Document_and_Entity_Informatio
Document and Entity Information | 6 Months Ended | |
Feb. 28, 2015 | Apr. 10, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | Service Team Inc. | |
Entity Trading Symbol | SVTM | |
Document Type | 10-Q | |
Document Period End Date | 28-Feb-15 | |
Amendment Flag | FALSE | |
Entity Central Index Key | 1535635 | |
Current Fiscal Year End Date | -23 | |
Entity Common Stock, Shares Outstanding | 12,525,647 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q2 |
CONSOLIDATED_BALANCE_SHEETS_UN
CONSOLIDATED BALANCE SHEETS (UNAUDITED) (USD $) | Feb. 28, 2015 | Aug. 31, 2014 |
ASSETS | ||
Cash | $34,456 | $7,457 |
Accounts receivable, net of allowances of $12,323 and $2,802, respectively | 154,572 | 186,026 |
Deferred financing costs | 16,397 | |
Total current assets | 205,425 | 193,483 |
Property and equipment, net | 8,647 | 9,641 |
Prepaid expenses | 9,000 | 9,000 |
TOTAL ASSETS | 223,072 | 212,124 |
LIABILITIES & SHAREHOLDERS' (DEFICIT) | ||
Accounts payable | 227,496 | 172,117 |
Promissory note - related party | 158 | 27,158 |
Convertible note, net of discounts of $24,975 and $0, respectively | 30,025 | |
Contingent Liability | 54,100 | 54,100 |
Accrued expense | 61,610 | 56,403 |
Accrued interest | 3,644 | 3,987 |
TOTAL LIABILITIES | 377,033 | 313,765 |
Common stock, $0.001 par value, 74,000,000 authorized, 12,525,647 and 12,485,647 issued and outstanding as of February 28, 2015 and August 31, 2014, respectively. | 12,526 | 12,486 |
Preferred stock - Series A, $0.001 par value, 100,000 authorized, 100,000 and 0 issued and outstanding as of February 28, 2015 and August 31, 2014, respectively. | 100 | |
Additional paid in capital | 1,521,193 | 955,650 |
Accumulated deficit | -1,687,780 | -1,109,777 |
TOTAL SHAREHOLDERS' (DEFICIT) | -153,961 | -101,641 |
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) | $223,072 | $212,124 |
CONSOLIDATED_BALANCE_SHEETS_PA
CONSOLIDATED BALANCE SHEETS PARENTHETICALS (USD $) | Feb. 28, 2015 | Aug. 31, 2014 |
PARENTHETICALS | ||
Accounts receivable, net of allowances | $12,323 | $2,802 |
Common Stock, Par Value | $0.00 | $0.00 |
Common Stock, Shares Authorized | 74,000,000 | 74,000,000 |
Common Stock, Shares Issued | 12,525,647 | 12,485,647 |
Common Stock, Shares Outstanding | 12,525,647 | 12,485,647 |
Preferred stock, Par Value | $0.00 | $0.00 |
Preferred stock, Shares Authorized | 100,000 | 100,000 |
Preferred stock, Shares Issued | 100,000 | 0 |
Preferred stock, Shares Outstanding | 100,000 | 0 |
Convertible note, net of discount | $24,975 | $0 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (USD $) | 3 Months Ended | 6 Months Ended | ||
Feb. 28, 2015 | Feb. 28, 2014 | Feb. 28, 2015 | Feb. 28, 2014 | |
REVENUES | ||||
Sales | $612,394 | $442,895 | $1,166,021 | $920,118 |
COST OF SALES | ||||
Cost of sales | 558,323 | 345,920 | 1,071,706 | 657,426 |
Gross Margin | 54,071 | 96,975 | 94,315 | 262,692 |
OPERATING EXPENSES | ||||
General & administrative expenses | 608,938 | 174,599 | 668,160 | 331,830 |
Total Operating Expenses | 608,938 | 174,599 | 668,160 | 331,830 |
INCOME (LOSS) FROM OPERATIONS | -554,867 | -77,624 | -573,845 | -69,138 |
OTHER INCOME (EXPENSE) | ||||
Interest expense | -3,692 | -5,522 | -4,158 | -17,745 |
Total Other Income (Expense) | -3,692 | -5,522 | -4,158 | -17,745 |
NET INCOME (LOSS) | ($558,559) | ($83,146) | ($578,003) | ($86,883) |
Weighted average number of common shares outstanding - basic and fully diluted | 12,525,647 | 12,414,277 | 12,518,796 | 12,392,434 |
Net income (loss) per share - basic and fully diluted | ($0.04) | ($0.01) | ($0.05) | ($0.01) |
CONSOLIDATED_STATEMENT_OF_SHAR
CONSOLIDATED STATEMENT OF SHAREHOLDERS DEFICIT (UNAUDITED) (USD $) | Common Stock Shares | Common Stock Amount | Preferred Stock Shares | Preferred Stock Amount | Additional Paid In Capital | Accumulated Deficit | Total |
USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | |||
Balance at Aug. 31, 2013 | 12,367,314 | 12,368 | 950,302 | -1,184,133 | -221,464 | ||
Imputed Interest on Related Party Debt | $10,716 | $10,716 | |||||
Shares Issued for Cash | 118,333 | 118 | 34,632 | 34,750 | |||
Net Income | 74,356 | 74,356 | |||||
Balance at Aug. 31, 2014 | 12,485,647 | 12,486 | 995,650 | -1,109,777 | -101,641 | ||
Imputed Interest on Related Party Debt | 683 | 683 | |||||
Beneficial Conversion Feature | 22,000 | 22,000 | |||||
Preferred shares issued for Services | 100,000 | 100 | 498,900 | 499,000 | |||
Shares Issued for Cash | 40,000 | 40 | 3,960 | 4,000 | |||
Net Loss | ($578,003) | ($578,003) | |||||
Balance at Feb. 28, 2015 | 12,525,647 | 12,526 | 100,000 | 100 | 1,521,193 | -1,687,780 | -153,961 |
CONSOLIDATED_STATEMENT_OF_CASH
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (USD $) | 6 Months Ended | |
Feb. 28, 2015 | Feb. 28, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net Loss | ($578,003) | ($86,883) |
Adjustments to reconcile net loss with cash provided by (used in) operations: | ||
Imputed rent expense | 3,000 | |
Debt discount amortization | 2,025 | 6,833 |
Stock based compensation | 499,000 | |
Deferred financing cost amortization | 1,103 | |
Depreciation | 994 | |
Imputed interest | 683 | 9,532 |
