UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934
For the Quarterly Period Ended May 31, 2011
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934
Commission File No. 333-165370
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Onyx Service & Solutions, Inc. |
(Exact name of registrant as specified in its charter) |
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Delaware |
| 80-0513468 |
(State of incorporation) |
| (IRS Employer Identification Number) |
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7337 Oswego Road Liverpool, NY 13090 (315) 451-4822 |
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) |
(Former name, former address and former fiscal year, if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days x Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and" smaller reporting company" in Rule 12b-2 of the Exchange Act.
o Large accelerated filer Accelerated filer
o Non-accelerated filer
x Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes x No
The number of shares outstanding of the issuer's common stock, was 4,309,000 common shares as of May 31, 2011.
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| PART I – FINANCIAL INFORMATION | Page | |||||
Item 1. | Financial Statements |
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| Balance Sheets As of May 31, 2011 (Unaudited) As of November 30, 2010 | 4 | |||||
| Unaudited Statements of Operations For the three and six months ended May 31, 2011 and May 31, 2010 | 5 | |||||
| Unaudited Statements of Cash Flows For the six months ended May 31, 2011 and May 31, 2010 | 6 | |||||
| Unaudited Notes to Financial Statements | 7 | |||||
Item 2. | Management’s Discussion and Analysis or Plan of Operation | 11 | |||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 13 | |||||
Item 4. | Controls and Procedures | 14 | |||||
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| PART II – OTHER INFORMATION |
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Item 1. | Legal Proceedings | 15 | |||||
Item1A | Risk Factors | 15 | |||||
Item 2. | Unregistered Sale 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 | 15 | |||||
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| SIGNATURES | 16 | |||||
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Forward-Looking Statements
Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words "believes," "project," "expects," "anticipates," "estimates," "intends," "strategy," "plan," "may," "will," "would," "will be," "will continue," "will likely result, "and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.
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PART I. FINANCIAL INFORMATION
ONYX SERVICE AND SOLUTIONS INC. AND SUBSIDIARIES | ||||
CONSOLIDATED BALANCE SHEETS | ||||
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| May 31, 2011 |
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| (UNAUDITED) |
| November 30, 2010 |
CURRENT ASSETS |
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Cash and Cash Equivalents |
| $ 4,239 |
| $ 32,541 |
Accrued Receivable |
| 1,225 |
| 869 |
Prepaid Expenses |
| 10,000 |
| - |
TOTAL CURRENT ASSETS |
| 15,464 |
| 33,410 |
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PROPERTY & EQUIPMENT - NET |
| 931 |
| 1,359 |
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TOTAL ASSETS |
| $ 16,395 |
| $ 34,769 |
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
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Accounts Payable - Related Party |
| 5,700 |
| 3,900 |
Accounts Payable |
| 6,998 |
| 7,490 |
Related Party Notes Payable |
| 18,200 |
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Accrued Interest |
| 181 |
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TOTAL LIABILITIES |
| 31,079 |
| 11,390 |
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STOCKHOLDERS' EQUITY (DEFICIT) |
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Preferred Stock, .0001 par value 10,000,000 shares authorized |
| - |
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Common Stock, .0001 par value 250,000,000 shares authorized, |
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4,309,000 shares issued and outstanding. |
| 431 |
| 431 |
Additional Paid in Capital |
| 78,428 |
| 78,428 |
Accumulated Deficit |
| (93,543) |
| (55,480) |
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TOTAL STOCKHOLDERS' EQUITY (DEFICIT) |
| (14,684) |
| 23,379 |
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
| $ 16,395 |
| $ 34,769 |
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The accompanying notes are an integral part of these financial statements | ||||
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ONYX SERVICE AND SOLUTIONS INC. AND SUBSIDIARIES | ||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
(UNAUDITED) | ||||||||
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| For The Three |
| For The Three |
| For The Six |
| For The Six |
