UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM 10-QSB
_________________________
ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2006
OR
¨ 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: 0-32267
SPECIALIZED SERVICES, INC.
(Exact Name Of Registrant As Specified In Its Charter)
| Michigan | 38-2781857 |
| (State of Incorporation) | (I.R.S. Employer Identification No.) |
| 23077 Greenfield Road, Suite 470, Southfield, MI | 48075 |
| (Address of Principal Executive Offices) | (ZIP Code) |
Registrant's Telephone Number, Including Area Code: (248) 557-1030
Securities Registered Pursuant to Section 12(g) of The Act: Common Stock, $0.0001
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 ¨ No x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.
| Large accelerated filer ¨ | Accelerated filer ¨ | Non-accelerated filer x |
At September 30, 2006, the Registrant had 29,998,000 shares of common stock issued.
| Item | Description | Page | |||
|---|---|---|---|---|---|
PART I - FINANCIAL INFORMATION | |||||
ITEM 1. | 3 | ||||
ITEM 2. | 3 | ||||
ITEM 3. | 4 | ||||
PART II - OTHER INFORMATION | |||||
ITEM 1. | 5 | ||||
ITEM 2. | 5 | ||||
ITEM 3. | 5 | ||||
ITEM 4. | 5 | ||||
ITEM 5. | 5 | ||||
| ITEM 6. | EXHIBITS AND REPORTS ON FORM 8-K. | 5 | |||
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS Back to Table of Contents
The Registrant's financial statements for the three and nine-month periods ended September 30, 2006 and 2005 are attached to this quarterly report.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATION Back to Table of Contents
Forward-Looking Statements; Market Data
As used in this Quarterly Report, the terms "we", "us", "our" "Registrant", "SPSV" and the "Company" means Specialized Services, Inc., a Michigan corporation, and its subsidiaries. To the extent that we make any forward-looking statements in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Quarterly Report, we emphasize that forward-looking statements involve risks and uncertainties and our actual results may differ materially from those expressed or implied by our forward-looking statements. Our forward-looking statements in this Quarterly Report reflect our current views about future events and are based on assumptions and are subject to risks and uncertainties. Generally, forward-looking statements include phrases with words such as "expect", "anticipate", "intend", "plan", "believe", "seek", "estimate" and similar expressions to identify forward-looking statements.
General
On October 5, 2005, the Company entered into an Agreement and Plan of Merger with and into Fifth Avenue Acquisition II Corp., a public shell company. Specialized Services, Inc., a Michigan corporation has become the successor reporting company. From August 2000 to October 2005, prior to the Agreement and Plan of Merger, the Registrant had only limited business operations. As a result, the financial statements of the Registrant for the periods ended September 30, 2006 and 2005 are not comparable.
Three Months Ended September 30, 2006
Gross Billings and Net Revenues
Gross billings for the three-month period ended September 30, 2006 were $4,417,148. Our direct costs during the three-month period were $4,415,608. We had net revenues of $1,540 during the three-month period ended September 30, 2006.
General and administrative expenses
During the three-month period ended September 30, 2006, general and administrative expenses totaled $13,605.
Operating Income (loss)
Our operating loss was $12,065 during the three month ended September 30, 2006.
Net Income (Loss)
Our net loss during the three-months ended September 30, 2006 was $13,209.
Nine Months Ended September 30, 2006
Gross Billings and Net Revenues
Gross billings for the nine-month period ended September 30, 2006 were $14,715,356. Our direct costs during the nine-month period were $14,657,106. We had net revenues of $58,250 during the nine-month period ended September 30, 2006.
General and administrative expenses
During the nine-month period ended September 30, 2006, general and administrative expenses totaled $135,944.
Operating Income (loss)
Our operating loss was $77,694 during the nine months ended September 30, 2006.
Net Income (Loss)
Our net loss during the nine-month period ended September 30, 2006 was $59,365.
Liquidity and Capital Resources
Cash used in operating activities during the nine months ended September 30, 2006 was $24,276. During the nine months ended September 30, 2006, cash flow from financing activities was $27,765 mainly received through the issuance of common stock and proceeds under our line of credit of $14,965.
There are no limitations in the Company's articles of incorporation on the Company's ability to borrow funds or raise funds through the issuance of restricted common stock. The Company's limited resources and lack of having cash-generating business operations may make it difficult to borrow funds or raise capital. The Company's limitations to borrow funds or raise funds through the issuance of restricted capital stock may have a material adverse effect on the Company's financial condition and future prospects, including the ability to execute its business plan. To the extent that debt financing ultimately proves to be available, any borrowing will subject us to various risks traditionally associated with indebtedness, including the risks of interest rate fluctuations and insufficiency of cash flow to pay principal and interest.