CHANGE IN OPERATING ASSETS AND LIABILITIES | ||
Accounts Receivable | 31,454 | 6,660 |
Accrued Expenses | 4,864 | 292 |
Accounts Payable | 55,379 | -14,819 |
Net Cash Provided by (Used in) Operating Activities | 17,499 | -75,385 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Cash paid for purchase of fixed assets | 0 | |
Net Cash Used in Investing Activities | 0 | |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from sale of stock | 4,000 | 15,000 |
Proceeds from loans with Hallmark Venture Group, Inc. * | 5,280 | |
Payments on loans with Hallmark Venture Group, Inc. * | -27,000 | -39,000 |
Deferred financing costs | -17,500 | |
Proceeds from convertible notes payable | 50,000 | |
Payments on convertible notes payable | -5,000 | |
Net Cash Provided by (Used in) Financing Activities | 9,500 | -23,720 |
Net Increase (Decrease) In Cash and Cash Equivalents | 26,999 | -99,105 |
Cash at Beginning of Period | 7,457 | 100,895 |
Cash at End of Period | 34,456 | 1,790 |
Supplemental Disclosures | ||
Interest Paid | 0 | |
Taxes Paid | 0 | |
Non-cash transactions: | ||
Beneficial conversion feature | 22,000 | |
Shares issued for subscriptions receivable | 10,000 | |
Related Party | $0 |
ORGANIZATION
ORGANIZATION | 6 Months Ended |
Feb. 28, 2015 | |
ORGANIZATION | |
ORGANIZATION | NOTE 1 - ORGANIZATION |
Organization | |
Service Team Inc. (the “Company”) was incorporated pursuant to the laws of the State of Nevada on June 6, 2011. The Company was organized to comply with the warranty obligations of electronic devices manufactured by companies outside of the United States. The business proved to be unprofitable and the Company reduced its warranty and repair operations. On June 5, 2013, Service Team Inc. acquired Trade Leasing, Inc. for 4,000,000 shares of its common stock, a commonly held company. Trade Leasing, Inc., a California corporation, was incorporated on November 1, 2011, and commenced business January 1, 2013. Trade Leasing, Inc. is principally involved in the manufacturing, maintenance and repair of truck bodies. | |
The Company has established a fiscal year end of August 31. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended | ||||||||||||||||
Feb. 28, 2015 | |||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||||||||||||
Basis of Presentation | |||||||||||||||||
The consolidated financial statements presented in this report are the combined financial reports of Trade Leasing, Inc. and Service Team Inc. | |||||||||||||||||
The Company maintains its accounting records on an accrual basis in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP). | |||||||||||||||||
The consolidated financial statements present the Balance Sheet, Statements of Operations, Shareholders’ Deficit and Cash Flows of the Company. These consolidated financial statements are presented in United States dollars. The accompanying audited, consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q. All adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations for the interim periods have been made and are of a recurring nature unless otherwise disclosed herein. | |||||||||||||||||
Principles of Consolidation | |||||||||||||||||
The accompanying consolidated financial statements include the accounts of Service Team Inc. and Trade Leasing, Inc. both of which are under common control and ownership. The condensed consolidated financial statements herein contain the operations of the wholly-owned subsidiaries listed above. All significant inter-company transactions have been eliminated in the preparation of these financial statements. | |||||||||||||||||
Use of Estimates | |||||||||||||||||
The preparation of the consolidated 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 liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. | |||||||||||||||||
Going Concern | |||||||||||||||||
The Company's consolidated financial statements are prepared using the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America, and have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. However, we have incurred continued losses, have a net working capital deficiency of $171,608, and have an accumulated deficit of $1,687,780 as of February 28, 2015. There can be no assurance that the Company will be successful in order to continue as a going concern. The Company is funding its operations by issuing common shares and debt. As of February 28, 2015, the Company had sold 6,000,000 shares to Hallmark Venture Group, Inc. at $0.001 per share for net funds to the Company of $6,000 and received capital contributions of $23,027. The Company has also sold 1,969,014 shares to various individuals and received net funds of $340,383. Hallmark Venture Group, Inc. has also loaned the Company $166,279. The major shareholder, Hallmark Venture Group, Inc., has committed to advancing additional funds as may be required for the operation of the Company. We cannot be certain that capital will be provided when it is required. | |||||||||||||||||
Cash and Equivalents | |||||||||||||||||