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| Months Ended |
| Months Ended |
| Months Ended |
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| May 31, 2011 |
| May 31, 2010 |
| May 31, 2011 |
| May 31, 2010 |
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SALES |
| $6,384 |
| $5,700 |
| $ 11,099 |
| $ 11,246 |
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COST OF SALES |
| 1,957 |
| 855 |
| 3,483 |
| 1,197 |
DEPRECIATION |
| 109 |
| 847 |
| 428 |
| 847 |
GENERAL AND ADMINSTRATIVE |
| 12,407 |
| 7,008 |
| 45,070 |
| 6,764 |
TOTAL EXPENSES |
| 14,473 |
| 8,710 |
| 48,981 |
| 8,808 |
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NET OPERATING INCOME/LOSS |
| (8,089) |
| (3,010) |
| (37,882) |
| 2,438 |
OTHER INCOME (EXPENSE) |
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Interest Expense |
| (171) |
| (425) |
| (181) |
| (425) |
Total Other Income (Expense) |
| (171) |
| (425) |
| (181) |
| (425) |
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NET INCOME (LOSS) |
| $ (8,260) |
| $ (3,435) |
| $ (38,063) |
| $ 2,013 |
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Net Income (Loss) per Common Share |
| $ (0.00) |
| $ (0.00) |
| $ (0.01) |
| $ 0.00 |
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Weighted Common Shares Outstanding - basic and diluted |
| 4,309,000 |
| 4,000,000 |
| 4,309,000 |
| 4,000,000 |
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The accompanying notes are an integral part of these financial statements | ||||||||
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ONYX SERVICE AND SOLUTIONS, INC. AND SUBSIDIARIES | ||||
CONSOLDIATED STATEMENTS OF CASH FLOW | ||||
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| Period Ended |
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| May 31, 2011 |
| May 31, 2010 |
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CASH FLOW FROM OPERATING ACTIVITIES |
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Net Income(Loss) |
| $ (38,063) |
| 2,013 |
Adjustments to reconcile Net Income(Loss) to net |
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cash (used for) operating activities: |
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Depreciation expense |
| 428 |
| - |
Changes in Operating Assets & Liabilities: |
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Accounts Recievable |
| (356) |
| (60) |
Prepaid Expenses |
| (10,000) |
| - |
Accounts Payable |
| (492) |
| 4,736 |
Accounts Payable - Related Party |
| 1,800 |
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Accrued Interest - Related Party |
| 181 |
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CASH PROVIDED BY(USED FOR) OPERATING ACTIVITIES | (46,502) |
| 6,689 | |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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Purchase of Fixed Assets |
| - |
| (10,400) |
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CASH USED FOR INVESTING ACTIVITIES |
| - |
| (10,400) |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Additional Paid In Capital |
| - |
| - |
Proceeds from sale of stock |
| - |
| - |
Contributed Capital |
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| 958 |
Borrowing on Debt - Related Party |
| 18,200 |
| 11,431 |
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CASH PROVIDED BY FINANCING ACTIVITIES |
| 18,200 |
| 12,389 |
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NET INCREASE (DECREASE) IN CASH |
| (28,302) |
| 8,678 |
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CASH AT BEGINNING OF PERIOD |
| 32,541 |
| 44,795 |
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CASH AT PERIOD END |
| $ 4,239 |
| $ 53,473 |
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The accompanying notes are an integral part of these financial statements | ||||
6
ONYX SERVICE AND SOLUTIONS, INC. AND SUBISIDARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2011
(UNAUDITED)
NOTE 1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
Onyx Service and Solutions, Inc. (the Company) is currently a provider of both privately owned and company owned automatic teller machines (ATM). The Company receives revenues from the collection of the surcharge revenues and inter-exchange revenues.
Organization and Basis of Presentation
The Company was formed under the laws of the State of Delaware. On November 25, 2009, the Company entered into an asset purchase agreement with Fresca Worldwide Trading., a Nevada company, for the purchase of its ATM assets. The Company paid Fresca World Wide Trading Corp. $10,400 for the purchase of its ATM assets. In the opinion of management, all adjustments consisting of normal recurring adjustments necessary for a fair presentation of financial position and the results of operations for the periods presented have been reflected herein.
NOTE 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING BASIS
These financial statements are prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America.
