UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
S QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2008
£ TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE EXCHANGE ACT
For the transition period from ___________ to _____________
Solutions Mechanical, Inc.
(Exact name of small business issuer as specified in its charter)
Nevada |
| 333-141102 |
| 20-8273570 |
(State or other jurisdiction of incorporation or organization) |
| (Commission file number) |
| (IRS Employer Identification No.) |
Jeffery Thompson Solutions Mechanical, Inc. 2702 Pebble Creek Drive Pearland, TX 77581 (Address of principal executive offices) |
1-888-471-3599 |
(Issuer's telephone number) |
Check 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. Yesx Noo
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):
Large Accelerated Filero Accelerated Filero Non-Accelerated Filero Smaller Reporting Company x
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 10,000,000 shares of Common Stock, as of October 14, 2008.
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934) (check one): Yeso Nox
Transitional Small Business Disclosure Format (check one): Yeso Nox
SOLUTIONS MECHANICAL, INC.
FORM 10-Q
September 30, 2008
INDEX
PART I-- FINANCIAL INFORMATION |
| |
|
| Page |
Item 1. | Unaudited Financial Statements | 3 |
Item 2. | Management’s Discussion and Analysis of Financial Condition | 9 |
Item 3 | Quantitative and Qualitative Disclosures About Market Risk | 14 |
Item 4. | Control and Procedures | 14 |
|
| |
PART II-- OTHER INFORMATION |
| |
|
|
|
Item 1 | Legal Proceedings | 15 |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 15 |
Item 3. | Defaults Upon Senior Securities | 15 |
Item 4. | Submission of Matters to a Vote of Security Holders | 15 |
Item 5. | Other Information | 15 |
Item 6. | Exhibits and Reports on Form 8-K | 15 |
2
ITEM 1. Financial Information
SOLUTIONS MECHANICAL, INC.
Balance Sheets
|
| September 30, 2008 |
| December 31, 2007 |
|
| (Unaudited) |
|
|
ASSETS |
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
Cash | $ | 16,369 | $ | 16,476 |
Accounts receivable – net |
| 42,116 |
| 34,533 |
Other |
| - |
| 805 |
Total Current Assets |
| 58,485 |
| 51,814 |
|
|
|
|
|
EQUIPMENT: |
|
|
|
|
Trucks |
| 33,621 |
| 23,099 |
Trailer and tools |
| 29,384 |
| 11,801 |
Computer |
| 2,783 |
| 2,729 |
Total |
| 65,788 |
| 37,629 |
Accumulated depreciation |
| (34,986) |
| (22,986) |
Net |
| 30,802 |
| 14,643 |
|
|
|
|
|
TOTAL ASSETS | $ | 89,287 | $ | 66,457 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT |
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
Accounts payable | $ | 15,500 | $ | 7,438 |
Accrued expenses |
| 56,242 |
| 35,577 |
Notes payable |
| 36,691 |
| 19,327 |
Current maturity of long-term debt |
| 5,487 |
| 5,203 |
Total Current Liabilities |
| 113,920 |
| 67,545 |
|
|
|
|
|
LONG-TERM DEBT |
| 4,379 |
| 8,530 |
|
|
|
|
|
TOTAL LIABILITIES |
| 118,299 |
| 76,075 |
|
|
|
|
|
STOCKHOLDERS’ DEFICIT: |
|
|
|
|
Preferred stock at $0.001 par value; 1,000,000 shares authorized; no shares issued or outstanding |
| - |
| - |
Common stock at $0.001 par value; 74,000,000 shares authorized; 10,000,000 shares issued and outstanding |
| 10,000 |
| 10,000 |
Additional paid-in capital |
| 397 |
| 397 |
Accumulated deficit |
| (39,409) |
| (20,015) |
Total Stockholders’ Deficit |
| (29,012) |
| (9,618) |
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 89,287 | $ | 66,457 |
See accompanying notes to the financial statements.
3
SOLUTIONS MECHANICAL, INC.