Cash and equivalents include investments with initial maturities of three months or less. The Company maintains its cash balances at credit-worthy financial institutions that are insured by the Federal Deposit Insurance Corporation ("FDIC") up to $250,000. There were no cash equivalents at February 28, 2015, or August 31, 2014. | |||||||||||||||||
Concentration of Credit Risk | |||||||||||||||||
Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, are cash and cash equivalents. The Company places its cash and temporary cash investments with credit quality institutions. At times, such investments may be in excess of FDIC insurance limits. | |||||||||||||||||
Accounts Receivable | |||||||||||||||||
All accounts receivable are due thirty (30) days from the date billed. If the funds are not received within thirty (30) days the customer is contacted to arrange payment. The Company uses the allowance method to account for uncollectable accounts receivable. All accounts were considered collectable at period end and no allowance for bad debts was considered necessary. The allowance for doubtful accounts as of February 28, 2015, and August 31, 2014 was $12,323 and $2,802, respectively. | |||||||||||||||||
Accounts Receivable and Revenue Concentrations | |||||||||||||||||
The Company’s wholly owned subsidiary, Trade Leasing, Inc., has more than 400 customers. Three customers represented about 23%, 11% and 10% of total receivables as of February 28, 2015. One customer represented about 20% of total receivables as of August 31, 2014. | |||||||||||||||||
During the six months period ended February 28, 2015, the Company had one customer that represented 19% of total sales. During the three months ended August 31, 2014, the Company had one customer that represented about 22% of total sales. | |||||||||||||||||
Inventory | |||||||||||||||||
The Company does not own inventory, materials are purchased as needed from local suppliers; therefore, there was no additional inventory on hand at February 28, 2015 or August 31, 2014. | |||||||||||||||||
Property and Equipment | |||||||||||||||||
Equipment, vehicles and furniture, which are recorded at cost, consist primarily of fabrication equipment and are depreciated using the straight-line method over the estimated useful lives of the related assets (generally 15 years or less). Costs incurred for maintenance and repairs are expensed as incurred and expenditures for major replacements and improvements are capitalized and depreciated over their estimated remaining useful lives. There was $994 of depreciation expense during the six months ended February 28, 2015. There was no depreciation expense recorded during the six month period ended February 28, 2014. | |||||||||||||||||
Net property and equipment were as follows at February 28, 2015 and August 31, 2014: | |||||||||||||||||
2/28/15 | 8/31/14 | ||||||||||||||||
Equipment | $ | 243,444 | $ | 243,444 | |||||||||||||
Vehicles | 15,000 | 15,000 | |||||||||||||||
Furniture | 1,500 | 1,500 | |||||||||||||||
Subtotal | 259,944 | 259,944 | |||||||||||||||
Less: accumulated depreciation | (251,297 | ) | (250,303 | ) | |||||||||||||
Total | $ | 8,647 | $ | 9,641 | |||||||||||||
Lease Commitments | |||||||||||||||||
Service Team Inc. leases a manufacturing facility at 10633 Ruchti Road, South Gate, California 90280 on a year-to-year basis for $7,000 per month. The location consists of three acres of land with two buildings a fabrication building of 6,000 square feet and a final assembly building of 12,000 square feet. The final assembly building includes a large spray booth capable of accommodating large trucks and office space for four offices. | |||||||||||||||||
Our principal executive offices are located in 600 square feet in a building at 18482 Park Villa Place, Villa Park, California 92861. The space is furnished by Hallmark Venture Group, Inc., a related party, at no charge. As a result of this contribution of office space, $0 and $3,000 of imputed rent expense was recorded for the six months ended February 28, 2015 and 2014, respectively. | |||||||||||||||||
Beneficial Conversion Features | |||||||||||||||||
From time to time, the Company may issue convertible notes that may contain an imbedded beneficial conversion feature. A beneficial conversion feature exists on the date a convertible note is issued when the fair value of the underlying common stock to which the note is convertible into is in excess of the remaining unallocated proceeds of the note after first considering the allocation of a portion of the note proceeds to the fair value of warrants, if related warrants have been granted. The intrinsic value of the beneficial conversion feature is recorded as a debt discount with a corresponding amount to additional paid in capital. The debt discount is amortized to interest expense over the life of the note using the effective interest method. | |||||||||||||||||
Fair Value of Financial Instruments | |||||||||||||||||
The Company adopted Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820 on June 6, 2011. Under this FASB, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value. | |||||||||||||||||