ITEM 3. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures. As of September 30, 2006, the Company's chief executive officer and chief financial officer conducted an evaluation regarding the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act. Based upon the evaluation of these controls and procedures, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of the date of filing this annual report applicable for the period covered by this report.
Changes in internal controls. During the period covered by this report, no changes occurred in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS Back to Table of Contents
None.
ITEM 2. CHANGES IN SECURITIES Back to Table of Contents
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES Back to Table of Contents
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Back to Table of Contents
None.
ITEM 5. OTHER INFORMATION Back to Table of Contents
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K Back to Table of Contents
(a) The following documents are filed as exhibits to this report on Form 10-QSB or incorporated by reference herein. Any document incorporated by reference is identified by a parenthetical reference to the SEC filing that included such document.
| Exhibit No. | Description |
| 31.1 | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to the Sarbanes-Oxley Act of 2002 |
| 31.2 | Certification of Chief Financial Officer Pursuant to Section 906 of Sarbanes-Oxley Act of 2002 |
| 32.1 | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to the Sarbanes-Oxley Act of 2002 |
| 32.2 | Certification of Chief Financial Officer Pursuant to Section 906 of Sarbanes-Oxley Act of 2002 |
(b) Reports on Form 8-K During the Period Covered by this Report:
The Registrant has not filed a Form 8-K during the period ended September 30, 2006.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
| /s/ David E. Joseph, CEO, President | /s/ Michael B. Jackson, CFO |
| (Principal Executive Officer) | (Principal Financial Officer) |
| Dated: October 17, 2007 | Dated: October 17, 2007 |
Financial Statements Back to Table of Contents
BALANCE SHEET | ||
As of September 30, 2006 (Unaudited) | ||
ASSETS | ||
| Current Assets | ||
| Cash | $ | 8,776 |
| Accounts Receivable | 2,334 | |
| Total Current Assets | 11,110 | |
| Property and Equipment | ||
| Machinery and Equipment | 186,902 | |
| Furniture and Fixtures | 25,793 | |
| Transportation Equipment | 21,494 | |
| 234,189 | ||
| Less: accumulated depreciation | 234,189 | |
| Net property and equipment | 0 | |
| Other Assets | ||
| Deposits | 4,395 | |
| TOTAL ASSETS | $ | 15,505 |
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||
| Current liabilities | ||
| Accounts payable | $ | 5,820 |
| Accrued expenses | 22,462 | |
| Taxes payable | 16,937 | |
| Loan from officers | 10,550 | |
| Note payable | 50,588 | |
| Total liabilities | 106,357 | |
| Stockholders’ Deficit: | ||
| Common Stock, $.0001 par value, 100,000,000 shares authorized, 29,998,000 shares issued and outstanding | 3,000 | |
| Additional Paid in Capital | 34,048 | |
| Accumulated Deficit | (127,900) | |
| Total Stockholders’ Deficit | (90,852) | |
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 15,505 |
See accompanying notes to financial statements. | ||
STATEMENTS OF OPERATIONS (Unaudited) | ||||||||
For the Three and Nine Months ended September 30, 2006 and 2005 | ||||||||
| Three Months | Three Months | Nine Months | Nine Months | |||||
| Ended | Ended | Ended | Ended | |||||
| September 30, 2006 | September 30, 2005 | September 30, 2006 | September 30, 2005 | |||||
| Gross Billings | $ | 4,417,148 | $ | - | $ | 14,715,356 | $ | - |
| Direct Costs | 4,415,608 | - | (14,657,106) | - | ||||
| Gross Profit | 1,540 | - | 58,250 | - | ||||
| General and Administrative Expenses | 13,605 | - | 135,944 | - | ||||
| Loss from Operations | (12,065) | - | (77,694) | - | ||||
| Other Income (Expenses) | (1,144) | - | 18,329 | - | ||||
| Net Income (Loss) Before Taxes | (13,209) | - | (59,365) | - | ||||
| Provision for Income Taxes | - | - | - | - | ||||
| Net Loss | $ | (13,209) | $ | - | $ | (59,365) | $ | - |
| Net Income (Loss) Per Share | $ | (0.00) | $ | - | $ | (0.00) | $ | - |
| Weighted Average Shares Outstanding | 29,998,000 | 1,000,000 | 28,163,746 | 1,000,000 | ||||
| See accompanying notes to financial statements. | ||||||||
STATEMENTS OF CASH FLOWS (Unaudited) | ||||
For the Nine Months ended September 30, 2006 and 2005 | ||||