Statements of Operations
For the Three Months Ended September 30, 2008 and 2007
(Unaudited)
|
| 2008 |
| 2007 |
|
|
|
|
|
Sales | $ | 66,366 | $ | 78,866 |
|
|
|
|
|
Cost of Sales |
| 52,974 |
| 53,608 |
|
|
|
|
|
Gross Profit |
| 13,392 |
| 25,258 |
|
|
|
|
|
Other (Income) Expenses: |
|
|
|
|
General and administrative |
| 18,786 |
| 17,079 |
Depreciation |
| 4,000 |
| 3,000 |
Other, net |
| (124) |
| (135) |
|
| 22,662 |
| 19,944 |
|
|
|
|
|
Income (loss) before income taxes |
| (9,270) |
| 5,314 |
|
|
|
|
|
Provision for income taxes |
| - |
| - |
|
|
|
|
|
Net income (loss) | $ | (9,270) | $ | 5,314 |
|
|
|
|
|
Net income (loss) per share - basic and diluted | $ | (0.00) | $ | 0.00 |
|
|
|
|
|
Weighted average number of common shares outstanding - basic and diluted |
| 10,000,000 |
| 10,000,000 |
|
|
|
|
|
See accompanying notes to the financial statements. | ||||
4
SOLUTIONS MECHANICAL, INC.
Statements of Operations
For the Nine Months Ended September 30, 2008 and 2007
(Unaudited)
|
| 2008 |
| 2007 |
|
|
|
|
|
Sales | $ | 381,871 | $ | 259,238 |
|
|
|
|
|
Cost of Sales |
| 325,661 |
| 200,397 |
|
|
|
|
|
Gross Profit |
| 56,210 |
| 58,841 |
|
|
|
|
|
Other Expenses: |
|
|
|
|
General and administrative |
| 63,776 |
| 54,371 |
Depreciation |
| 12,000 |
| 9,000 |
Other, net |
| (172) |
| (15) |
|
| 75,604 |
| 63,356 |
|
|
|
|
|
Loss before income taxes |
| (19,394) |
| (4,515) |
|
|
|
|
|
Provision for income taxes |
| - |
| - |
|
|
|
|
|
Net loss | $ | (19,394) | $ | (4,515) |
|
|
|
|
|
Net loss per share – basic and diluted | $ | (0.00) | $ | (0.00) |
|
|
|
|
|
Weighted average number of common shares outstanding - basic and diluted |
| 10,000,000 |
| 9,949,597 |
|
|
|
|
|
See accompanying notes to the financial statements. | ||||
5
SOLUTIONS MECHANICAL, INC.
Statements of Cash Flows
For the Nine Months Ended September 30, 2008 and 2007
(Unaudited)
|
| 2008 |
| 2007 |
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
Net loss | $ | (19,394) | $ | (4,515) |
|
|
|
|
|
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
Depreciation |
| 12,000 |
| 9,000 |
Changes in net operating assets |
| 21,949 |
| 2,977 |
Net Cash Provided by Operating Activities |
| 14,555 |
| 7,462 |
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
Purchase of equipment |
| (28,159) |
| (3,101) |
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
Sale of shares |
| - |
| 860 |
Proceeds from notes payable |
| 52,103 |
| - |
Repayment of loans |
| (38,606) |
| (4,763) |
Net Cash Provided by (Used in) Financing Activities |
| 13,497 |
| (3,903) |
|
|
|
|
|
NET CHANGE IN CASH |
| (107) |
| 458 |
|
|
|
|
|
CASH AT BEGINNING OF PERIOD |
| 16,476 |
| 11,401 |
CASH AT END OF PERIOD | $ | 16,369 | $ | 11,859 |
|
|
|
|
|
See accompanying notes to the financial statements. | ||||
6
SOLUTIONS MECHANICAL, INC.
