SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31,June 30, 2014
OR
[ ]TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF 1934
From the transition period from ___________ to ____________.
Commission File Number 333-168089
AMERICAN METALS RECOVERY AND RECYCLING INC.
(Exact name of small business issuer as specified in its charter)
Nevada |
| 27-2262066 |
(State or other jurisdiction of incorporation or organization) |
| (IRS Employer Identification No.) |
61 Broadway, 32nd Floor
New York, NY 10006
(Address of principal executive offices)
(917) 289-1998
(Issuer's telephone number)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 [ 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“large accelerated filer,” “accelerated filer”“accelerated filer” and “smaller“smaller reporting company”company” in Rule 12b-2 of the Exchange Act:
| Large Accelerated Filer [ ] | Accelerated Filer [ ] |
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| Non-Accelerated Filer [ ] | Smaller Reporting Company [X] |
Indicate by a check mark whether the company is a shell company (as defined by Rule 12b-2 of the Exchange Act: Yes[ ] No [X].
Indicate by check mark whether the registrant has submitted electronically and posted on its website, if any, every Interactive File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (SS325.405 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 [X ]
As of May 15,August 19, 2014, there were 9,996,336 shares of Common Stock of the issuer outstanding.
1
TABLE OF CONTENTS
Items
Page
| PART I |
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Item | Consolidated Financial |
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Item |
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Item | Quantitative and Qualitative Disclosures about Market Risk |
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Item | Controls and Procedures | 10 |
PART II | ||
Item 1 | Legal Proceedings | 11 |
Item 1A | Risk Factors | 11 |
Item 2 | Unregistered Sales of Equity Securities and Use of |
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Item | Defaults Upon Senior |
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Item | Mine Safety |
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Item | Other |
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| 12-14 |
Signatures | 14 | |
2
PREMIER OIL FIELD SERVICES, INC. |
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CONSOLIDATED BALANCE SHEETS |
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MARCH 31, 2014 AND DECEMBER 31, 2013 |
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ASSETS |
| March 31, 2014 |
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| December 31, 2013 |
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Current Assets |
| (Unaudited) |
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Cash and Cash Equivalents |
| $ | 8,552 |
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| $ | 17,088 |
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Total Current Assets |
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| 8,552 |
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| 17,088 |
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Fixed Assets (net of accumulated depreciation of $369,347 and $364,778) |
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| 51,028 |
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| 55,598 |
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TOTAL ASSETS |
| $ | 59,580 |
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| $ | 72,686 |
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
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Current Liabilities |
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Accounts Payable |
| $ | 34,762 |
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| $ | 41,358 |
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Current Portion of Notes Payable |
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| 10,152 |
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| 10,714 |
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Total Current Liabilities |
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| 44,914 |
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| 52,072 |
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Long Term Liabilities: |
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Loan From Shareholder |
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| 23,117 |
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| - |
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Notes Payable |
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| 27,645 |
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| 32,513 |
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Total Long Term Liabilities |
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| 50,762 |
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| 32,513 |
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TOTAL LIABILITIES |
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| 95,676 |
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| 84,585 |
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Stockholders’ Equity (Deficit) |
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Preferred stock, $0.001 par value, 20,000,000 authorized, |
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-0- issued and outstanding at March 31, 2014 and December 31, 2013 |
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| 0 |
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| 0 |
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Common stock, $0.001 par value, 50,000,000 authorized, |
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7,346,336 and 7,346,336 issued and outstanding at March 31, 2014 and December 31, 2013 |
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| 7,346 |
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| 7,346 |
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Additional Paid in capital |
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| 277,862 |
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| 277,862 |
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Retained Earnings/(Accumulated Deficit) |
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| (321,304 | ) |
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| (297,107 | ) |
Total Stockholders’ Equity (Deficit) |
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| (36,096 | ) |
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| (11,899 | ) |
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
| $ | 59,580 |
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| $ | 72,686 |
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See accompanying summary of accounting policies and notes to consolidated financial statements. |
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3
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| Three Months Ended | |||||
| March 31, 2014 |
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| March 31, 2013 | ||
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REVENUES |
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Third Party Revenues | $ | 4,927 |
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| $ | 571,330 |
Related Party Revenues |
| - |
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| - |
TOTAL REVENUES |
| 4,927 |
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| 571,330 |
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COST of SALES (inclusive of depreciation of $4,570 and $20,183) |
| 5,854 |
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| 194,945 |
Gross Profit |
| (927 | ) |
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| 376,385 |
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Operating Expenses: |
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Depreciation and Amortization |
| - |
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| 251 |
Other General and Administrative |
| 21,847 |
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| 169,057 |
Total Operating Expenses |
| 21,847 |
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| 169,308 |
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Operating Income |
| (22,774 | ) |
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| 207,077 |
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Other Income (Expense) |
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Interest Income |
| 1 |
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| 8 |
Loss on Sale of Assets |
| - |
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| (3,109 |
Interest Expense |
| (1,424 | ) |
|
| (1,905 |
Total Other Income (Expense) |
| (1,423 | ) |
|
| (5,006 |
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Net Income before Income Tax Expense |
| (24,197 | ) |
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| 202,071 |
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Provision for Income Tax (Expense) |
| - |
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| (42,081 |
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Net Income after Income Tax Expense | $ | (24,197 | ) |
| $ | 159,990 |
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Basic and Diluted Loss per share | $ | 0.00 |
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| $ | 0.02 |
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Weighted Average Shares Outstanding: |
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Basic and Diluted |
| 7,346,336 |
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| 7,346,336 |
See accompanying summary of accounting policies and notes to consolidated financial statements.
