ASU 2012-03, “Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22 (SEC Update)” in Accounting Standards Update No. 2012-03. This update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 is not expected to have a material impact on our financial position or results of operations.

In July 2012, the FASB issued ASU 2012-02, “Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment” in Accounting Standards Update No. 2012-02. This update amends ASU 2011-08,Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment and permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles - Goodwill and Other - General Intangibles Other than Goodwill. The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entity’s financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance. The adoption of ASU 2012-02 is not expected to have a material impact on our financial position or results of operations.

In September 2011, the FASB issued ASU No. 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment. The guidance in ASU 2011-08 is intended to reduce complexity and costs by allowing an entity the option to make a qualitative evaluation about the likelihood of goodwill impairment to determine whether it should calculate the fair value of a reporting unit. The amendments also improve previous guidance by expanding upon the examples of events and circumstances that an entity should consider between annual impairment tests in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Also, the amendments improve the examples of events and circumstances that an entity having a reporting unit with a zero or negative carrying amount should consider in determining whether to measure an impairment loss, if any, under the second step of the goodwill impairment test. The amendments in this ASU are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted, including for annual and interim goodwill impairment tests performed as of a date before September 15, 2011, if an entity’s financial statements for the most recent annual or interim period have not yet been issued. The adoption of this guidance is not expected to have a material impact on the Company’s financial position or results of operations.

NOTE 3 – FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company adopted the FASB standard related to fair value measurement at inception. The standard defines fair value, establishes a framework for measuring fair value and expands disclosure of fair value measurements. The standard applies under other accounting pronouncements that require or permit fair value measurements and, accordingly, does not require any new fair value measurements. The standard clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The recorded values of long-term debt approximate their fair values, as interest approximates market rates. As a basis for considering such assumptions, the standard established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows.

· Level 1. Observable inputs such as quoted prices in active markets;

· Level 2. Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and

· Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The Company’s financial instruments are cash, accounts receivable, and accounts payable. The recorded values of cash, accounts receivable, and accounts payable approximate their fair values based on their short-term nature.

The following table presents assets that were measured and recognized at fair value as of May 31, 2013 and August 31, 2012, and the period then ended on a recurring basis:

Total

Realized

Description

Level 1

Level 2

Level 3

Loss

Totals

NOTE 4 – CAPITAL STOCK

The Company’s authorized capital is 74,000,000 common shares with a par value of $0.001 per share and 100,000 preferred shares with a par value of $0.001 per share.

As of November 30, 2012, the Company had issued 6,000,000 shares of common stock in the Company at $0.001 per share to a related party in exchange for $6,000 cash and a capital contribution of $31,667.

During the period from June 6, 2011 to May 31, 2013, the Company has also sold 1,747,314 shares for $280,829.

On April 16, 2013, the Company granted 300,000 restricted shares to Newport Capital Consultants for broker services to be performed over the two year period beginning on that date. As there were no claw-back provisions on the shares, the Company expensed fully the fair value of the shares on the agreement date valued at $195,000. In addition, 300,000 trading shares were contributed by Hallmark Venture Group, Inc., which was accounted for as a capital contribution of shares which were transferred to Newport Capital Consultants as additional stock compensation expense of $195,000 on that date.

On May 30, 2013, the Company issued 4,000,000 shares into an escrow account for the future acquisition of 25,000 shares of Trade Leasing, Inc. As of May 31, 2013, these shares had not been transferred out of the Company; therefore, they were recorded as an increase to common stock at their par value of $4,000, and an offsetting reduction in additional paid in capital of the same amount. See the Note 7 for further details of this acquisition of shares.

No preferred shares have been issued.

As of August 31, 2012 and May 31, 2013, the Company has not granted any stock options.