The Company has various financial instruments that must be measured under the new fair value standardincluding: cash, convertible notes payable, accrued expenses, promissory notes payable, accounts receivable and accounts payable. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows: | |||||||||||||||||
Level 1 – Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. The fair value of the Company’s cash is based on quoted prices and therefore classified as Level 1. | |||||||||||||||||
Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). | |||||||||||||||||
Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability. | |||||||||||||||||
Cash, accounts receivable, accounts payable, promissory notes, convertible notes and accrued expenses reported on the balance sheet are estimated by management to approximate fair market value due to their short term nature. | |||||||||||||||||
The following table presents assets and liabilities that were measured and recognized at fair value as of February 28, 2015 on a recurring basis: | |||||||||||||||||
Total | |||||||||||||||||
Realized | |||||||||||||||||
Description | Level 1 | Level 2 | Level 3 | Loss | |||||||||||||
$ | - | $ | - | $ | - | $ | - | ||||||||||
Total | $ | - | $ | - | $ | - | $ | - | |||||||||
The following table presents assets and liabilities that were measured and recognized at fair value as of August 31, 2014 on a recurring basis: | |||||||||||||||||
Total | |||||||||||||||||
Realized | |||||||||||||||||
Description | Level 1 | Level 2 | Level 3 | Loss | |||||||||||||
$ | - | $ | - | $ | - | $ | - | ||||||||||
Total | $ | - | $ | - | $ | - | $ | - | |||||||||
Income Taxes | |||||||||||||||||
In assessing the realization of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on the level of historical operating results and the uncertainty of the economic conditions, the Company has recorded a full valuation allowance against its deferred tax assets at February 28, 2015 and August 31, 2014 where it cannot conclude that it is more likely than not that those assets will be realized. | |||||||||||||||||
Revenue Recognition | |||||||||||||||||
Trade Leasing Division | |||||||||||||||||
The Trade Leasing Division receives orders from customers to build or repair truck bodies. The company builds the requested product. At the completion of the product the truck is delivered to the customer. If the customer accepts the product Trade Leasing Inc. issues an invoice to the customer for the job. The invoice is entered into our accounting system and is recognized as revenue at that time. | |||||||||||||||||
In the Trade Leasing Division we use the completed contract method for truck bodies built, which typically have construction periods of 15 days or less. Contracts are considered complete when title has passed, the customer has accepted the product and we do not retain risks or rewards of ownership of the truck bodies. Losses are accrued if manufacturing costs are expected to exceed manufacturing contract revenue. Manufacturing expenses are primarily composed of aluminum cost, which is the largest component of our raw materials cost and the cost of labor. | |||||||||||||||||
Service Products Division | |||||||||||||||||
The Service Products Division shut down in fiscal 2013 repaired or replaced electrical appliances (mostly televisions), covered by warranties or insurance companies. The Company had a price list of its services that sets forth a menu of charges for various repairs or replacements. At the completion of the repair, an invoice was prepared itemizing the parts used and fixed labor rate costs billed by the Company. The invoice was entered into our accounting system and recognized as revenue at that time. Our invoice was paid by the warranty insurance companies. We did not take title to the product at any point during this process. | |||||||||||||||||
As described above, in accordance with the requirements of ASC 605-10-599, the Company recognized revenue when (1) persuasive evidence of an arrangement exists (contracts); (2) delivery has occurred; (3) the seller’s price is fixed or determinable (per the customer’s contract); and (4) collectability is reasonably assured (based upon our credit policy). | |||||||||||||||||
Share Based Expenses | |||||||||||||||||
The Company accounts for the issuance of equity instruments to acquire goods and/or services based on the fair value of the goods and services or the fair value of the equity instrument at the time of issuance, whichever is more readily determinable. The Company's accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of standards issued by the FASB. The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor's performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement. | |||||||||||||||||
Stock Based Compensation | |||||||||||||||||
In December of 2004, the FASB issued a standard which applies to transactions in which an entity exchanges its equity instruments for goods or services and also applies to liabilities an entity may incur for goods or services that are based on the fair value of those equity instruments. For any unvested portion of previously issued and outstanding awards, compensation expense is required to be recorded based on the previously disclosed methodology and amounts. Prior periods presented are not required to be restated. We adopted the standard as of inception. The Company has not issued any stock options to its Board of Directors and officers as compensation for their services. If options are granted, they will be accounted for at a fair value as required by the FASB ASC 718. | |||||||||||||||||