4
PREMIER OIL FIELD SERVICES, INC. |
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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) |
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For the Year Ended December 31, 2013 and The Three Months Ended March 31, 2014 |
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| Additional |
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| Retained Earnings / |
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| Common Shares |
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| Common Amount |
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| Paid In Capital |
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| (Accumulated Deficit) |
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| Total |
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Balance at January 1, 2013 |
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| 7,346,336 |
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| $ | 7,346 |
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| $ | 277,862 |
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| $ | (94,043) |
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| $ | 191,165 |
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Net Income |
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| 0 |
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| 0 |
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| 0 |
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| (203,064) |
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| (203,064 | ) | ||||||||||
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Balance at December 31, 2013 |
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| 7,346,336 |
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| 7,346 |
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| 277,862 |
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| (297,107) |
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| (11,899) |
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Net Income |
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| 0 |
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| 0 |
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| 0 |
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| (24,197) |
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| (24,197) |
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Balance at March 31, 2014 (unaudited) |
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| 7,346,336 |
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| $ | 7,346 |
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| $ | 277,862 |
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| $ | (321,304) |
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| $ | (36,096) |
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See accompanying summary of accounting policies and notes to consolidated financial statements. |
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5
PART I –FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICAN METALS RECOVERY AND RECYCLING, INC. | |||||||
Consolidated Balance Sheets | |||||||
ASSETS | |||||||
June 30, | December 31, | ||||||
2014 | 2013 | ||||||
CURRENT ASSETS | (unaudited) |
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Cash | $ | 125,022 | $ | 136,766 | |||
Accounts receivable | 7,565 | 23,858 | |||||
Refundable deposits and advances | - | 51,187 | |||||
Inventory |
| 110,422 |
| 93,373 | |||
Total Current Assets |
| 243,009 |
| 305,184 | |||
PROPERTY AND EQUIPMENT, net |
| 385,596 |
| 464,696 | |||
TOTAL ASSETS | $ | 628,605 | $ | 769,880 | |||
LIABILITIES AND STOCKHOLDERS' (DEFICIT) | |||||||
CURRENT LIABILITIES | |||||||
Accounts payable and accrued expenses | $ | 161,161 | $ | 127,963 | |||
Accrued expenses - related parties | 203,545 | 137,550 | |||||
Notes payable - related parties | 170,801 | 276,485 | |||||
Line of credit | 350,205 | 372,609 | |||||
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Total Current Liabilities |
| 885,712 |
| 914,607 | |||
TOTAL LIABILITIES |
| 885,712 |
| 914,607 | |||
STOCKHOLDERS' (DEFICIT) | |||||||
Preferred stock, $0.001 par value, 5,000,000 shares | |||||||
authorized, no shares issued and outstanding | - | - | |||||
Common stock, $0.001 par value, 125,000,000 shares | |||||||
authorized, 9,996,336 and 9,000,000 shares | |||||||
issued and outstanding, respectively | 9,996 | 9,000 | |||||
Additional paid-in capital | 15,675 | 16,671 | |||||
Accumulated Deficit |
| (282,778) |
| (170,398) | |||
Total Stockholders' (Deficit) |
| (257,107) |
| (144,727) | |||
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) | $ | 628,605 | $ | 769,880 | |||
The accompanying notes are an integral part of these consolidated financial statements. | |||||||
AMERICAN METALS RECOVERY AND RECYCLING, INC. | ||||||||||||||
Consolidated Statements of Operations | ||||||||||||||
(unaudited) | ||||||||||||||
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For the Three Months Ended | For the Six Months Ended | |||||||||||||
June 30, | June 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
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REVENUE | $ | 1,055,180 | $ | 897,826 | $ | 1,731,432 | $ | 1,630,611 | ||||||
COST OF SALES |
| 625,240 |
| 610,917 |
| 1,066,530 |
| 1,085,807 | ||||||
GROSS PROFIT |
| 429,940 |
| 286,909 |
| 664,902 |
| 544,804 | ||||||
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OPERATING EXPENSES | ||||||||||||||
Fuel | 59,190 | 78,064 | 109,172 | 124,735 | ||||||||||
Depreciation expense | 31,327 | 31,327 | 62,635 | 62,655 | ||||||||||
Salaries | 130,810 | 115,724 | 247,060 | 183,924 | ||||||||||
General and administrative expenses | 167,471 | 135,506 | 364,445 | 267,583 | ||||||||||
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Total Operating Expenses |
| 388,798 |
| 360,621 |
| 783,312 |
| 638,897 | ||||||
INCOME (LOSS) FROM OPERATIONS |
| 41,142 |
| (73,712) |
| (118,410) |
| (94,093) | ||||||
OTHER INCOME (EXPENSES) | ||||||||||||||
Gain on sale of assets | - | - | 16,035 | - | ||||||||||
Interest expense |
| (4,996) |
| (5,344) |
| (10,005) |
| (11,278) | ||||||
Total Other Income (Expenses) |
| (4,996) |
| (5,344) |
| 6,030 |
| (11,278) | ||||||
INCOME (LOSS) BEFORE INCOME TAXES | 36,146 | (79,056) | (112,380) | (105,371) | ||||||||||
PROVISION FOR INCOME TAXES |
| - |
| - |
| - |
| - | ||||||
NET INCOME (LOSS) | $ | 36,146 | $ | (79,056) | $ | (112,380) | $ | (105,371) | ||||||
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BASIC AND DILUTED INCOME (LOSS) PER SHARE | $ | 0.00 | $ | (0.01) | $ | (0.01) | $ | (0.01) | ||||||
WEIGHTED AVERAGE NUMBER OF | ||||||||||||||
COMMON SHARES OUTSTANDING - | ||||||||||||||
BASIC AND DILUTED |
| 9,918,843 |
| 9,000,000 |
| 9,459,421 |
| 9,000,000 | ||||||
The accompanying notes are an integral part of these consolidated financial statements. | ||||||||||||||
PREMIER OIL FIELD SERVICES, INC. |
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CONSOLIDATED STATEMENTS OF CASH FLOWS |
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FOR THE THREE MONTHS ENDED MARCH 31, 2014 and 2013 (Unaudited) |
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| March 31, 2014 |
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| March 31, 2013 |
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net Income |
| $ | (24,197 | ) |
| $ | 159,990 |
