| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
| Florida (State or other jurisdiction of incorporation or organization) | 56-2335301 (IRS Employer Identification No.) | |
1150 S US Highway 1, Suite 302 | ||
| Jupiter, Florida | 33477-7236 | |
| (Address of principal executive offices) | (Zip 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.
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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company (as defined by Rule 12b-2 of the Exchange Act).
| Large accelerated filero | Accelerated filero | Non-accelerated filero | Smaller reporting companyx | |||
| (Do not check if a smaller reporting company) |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
2
American Environmental, Inc.
(A Development Stage Company)
INDEX
3
Condensed Balance Sheets
| August 31, 2008 | May 31, 2008 | |||||||
Assets | (unaudited) | |||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 2 | $ | 2 | ||||
Total current assets | 2 | 2 | ||||||
Total assets | $ | 2 | $ | 2 | ||||
| ||||||||
Liabilities and Stockholders' Deficit | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 1,790 | $ | 1,790 | ||||
Loans payable - related parties | 301 | 129 | ||||||
Total current liabilities | 2,091 | 1,919 | ||||||
| Total liabilities | 2,091 | 1,919 | ||||||
Commitments and Contingencies | ||||||||
Stockholders' Deficit: | ||||||||
Common stock, $.0001 par value; 300,000,000 shares authorized; 46,399,247 and 45,893,247 shares issued and outstanding, respectively | 4,640 | 4,589 | ||||||
Paid-in-capital | 1,038,142 | 1,033,133 | ||||||
Deficit accumulated during the development stage | (1,044,871 | ) | (1,039,639 | ) | ||||
Total stockholders' deficit | (2,089 | ) | (1,917 | ) | ||||
| ) | ||||||||
Total liabilities and stockholders' deficit | $ | 2 | $ | 2 | ||||
See accompanying notes to unaudited condensed financial statements.
4
Condensed Statements of Operations
(unaudited)
| Three Months Ended August 31, 2008 | Period from March 28, 2008 (Date of Bankruptcy Effectiveness) Through August 31, 2008 | |||||
Net Sales | $ | 0 | $ | 0 | |||
Cost of Sales | 0 | 0 | |||||
Gross profit | 0 | 0 | |||||
Operating expenses: | |||||||
General & administrative | 5,232 | 13,600 | |||||
Sales and marketing | 0 | 0 | |||||
Total operating expenses | 5,232 | 13,600 | |||||
Loss from operations | (5,232 | ) | (13,600 | ) | |||
| Other Expense | |||||||
Loss on write-down of receivables | 0 | (25,058 | ) | ||||
Other Expense | 0 | (25,058 | ) | ||||
Net Loss | $ | (5,232 | ) | $ | (38,658 | ) | |
Basic and Diluted | |||||||
Net loss per common share | $ | (.000 | ) | $ | (.001 | ) | |
| |||||||
Weighted-average shares outstanding: | 45,898,747 | 45,568,366 | |||||
See accompanying notes to unaudited condensed financial statements.
5
American Environmental, Inc.
(A Development Stage Company)
Condensed Statement of Changes in Stockholders' Deficit
(unaudited)
| Common Stock | Add'l Paid in Capital | Deficit Accumulated During the Development Stage | Total Stockholders' Equity (Deficit) | ||||||||||||||||
| Number of Shares | at Par Value $.0001 | ||||||||||||||||||
Balance Mar. 28, 2008 (date of bankruptcy effectiveness) | 45,080,747 | $ | 4,508 | $ | 1,025,089 | $ | (1,006,213 | ) | $ | 23,384 | |||||||||
Issuance of common stock for services | 812,500 | 81 | 8,044 | 0 | 8,125 | ||||||||||||||
Net loss March 28, 2008 through May 31, 2008 | 0 | 0 | 0 | (33,426 | ) | (33,426 | ) | ||||||||||||
Balance May 31, 2008 | 45,893,247 | 4,589 | 1,033,133 | (1,039,639 | ) | (1,917 | ) | ||||||||||||
Issuance of common stock for services | 506,000 | 51 | 5,009 | 0 | 5,060 | ||||||||||||||
Net loss three months ended August 31, 2008 | 0 | 0 | 0 | (5,232 | ) | (5,232 | ) | ||||||||||||
Balance August 31, 2008 | 46,399,247 | $ | 4,640 | $ | 1,038,142 | $ | (1,044,871 | ) | $ | (2,089 | ) | ||||||||
See accompanying notes to unaudited condensed financial statements.