UNAUDITED INTERIM FINANCIAL INFORMATION
The accompanying consolidated balance sheet as of May 31, 2011, consolidated statements of operations for the three and six months ended May 31, and 2010, consolidated statement of owner’s equity for the six months ended May 31, 2011, and consolidated statements of cash flows for the six months ended May 31, 2011, are unaudited. These unaudited interim consolidated financial statements have been prepared in accordance with accounting principles accepted in the United States of America (“GAAP”). In the opinion of the company’s management, the unaudited interim consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and included all adjustments necessary for the fair presentation of the company’s statement of financial position at May 31, 2011 and its results of operations and its cash flows for the six months ended May 31, 2011 and 2010. The results for the six months ended May 31, 2011, are not necessarily indicative of the results to be expected for the fiscal year ending November 30, 2011.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts Onyx Service and Solutions, Inc., Fresca World Wide Trading Corp. and Premier ATM Inc., a wholly owned subsidiary of Fresca World Wide Trading Corp. All significant intercompany balances and transactions have been eliminated in consolidation.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting principles requires management 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.
REVENUE RECOGNITION
The Company derives its revenue from surcharge revenue and inter-exchange revenue. Surcharge fees are added fees which the Company charges the ATM user for dispensing cash. Inter exchange fees are fees charged between banks for transferring money. The Company receives all of the Surcharge Fees and receives a net of $.20 per transaction of the Inter exchange fees. The Company recognizes the net fees received as revenues.
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The Company receives interchange fees for transactions on ATM’s that it owns. The Company also receives the interchange fee for transactions on ATM’s owned by third party vendors included within its network. The Company keeps and reports as revenues all interchange fees.
The Company has 3 different circumstances for recording the surcharge fee as revenue. In the first case, for ATM’s owned and serviced by the Company, the Company receives and reports surcharge fee as revenue. In the second case, where the Company owns but does not service the ATM’s, the Company records the surcharge fee as revenue and records the portion of the fee paid to the owner of the ATM location as commission expense. In the third case, of ATM’s owned and serviced by third party vendors, the Company rebates all of the surcharge fee to the third party and does not report any surcharge fee revenue.
INCOME TAXES
The Company provides for income taxes under Financial Accounting Standards Board (“FASB”) Accounting Codification Number (“ASC”) 740, “Accounting for Income Taxes.” ASC 740 requires the use of an asset and liability approach in accounting for income taxes.
ASC 740 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
In accordance with ASC 740, the Company has evaluate its tax positions and determined there are no uncertain tax positions.
EARNINGS (LOSS) PER SHARE
The basic earnings (loss) per share are calculated by dividing the Company’s net income available to common shareholders by the weighted average number of common shares outstanding during the year. The diluted earnings (loss) per share are calculated by dividing the Company’s net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted as of the first of the year for any potentially dilutive debt or equity. There are no diluted shares outstanding.
ACCOUNTS RECEIVABLE
The Company considers accounts receivable to be fully collectible; accordingly, no allowance for doubtful accounts is required. If amounts become uncollectible, they will be charged to operations when that determination is made. No such charges were recorded for the period ended May 31, 2011.
FAIR VALUE OF FINANCIAL INSTRUMENTS
In September 2006, the FASB issued ASC 820, Fair Value Measurements and Disclosures. ASC 820 defines fair value, establishes guidelines for measuring fair value and expands disclosures regarding fair value measurements. ASC 820 does not require any new fair value measurements but rather eliminates inconsistencies in guidance found in various prior accounting pronouncements. ASC 820 is effective for fiscal years beginning after November 15, 2007.
ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, ASC 820 establishes a three-tiered fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows.
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Level 1. Observable inputs such as quoted market prices in active markets.
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Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly:, and
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Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. [The basic earnings (loss) per share are calculated by dividing the Company’s net income available to common shareholders by the weighted average number of common shares outstanding during the year. The diluted earnings (loss) per share are calculated by dividing the Company’s net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted as of the first of the year for any potentially dilutive debt or equity. There are no diluted shares outstanding.
The Company had no assets or liabilities that were measured and recognized at fair value on a non-recurring basis as of May 31, 2011 or 2010, and as such, had no assets or liabilities that fell into the tiers described above.