|
Adjustments to reconcile net income to net cash |
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used by operating activities: |
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Depreciation Expense |
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| 4,570 |
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| 20,434 |
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Bad Debt Expense Loss on Sale of Asset |
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| - - |
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| 1,164 3,109 |
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Changes in assets and liabilities: |
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(Increase) Decrease in Accounts Receivable |
|
| - |
|
|
| (95,730 |
|
(Increase) Decrease in Other Current Assets |
|
| - |
|
|
| (1,249 | ) |
Increase (Decrease) Accounts Payable |
|
| (6,596 | ) |
|
| 27,638 |
|
Increase (Decrease) Accrued Expenses |
|
| - |
|
|
| 172,081 |
|
NET CASH (USED IN) OPERATING ACTIVITIES |
|
| (26,223 | ) |
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| 287,437 |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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Proceeds from Sale of Assets |
|
| - |
|
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| 29,586 |
|
Purchase of Fixed Assets |
|
| - |
|
|
| - |
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NET CASH (USED IN) INVESTING ACTIVITIES |
|
| - |
|
|
| 29,586 |
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CASH FLOWS FROM FINANCING ACTIVITES |
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Sale of Stock for Cash |
|
| - |
|
|
| - |
|
Payments on Shareholder Loan |
|
| 23,117 |
|
|
| (39,608 | ) |
Payments on Note Payable |
|
| (5,430 | ) |
|
| (35,636 | ) |
NET CASH PROVIDED BY FINANCING ACTIVITIES |
|
| 17,687 |
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| (75,244 | ) |
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NET CHANGE IN CASH AND CASH EQUIVALENTS |
|
| (8,536 | ) |
|
| 241,799 |
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CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |
|
| 17,088 |
|
|
| 57,741 |
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CASH AND CASH EQUIVALENTS AT END OF PERIOD |
| $ | 8,552 |
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| $ | 299,520 |
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SUPPLEMENTAL DISCLOSURES |
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Cash Paid During the Period for Interest Expense |
| $ | 1,424 |
|
| $ | 1,905 |
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|
See accompanying summary of accounting policies and notes to consolidated financial statements. |
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AMERICAN METALS RECOVERY AND RECYCLING, INC. | |||||||||||||
Consolidated Statements of Stockholders' (Deficit) | |||||||||||||
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Additional | |||||||||||||
Common Stock | Paid-in | Accumulated |
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Shares | Amount | Capital | Deficit | Total | |||||||||
Balance, December 31, 2012 | 9,000,000 |
| $ | 9,000 |
| $ | 16,671 |
| $ | (4,691) |
| $ | 20,980 |
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Net loss for the year ended |
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|
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|
December 31, 2013 | - |
|
| - |
| - |
|
| (165,707) |
|
| (165,707) | |
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|
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|
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Balance, December 31, 2013 | 9,000,000 |
|
| 9,000 |
|
| 16,671 |
|
| (170,398) |
|
| (144,727) |
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Recapitalization (unaudited) | 996,336 |
|
| 996 |
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| (996) |
|
| - |
|
| - |
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Net loss for the six months ended |
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|
June 30, 2014 (unaudited) | - |
|
| - |
| - |
|
| (112,380) |
|
| (112,380) | |
|
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|
|
|
|
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|
|
Balance, June 30, 2014 (unaudited) | 9,996,336 |
| $ | 9,996 |
| $ | 15,675 |
| $ | (282,778) |
| $ | (257,107) |
|
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The accompanying notes are an integral part of these consolidated financial statements. | |||||||||||||
AMERICAN METALS RECOVERY AND RECYCLING, INC. | |||||||||
Consolidated Statements of Cash Flows | |||||||||
(unaudited) | |||||||||
For the Six Months Ended | |||||||||
June 30, | |||||||||
2014 | 2013 | ||||||||
|
| ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||
Net loss | $ | (112,380) | $ | (105,371) | |||||
Adjustments to reconcile net loss to net | |||||||||
cash provided by (used in) operating activities: | |||||||||
Depreciation | 62,635 | 62,655 | |||||||
Gain on sale of assets | (16,035) | - | |||||||
Changes in operating assets and liabilities | |||||||||
Accounts receivable | 16,293 | (12,739) | |||||||
Refundable deposits and advances | 51,187 | - | |||||||
Inventory | (17,049) | (45,816) | |||||||
Accounts payable and accrued expenses-related parties | 65,995 | 28,000 | |||||||
Accounts payable and accrued expenses | 38,198 | (7,014) | |||||||
|
|
|
| ||||||
Net Cash Provided by (Used in) Operating Activities |
| 79,125 |
| (80,285) | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||
Sale of property and equipment |
| 32,500 |
| 2,069 | |||||
Net Cash Provided by Investing Activities |
| 32,500 |
| 2,069 | |||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||
Repayments on related party loans | (105,684) | ||||||||
Proceeds from related party loans | - | 11,683 | |||||||
Repayment of line of credit |
| (22,404) |
| (9,657) | |||||
Net Cash Provided by (Used in) Financing Activities |
| (123,369) |
| 2,026 | |||||
NET DECREASE IN CASH | (11,744) | (76,190) | |||||||
CASH AT BEGINNING OF PERIOD |
| 136,766 |
| 82,703 | |||||
CASH AT END OF PERIOD | $ | 125,022 |
|
| $ 6,513 | ||||
SUPPLEMENTAL DISCLOSURES OF | |||||||||
| CASH FLOW INFORMATION: | ||||||||
CASH PAID FOR: | |||||||||
Interest | $ | 7,609 | $ | 11,278 | |||||
Income taxes | - | - | |||||||
NON CASH FINANCING ACTIVITIES: | $ | - | $ | - | |||||
The accompanying notes are an integral part of these consolidated financial statements. | |||||||||
6
AMERICAN METALS RECOVERY AND RECYCLING, INC.
Notes to Condensed Consolidated Financial Statements
June 30, 2014 and 2013
PREMIER OIL FIELD SERVICES, INC.
NOTES TO THE CONSOLIDATEDNOTE 1 - CONDENSED FINANCIAL STATEMENTS
March 31, 2014
(Unaudited)
NOTE 1 – NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Activities, History and Organization:
Premier Oil Field Services, Inc. (The “Company” or "Premier") serves the oil and gas industry with down-hole drilling motors. These motors are used in the oil and gas well drilling process to drill out frac plugs and other debris in the well bore. The Company is located in Rockwall, Texas and was incorporated on June 29, 2009 under the laws of the State of Nevada.
Premier Oil Field Services, Inc., is the parent company of Coil Tubing Motors Corporation, (“CTM”), a company incorporated under the laws of the State of Texas. CTM was established in June 2006.