6
American Environmental, Inc.
(A Development Stage Company)
Condensed Statements of Cash Flows
(unaudited)
| ||||||||
Three Months Ended August 31, 2008 | Period from March 28 2008 (Date of Bankruptcy Effectiveness) Through August 31, 2008 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (5,232 | ) | $ | (38,658 | ) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
Stock-based compensation | 5,060 | 13,185 | ||||||
Write down of notes receivable | 0 | 25,058 | ||||||
Changes in operating assets and liabilities | ||||||||
Decrease (increase) to accounts receivable | 0 | 66 | ||||||
Increase (decrease) to accounts payable and accrued expenses | 172 | 350 | ||||||
Net cash used in operating activities | 0 | 1 | ||||||
| Cash Flows From Investing Activities | ||||||||
Purchase of property and equipment | 0 | 0 | ||||||
| Net cash used in investing activities | 0 | 0 | ||||||
| Cash Flows From Financing Activities | ||||||||
Proceeds from related companies | 0 | 0 | ||||||
| Net cash provided by financing activities | 0 | 0 | ||||||
Net increase (decrease) in cash | 0 | 1 | ||||||
Cash at beginning of period | 2 | 1 | ||||||
Cash at end of period | $ | 2 | $ | 2 | ||||
| Supplemental Disclosure of Cash Flow Information: | ||||||||
Interest paid | $ | 0 | $ | 0 | ||||
Income taxes paid | $ | 0 | $ | 0 | ||||
See accompanying notes to unaudited condensed financial statements.
7
(A Development Stage Company)
Notes to Condensed Financial Statements
(unaudited)
Note A. Description of Business
American Environmental, Inc. (the "Company" or "AEI") was originally incorporated in the State of Florida on February 28, 2003 as MyZipSoft, Inc. ("MyZipSoft"), a wholly owned subsidiary of eCom eCom.com, Inc. ("eCom"). MyZipSoft's core business was the development and distribution of software products. Its first product was a digital image compression software call MyPhotoZip. The Company ceased pursing this line of business during June 2006. The Company currently has no operations.
Pursuant to SEC Staff Legal Bulletin No. 4, eCom decided to spin off the Company into an independent company in the belief that the independent company, with a distinct business, would be better able to obtain necessary funding and develop their business plans.
On December 1, 2003, the Board of Directors of eCom approved the spin-off of MyZipSoft, Inc.
eCom spun off MyZipSoft on January 23, 2004. The spin-off was subject to the effectiveness of the bankruptcy of eCom. The stock dividend from eCom was one share of MyZipSoft, Inc. for every 100 shares of eCom held. This dividend had a shareholder of record date of February 23, 2004 and a payment date of June 2, 2005.
On December 12, 2003, the Company changed its name to Freedom 4 Wireless, Inc. ("F4W") in connection with its spin off by eCom and its planned acquisition of certain assets of a company known as Freedom 4 Wireless, Inc. (Delaware). On January 24, 2005, the Company changed their name back to MyZipSoft, Inc. due to the discontinued operations of the wireless division. MyZipSoft, Inc. changed its name to American Environmental, Inc. on November 2, 2005.
On March 28, 2008 the US Bankruptcy court issued a final order on the eCom bankruptcy case. As a result of the emergence of American Environmental, Inc. (Prior American Environmental) ("Prior AEI") from operating under Chapter 11 of the United States Bankruptcy Code (the Bankruptcy Code) on March 28, 2008 (the Effective Date), the Company is the successor registrant to Prior American Environmental pursuant to Rule 12g-3 under the Securities Exchange Act of 1934.