Notes to Unaudited Financial Statements
September 30, 2008
(Unaudited)
NOTE 1
BASIS OF PRESENTATION
The accompanying interim financial statements for the three and nine-month periods ended September 30, 2008 and 2007 are unaudited and include all adjustments (consisting of normal recurring adjustments) considered necessary by management for a fair presentation. The results of operations realized during an interim period are not necessarily indicative of results to be expected for a full year. These financial statements should be read in conjunction with the information filed as part of the Company’s Annual Report on Form 10-KSB for the year ended December 31, 2007.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 as well as the reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates.
NOTE 2
CURRENT DEVELOPMENTS
As part of the Company’s plan to augment its financial resources and consider attractive business opportunities, its principal stockholders have entered into discussions with an unaffiliated third party with respect to a potential merger transaction which could result in change of control/ownership and new management. There can be no assurance that a merger or other significant transaction will be consummated with the third party or, if consummated, that the Company or its stockholders would realize any benefits from it.
NOTE 3
GOING CONCERN
The accompanying financial statements have been prepared on a going concern basis which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. At September 30, 2008, the Company has limited financial resources, has not established a source of equity or debt financing, has negative working capital and has incurred operating losses since inception. These factors, among others, indicate that the Company's continuation as a going concern is dependent upon its ability to achieve profitable operations or obtain adequate financing.
The Company will solicit sales based on all leads that it can obtain from contacts of its president, existing customers, advertising and trade literature. However, the Company cannot predict the likelihood of it being successful in its efforts to increase sales.
The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.
7
NOTE 4
NOTES PAYABLE
Notes Payable at September 30, 2008 included $31,408 that is due to the Company’s President. It is noninterest-bearing and due on demand.
The Company has a $6,000 revolving line of credit with a credit union that requires minimum monthly payments of $157 which includes interest and principal. Interest is charged at the rate of 6.24%, per annum. This line of credit is guaranteed by the Company’s President and the balance at September 30, 2008 was $5,283.
8
ITEM 2
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Information set forth herein contains "forward-looking statements" which can be identified by the use of forward-looking terminology such as "believes," "expects," "may,” “should" or "anticipates" or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy. No assurance can be given that the future results covered by the forward-looking statements will be achieved. The Company cautions readers that important factors may affect the Company’s actual results and could cause such results to differ materially from forward-looking statements made by or on behalf of the Company. These factors include the Company’s lack of historically profitable operations, dependence on key personnel, the success of the Company’s business, ability to manage anticipated growth and other factors identified in the Company's filings with the Securities and Exchange Commission, press releases and/or other public communications.
The following discussion and analysis provides information which the Company’s management believes to be relevant to an assessment and understanding of the Company's results of operations and financial condition. This discussion should be read together with the Company's financial statements and the notes to financial statements, which are included in this report.
This management's discussion and analysis or plan of operation should be read in conjunction with the financial statements and notes thereto of the Company for the nine months ended September 30, 2008. The reported results may not necessarily reflect the future.
Current Developments
As part of our plan to augment our financial resources and consider attractive business opportunities, our principal stockholders have entered into discussions with an unaffiliated third party with respect to a potential merger transaction which could result in change of control/ownership and new management. There can be no assurance that a merger or other significant transaction will be consummated with the third party or, if consummated, that the Company or its stockholders would realize any benefits from it.
Operations
We were founded as an unincorporated business in January 2006, became a limited liability company on April 3, 2006 under the name JL Solutions Mechanical LLC and a C corporation on October 10, 2006. We began generating revenue in January 2006. At October 14, 2008, we had one employee, Jeffery Thompson, our president. Mr. Thompson devotes fulltime to us.
9
A summary of our operations for the nine months ended September 30, 2008 and 2007 follows:
|
| 2008 |
| 2007 |
|
|
|
|
|
Sales | $ | 381,871 | $ | 259,238 |
|
|
|
|
|
Cost of Sales |
| 325,661 |
| 200,397 |
|
|
|
|
|
Gross Profit |
| 56,210 |
| 58,841 |
|
|
|
|
|
Other Expenses: |
|
|
|
|
General and administrative |
| 63,776 |
| 54,371 |
Depreciation |
| 12,000 |
| 9,000 |
Other, net |
| (172) |
| (15) |
|
| 75,604 |
| 63,356 |
|
|
|
|
|
Loss before income taxes | $ | (19,394) | $ | (4,515) |
Sales - We commenced operations in January 2006. We devoted the first nine months of 2006 developing our initial business. Our revenue for quarters since then reflects increases over the corresponding period in the prior year. We cannot provide any assurances that that trend will continue.