Net Loss Per Share | |||||||||||||||||
The Company adopted the standard issued by the FASB, which requires presentation of basic earnings or loss per share and diluted earnings or loss per share. Basic income (loss) per share (“Basic EPS”) is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share (“Diluted EPS”) are similarly calculated using the treasury stock method except that the denominator is increased to reflect the potential dilution that would occur if dilutive securities at the end of the applicable period were exercised. As of February 28, 2015 and 2014, because the Company does not have any potentially dilutive securities, the accompanying presentation is only of basic loss per share. | |||||||||||||||||
Recent Accounting Pronouncements | |||||||||||||||||
In June 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-12, Compensation – Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. The new guidance requires that share-based compensation that require a specific performance target to be achieved in order for employees to become eligible to vest in the awards and that could be achieved after an employee completes the requisite service period be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation costs should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. This new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2015. Early adoption is permitted. Entities may apply the amendments in this Update either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The adoption of ASU 2014-12 is not expected to have a material impact on our financial position or results of operations. | |||||||||||||||||
In June 2014, the FASB issued ASU No. 2014-10: Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation, to improve financial reporting by reducing the cost and complexity associated with the incremental reporting requirements of development stage entities. The amendments in this update remove all incremental financial reporting requirements from U.S. GAAP for development stage entities, thereby improving financial reporting by eliminating the cost and complexity associated with providing that information. The amendments in this Update also eliminate an exception provided to development stage entities in Topic 810, Consolidation, for determining whether an entity is a variable interest entity on the basis of the amount of investment equity that is at risk. The amendments to eliminate that exception simplify U.S. GAAP by reducing avoidable complexity in existing accounting literature and improve the relevance of information provided to financial statement users by requiring the application of the same consolidation guidance by all reporting entities. The elimination of the exception may change the consolidation analysis, consolidation decision, and disclosure requirements for a reporting entity that has an interest in an entity in the development stage. The amendments related to the elimination of inception-to-date information and the other remaining disclosure requirements of Topic 915 should be applied retrospectively except for the clarification to Topic 275, which shall be applied prospectively. For public companies, those amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. Early adoption is permitted. The adoption of ASU 2014-10 is not expected to have a material impact on our financial position or results of operations. | |||||||||||||||||
CAPITAL_STOCK
CAPITAL STOCK | 6 Months Ended |
Feb. 28, 2015 | |
CAPITAL STOCK | |
CAPITAL STOCK | NOTE 3 – CAPITAL STOCK |
The Company’s authorized capital is 74,000,000 common shares with a par value of $0.001 per share and 100,000 preferred shares with a par value of $0.001 per share. | |
2015 | |
During the six months ended February 28, 2015, the Company sold 40,000 shares for $4,000. | |
On January 20, 2015, the Company authorized and issued 100,000 shares of Series A Preferred Stock to be granted to Hallmark Venture Group, Inc. (a related party) in exchange for services’. The 100,000 shares grant the holder to have the right to vote on all shareholder matters equal to 500 votes per share. The Series A shares were valued according to the additional voting rights assigned. The value assigned to the voting rights was derived from a model utilizing control premiums to value the voting control of the preferred stock. The value assigned to the Series A shares was $499,000 and was recorded on the grant date as stock based compensation. | |
As of February 28, 2015, and August 31, 2014 the Company has not granted any stock options. | |
2014 | |
During the six months ended February 28, 2014 the Company sold 63,333 shares for $25,000 of cash from an unrelated investor. | |
During the three months ended May 31, 2014 the Company sold 55,000 shares for $9,750 of cash from three unrelated investors. | |