Note B. Summary of Significant Accounting Policies
BASISOF PRESENTATION, USEOF ESTIMATES
The Company maintains its accounts on the accrual basis of accounting. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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.
DEVELOPMENT STAGECOMPANY
Based upon the Company's business plan, it is a development stage enterprise since planned principal activities have not yet commenced. As a development stage enterprise, the Company discloses the deficit accumulated during the development stage commencement to the current balance sheet date on the condensed statement of changes in shareholders' deficit. The development stage began February 28, 2003, the date the Company was incorporated.
REVENUERECOGNITION
Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is assured.
CASH
Cash consists of deposits in banks and other financial institutions having original maturities of less than ninety days.
STOCK-BASEDCOMPENSATION
The accounting for common stock issued for services is based on the estimated fair value of the common stock issued as of the grant date. Because there is no market for the Company's common stock and no operations, the Company recorded the issuance of common stock for services at par value, which approximated the value of services received.
8
INCOME TAXES
The Company accounts for income taxes in accordance with FASB Statement No. 109, Accounting for Income Taxes (FASB 109). Under FASB 109, income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related to certain income and expenses recognized in different periods for financial and income tax reporting purposes. Deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes also are recognized for operating losses and tax credits that are available to offset future taxable income and income taxes, respectively. A Valuation allowance is provided if it is more likely than not that some or all of the deferred tax asset will not be realized.
NET LOSSPERCOMMONSHARE
Basic net loss per common share is computed using the weighted average number of common shares outstanding during each period presented. Diluted net loss per common share is computed by using the weighted average number of common shares and potential common shares outstanding during the period.
RECENTLY ISSUEDACCOUNTINGSTANDARDS
In December 2008, the FASB issued FSP FIN No. 48-3, "Effective Date of FASB Interpretation No. 48 for Certain Nonpublic Enterprises." FSP FIN No. 48-3 defers the effective date of FIN No. 48, "Accounting for Uncertainty in Income Taxes," for certain nonpublic enterprises as defined in SFAS No. 109, "Accounting for Income Taxes." However, nonpublic consolidated entities of public enterprises that apply U.S. generally accepted accounting principles (GAAP) are not eligible for the deferral. FSP FIN No. 48-3 was effective upon issuance. The impact of adoption was not material to the Company's financial condition or results of operations.
In December 2008, the FASB issued FSP FAS No. 140-4 and FIN No. 46(R) -8, "Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities." This FSP amends SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities," to require public entities to provide additional disclosures about transfers of financials assets. FSP FAS No. 140-4 also amends FIN No. 46(R)-8, "Consolidation of Variable Interest Entities," to require public enterprises, including sponsors that have a variable interest entity, to provide additional disclosures about their involvement with a variable interest entity. FSP FAS No. 140-4 also requires certain additional disclosures, in regards to variable interest entities, to provide greater transparency to financial statement users. FSP FAS No. 140-4 is effective for the first reporting period (interim or annual) ending after December 15, 2008, with early application encouraged. The adoption of FSP FAS No. 140-4 did not have an impact on the Company's financial position and results of operations.
In October 2008, the FASB issued FSP FAS No. 157-3, "Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active." This FSP clarifies the application of SFAS No. 157, "Fair Value Measurements," in a market that is not active. The FSP also provides examples for determining the fair value of a financial asset when the market for that financial asset is not active. FSP FAS No. 157-3 was effective upon issuance, including prior periods for which financial statements have not been issued. The impact of adoption was not material to the Company's financial condition or results of operations.
In June 2008, the FASB issued EITF Issue No. 03-6-1, "Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities." EITF No. 03-6-1 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share under the two-class method. The EITF 03-6-1 affects entities that accrue dividends on share-based payment awards during the awards' service period when the dividends do not need to be returned if the employees forfeit the award. EITF 03-6-1 is effective for fiscal years beginning after December 15, 2008. The adoption of EITF 03-6-1 did not impact the Company's financial position and results of operations.