Premier is a private holding company established under the laws of Nevada on June 29, 2009, was formed in order to acquire 100% of the outstanding membership interests of CTM. On September 30, 2009, Premier issued 7,000,000 shares of common stock in exchange for a 100% equity interest in CTM. As a result of the share exchange, CTM became the wholly owned subsidiary of Premier. As a result, the members of CTM owned a majority of the voting stock of Premier. The transaction was accounted for as a reverse merger whereby CTM was considered to be the accounting acquirer as its members retained control of Premier after the exchange, although Premier is the legal parent company. The share exchange was treated as a recapitalization of Premier. As such, CTM, (and its historical financial statements) is the continuing entity for financial reporting purposes. Theaccompanying financial statements have been prepared as if Premier had always been the reporting company and then on the share exchange date, had changed its name and reorganized its capital stock. The share exchange transaction was effected to change the state of incorporation to allow the opportunity for a reduction of franchise taxes under the new Texas franchise tax calculations and to facilitate the initial public offering. At the time of the exchange transaction, Premier had no assets or liabilities and CTM had assets of approximately $409,000 with equity of approximately $81,800.
The capital structure of Premier is presented as a consolidated entity as if the transaction had been effected in 2006 to consistently reflect the number of shares outstanding. However, the capital structure as presented is different that the capital structure that appears in the historical statements of CTM, in earlier periods due to the recapitalization accounting.
The Company operates on a calendar year-end. Due to the nature of their operations,by the Company operates in only one business segment.
Basis of Accounting and Consolidation:
The Company prepares its financial statements on the accrual basis of accounting. It has one wholly owned subsidiary, Coil Tubing Motors, Corporation, which is consolidated. All intercompany balances and transactions are eliminated.
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and applicable Securities and Exchange Commission (“SEC”) regulations.
Unaudited Interim Financial Statements:
The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States and applicable Securities and Exchange Commission (“SEC”) regulations for interim financial information. These financial statements are unaudited and, inwithout audit. In the opinion of management, include all adjustments (consisting of(which include only normal recurring accruals)adjustments) necessary to present fairly the balance sheets, statementsfinancial position, results of operations and statements of cash flows at June 30, 2014 and for theall periods presented in accordance with accounting principles generally accepted in the United States. have been made.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to SEC rules and regulations.omitted. It is presumedsuggested that users of this interimthese condensed financial information havestatements be read or have access toin conjunction with the financial statements and notes thereto included in the Company's December 31, 2013 audited financial statements and footnote disclosure for the preceding year containedfiled in the Company’s Annual Report on Form 10-K.an 8-K filed on April 2,11, 2014. OperatingThe results of operations for the interim periods presentedperiod ended June 30, 2014 and 2013 are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2014.full years.
On April 7, 2014, the Company (fka Premier Oil Field Services, Inc.), entered into a Share Exchange Agreement (the “Exchange Agreement”) with Perfect Metals Inc., a Nevada corporation (“Perfect Metals”) and the shareholders (the “PM Shareholders”) holding all of the issued and outstanding common stock (“PM Common Stock”) of Perfect Metals. Under the Exchange Agreement, the PM Shareholders sold, transferred, conveyed and assigned all their share of PM Common Stock to the Company and the Company issued to the PM Shareholders an aggregate of 9,000,000 newly issued common stock, par value $.001 per share, of the Company (“Premier Common Stock”). As a result of the Exchange Agreement, Perfect Metals became the Company’s wholly-owned subsidiary (the “Acquisition”) and the Company changed its name to American Metals Recovery and Recycling, Inc.
In addition, pursuant to the terms and conditions of the Exchange Agreement Immediately following the Acquisition the Company cancelled 6,350,000 shares of Common Stock, in connection with the Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations (the Agreement). Under terms of the Agreement the Company returned all of the assets and obligations of Premier Oil Field Services, Inc. to the transferring shareholders.
After the completion of the agreements described above the shareholders of the Perfect Metals became the controlling shareholders of the Company. Accordingly, the transaction is accounted for as a recapitalization of Perfect Metals, whereby the historical financial statements of Perfect Metals are presented as those of the combined entity.
NOTE 2 –SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying financial statements present on a consolidated basis the financial position and operations of Whispers and Perfect as the predecessors to the Company. All significant intercompany transactions have been eliminated in the consolidation.
Significant Accounting Policies:
The Company’s management selects accounting principles generally accepted in the United States of America and adopts methods for their application. The application of accounting principles requires the estimating, matching and timing of revenue and expense.
The financial statements and notes are representations of the Company’s management which is responsible for their integrity and objectivity. Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company's system of internal accounting control is designed to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented.
Cash and Cash Equivalents:
All highly liquid investments with original maturities of three months or less are included in cash and cash equivalents. All deposits are maintained in FDIC insured depository accounts in local financial institutions and balances are insured up to $250,000.
Fair Value of Financial Instruments:
In accordance with the reporting requirements of ASC 820, the Company calculates the fair value of its assets and liabilities which qualify as financial instruments under this statement and includes this additional information in the notes to the financial statements when the fair value is different than the carrying value of those financial instruments.
The carrying amounts of cash, cash equivalents, accounts receivable, accounts payable and notes payable approximate their fair values due to the short-term maturities of these instruments. The carrying amount of the Company’s marketable securities and capital leases approximate fair value due to the stated interest rates approximating market rates.
Accounts Receivable:
Accounts receivable are carried at their face amount, less an allowance for doubtful accounts. On a periodic basis, the Company evaluates accounts receivable and establishes the allowance for doubtful accounts based on a combination of specific customer circumstances and credit conditions, based on a history of write offs and collections. The Company’s policy is generally not to charge interest on trade receivables after the invoice becomes past due. A receivable is considered past due if payments have not been received within agreed upon invoice terms. The Company provides an allowance for all receivables that are greater than 90 days old. Allowances for Doubtful Accounts totaled $0 and $0 at March 31, 2014 and December 31, 2013, respectively. Write offs are recorded at a time when a customer receivable is deemed uncollectible.
Revenue Recognition:
The Company recognizes revenue in accordance with ASC 605-10. Revenue will be recognized only when all of the following criteria have been met:
●
Persuasive evidence of an arrangement exists;
●
Ownership and all risks of loss have been transferred to buyer, which is generally upon shipment or at the time the service is provided;
●
The price is fixed and determinable; and
●
Collectability is reasonably assured.
All services are billed when rendered and payment is due upon receipt of invoice. Revenue is recorded net of any sales taxes charged.