In February 2007, the FASB issued ASC 825, Financial Instruments. ASC 825 permits entities an option to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. The objective of this Statement is to reduce both complexity in accounting for financial instruments and the volatility in earnings caused by measuring related assets and liabilities using different measurement techniques. The fair value measurement provisions are elective and can be applied to individual financial instruments. A business entity shall report unrealized gains and losses on items for which the fair value options have been elected in earnings at
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each subsequent reporting date. The Company does not expect that the adoption of ASC 825 will have a material impact, if any, on the Company’s financial position or results of operations.
NOTE 3.
PROPERTY & EQUIPMENT
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| May 31, 2011 |
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| November 30, 2010 |
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Equipment | $ | 8,469 |
| $ | 8,469 |
Accumulated Depreciation |
| (7,538) |
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| (7,110) |
Total Property & Equipment | $ | 931 |
| $ | 1,395 |
NOTE 4.
COMMON STOCK
During November 2009 the company sold 4,000,000 founder’s shares of common stock. During April 2010, the company sold 309,000 shares at $.25 per share for proceeds of $77,250. The number of shares issued and outstanding at May 31, 2011 is 4,309,000. The company is authorized to issue common stock of 250,000,000 shares at par value of $ .0001.
NOTE 5.
NOTES PAYABLE – RELATED PARTY
The Company has $10,600 of notes payable with Mary Passalqua an officer of the company, bearing interest at 8%; payable on demand.
The Company has a $7,600 note payable with Margaret Burton an officer of the company, bearing interest at 8%; payable on demand. The total of related party note payable is $18,200 as of May 31, 2011 with accrued interest of $181.15.
NOTE 6.
OPERATING LEASE
The Company leases office space under an operating lease expiring in December 2012. Rent expense for the period ended May 31, 2011 amounted to $1,800. The Rent is due to Calloway Properties a company fully owned by Mary Passalaqua, a related party of Onyx.
The minimum future rental payments under the operating lease at May 31, 2011 are as follows:
2011 | $2,700 |
2012 | $3,300 |
NOTE 7.
THE EFFECT OF RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS
In February 2010, the FASB issued ASU No. 2010-09 regarding subsequent events and amendments to certain recognition and disclosure requirements. Under this ASU, a public company that is a SEC filer, as defined, is not required to disclose the date through which subsequent events have been evaluated. This ASU is effective upon the issuance of this ASU. The adoption of this ASU did not have a material impact on our financial statements.
In January 2010, the FASB issued ASU No. 2010-06 regarding fair value measurements and disclosures and improvement in the disclosure about fair value measurements. This ASU requires additional disclosures regarding significant transfers in and out of Levels 1 and 2 of fair value measurements, including a description of the reasons for the transfers. Further, this ASU requires additional disclosures for the activity in Level 3 fair value measurements, requiring presentation of information about purchases, sales, issuances, and settlements in the reconciliation for fair value measurements. This ASU is effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. We are currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our financial statements.
In October 2009, the FASB issued an amendment to the accounting standards related to certain revenue arrangements that include software elements. This standard clarifies the existing accounting guidance such that tangible products that contain both software and non-software components that function together to deliver the product’s essential functionality, shall be excluded from the scope of the software revenue recognition accounting standards. Accordingly, sales of these products may fall within the scope of other revenue recognition standards or may now be within the scope of this standard and may require an allocation of the arrangement consideration for each element of the arrangement. The ASC was effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. We are currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our financial statements.
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NOTE 8.
THE EFFECT OF RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS (CON’T)
In August 2009, the FASB issued an amendment to the accounting standards related to the measurement of liabilities that are recognized or disclosed at fair value on a recurring basis. This standard clarifies how a company
should measure the fair value of liabilities and that restrictions preventing the transfer of a liability should not be considered as a factor in the measurement of liabilities within the scope of this standard. The ASC was effective for the Company for the first reporting period, including interim periods, beginning after issuance. The adoption of this ASU did not have a material impact on our financial statements.