9
In April 2008, the FASB issued FSP FAS No. 142-3, "Determination of the Useful Life of Intangible Assets", which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of intangible assets under SFAS No. 142 "Goodwill and Other Intangible Assets". The intent of this FSP is to improve the consistency between the useful life of a recognized intangible asset under SFAS No. 142 and the period of the expected cash flows used to measure the fair value of the asset under SFAS No. 141 (revised 2007) "Business Combinations" and other U.S. generally accepted accounting principles. The adoption of FSP FAS No. 142-3 did not have a material impact on the Company's financial statements.
In February 2008, the FASB issued FSP FAS No. 157-2, "Effective Date of FASB Statement No. 157". This FSP delays the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value on a recurring basis (at least annually). The impact of adoption was not material to the Company's consolidated financial condition or results of operations.
In December 2007, the FASB issued SFAS No. 141(R) "Business Combinations." This Statement replaces the original SFAS No. 141. This Statement retains the fundamental requirements in SFAS No. 141 that the acquisition method of accounting (which SFAS No. 141 called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination. The objective of SFAS No. 141(R) is to improve the relevance, and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. To accomplish that, SFAS No. 141(R) establishes principles and requirements for how the acquirer:
a. | Recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. |
b. | Recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase. |
c. | Determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. |
This Statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008 and may not be applied before that date. The adoption of SFAS No. 141(R) did not have a material impact on the Company's results of operations and financial condition.
In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment of SFAS No. 115," which becomes effective for the Company on February 1, 2008, permits companies to choose to measure many financial instruments and certain other items at fair value and report unrealized gains and losses in earnings. Such accounting is optional and is generally to be applied instrument by instrument. There was no material impact on the Company's results of operations and financial condition due to the adoption of SFAS No. 159.
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements." SFAS No. 157 provides guidance for using fair value to measure assets and liabilities. SFAS No. 157 addresses the requests from investors for expanded disclosure about the extent to which companies' measure assets and liabilities at fair value, the information used to measure fair value and the effect of fair value measurements on earnings. SFAS No. 157 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value, and does not expand the use of fair value in any new circumstances. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and was adopted by the Company in the first quarter of fiscal year 2008. There was no material impact on the Company's results of operations and financial condition due to the adoption of SFAS No. 157.
Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.
10
Note C. Involuntary Reorganization under Chapter 11
The Plan of Reorganization became effective and the Company emerged from Chapter 11 reorganization proceedings on March 28, 2008 (the "Reorganization Effective Date"). On the Reorganization Effective Date, the Company implemented fresh-start reporting in accordance with American Institute of Certified Public Accounts Statement of Position 90-7: Financial Reporting by Entities in Reorganization under the Bankruptcy Code ("SOP 90-7").
All conditions required for the adoption of fresh-start reporting were met upon emergence from the reorganization Proceedings on the Reorganization Effective Date. As a result, the fair value of the Prior AEI assets became the new basis for the Company's statement of financial position as of the Fresh-Start Adoption Date, and all operations beginning on or after March 28, 2008 are related to the Successor Company.
As a result of the application of fresh-start reporting, the financial statements prior to and including March 28, 2008 represent the operations of the Prior AEI and are not comparable with the financial statements for periods on or after March 28, 2008. References to "New AEI" refer to the Company on or after March 28, 2008, after giving effect to the application of fresh-start reporting. References to the "Prior AEI" refer to the Company prior to and including March 28, 2008.
Note D. Note and Loans Receivable
The Note receivable dated June 1, 2005 was with Miami Filter in the amount of $50,000, plus accrued interest at 5% interest per annum on the unpaid balance. The note was non-collateralized and was scheduled to mature on September 1, 2005. On May 31, 2008, the note was deemed uncollectable and the uncollected principal balance of $22,500 plus accrued interest of $2,558 was charged off resulting in a net loss off $25,058.
Note E. Income Taxes
The Company does not believe that the realization of the related net deferred tax asset meets the criteria required by generally accepted accounting principles and, accordingly, the deferred income tax asset arising from such loss carry forward has been fully reserved.