During the period from November 29, 2011 until June 1, 2012, the Company sold 541,000 shares to various individuals for a total cash consideration of $54,100. The funds were used for operating capital of the Company including rent and payroll. These private sales of our shares sold after the filing date of our S-1 Registration (November 29, 2011) may not be covered by a valid private placement exemption from the registration requirements due to possible integration with the public offering. . Our rescission offer covers twenty-five shareholders (25) for a total of 541,000 shares originally sold for $54,100.

Stock Based Compensation

We have accounted for stock based compensation under the provisions of FASB Accounting Standards codification (ASC) 718-10-55. (Prior authoritative literature: FASB Statement 123 (R), Share-based payment.) This statement requires us to record any expense associated with the fair value of stock based compensation. Determining fair value requires input of highly subjective assumptions, including the expected price volatility. Changes in these assumptions can materially affect the fair value estimate.

NOTE 5 – RELATED PARTY TRANSACTIONS

On July 25, 2011, the Company entered into a lease agreement with Hallmark Venture Group, Inc. to lease furniture, office equipment, computers, work benches, test equipment, telephones and miscellaneous equipment and tools used to repair televisions and electrical appliances. The lease calls for a payment of $100 a month for three years payable to Hallmark Venture Group, Inc., effective August 1, 2011. Robert L. Cashman, Vice President and Secretary of Service Team Inc., is the beneficial owner of Hallmark Venture Group, Inc. This is considered to be an operating lease for reporting purposes.

During the nine month periods ended May 31, 2013 and May 31, 2012, the Company has received $123,643 and $83,950, respectively, in non-interest bearing loans from Hallmark Venture Group, Inc. As of May 31, 2013 and August 31, 2012, these loans totaled $219,215 and $106,764, respectively. The contributions do not bear interest. We, therefore, during the nine month periods ended May 31, 2013 and May 31, 2012, imputed interest of $9,385 and $5,095, respectively, charging expense with that amount and increasing Additional Paid in Capital. The loans from Hallmark Venture Group, Inc. are for general operating costs and are to be repaid as funds are available. Hallmark Venture Group, Inc. and its beneficial owner, Robert L. Cashman, is Secretary and Director and controlling shareholder of Service Team, Inc. In addition, during the period ending August 31, 2011, Hallmark Venture Group, Inc. contributed $31,667 to the Company.

On April 16, 2013, 300,000 trading shares were contributed by Hallmark Venture Group, Inc. (a related party), which was accounted for as a capital contribution of shares which were transferred to Newport Capital Consultants as additional stock compensation expense of $195,000 on that date.

During the second quarter of 2012, the Company has also issued 500,000 shares to its President, Carlos Arreola, for a cash payment of $500; and 100,000 shares to its Vice President, Douglas K. Dungee, for a cash payment of $100. These shares were priced at par value, $0.001 per share. This resulted in a charge to expenses of $59,400 in stock based compensation as provided by FASB Accounting Standards Codification (“ASC”) 718-10-55; due to the fact that the cash value to non-related party investors is at $0.10 per share. See “Stock Based Compensation” in Note 4.

During the third quarter of 2012, the Company issued 380,000 shares to various individuals, priced at par value $0.001 per share, totaling cash receipts of $380. This resulted in a charge to expenses of $37,620 in stock based compensation as provided by ASC 718-10-55; due to the fact that the cash value to non-related party investors is at $0.10 per share. See “Stock Based Compensation” in Note 4. No preferred shares have been issued.

NOTE 6 – INCOME TAXES

As of May 31, 2013, the Company has $514,317 of net estimated tax loss carry forwards for tax purposes, commencing in the fiscal year 2013 which may be applied against future taxable income. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization has not been determined to be more likely than not to occur.