Cost of sales – gross margin was lower in 2008 because the engagements required more purchases of installed equipment and subcontractor costs incurred to complete a large job were more than anticipated.
General and administrative - The principal components of general and administrative expenses in 2008 are advertising ($9,474), automobile and fuel expenses ($20,601), communications ($4,988), employee benefits ($4,146), insurance ($3,544), office supplies and expenses ($3,151), and rent ($7,623). In 2007 the principal categories of general and administrative expenses are advertising ($8,601), automobile expenses ($4,332), bank fees ($2,295) communications ($2,963), insurance ($4,611), office supplies ($2,636), tax and licenses ($4,325) and professional fees ($14,883).
Depreciation– depreciation relates principally to our trucks and equipment.
General
As a corporate policy,we will not incur any cash obligations that we cannot satisfy with known resources, of which there are currently none except as described in “Liquidity” below and/or elsewhere in this prospectus.
Liquidity
In 2007, we failed to generate cash from operating activities. We believe that we can manage our basic HVAC operations in a manner to at least breakeven from a cash perspective during the next 12 months. We do not plan on making any significant capital expenditures have no plans to hire additional employees and therefore do not anticipate raising any additional funds during the next twelve months. See below for a discussion of the expected impact of incremental costs associated with becoming a “public” company.
10
At September 30, 2008, we owed a note to our President of $31,408. The obligation is noninterest-bearing and due on demand. Our President’s personal resources are limited. We do not believe that we can rely on the likelihood of any significant advance beyond the amount currently due to him if we are unable to pay standard operating costs and our president is not legally bound to provide us with such loan. We have a $6,000 revolving line of credit with a credit union that requires minimum monthly payments of $157 which includes interest and principal. Interest is charged at the rate of 6.24%, per annum. At September 30, 2008, the balance outstanding was $5,283. This line of credit is guaranteed by our President.
We have a long-term bank loan, the proceeds of which were used to purchase our truck. The balance outstanding at September 30, 2008 was $9,866. The loan is guaranteed by our president and is payable in equal monthly payments of $501 through June 2010. The loan includes interest at the rate of 7.10% per annum.
Private capital, if sought, will be sought from former business associates of our founder or private investors referred to us by those business associates. To date, we have not sought any funding source and have not authorized any person or entity to seek out funding on our behalf. If a market for our shares ever develops, of which there can be no assurances, we may use restricted shares of our common stock to compensate employees/consultants and independent contractors wherever possible. We believe that operations are generating sufficient cash to continue operations for the next 12 months from the date of this prospectus.
We have become a public company and, by doing so, have incurred and will continue to incur additional significant expenses for legal, accounting and related services. Once we become a public entity, subject to the reporting requirements of the Exchange Act of 1934, we will incur ongoing expenses associated with professional fees for accounting, legal and a host of other expenses for annual reports and proxy statements. We estimate that these costs will range up to $50,000 per year for the next few years and will be higher if our business volume and activity increases but lower during the first year of being public because our overall business volume will be lower, and we will not yet be subject to the requirements of Section 404 of the Sarbanes-Oxley Act of 2002. These obligations will reduce our ability and resources to fund other aspects of our business. We hope to be able to use our status as a public company to increase our ability to use noncash means of settling obligations and compensate independent contractors who provide professional services to us, although there can be no assurances that we will be successful in any of those efforts. We will reduce the compensation levels paid to our president if there is insufficient cash generated from operations to satisfy these costs.