In November 2009, the Financial Accounting Standards Board (“FASB”) issued the FASB Accounting Standards Codification (the “ASC”). The ASC has become the single source of non-governmental accounting principles generally accepted in the United States (“GAAP”) recognized by the FASB in the preparation of financial statements. The ASC does not supersede the rules or regulations of the Securities and Exchange Commission (“SEC”), therefore, the rules and interpretive releases of the SEC continue to be additional sources of GAAP for the Company. The Company adopted the ASC upon inception at June 23, 2009. The ASC does not change GAAP and did not have an effect on the Company’s financial position, results of operations or cash flows.
In May 2009, the FASB issued ASC 855-10 entitled “Subsequent Events”. Companies are now required to disclose the date through which subsequent events have been evaluated by management. Public entities (as defined) must conduct the evaluation as of the date the financial statements are issued, and provide disclosure that such date was used for this evaluation. ASC 855-10 provides that financial statements are considered “issued” when they are widely distributed for general use and reliance in a form and format that complies with GAAP. ASC 855-10 is effective for interim and annual periods ending after June 15, 2009 and must be applied prospectively. The adoption of ASC 855-10 did not have a significant effect on the Company’s financial statements. In connection with preparing the accompanying audited financial statements, management evaluated subsequent events through the date that such financial statements were issued (filed with the Securities and Exchange Commission).
NOTE 9.
GOING CONCERN
The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plans to obtain such resources for the Company include (1) obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses, and (2) seeking out and completing a merger with an existing operating company. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
Forward Looking Statements
Some of the information in this section contains forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by forward-looking words such as "may," "will," "expect," "anticipate," "believe," "estimate" and "continue," or similar words. You should read statements that contain these words carefully because they:
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discuss our future expectations;
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contain projections of our future results of operations or of our financial condition; and
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state other "forward-looking" information.
We believe it is important to communicate our expectations. However, there may be events in the future that we are not able to accurately predict or over which we have no control. Our actual results and the timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under "Risk Factors," "Business" and elsewhere in this prospectus. See "Risk Factors."
Organization and Basis of Presentation
The Company was formed under the laws of the State of Deleware. On November 25, 2009, the Company entered into an asset purchase agreement with Fresca World Wide Trading Corp, a Nevada company, for the purchase of its ATM assets. The Company paid Fresca World Wide Trading, Corp. $10,400 and assumed 32,995 of Liabilities for the purchase of its ATM assets on November 25, 2009. Fresca World Wide Trading, Corp is operated as a privately held company and has been in existence since 2006. The Company was active from February 10, 2006, (date of formation) until November 25, 2009
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, assumptions and estimates that affect the amounts reported in our consolidated financial statements and accompanying notes. We base our estimates and judgments on historical experience and on various other assumptions that we believe are reasonable under the circumstances. However, future events are subject to change, and the best estimates and judgments routinely require adjustment. The amounts of assets and liabilities reported in our consolidated balance sheet, and the amounts of revenues and expenses reported for each of the fiscal periods, are affected by estimates and assumptions which are used for, but not limited to, the accounting for allowance for doubtful accounts, goodwill and intangible asset impairments, restructurings, inventory and income taxes. Actual results could differ from these estimates. The following critical accounting policies are significantly affected by judgments, assumptions and estimates used in the preparation of our consolidated financial statements.
Revenue Recognition Policies
The Company derives its revenue from surcharge revenue and inter-exchange revenue. Surcharge fees are added fees which the Company charges the ATM user for dispensing cash. Inter exchange fees are fees charged between banks for transferring money. The Company all of the Surcharge Fees and receives a portion of the Inter exchange fees as income. The Company recognizes the net fees received as revenues.
The Company receives interchange fees for transactions on ATM’s that it owns. The Company also receives the interchange fee for transactions on ATM’s owned by third party vendors included within its network. The Company keeps and reports as revenues all interchange fees.
The Company has 3 different circumstances for recording the surcharge fee as revenue. In the first case, for ATM’s owned and serviced by the Company, the Company receives and reports the entire surcharge fee as revenue. In the second case, where the Company owns but does not service the ATM’s, the Company records the surcharge fee as revenue and records the portion of the fee paid to the owner of the ATM location as commission expense. In the third case, of ATM’s owned and serviced by third party vendors, the Company rebates all of the surcharge fee to the third party and does not report any surcharge fee revenue.