Advertising:
The Company did not incur any advertising expenses in the three and three months ended March 31, 2014 and 2013.
Cost of Sales:
Cost of sales consists primarily of shop supplies, contract labor, field related expenses, and deprecation on equipment used in providing services.
Income Taxes:
The Company has adopted ASC 740-10 which requires the use of the liability method in the computation of income tax expense and the current and deferred income taxes payable.
Earnings per Share:
Earnings per share (basic) is calculated by dividing the net income (loss) by the weighted average number of common shares outstanding for the period covered. As the Company has no potentially dilutive securities, fully diluted earnings per share is equal to earnings per share (basic).
Use of Estimates:Estimates
The preparation of financial statements in conformity with accounting principles generally accepted accounting principlesin the United States requires management to make estimates and assumptions that affect certainthe reported amounts of assets and disclosures. Accordingly, actualliabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Recently Issued Accounting Pronouncements:Cash and Cash Equivalents
We maintain cash balances in non-interest-bearing accounts, which do not currently exceed federally insured limits. For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents.
Accounts Receivable
Management reviews accounts receivable periodically to determine if any receivables will potentially be uncollectible. Management’s evaluation includes several factors including the aging of the accounts receivable balances, a review of significant past due accounts, economic conditions, and our historical write-off experience, net of recoveries. The Company does not expectincludes any accounts receivable balances that are determined to be uncollectible, along with a general reserve, in its allowance for doubtful accounts. After all attempts to collect a receivable have failed, the adoptionreceivable is written off against the allowance. The Company’s allowance for bad doubtful accounts was $-0- and $-0- as of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.June 30, 2014 and 2013, respectively.
Employee Benefit Plans:Inventory
The Company has no employee benefit plans.
Emerging Growth Company Critical Accounting Policy Disclosure’
s inventory is comprised of scrap metals held for resale to metal recyclers and is recorded at the lower of cost or market on a first in first out basis. The Company qualifies’s inventory of scrap metals was $110,422 and $93,373 as an “emerging growth company” under the 2012 JOBS Act. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. As an emerging grown company, the Company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company may elect to take advantage of the benefits of this extended transition period in the future.
NOTE 2 – FIXED ASSETS
Fixed assets at March 31,June 30, 2014 and December 31, 2013, are as follows:respectively.
|
|
| March 31, 2014 |
|
|
| December 31, 2013 |
|
Office Equipment |
| $ | 9,748 |
|
| $ | 9,748 |
|
Trucks & Trailers |
|
| 91,404 |
|
|
| 91,404 |
|
Machinery & Equipment |
|
| 319,223 |
|
|
| 319,223 |
|
Less: Accumulated Depreciation |
|
| (369,347 | ) |
|
| (364,778 | ) |
Total Fixed Assets |
| $ | 51,028 |
|
| $ | 55,598 |
|
Depreciation expense for the three months ended March 31,AMERICAN METALS RECOVERY AND RECYCLING, INC.
Notes to Condensed Consolidated Financial Statements
June 30, 2014 and 2013 was $4,570 and $20,183, respectively.
In JanuaryNOTE 2 –SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue Recognition
The Company’s revenues derive from the sale of scrap metals. Revenue is recognized at the time of sale if collection is reasonably assured. The time of sale is determined to be the point at which the scrap metals are delivered to and accepted by the customer. The Company defers any revenue for which the product has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required.
NOTE 3 – RELATED-PARTY TRANSACTIONS
During the six months ended June 30, 2014 and 2013 the Company sold a vehicle for $29,586made repayments on notes payable related party of $(105,684) and realized a loss of $3,109 on the transaction.$-0-, respectively.
NOTE 3 – EQUITY
The Company is authorized to issue 20,000,000 preferred shares at a par valueAs of $0.001 per share. These shares have full voting rights. At March 31,June 30, 2014 and December 31, 2013 there were zero shares issuedthe outstanding balance on the notes payable related party was $170,801 and outstanding.$276,485, respectively.
NOTE 4 – LINE OF CREDIT
Line of Credit
The Company’s founder has a bank line of credit, in the original amount of $440,000, which is authorized to issue 50,000,000 common sharessecured by the Company’s inventory and equipment and is accordingly accounted for as a liability of the Company. The line of credit accrues interest at a par value6.75% per annum and requires monthly payments of $0.001 per share. These shares have full voting rights. At$5,000 with the balance due on March 31,1, 2015. As of June 30, 2014 and December 31, 2013 there were 7,346,336the outstanding balance on the line of credit was $350,205 and 7,346,336 shares issued and outstanding,$372,609, respectively.
NOTE 4 5 – COMMITMENTS AND CONTINGENCIES
The Company operates outcurrently leases office space and property at a rate of a mobile trailer as it$2,800 per month for an aggregate total of $33,600 annually. The term of the lease is on-site at gas fields.one year beginning April 1, 2012. The Company usesrenewed the President’s home address as its mailing address.
At March 31, 2014, the Company had the following outstanding notes payable:
·
Vehicle loan from Alliance Bank, dated September 17, 2012, originally for $52,119, at an annual interest rate of 4.75% due August 17, 2017. Amount due at March 31, 2014 was $37,797. The current principal amount due in one year is $10,152.
NOTE 5 – INCOME TAXES
The Company has adopted ASC 740-10, which requires the use of the liability method in the computation of income tax expense and the current and deferred income taxes payable (deferred tax liability) or benefit (deferred tax asset). Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
The cumulative tax effect at the expected tax rate of 25% of significant items comprising the Company’s net deferred tax amounts as of March 31, 2014 and December 31, 2013 are as follows:
Deferred tax asset related to:
|
| March 31, |
|
| December 31, |
| ||
|
| 2014 |
|
| 2013 |
| ||
Prior Year |
| $ | 85,514 |
|
|
| $33,748 |
|
Utilization of NOL |
|
| - |
|
|
|
|
|
Tax Benefit for Current Period |
|
| 6,049 |
|
|
| 50,766 |
|
Net Operating Loss Carryforward |
| $ | 90,563 |
|
| $ | 84,514 |
|
Less: Valuation Allowance |
|
| (90,563 | ) |
|
| (84,514 | ) |
Net Deferred Tax Asset |
| $ | 0 |
|
| $ | 0 |
|
The Company now has a cumulative net operating loss carry-forward at March 31, 2014 of $90,563 and a cumulative net operating loss carry-forward of $84,514 at December 31, 2013,
NOTE 6 – LEGAL PROCEEDINGS
The Company was involved in one legal proceeding. On June 15, 2010, the Company was served with a lawsuit from National Oilwell Varco LP (“VARCO”), a vendor of the Company, for $114,065, related to unpaid invoices from October 25, 2007 to September 30, 2008 During April, 2011 the Company agreed to a settlement that would require the Company to pay $122,304 over the next 24 months in equal installments of $5,096 month. The final payment was made in the third fiscal quarter of 2013 and the balance at March 31, 2014 and December 31, 213 was $0.