There are no current plans to seek private investment. We do not have any current plans to raise funds through the sale of securities. We hope to be able to use our status as a public company to enable us to use non-cash means of settling obligations and compensate persons and/or firms providing services or products to us, although there can be no assurances that we will be successful in any of those efforts. Issuing shares of our common stock to such persons instead of paying cash to them would increase our chances to expand our business. Having shares of our common stock may also give persons a greater feeling of identity with us which may result in referrals. To date, we have not sought any funding source and have not authorized any person or entity to seek out funding on our behalf.
In January 2007, Solutions Mechanical sold 860,000 shares of its common stock to 39 individuals for $860. The sale of such shares was not specifically or solely intended to raise financing since the funds raised were de minimis. It was also intended to get relatives and business associates of management involved in our business. Although these stockholders have no obligation to provide any services to us, management hopes that these new stockholders, their families, friends and/or business associates may provide us with valuable services such as recommending our services and providing us with business advice in any areas of expertise or knowledge that they may have that can be of value and assistance to us.
11
Off Balance Sheet Arrangements
We have no off balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K, obligations under any guarantee contracts or contingent obligations. We also have no other commitments, other than the costs of being a public company that will increase our operating costs or cash requirements in the future.
Recently Issued Accounting Pronouncements
In June 2003, the United States Securities and Exchange Commission adopted final rules under Section 404 of the Sarbanes-Oxley Act of 2002”), as amended by SEC Release No. 33-8934 on June 26, 2008. Commencing with our annual report for the year ended December 31, 2009, we will be required to include a report of management on our internal control over financial reporting. The internal control report must include a statement.
§
of management’s responsibility for establishing and maintaining adequate internal control over our financial reporting;
§
of management’s assessment of the effectiveness of our internal control over financial reporting as of year end; and
§
of the framework used by management to evaluate the effectiveness of our internal control over financial reporting.
Furthermore, in the following fiscal year, it is required to file the registered accounting firm’s attestation report separately on the Company’s internal control over financial reporting on whether it believes that the Company has maintained, in all material respects, effective internal control over financial reporting.
In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157,Fair Value Measurements. This Statement defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosure related to the use of fair value measures in financial statements. The Statement is effective as of the beginning of the first fiscal year beginning after November 15, 2007. Ensign is currently evaluating the timing of adoption and the impact that adoption might have on its financial position or results of operations.
On February 15, 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities: Including an amendment of FASB Statement No. 115 (“SFAS No. 159”). SFAS No. 159 permits all entities to elect to measure many financial instruments and certain other items at fair value with changes in fair value reported in earnings. SFAS No. 159 is effective as of the beginning of the first fiscal year that begins after November 15, 2007, with earlier adoption permitted. We do not anticipate that the adoption of this statement will have a material effect on our financial condition and results of operations.
In June 2007, the Emerging Issues Task Force of the FASB issued EITF Issue No. 07-3Accounting for Nonrefundable Advance Payments for Goods or Services to be Used in Future Research and Development Activities (“EITF Issue No. 07-3”) which is effective for fiscal years beginning after December 15, 2007. EITF Issue No. 07-3 requires that nonrefundable advance payments for future research and development activities be deferred and capitalized. Such amounts will be recognized as an expense as the goods are delivered or the related services are performed. The Company does not expect the adoption of EITF Issue No. 07-3 to have a material impact on the financial results of the Company.
12
In December 2007, the FASB issued FASB Statement No. 141 (Revised 2007), Business Combinations (“SFAS No. 141(R)”), which requires the Company to record fair value estimates of contingent consideration and certain other potential liabilities during the original purchase price allocation, expense acquisition costs as incurred and does not permit certain restructuring activities previously allowed under Emerging Issues Task Force Issue No. 95-3 to be recorded as a component of purchase accounting. SFAS No. 141(R) 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, except for the presentation and disclosure requirements, which shall be applied retrospectively for all periods presented. The Company will adopt this standard at the beginning of the Company’s fiscal year ending December 31, 2009 for all prospective business acquisitions. The Company has not determined the effect that the adoption of SFAS No. 141(R) will have on its financial statements.