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THREE MONTHS ENDED MAY 31, 2011
REVENUES
The Company had total Revenue for the Three Months Ended May 31, 2011 of $6,384. This reflects an increase of $684 or 12% when compared to the total revenue of $5,700 for the Three Months Ended May 31, 2010. This change is primarily attributed to an increase in the number of transactions on the system.
The Company had Inter-exchange Revenue for the Three Months Ended May 31, 2011 of $3740. This reflects an increase of $1,074 or 84.6%, when compared to the Interexchange Revenue $2026 for the Three Months Ended May 31, 2010. This is primarily attributed to an increase in the number of ATM’s which Interexchange Revenue is earned and the number of transactions occurring during the period.
The Company had Surcharge Revenue for the Three Months Ended May 31, 2011 of $2,644. This reflects a decrease of $1,030 or 28% when compared to $3,674 for the Three Months Ended May 31, 2010. This decrease is primarily attributed to a decrease in the number of transactions.
COSTS OF SALES
Our commissions increased $1,133 or 175.4% from $646 for the Three Months Ended May 31, 2010 to $1,779, for the Three Months Ended May 31, 2011. This increase is due to an increase in the number of vendors receiving commission.
Our cost for ATM phone lines and supplies decreased $30 from $208 for the Three Months Ended May 31, 2010 to $178 for the Three Months Ended May 31, 2011. This decrease is primarily due to a decrease in ATM Phone supplies purchased.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the Three Months Ended May 31, 2011 are $12,407. This is an increase of $5,398 when compared to $7,009 for the Three Months Ended May 31, 2010. This increase consists primarily of increases in professional fees.
Net Loss from Operations
We had net loss of $8,260 for the Three Months Ended May 31, 2011 as compared to a net loss of $3,435 for the Three Months Ended May 31, 2010. This increase was primarily due to an increase in Professional fees for the Three Months Ended May 31, 2011.
SIX MONTHS ENDED MAY 31, 2011
REVENUES
The Company had total Revenue for the Six Months Ended May 31, 2011 of $11,099. This reflects an decrease of $147 or 1.3% when compared to the total revenue of $11,246 for the Six Months Ended May 31, 2010. This change is primarily attributed to a decrease in the number of transactions on the system.
The Company had Inter-exchange Revenue for the Six Months Ended May 31, 2011 of $6,532. This reflects an increase of $2,627 or 67.4%, when compared to the Interexchange Revenue $3,905 for the Six Months Ended May 31, 2010. This is primarily attributed to an increase in the number of ATM’s which Interexchange Revenue is earned and the number of transactions occurring during the period.
The Company had Surcharge Revenue for the Six Months Ended May 31, 2011 of $4,567. This reflects a decrease of $2,278 or 33.3% when compared to $6,845 for the Six Months Ended May 31, 2010. This decrease is primarily attributed to a decrease in the number of transactions.
COSTS OF SALES
Our commissions increased $1,606 or 105.6% from $1,521 for the Six Months Ended May 31, 2010 to $3,127, for the Six Months Ended May 31, 2011. This increase is due to an increase in the number of vendors receiving commission.
Our cost for ATM phone lines and supplies decreased $175 from $531 for the Six Months Ended May 31, 2010 to $356 for the Six Months Ended May 31, 2011. This decrease is primarily due to an decrease in ATM Phone supplies purchased.
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GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the Six Months Ended May 31, 2011 are $45,070. This is an increase of $31,297 when compared to $13,773 for the Six Months Ended May 31, 2010. This increase consists primarily of increases in professional fees.
Net Loss from Operations
We had net loss of $38,063 for the Six Months Ended May 31, 2011 as compared to a net income of $2,013 for the Six Months Ended May 31, 2010. This increase was primarily due to an increase in Professional fees for the Six Months Ended May 31, 2011.
Liquidation & Capital Resources
Our primary liquidity and capital resource needs are to finance the costs of our operations.
As of May 31, 2011 we had $4,240 cash on hand, compared to $32,541 as of November 30, 2010. We believe that we will continue to need investing and financing activities to fund operations.