During the twelve months ended August 31, 2014, $10,716 of interest expense was imputed from a promissory note with related party Hallmark Venture Group, Inc. based upon the average balance during the period at an interest rate of 10 percent. | |
Stock Based Compensation | |
We have accounted for stock based compensation under the provisions of FASB Accounting Standards codification (ASC) 718-10-55. (Prior authoritative literature: FASB Statement 123 (R), Share-based payment.) This statement requires us to record any expense associated with the fair value of stock based compensation. Determining fair value requires input of highly subjective assumptions, including the expected price volatility. Changes in these assumptions can materially affect the fair value estimate. | |
DEBT_TRANSACTIONS
DEBT TRANSACTIONS | 6 Months Ended |
Feb. 28, 2015 | |
DEBT TRANSACTIONS | |
DEBT TRANSACTIONS | NOTE 4 – DEBT TRANSACTIONS |
Convertible Note Payable – Third Party | |
On February 5, 2015, the Company entered into a Convertible Note Agreement with Tangiers Investment Group, LLC (“Tangiers”), pursuant to which the Company sold to Tangiers a 10% Convertible Promissory Note in the original principal amount of $50,000 (the “First Tangiers Note”). The First Tangiers Note has a maturity date of February 5, 2016, and is convertible into Company common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 55% multiplied by the Market Price (representing a discount rate of 45%). “Market Price” means the lowest trading price for the Common Stock during the twnty trading day period ending on the latest complete trading day prior to the conversion date. “Fixed Conversion Price” shall mean $0.001. The shares of common stock issuable upon conversion of the First Tangiers Note will be restricted securities as defined in Rule 144 promulgated under the Securities Act of 1933. | |
The Company evaluated the First Tangiers Note and determined that the shares issuable pursuant to the conversion option were determinate due to the Fixed Conversion Price and, as such, does not constitute a derivative liability. The beneficial conversion feature discount resulting from the conversion price of $0.29 below the market price on February 5, 2015 of $0.40 provided a value of $22,000. In addition, an original issuance discount was recorded in accordance with the agreement in the amount of $5,000. During the periods ended February 28, 2015 and August 31, 2014, $2,025 and $0, respectively, of the debt discount was amortized. Accrued interest related to the First Tangiers Note as of February 28, 2015 and August 31, 2014 was $347 and $0, respectively. | |
Convertible Note Payable – Related Party | |
On August 10, 2014, Hallmark Venture Group, Inc. acquired the Note, with principal of $27,158 and accrued interest of $3,987, to Howard Nunn, Jr. for 80,000 shares of Service Team Inc. Common Stock owned by Hallmark Venture Group, Inc. The Note was then canceled and the amounts due on the Note were added to the amounts due Hallmark Venture Group, Inc. The option to convert to shares was voided. | |
The Company evaluated the Nunn Note and determined that the shares issuable pursuant to the conversion option were determinate due to the Fixed Conversion Price and, as such, does not constitute a derivative liability as the appropriate number of shares will be available or issuable for settlement to occur. The beneficial conversion feature discount resulting from the conversion price of $0.75 below the market price on June 21, 2013 of $1.25 provided a value of $23,003; which was recorded as an increase to additional paid in capital and a reduction of debt due to the discount. The discount was amortized completely during the year ended August 31, 2014. Accrued interest was $3,297 and $3,297 as of February 28, 2015, and August 31, 2014, respectively. | |
Promissory Note – Related Party | |
On August 25, 2011, the Company entered into a loan agreement with Hallmark Venture Group, Inc., with no maturity date or interest rate. During the six months ended February 28, 2015, and February 28, 2014, the Company repaid net funds of $27,000 and $33,720, respectively. During the six months ended February 28, 2015, and February 28, 2014, the Company has imputed interest at a reasonable rate of 10 percent totaling $683 and $9,532, respectively. | |
RELATED_PARTY_TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Feb. 28, 2015 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 5 - RELATED PARTY TRANSACTIONS |
Promissory Note – Related Party | |
On August 25, 2011, the Company entered into a loan agreement with Hallmark Venture Group, Inc., with no maturity date or interest rate. During the six months ended February 28, 2015, and February 28, 2014, the Company repaid net funds of $27,000 and $33,720, respectively. During the six months ended February 28, 2015, and February 28, 2014, the Company has imputed interest at a reasonable rate of 10 percent totaling $683 and $9,532, respectively. | |
Common Stock exchanged for Preferred Stock | |