In December 2007, the FASB issued FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB No. 51 (“SFAS No. 160”), which causes noncontrolling interests in subsidiaries to be included in the equity section of the balance sheet. SFAS No. 160 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, except for the presentation and disclosure requirements, which shall be applied retrospectively for all periods presented. The Company will adopt this standard at the beginning of the Company’s fiscal year ending December 31, 2009 for all prospective business acquisitions. The Company has not determined the effect that the adoption of SFAS No. 160 will have on its consolidated financial statements.
In March 2008, the FASB issued FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities an amendment of FASB Statement No. 133 (“SFAS No. 161”), which changes the disclosure requirements for derivative instruments and hedging activities. Pursuant to SFAS No.161, Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008 with early application encouraged. SFAS No. 161 encourages but does not require disclosures for earlier periods presented for comparative purposes at initial adoption. In years after initial adoption, this Statement requires comparative disclosures only for periods subsequent to initial adoption. The Company will adopt this standard at the beginning of the Company’s year ending December 31, 2009. The Company does not expect the adoption of SFAS No. 161 to have a material impact on the financial results of the Company.
The FASB, the Emerging Issues Task Force and the United States Securities and Exchange Commission have issued certain other accounting pronouncements and regulations as of September 30, 2008 that will become effective in subsequent periods; however, management does not believe that any of those pronouncements would have significantly affected our financial accounting measurements or disclosures had they been in effect during the three and nine months ended September 30, 2008 and 2007, and it does not believe that any of those pronouncements will have a significant impact on our financial statements at the time they become effective.
Critical Accounting Policies
The preparation of financial statements and related notes requires us to make judgments, estimates, and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.
13
An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements.
Financial Reporting Release No. 60 requires all companies to include a discussion of critical accounting policies or methods used in the preparation of financial statements. There are no critical policies or decisions that rely on judgments that are based on assumptions about matters that are highly uncertain at the time the estimate is made. Note 2to the financial statements, included in our Annual Report on Form 10K, includes a summary of the significant accounting policies and methods used in the preparation of our financial statements.
Seasonality
Typically, there is a greater demand for our services in the summer months. However, the impact of Hurricane Ike on the Houston area in September 2008 may result in a temporary change in the timing for our services because significant repairs will be needed throughout the Houston area in the fall and winter of 2008.
ITEM 3
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is subject to certain market risks, including changes in interest rates and currency exchange rates. The Company does not undertake any specific actions to limit those exposures.
ITEM 4
CONTROLS AND PROCEDURES
(a)
Evaluation of Disclosure Controls and Procedures.
An evaluation was carried out under the supervision and with the participation of the Company's management, including the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") (in this case the same person), of the effectiveness of the Company's disclosure controls and procedures as of September 30, 2008. Based on that evaluation, the CEO/CFO has concluded that the Company's disclosure controls and procedures are effective to provide reasonable assurance that: (i) information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the Company's management, including the CEO/CFO, as appropriate to allow timely decisions regarding required disclosure by the Company; and (ii) information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.
(b) Changes in Internal Controls.
During the quarter ended September 30, 2008, there were no changes in the Company's internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.
14
PART II
OTHER INFORMATION
| |
Item 1 | Legal Proceedings |
|
|
| None |
|
|
Item 2 | Unregistered Sale of Equity Securities and Use of Proceeds |
|
|
| None |
|
|
Item 3 | Defaults Upon Senior Securities |
|
|
| None |
|
|
Item 4 | Submission of Matters to a Vote of Shareholders |
|
|
| None |
|
|
Item 5 | Other Information |
|
|
| None |
|
|
Item 6 | Exhibits and Reports on Form 8-K |
(a) Exhibits
Exhibit Number |
| Description |
31.1 |
| Section 302 Certification Of Chief Executive And Chief Financial Officer |
|
|
|
32.1 |
| Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002 – Chief Executive And Chief Financial Officer |
(b) Reports of Form 8-K
None.
15
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Solutions Mechanical, Inc.
(Registrant)
/s/ Jeffery Thompson
Jeffery Thompson
Title: President and Chief Financial Officer
November 5, 2008
16