| Nine Months | Nine Months | |||
| Ended | Ended | |||
| September 30, 2006 | September 30, 2005 | |||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||
| Net Loss | $ | (59,365) | $ | - |
| Adjustments to Reconcile Net Income to Cash Used In Operating Activities: | ||||
| Depreciation and Amortization | 163 | - | ||
| Change in operating assets and liabilities: | ||||
| Decrease in Accounts Receivable | 14,045 | - | ||
| Decrease in Accounts Payable | (15,245) | - | ||
| Increase in Accrued Expenses | 18,538 | - | ||
| Increase in Taxes Payable | 15,588 | |||
| Decrease in Loan from Officers | 2,000 | - | ||
| CASH FLOWS USED IN OPERATING ACTIVITIES | (24,276) | - | ||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||
| CASH FLOWS PROVIDED BY INVESTING ACTIVITIES | - | - | ||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||
| Stockholder Contributions | 12,000 | - | ||
| Proceeds from Issuance of Common Shares | 800 | - | ||
| Proceeds from line of credit | 14,965 | - | ||
| Repayment of Line of Credit | (2,535) | - | ||
| CASH FLOWS PROVIDED BY FINANCING ACTIVITIES | 27,765 | - | ||
| NET INCREASE IN CASH | 3,489 | - | ||
| CASH, BEGINNING OF PERIOD | 5,287 | - | ||
| CASH, END OF PERIOD | $ | 8,776 | $ | - |
| SUPPLEMENTAL CASH FLOW INFORMATION | ||||
| Interest paid | $ | 3,056 | $ | - |
| Income taxes paid | $ | - | $ | - |
| ||||
| See accompanying notes to financial statements. | ||||
SPECIALIZED SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2006 (Unaudited)
(1) INCORPORATION AND PRINCIPAL ACTIVITY
Specialized Services Inc. (the Company) was incorporated on January 13, 1988 under the Business Corporation Act of Michigan.
The Company develops and implements innovative alternatives to traditional business solutions in the areas of administrative arid purchase support services. The Company aggregates (bundles) products and services. These customized process enhancements are delivered to corporate customers designed to help control cost; save time end money, including but not limited to
Over-the-Road Fuel Management
Bulk Fuel Distribution
Pre-Paid Fuel Cards
Energy Price Hedging
Master Card Services
Application Service Design and Implementation
Telecommunication Services
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
It is the Company’s policy to apply accounting principles generally accepted in the United States of America in presenting its financial position and related statements of income, retained earnings and cash flows. In this connection, the more significant accounting policies of the Company are described below;
Principles of Accounting
The accounts of the Company are maintained, and the accompanying financial statements have been prepared on the accrual basis of accounting.
Property and Equipment
The Company depreciates the fixed assets for financial reporting purposes over their estimated useful lives.
Income Taxes
Effective October 5, 2005, Fifth Avenue Acquisition II Corp. a Florida corporation and Specialized Services, Inc. a Michigan corporation agreed to merge and SSI has become the successor reporting company under the Exchange Act. The merger was adopted by the unanimous consent of the Board of Directors and by written approval of 100% of the issued and outstanding shares of the Fifth Avenue Acquisition II Corp. and by the board of directors of SSI. SSI will be taxed as a “C” corporation.
Use of Estimates
In preparing the financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
(3) NOTE PAYABLE
The Company has a $100,000 line of credit with Franklin Bank. The line of credit bears annual interest at 11.5%. The line of credit is guaranteed by the Company’s stockholders. The balance outstanding on the line of credit was $50,588 at September 30, 2006.
(4) OFFICE LEASE
The Company leases approximate 3,296 square feet of office space under an operating tease with Advance Office Building LP. The lease expires in October 2008.
The following is a schedule of non-cancelable future minimum lease payments required under the operating lease:
| 2006 | $ | 49,440 |
| 2007 | 51,088 | |
| 2008 | 47,900 | |
| Total | $ | 148,428 |
(5) STOCKS
On January 28, 2006, the Corporation issued 4,000,000 common stock shaves to a business development group in return for services provided. On February 27, 2006 4,000,000 common stock shares has been issued to an individual in return for legal services provided. As of September 30, 2006, the total common stock shares issued is 29,998,000.