On January 20, 2015, the Company authorized and issued 100,000 shares of Series A Preferred Stock to be granted to Hallmark Venture Group, Inc. (a related party) in exchange for services. The 100,000 shares grant the holder to have the right to vote on all shareholder matters equal to 500 votes per share. The Series A shares were valued according to the additional voting rights assigned. The value assigned to the voting rights was derived from a model utilizing control premiums to value the voting control of the preferred stock. The value assigned to the Series A shares was $499,000 and was recorded on the grant date as stock based compensation. | |
Lease Commitments | |
Our principal executive offices are located in 600 square feet in a building at 18482 Park Villa Place, Villa Park, California 92861. The space is furnished by Hallmark Venture Group, Inc., a related party, at no charge. As a result of this contribution of office space, $0 and $3,000 of rent expense was imputed for the six months ended February 28, 2015 and February 28, 2014, respectively. |
INCOME_TAXES
INCOME TAXES | 6 Months Ended | ||||||||
Feb. 28, 2015 | |||||||||
INCOME TAXES | |||||||||
INCOME TAXES | NOTE 6 – INCOME TAXES | ||||||||
The Company accounts for income taxes under standards issued by the FASB. Under those standards, deferred tax assets and liabilities are recognized for future tax benefits or consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for significant deferred tax assets when it is more likely than not that such assets will not be realized through future operations. | |||||||||
No provision for federal income taxes has been recorded due to the net operating loss carry forwards totaling approximately $623,530 as of February 28, 2015, that will be offset against future taxable income. The available net operating loss carry forwards of approximately $623,530 will expire in various years through 2032. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the future tax loss carry forwards. | |||||||||
The actual income tax provisions differ from the expected amounts calculated by applying the statutory income tax rate to the Company’s loss before income taxes. The components of these differences are as follows at February 28, 2015 and August 31, 2014: | |||||||||
2/28/15 | 8/31/14 | ||||||||
Net tax loss carry-forwards | $ | 623,530 | $ | 548,338 | |||||
Statutory rate | 34 | % | 34 | % | |||||
Expected tax recovery | 212,000 | 186,435 | |||||||
Change in valuation allowance | (212,000 | ) | (186,435 | ) | |||||
Income tax provision | $ | - | $ | - | |||||
Components of deferred tax asset: | |||||||||
Non capital tax loss carry forwards | $ | 212,000 | $ | 186,435 | |||||
Less: valuation allowance | (212,000 | ) | (186,435 | ) | |||||
Net deferred tax asset | $ | - | $ | - |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Feb. 28, 2015 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 7 – COMMITMENTS AND CONTINGENCIES |
Litigation | |
None. | |
Operating Leases | |
Service Team Inc. leases a manufacturing facility at 10633 Ruchti Road, South Gate, California 90280 on a year-to-year basis for $7,000 per month. The location consists of three acres of land with two buildings—a fabrication building of 6,000 square feet and a final assembly building of 12,000 square feet. The final assembly building includes a large spray booth capable of accommodating large trucks and office space for four offices. The minimum lease payments required over the next 12 months is $84,000. | |
Our principal executive offices are located in 600 square feet in a building at 18482 Park Villa Place, Villa Park, California 92861. The space is furnished by Hallmark Venture Group, Inc., a related party, at no charge. As a result of this contribution of office space, $0 and $3,000 of rent expense was imputed for the six months ended February 28, 2015 and February 28, 2014, respectively. | |
SEGMENT_REPORTING
SEGMENT REPORTING | 6 Months Ended | ||||||||||||
Feb. 28, 2015 | |||||||||||||
SEGMENT REPORTING | |||||||||||||
Segment Reporting Disclosure | NOTE 8 – SEGMENT REPORTING | ||||||||||||
Our operations during fiscal 2013 were managed through two operating segments, as shown below. We disclose the results of each of our operating segments in accordance with ASC 280, Segment Reporting. Each of the operating segments was managed under a common structure chaired by our Chief Executive Officer and discrete financial information for both of the segments was available. Our Chief Executive Officer used the operating results of each of the two operating segments for performance evaluation and resource allocation and, as such, was the chief operating decision maker. The activities of each of our segments from which they earned revenues and incurred expenses are described below: | |||||||||||||
? | The Trade Leasing segment is involved in the manufacture and repair of truck bodies. | ||||||||||||
? | The Service Products segment specialized in electronics service, repair and sales. | ||||||||||||
Summarized financial information concerning reportable segments is shown in the following table for the six months ended: | |||||||||||||
February 28, 2015: | |||||||||||||
Trade Leasing | Service Products | Total | |||||||||||
Revenues | $ | 1,166,021 | $ | - | $ | 1,166,021 | |||||||