NOTE 7 – FINANCIAL CONDITION AND GOING CONCERN
The Company has a retained deficitlease through March 31, 2014 totaling $321,304 and negative working capital of $36,362. Although the Company has retained earnings it has a history of an accumulated deficit and it is uncertain whether additional working capital will be required to develop its business operations.2015.
The Company has experienced no loan defaults, labor stoppages, legal proceedings or any other operating interruption in 2014. Therefore, these items will not factor into whether the business continues as a going concern, and accordingly, management has not made any plans to dispose of assets or factor receivables to assist in generating working capital.
The Company intends to raise additional working capital either through private placements, and/or bank financing, or additional loans from Management if there is need for liquidity. Management may also consider reducing administrative costs. There are no assurances that the Company will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placement, and/or bank financing necessary to support the Company’s working capital requirements. To the extent that funds generated from private placements, and/or bank financing are insufficient, the Company will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company. If adequate working capital is not generated from operations, financing is not available, or the Management cannot loan sufficient funds, the Company may not be able to continue its operations.
Management believes that the efforts it has made to promote its operation will continue for the foreseeable future. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE 8 – REVENUE CONCENTRATION
The Company provides drilling services to the oil and gas industry and has two significant customers from which 94% of revenues were derived during the three months ended March 31, 2014.
Customers | 2014 Revenue | % | 2013 Revenue | % |
A – Related Party | $0 | 0.0% | $0 | 0.0% |
B | 4,927 | 100.0 | 571,330 | 100.0 |
C | 0 | 0.0 | 0 | 0.0 |
Others | 0 | 0.0 | 0 | 0.0 |
TOTAL | $4,927 | 100.0% | $571,330 | 100.0% |
None of the Company’s revenue for the three months ended March 31, 2014 was generated from services performed for an entity controlled by the Company’s chief executive officer.
NOTE 6 – SUBSEQUENT EVENTS
In accordance with ASC 855, management evaluated subsequent events through the date these consolidated financial statements were issued and the Company had no additional material subsequent events to report.
NOTE 9 – SUBSEQUENT EVENTSItem 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
Executive Overview
On April 7, 2014, in accordance withthe Company (fka Premier Oil Field Services, Inc.), entered into a Share Exchange Agreement (the “Exchange Agreement”) with Perfect Metals Inc., a Nevada corporation (“Perfect Metals”) and the Company acquiredshareholders (the “PM Shareholders”) holding all of the issued and outstanding common stock (“PM Common Stock”) of Perfect Metals USA (PM), which acquisition resulted in PM becomingMetals. Under the Company’s wholly-owned subsidiary (the “Acquisition”). In exchange for the shares of PM common stock,Exchange Agreement, the PM Shareholders received a totalsold, transferred, conveyed and assigned all their share of 9,000,000 newly-issued shares ofPM Common Stock to the Company’s common stock, representing approximately 90.03% ofCompany and the outstanding shares of the Company’s common stock. 996,336 shares of the Company’s common stock are held by the Company’s pre-Acquisition stockholders, representing approximately 9.97% of the outstanding shares of the Company’s common stock. In connection with the Acquisition, Lewis Andrews resigned as the Company’s President, Chief Executive Officer, Chief Financial Officer and sole member of the Company’s Board of Directors. Prior to his resignation, Mr. Andrews appointed Gordon Muir as the Company’s Chief Executive Officer and a member of the Company’s Board of Directors.
The issuance of shares of Company’s common stockCompany issued to the PM Shareholders an aggregate of 9,000,000 newly issued common stock, par value $.001 per share, of the Company (“Premier Common Stock”). As a result of the Exchange Agreement, Perfect Metals became the Company’s wholly-owned subsidiary (the “Acquisition”) and the Company changed its name to American Metals Recovery and Recycling, Inc.
In addition, pursuant to the terms and conditions of the Exchange Agreement Immediately following the Acquisition the Company cancelled 6,350,000 shares of Common Stock, in connection with the Acquisition was not registered under the Securities ActAgreement of 1933, as amendedConveyance, Transfer and Assignment of Assets and Assumption of Obligations (the “Securities Act”), but was conducted in reliance on the exemption from registration provided by Section 4(2)Agreement). Under terms of the Securities Act and/or Regulation D promulgated under that section, which exempts salesAgreement the Company returned all of securities by an issuer not involvingthe assets and obligations of Premier Oil Field Services, Inc. to the transferring shareholders.
After the completion of the agreements described above the shareholders of the PM became the controlling shareholders of the Company. Accordingly, the transaction is accounted for as a public offering.recapitalization of PM, whereby the historical financial statements of PM are presented as those of the combined entity.
Following the Acquisition, the Company carried on the business of PM as the Company’sCompany’s primary line of business. Perfect Metals USAPM was incorporated on October 10, 2012 as a closely-held Nevada corporation for the purpose of holding the equity interests and assets of a number of related entities in various businesses related to metals recycling and trucking. Perfect MetalsPM owns all of the outstanding equity interests of its two subsidiaries, Perfect Metals USA LLC, formedincorporated in 2010 and Whispers Trucking LLC, formedincorporated in 2009. PMPerfect Metals operates these businesses as individual wholly owned subsidiaries.subsidiaries of Perfect Metals. Each operating business earns revenue from different sources but are both related to the purchase for resale and saletrucking of trucking materials and ferrous and non-ferrous metalmetals for recycling.