The actual income tax provisions differ from the expected amounts calculated by applying the statutory income tax rate to the Company’s loss before income taxes. The components of these differences are as follows:

	Inception to May 31, 2013			Inception to August 31, 2012
Net tax loss carry-forwards	$	514,317			314,554
Statutory rate		34	%		34%
Expected tax recovery		174,868			106,818
Change in valuation allowance		(174,868	)		106,818	)
Income tax provision	$	-			-

Components of deferred tax asset:
Non capital tax loss carry forwards	$	174,868			106,818
Less: valuation allowance		(174,868	)		(106,818	)
Net deferred tax asset	$	-			-

NOTE 7 – SUBSEQUENT EVENTS

On June 6, 2013, Service Team Inc. entered into an Agreement to acquire 100% of the stock of Trade Leasing, Inc., a California corporation. Service Team Inc. is issuing four million of its shares to the owners of Trade Leasing, Inc. as consideration for the purchase.

NOTE 8 – COMMITMENTS & CONTINGENCIES

Orbital Enterprises, Inc. and Robert N. Meyer, an individual, vs. Robert L. Cashman, an individual, Carlos Arreola, an individual, Hallmark Venture Group, Inc., Service Team Inc., a California corporation, et. al. Superior Court, State ofCalifornia, County of San Diego (Central), Case No. 37-2012-00101746-CU-BT-CTL. The parties to this action were affiliated in business together doing business as Orbital Enterprises, Inc. Orbital Enterprises, Inc. became insolvent and discontinued business operations. Meyer, the controlling shareholder, retained Orbital Enterprises, Inc. and Cashman and Arreola started what is now Service Team Inc. Meyer does business as Orbital Enterprises, Inc. and Orbital Laboratories, Inc. and Cashman and Arreola do business as Service Team Inc. The parties separated amicably. Approximately six months later the action referred to herein was filed against the defendants alleging: (a) breach of fiduciary duty, (b) claim and delivery, (c) interference with economic advantage and (d) two claims for indemnification. The defendants filed a motion to dismiss as their initial pleading. The motion was heard and the court gave the parties until March 16, 2013, to correct the pleadings and for Orbital Enterprises, Inc. (whose authority to do business in California is suspended and its corporate charter in Nevada is revoked) to correct its corporate status in Nevada and California. The case has been abated until August or September, 2013. Counsel for the defendants believes that the action is frivolous and without merit, and that it will be dismissed.

NOTE 9 – RESTATEMENT OF FINANCIAL STATEMENTS

The Company has restated its previously issued financial statements related to the previously reported item:

During the period from November 29, 2011 until June 1, 2012, the Company sold 541,000 shares to various individuals for a total cash consideration of $54,100. The funds were used for operating capital of the Company including rent and payroll. These private sales of our shares sold after the filing date of our S-1 Registration (November 29, 2011) may not be covered by a valid private placement exemption from the registration requirements due to possible integration with the public offering. Our rescission offer covers twenty-five shareholders (25) for a total of 541,000 shares originally sold for $54,100.

The total impact of the correction of this error is a decrease in additional paid in capital of $54,100 and an increase in contingent liability of $54,100, as a non-cash transaction, with no impact to net income. As a result, the Company’s total liabilities have increased and total equity has decreased by $54,100 as of August 31, 2012.

The following is a summary of the restatement of the balance sheet as of August 31, 2012. There was no impact to the statement of operations for the fiscal year ended August 31, 2012.


	8/31/12 Previously Reported			Adjustments		8/31/12 As Restated
ASSETS
Cash		71,621		-		71,621
Total Current Assets		71,621		-		71,621


TOTAL ASSETS		71,621		-		71,621

LIABILITIES & SHAREHOLDERS' (DEFICIT)
Due Hallmark Venture Group Inc *		106,764		-		106,764
Contingent Liability		-		54,100		54,100
Accrued Payroll		50,259		-		50,259
TOTAL LIABILITIES		157,023		54,100		211,123

Common stock, $0.001 par value, 74,000,000 authorized, 7,707,500 issued and outstanding as of August 31, 2012.		7,708		-		7,708
Additional paid in capital		310,144		(54,100	)	256,044
Subscriptions receivable		(28,700	)	-		(28,700)
(Deficit) accumulated during development stage		(374,554	)	-		(374,554	)
TOTAL SHAREHOLDERS' (DEFICIT)		(85,402	)	(54,100	)	(139,502	)

TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT)		71,621		-		71,621

* Related Party

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

Overview of Our Company

Service Team Inc. was organized as a technology based company specializing in the electronics service and repair industry. The combination of the market and the business climate has caused our major customer, Warrentech, to substantially cut back on their business. This, in turn, has caused Service Team Inc. to gradually lose nearly all of our warranty customers. Service Team Inc. has not been able to develop new warranty customers to continue our business. As a result of these conditions, Service Team Inc. has entered into an Agreement to acquire Trade Leasing, Inc., an established manufacturer of truck bodies and truck parts.

Our Business

The primary business of Service Team Inc. will be the manufacture and repair of trucks and truck bodies. Service Team Inc. acquired Trade Leasing, Inc. on June 6, 2013. Trade Leading, Inc. is a manufacturer of truck bodies and truck parts. Trade Leasing, Inc.’s fabrication plant in South Gate, California, is a complete facility for manufacturing and modifying truck bodies. The Company currently has sales of approximately $100,000 per month and is operating profitably. The Company distributes its products under the trade name of Delta Stag Truck Bodies. Service Team Inc. is in the process of auditing Trade Leasing, Inc. at this time so its financial information can be consolidated with Service Team Inc. Management believes that the acquisition of Trade Leasing, Inc. will make the combined companies immediately profitable.

Service Team Inc. will continue to try to develop its warranty repair business and to support this business Service Team Inc. has created a wholly owned subsidiary called Service Products, Inc. Service Products, Inc. will import electronic devices, primarily from Asia, and resell them in the U. S. market and acquire the warranty repair business on these products.

Service Team Inc. is aggressively looking for companies to acquire to broaden its customer base. Companies to be acquired must have an existing customer base and profitable operations.

Liquidity and Capital Resources

As of May 31, 2013, we had assets of $10,500 including current assets of $10,500. We have no long term debt and no accounts payable. Our major shareholder, Hallmark Venture Group, Inc., is owed $219,215. The amount owed Hallmark Venture Group, Inc. were funds advanced to pay our on-going expenses. Hallmark Venture Group, Inc. is prepared to advance us additional funds as needed. There is no firm payback date. It is to be repaid when we have funds available. Accrued expenses are for work performed by employees during the organizational stage of the Company. There is no firm date which these are to be paid. It is to be repaid when we have funds available. Since inception we have also raised $193,883 from the sale of our common stock. We believe our ability to achieve commercial success and continued growth will be dependent upon our continued access to capital either through additional sale of our equity or cash generated from operations. We will seek to obtain additional working capital through the sale of our securities. We will attempt to obtain additional capital through bank lines of credit; however, we have no agreements or understandings with third parties at this time. Management believes that the acquisition of Trade Leasing, Inc. adds sales of more than one million dollars per year and a projected profit of more than one hundred thousand dollars.

Rescission Offer

During the period from November 29, 2011, until June 1, 2012, the Company sold 541,000 shares to various individuals for a total cash consideration of $54,100. The funds were used for operating capital of the Company including rent and payroll. These sales of our shares sold after the filing date of our S-1 Registration (November 29, 2011) may not be covered by a valid private placement exemption from the registration requirements due to possible integration with the public offering. To be certain of our position we have elected to offer rescission for all private sales made after November 29, 2011. Our rescission offer covers twenty-five shareholders (25) for a total of 541,000 shares originally sold for $54,100.