Deferred income taxes (benefits) are provided for certain income and expenses which are recognized in different periods for tax and financial reporting purposes. The Company had cumulative net operating loss carry-forwards for income tax purposes at August 31, 2008 of approximately $1,015,000, expiring through May 31, 2029. The Company has established a 100% valuation allowance against this deferred tax asset, as the Company has no history of profitable operations.
Note E. Related Party Transactions
The Company is allocated certain expenses such as rent, travel and administrative that are paid on behalf of the Company by American Capital Holdings, Inc., and United States Financial Group, Inc, companies that are related to the Company by mutual stockholders and Directors. The total expenses allocated to the Company in the three months ended August 31, 2008 and for the period from March 28, 2008 (date of bankruptcy effectiveness) through August 31, 2008 was $5,060 and $13,185, respectively.
The Company has received cash advances from Richard Turner, CFO of the Company, in varying amounts and at various times subsequent to August 31, 2008. These related party loans were non-collateralized, non-interest bearing and due on demand. As of August 31, 2008 the balance owed Mr. Turner was $301.
Note F. Going Concern
As reflected in the accompanying unaudited condensed financial statements, the Company had a net loss for the period March 28, 2008 (date of bankruptcy effectiveness) through August 31, 2008 of $38,658. The ability of the Company to continue as a going concern is dependent on the Company's ability to further implement its business plan and raise capital. The financial statements do not included any adjustments that might be necessary if the Company is unable to continue as a going concern.
11
Revenue for the three months ended August 31, 2008 and 2007 was $0 and $142 respectively.
Total operating expenses for the three months ended August 31, 2008 was $5,232 compared to $36,716 for the three months ended August 31, 2007. The decrease in expenses resulted from lower rent, transfer agent fees and management expenses incurred during the three months ended August 31, 2008.
The operations for the three months ended August 31, 2008 resulted in a net loss of $5,232 versus a net loss of $36,877 recorded in the three months ended August 31, 2007.
History of the CompanyTo review the History of the Company, see Part 1, Item 1 of our annual report filed for the Period May 31, 2008. That note is hereby incorporated by reference into this Part 1, Item 2.
Recently Adopted Accounting Pronouncements
For a discussion of recently adopted accounting pronouncements, see Note B to our financial statements at Part 1, Item 1 to this quarterly report.
For a discussion of recently issued accounting pronouncements that we have not yet adopted, see Note B to our financial statements at Part 1, Item 1 to this quarterly report.
This quarterly report on Form 10-Q contains "forward-looking statements" within the meaning of the federal securities laws. Statements regarding future events and developments and our future performance, as well as management's current expectations, beliefs, plans, estimates or projections relating to the future, are forward-looking statements within the meaning of these laws. Actual results could differ materially from those set forth in the forward-looking statements.
12
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit to the Securities and Exchange Commission under the Securities Exchange Act, is recorded, processed, summarized, and reported within the time periods specified by the Securities and Exchange Commission's rules and forms, and that information is accumulated and communicated to our management, including our principal executive and principal financial officer (whom we refer to in this periodic report as our Certifying Officer), as appropriate to allow timely decisions regarding required disclosure. Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our management evaluated, with the participation of our Certifying Officer, the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act) as of August 31, 2008, pursuant to Rule 13a-15(b) under the Securities Exchange Act. Based upon that evaluation, our Certifying Officer concluded that, as of August 31, 2008, our disclosure controls and procedures were effective at the reasonable assurance level.
13
None
There have been no material changes to the risk factors presently disclosed in our May 31, 2008 Form 10-K.
None
None
There were no matters submitted to a vote by the security holders during the three months ended August 31, 2008.
None
| Exhibit 31.1 | Certification pursuant to Rule 13a — 14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| Exhibit 31.2 | Certification pursuant to Rule 13a — 14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| Exhibit 32.1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
American Environmental, Inc. | ||||
| Date: August 31, 2012 | By: | /s/ Richard C. Turner | ||
| Richard C. Turner | ||||
| Chief Financial Officer (Duly Authorized Officer and Principal Financial and Accounting Officer) | ||||
14