Following the Acquisition, the Company entered into an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations (the “Transfer and Assumption Agreement”) with Lewis Andrews, the Company’s former Chief Executive Officer. Pursuant to the terms of the Transfer and Assumption Agreement, Mr. Andrews acquired all of the outstanding membership interests of the Company’s wholly-owned subsidiary Coil Tubing Motor Corp., a Texas corporation (“CTM”), in consideration for assuming all past or present liabilities of CTM. As a result, the Company will no longer engage in the business conducted by CTM
On April 25, 2014, the Company filed a Certificate of Amendment to its Articles of Incorporation, changing its name from “Premier Oil Field Services, Inc.,” to “American Metals Recovery and Recycling Inc.” (the “Name Change”). The Name Change became effective with the State of Nevada on May 1, 2014 and became market effective on May 2, 2014 under the new trading symbol “AMRR.”
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
Executive Overview
On April 7, 2014, the Company acquired all of the issued and outstanding shares of Perfect Metals USA (PM) common stock, which resulted in PM becoming the Company’s wholly-owned subsidiary (the “Acquisition”). In connection with the Acquisition, Lewis Andrews resigned as the Company’s President, Chief Executive Officer, Chief Financial Officer and sole member of the Company’s Board of Directors. Prior to his resignation, Mr. Andrews appointed Gordon Muir as the Company’s Chief Executive Officer and a member of the Company’s Board of Directors. In addition, the Company entered into an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations (the “Transfer and Assumption Agreement”) with Lewis Andrews, the Company’s former Chief Executive Officer. Pursuant to the terms of the Transfer and Assumption Agreement, Mr. Andrews acquired all of the outstanding membership interests of the Company’s wholly-owned subsidiary Coil Tubing Motor Corp., a Texas corporation (“CTM”), in consideration for assuming all past or present liabilities of CTM. As a result, the Company discontinued its prior business conducted under CTM and carried on the business of PM as the Company’s primary line of business.
Perfect Metals USA was incorporated on October 10, 2012 as a closely-held Nevada corporation for the purpose of holding the equity interests and assets of a number of entities in various businesses related to metals recycling and trucking. Perfect Metals owns all of the outstanding equity interests of its two subsidiaries, Perfect Metals USA LLC, formed in 2010 and Whispers Trucking LLC, formed in 2009. PM operates these businesses as individual wholly owned subsidiaries. Each operating business earns revenue from different sources but are both related to the purchase and sale of trucking materials and ferrous and non-ferrous metal recycling.
On April 25, 2014, the Company filed a Certificate of Amendment to its Articles of Incorporation, changing its name from “Premier Oil Field Services, Inc.,” to “American Metals Recovery and Recycling Inc.” (the “Name Change”). The Name Change became effective with the State of Nevada on May 1, 2014 and became market effective on May 2, 2014 under the new trading symbol “AMRR.”
Employees
Prior to the Acquisition, we employed one employee, the former President, and had three contract employees, one field technician, one field consultant and one administrative consultant. Following the Acquisition, the Company, through its wholly-owned subsidiary, Perfect Metals USA, has 8 employees and 3 consultants.
RESULTS FOR THE THREE MONTHS ENDED March 31,JUNE 30, 2014 andAND 2013
Our quarter ended on March 31, 2014. Any reference to the end of the fiscal quarter refers to the end of the first quarter for the period discussed herein.
REVENUE. Revenue for the three months ended March 31,June 30, 2014 was $4,927$1,055,180 compared to $571,330$897,826 for the three month period ended March 31,June 30, 2013. The decreaseincrease in sales of $566,403$157,354 is due to a numberpent up supply of large jobs with our largest customerscrap metals after the extremely hard winter in 2013.the first quarter of 2014 in north central Missouri. We expect revenues to continue at the same level for the remainder of 2014.
GROSS PROFIT. Gross profit for the three months ended March 31,June 30, 2014 was $negative $927$429,940 (41%) compared to $376,385 or 65.9%$286,909 (32%), for the three months ended March 31,June 30, 2013. The lackWe were able to improve our margins by offering our customers cash payments for scrap metals. We expect our margins to continue in the same range for the remainder of volume contributed to the negative margin in 2014. The Company did not generate sufficient revenue to cover fixed costs.
OPERATING EXPENSES. Total operating expenses for the three months ended March 31,June 30, 2014 were $21,847$388,798 compared to $169,308$360,621 for the three months ended March 31,June 30, 2013. The reducedincreased expense is directly related to the reducedincreased sales volume. OfIncluded in operating expenses for the $21,847three months ended June 30, 2014 is a onetime charge of expense$50,000 for the impairment of the deposit made on the purchase of a scrap yard and $9,267 in 2014, $12,000 was foradditional professional fees (mainly audit fees)related to going public. We expect to continue to incur costs related to due diligence on potential acquisitions for the next year.
NET INCOME (LOSS). Net income for the three months June 30, 2014 was $36,146 compared to net loss of $79,056 for the three months ended June 30, 2013. The increased sales volume and auto expense ($4,000) and insurance ($3,000).fluctuations as discussed above were the cause for the income increase.
RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2014 AND 2013
REVENUE. Revenue for the six months ended June 30, 2014 was $1,731,432 compared to $1,630,611 for the six month period ended June 30, 2013. The increase in sales of $100,821 is due to a pent up supply of scrap metals after the extremely hard winter in the first quarter of 2014 in north central Missouri. We expect revenues to continue at the same level for the remainder of 2014.
GROSS PROFIT. Gross profit for the six months ended June 30, 2014 was $664,902 (38%) compared to $286,909 (33%), for the six months ended June 30, 2013. We were able to improve our margins by offering our customers cash payments for scrap metals. We expect our margins to continue in the same range for the remainder of 2014.
OPERATING EXPENSES. Total operating expenses for the six months ended June 30, 2014 were $783,312 compared to $638,897 for the six months ended June 30, 2013. The increased expense is directly related to the increased sales volume. Included in operating expenses for the six months ended June 30, 2014 is a one time charge of $50,000 for the impairment of the
deposit made on the purchase of a scrap yard and $9,267 in additional professional fees related to going public. We expect to continue to incur costs related to due diligence on potential acquisitions for the next year.
NET INCOME (LOSS). Net loss for the threesix months March 31,June 30, 2014 was $24,197$112,380 compared to incomenet loss of $159,990$105,371 for the threesix months ended March 31,June 30, 2013. The decreasedincreased sales volume and expense fluctuations as discussed above were the cause for the loss increase.