Results of Operations

Nine Months Ended May 31, 2013 compared to Nine Months Ended May 31, 2012

Sales during the nine month period ended May 31, 2013, were $10,811 compared to 68,001 for the nine month period ending May 31, 2012. Our cost of goods sold was $126,761 which consisted primarily of repair personnel salaries. We had a loss for operations of $590,145. Beginning in March 2012 our shipping costs started increasing rapidly. By May 2012 the costs had increased so much that we elected to discontinue shipping the TV sets to our repair center. We developed a working arrangement with TV repair service personnel to repair our warranty claims in major population areas. This proved very hard to manage service on a timely basis. We gradually lost nearly all of our warranty customers. Service Team Inc. is gradually developing new warranty customers to continue our business.

Three Months Ended May 31, 2013 compared to Three Months Ended May 31, 2012

Sales during the three month period ended May 31, 2013, were $10,500 compared to $8,664 for the three month period ending May 31, 2012. Our cost of goods sold was $37,302 which consisted primarily of replacement parts. We had a loss for operations of $420,776. Beginning in March 2012 our shipping costs started increasing rapidly. By May 2012 the costs had increased so much that we elected to discontinue shipping the TV sets to our repair center. We developed a working arrangement with TV repair service personnel to repair our warranty claims in major population areas. This proved very hard to manage service on a timely basis. We gradually lost nearly all of our warranty customers. Service Team Inc. is gradually developing new warranty customers to continue our business.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not Applicable

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a – 15(c) and 15d – 15(e)). Based upon that evaluation, our principal executive officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer, as appropriate to allow timely decisions regarding required disclosure.

Inherent Limitations of Internal Controls

Our Principal Executive Officer does not expect that our disclosure controls or internal controls will prevent all error and all fraud. Although our disclosure controls and procedures were designed to provide reasonable assurance of achieving their objectives, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute assurance that the objectives of the system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented if there exists in an individual a desire to do so. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting, other than those stated above, during our most recent quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

Orbital Enterprises, Inc. and Robert N. Meyer, an individual, vs. Robert L. Cashman, an individual, Carlos Arreola, an individual, Hallmark Venture Group, Inc., Service Team Inc., a California corporation, et. al. Superior Court, State of California, County of San Diego (Central), Case No. 37-2012-00101746-CU-BT-CTL. The parties to this action were affiliated in business together doing business as Orbital Enterprises, Inc. Orbital Enterprises, Inc. became insolvent and discontinued business operations. Meyer, the controlling shareholder, retained Orbital Enterprises, Inc. and Cashman and Arreola started what is now Service Team Inc. Meyer does business as Orbital Enterprises, Inc. and Orbital Laboratories, Inc. and Cashman and Arreola do business as Service Team Inc. The parties separated amicably .Approximately six months later the action referred to herein was filed against the defendants alleging: (a) breach of fiduciary duty, (b) claim and delivery, (c) interference with economic advantage and (d) two claims for indemnification. The defendants filed a motion to dismiss as their initial pleading. The motion was heard and the court gave the parties until March 16, 2013, to correct the pleadings and for Orbital Enterprises, Inc. (whose authority to do business in California is suspended and its corporate charter in Nevada is revoked) to correct its corporate status in Nevada andCalifornia. The case has been abated until August or September, 2013. Counsel for the defendants believes that the action is frivolous and without merit, and that it will be dismissed.

Item 1A. Risk Factors.

Not applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

During the period of February 28, 2013, to May 31, 2013, the Company sold 39,814 shares of common stock for a consideration of $19,077.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

(a)	The following exhibits are filed with this report.

31.1 Certification by Chief Executive Officer pursuant to Sarbanes Oxley Section 302.

31.2 Certification by Chief Financial Officer pursuant to Sarbanes Oxley Section 302.

32.l Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350.

32.2 Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350.

101 Interactive Data Files

SIGNATURES

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

	Service Team Inc.

Date July 15, 2013	By:	/s/ Carlos Arreola
		Carlos Arreola
		Chief Executive Officer and President Principal Executive Officer



Date July 15, 2013	By:	/s/ Robert L. Cashman
		Robert L. Cashman
		Chief Financial Officer Principal Financial and Accounting Officer

Attached files

Service Team Inc. Reports

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