Net cash used by operating activities was $46,500 during the Six Months Ended May 31, 2011, mainly representative of an increase in General and Administrative expenses paid during 2010. This compares to net cash provided by operating activities of $7,114 for the Six Months Ended May 31, 2010.
Net cash provided by investing activities was $0 during the Six Months Ended May 31, 2011. This compares to net cash used by investing activities of $10,400 for the Six Months Ended May 31, 2011
Net cash provided by financial activities was $18,200 during the Six Months Ended May 31, 2011, mainly representing the increase in related party notes payable. This compares to net cash provided by financing activities of $958 for the Six Months Ended May 31, 2010.
We believe that our results of operations will provide us with the necessary funds to satisfy our liquidity needs for the next 3 months. To the extent they are not, however, our principal stockholders have agreed to fund our operations for the next Three-month period and beyond.
Working Capital
As of May 31, 2011, we had total current assets of $15,466 and total current liabilities of $31,079 which results in working capital deficit of $15,613 as compared to total current assets of $33,410 and total current liabilities of $11,390 resulting in working capital of 22,020 as of November 30, 2010.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Registrant is a smaller reporting company as defined by Item 10(f)(1) and is not required to provide the information required by this Item.
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Item 4T. Controls and Procedures
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
For purposes of this Item 4T, the term disclosure controls and procedures means controls and other procedures of the Company (i) that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended (15 U.S.C. 78a et seq. and hereinafter the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “Commission”), and (ii) include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our disclosure controls and procedures do not yet comply with the requirements in (i) and (ii) above.
Our Chief Executive Officer and Chief Financial Officer have reviewed the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) as of the end of the period covered by this report and have concluded that (i) the Company’s disclosure controls and procedures are not effective to ensure that material information relating to the Company is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Commission, and that (ii) the Company’s controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
There was no change in our internal control over financial reporting identified in connection with our evaluation that occurred during our last quarter (our fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the company. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; providing reasonable assurance that receipts and expenditures of Company assets are made in accordance with management authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition of Company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected.
INHERENT LIMITATIONS ON EFFECTIVENESS OF CONTROLS
The Company's management does not expect that its disclosure controls or its internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
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The Company is not a party to any pending legal proceeding and we are not aware of any pending legal proceeding in which any of our officers or directors or any beneficial holders of 5% or more of our voting securities are adverse to or have a material interest adverse to the Company.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
There were no unregistered sales of equity securities during the reported interim period.
Item 3. Defaults on Senior Securities
The Company has no outstanding Senior Securities.
Item 4. Submission of Matters to a Vote of Security Holders
No matters have been submitted to the Company's security holders for a vote, through the solicitation of proxies or otherwise during the interim period ended May 31, 2011.
None.
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EXHIBIT 31.1 | ONYX SERVICE & SOLUTIONS, INC. PRINCIPAL EXECUTIVE OFFICER'S CERTIFICATE PURSUANT TO SECTION 302 |
EXHIBIT 31.2 | ONYX SERVICE & SOLUTIONS, INC. PRINCIPAL FINANCIAL OFFICER'S CERTIFICATE PURSUANT TO SECTION 302 |
EXHIBIT 32.1 | ONYX SERVICE & SOLUTIONS, INC. PRINCIPAL EXECUTIVE OFFICER’S CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OFTHE SARBANES-OXLEY ACT OF 2002 |
EXHIBIT 32.2 | ONYX SERVICE & SOLUTIONS, INC. PRINCIPAL FINANCIAL OFFICER'S CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OFTHE SARBANES-OXLEY ACT OF 2002 |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
ONYX SERVICE & SOLUTIONS, INC.
Dated: July 13, 2011
by: /s/ Mary Passalaqua
Mary Passalaqua
President and Chief Executive Officer
by: /s/ Margaret Burton
Margaret Burton
Secretary; Director; Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, the following persons on behalf of the Registrant and in the capacities and on the dates indicated have signed this report below.
by: /s/ Mary Passalaqua
Mary Passalaqua
President and Chief Executive Officer
(Principal Executive Officer)
by: /s/ Margaret Burton
Margaret Burton
Secretary; Director; Chief Financial Officer
(Principal Financial Officer)
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