LIQUIDITY AND CAPITAL RESOURCES.
Trends, events or uncertainties impact on liquidity:
The Company knows of no trends, additional events or uncertainties that would impact liquidity other than the volatility of the oil and gas market.
In addition to the preceding, the Company plans for liquidity needs on a short term and long term basis as follows:
Short Term Liquidity
The Company has an accumulated deficit of $321,304$282,778 as of March 31,June 30, 2014. The Company has relied on external sources of financing to assist short-term working capital needs; through bank loans and shareholder advances. The Company has negative working capital of $36,362$642,703 due to accounts payableshareholder loans of $34,762.$170,801 and a bank line of credit of $350,205. Cash flows from operations for the threesix months ended March 31,June 30, 2014 were negative $26,223.$79,125.
.
Long Term Liquidity
The long term liquidity needsCompany has a line of credit secured by its equipment. The Company repaid $22,404 of the line of credit during the six months ended June 30, 2014. The Company are projected to be met primarily throughalso repaid $105,684 of related party loans during the cash flow provided by operations. Cash flowsix months ended June 30, 2014. The Company received $32,500 from Operating Activities is expected to remain positive throughthe sale of excess equipment during the six months ended June 30, 2014.
Capital Resources
As of March 31, 2014, the Company had capital commitments of $107,068 for vehicles and trailers purchased. As of the date of this filing the Company had no additional commitments other than what is disclosed in the footnotes to the financial statements.
Trends, events or uncertainties
The Company sincehas historically financed itself through shareholder loans and a line of credit with its inception in 2006, has not experienced noticeable revenue trends. Revenue followsbank. The Company is presently seeking equity and debt financing to expand its operations into other parts of the oil market and when prices increase business usually remains strong. Historically, when oil prices fall, revenue for the Company decreases.
Material Changes in Financial Condition
WORKING CAPITAL: Working Capital as of March 31, 2014 decreased by about $1,300 to negative $36,362, versus negative $34,984 as of December 31, 2013.
STOCKHOLDER’S EQUITY: Stockholder’s Equity as of March 31, 2014 decreased by $24,197 due to the net income.
GOING CONCERN: Although theUnited States. The Company has working capital of negative $36,362 and an accumulated deficit of $321,304 as of March 31, 2014, it has a history of losses and a retained deficit. Because ofno commitments for such financing at this history of an accumulated deficit and prior loses,time. The Company’s management believes that its cash reserves are sufficient to meet its present operating needs for at least the Company may require additional working capital to survive. The Company may need to raise additional working capital either through private placements or bank loans or loans from management if there is need for liquidity to alleviate the substantial doubt to continuing as a going concern. There are no assurances that the Company will be able to do any of these. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company. If adequate working capital cannot be generated, the Company may not be able to continue its operations.next 12 months.
Management Advisors
Yorkdale Capital, LLC advises and assists the President with many aspects related to the regulatory filings including assistance with the consolidation of financial statements for audit. Yorkdale Capital, LLC or its principals are shareholders and invoices the Company reasonable fees for professional services monthly. The accounts payable balance at March 31, 2014 was $17,700 and at December 31, 2013 was $19,200.
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 of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of March 31,June 30, 2014. This evaluation was accomplished under the supervision and with the participation of our chief executive officer / principal executive officer, and chief financial officer / principal financial officer who concluded that our disclosure controls and procedures are not effective.
Based upon an evaluation conducted for the period ended March 31,June 30, 2014, our Chief Executive and Chief Financial Officer as of March 31, 2014 and as of the date of this Report, has concluded that as of the end of the periods covered by this report, we have identified the following material weakness of our internal controls:
·
Reliance upon third party financial reporting consultants for review of critical accounting areas and disclosures and material non-standard transaction.
·
Lack of sufficient accounting staff which results in a lack of segregation of duties necessary for a good system of internal control.
In order to remedy our existing internal control deficiencies, as our finances allow, we will hire additional accounting staff.
Changes in Internal Controls over Financial Reporting
There were no changes in our internal controls over financial reporting that occurred duringDuring the period covered by this report on Form 10-Q that havethe Company’s management changed. The Company’s newly acquired subsidiary, Perfect Metals, USA, brought in its own accounting department. This materially affected or are reasonably likely to materially affect, our internal control over financial reporting.
However, the material weaknesses described above continue to exist with the new accounting department.
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PART II
Item 1. Legal Proceedings.
Except as disclosed below, weWe are not a party to any pending legal proceeding, nor is our property the subject of a pending legal proceeding, that is not in the ordinary course of business or otherwise material to the financial condition of our business. None of our directors, officers or affiliates is involved in a proceeding adverse to our business or has a material interest adverse to our business.
The Company was involved in one legal proceeding. On June 15, 2010, the Company was served with a lawsuit from National Oilwell Varco LP (“VARCO”), a vendor of the Company, for $114,065, related to unpaid invoices from October 25, 2007 to September 30, 2008 During April, 2011 the Company agreed to a settlement that would require the Company to pay $122,304 over the next 24 months in equal installments of $5,096 month. The final payment was made in the third fiscal quarter of 2013 and the balance at March 31, 2014 and December 31, 213 was $0.
Item 1A. Risk Factors.
Not Applicable.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosure.
None.
Item 5. Other Information.
None.
Item 6. Exhibits.
(a) None
(b) Exhibits
Exhibit Number | Name of Exhibit | ||
31.1 | Certification of Chief Executive Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002. | ||
31.2 | Certification of | ||
32.1 | Certification of Chief Executive Officer and | ||
101.INS** | XBRL Instance | ||
101.SCH** | XBRL Taxonomy Extension Schema | ||
101.CAL** | XBRL Taxonomy Extension Calculation | ||
101.DEF** | XBRL Taxonomy Extension Definition | ||
101.LAB** | XBRL Taxonomy Extension Labels | ||
101.PRE** | XBRL Taxonomy Extension Presentation | ||
** | In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2014 shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. | ||
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SIGNATURES
In accordance with 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.
AMERICAN METALS RECOVERY AND RECYCLING, INC.
By/s/ Gordon Muir
Gordon Muir, Chief Executive Officer
and PrincipalChief Financial Officer
Date: May 16,August 19, 2014
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