Cost of Sales | (1,071,706 | ) | - | (1,071,706 | ) | ||||||||
Gross Margin | 94,315 | - | 94,315 | ||||||||||
Operating Expense | (169,115 | ) | (499,045 | ) | (668,160 | ) | |||||||
Operating Loss | (74,800 | ) | (499,045 | ) | (573,845 | ) | |||||||
Other Expense | - | (4,158 | ) | (4,158 | ) | ||||||||
Net Loss | $ | (74,800 | ) | $ | (503,203 | ) | $ | (578,003 | ) | ||||
February 28, 2014: | |||||||||||||
Trade Leasing | Service Products | Total | |||||||||||
Revenues | $ | 920,118 | $ | - | $ | 920,118 | |||||||
Cost of Sales | (650,183 | ) | (7,243 | ) | (657,426 | ) | |||||||
Gross Margin | 269,935 | (7,243 | ) | 262,692 | |||||||||
Operating Expense | (289,792 | ) | (42,038 | ) | (331,830 | ) | |||||||
Operating Loss | (19,857 | ) | (49,281 | ) | (69,138 | ) | |||||||
Other Expense | - | (17,745 | ) | (17,745 | ) | ||||||||
Net Loss | $ | (19,857 | ) | $ | (67,026 | ) | $ | (86,883 | ) |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Feb. 28, 2015 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 9 – SUBSEQUENT EVENTS |
There were no subsequent events through the date that the financial statements were issued. | |
ACCOUNTING_POLICIES_POLICIES
ACCOUNTING POLICIES (POLICIES) | 6 Months Ended | ||||||||||||||||
Feb. 28, 2015 | |||||||||||||||||
ACCOUNTING POLICIES (POLICIES) | |||||||||||||||||
Basis of Presentation | Basis of Presentation | ||||||||||||||||
The consolidated financial statements presented in this report are the combined financial reports of Trade Leasing, Inc. and Service Team Inc. | |||||||||||||||||
The Company maintains its accounting records on an accrual basis in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP). | |||||||||||||||||
The consolidated financial statements present the Balance Sheet, Statements of Operations, Shareholders’ Deficit and Cash Flows of the Company. These consolidated financial statements are presented in United States dollars. The accompanying audited, consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q. All adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations for the interim periods have been made and are of a recurring nature unless otherwise disclosed herein. | |||||||||||||||||
Principles of Consolidation | Principles of Consolidation | ||||||||||||||||
The accompanying consolidated financial statements include the accounts of Service Team Inc. and Trade Leasing, Inc. both of which are under common control and ownership. The condensed consolidated financial statements herein contain the operations of the wholly-owned subsidiaries listed above. All significant inter-company transactions have been eliminated in the preparation of these financial statements. | |||||||||||||||||
Use of Estimates | Use of Estimates | ||||||||||||||||
The preparation of the consolidated 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 liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. | |||||||||||||||||
Going Concern | Going Concern | ||||||||||||||||
The Company's consolidated financial statements are prepared using the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America, and have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. However, we have incurred continued losses, have a net working capital deficiency of $171,608, and have an accumulated deficit of $1,687,780 as of February 28, 2015. There can be no assurance that the Company will be successful in order to continue as a going concern. The Company is funding its operations by issuing common shares and debt. As of February 28, 2015, the Company had sold 6,000,000 shares to Hallmark Venture Group, Inc. at $0.001 per share for net funds to the Company of $6,000 and received capital contributions of $23,027. The Company has also sold 1,969,014 shares to various individuals and received net funds of $340,383. Hallmark Venture Group, Inc. has also loaned the Company $166,279. The major shareholder, Hallmark Venture Group, Inc., has committed to advancing additional funds as may be required for the operation of the Company. We cannot be certain that capital will be provided when it is required. | |||||||||||||||||
Cash and Equivalents | Cash and Equivalents | ||||||||||||||||
Cash and equivalents include investments with initial maturities of three months or less. The Company maintains its cash balances at credit-worthy financial institutions that are insured by the Federal Deposit Insurance Corporation ("FDIC") up to $250,000. There were no cash equivalents at February 28, 2015, or August 31, 2014. | |||||||||||||||||
Concentration of Credit Risk | Concentration of Credit Risk | ||||||||||||||||
Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, are cash and cash equivalents. The Company places its cash and temporary cash investments with credit quality institutions. At times, such investments may be in excess of FDIC insurance limits. | |||||||||||||||||
Accounts Receivable | Accounts Receivable | ||||||||||||||||
All accounts receivable are due thirty (30) days from the date billed. If the funds are not received within thirty (30) days the customer is contacted to arrange payment. The Company uses the allowance method to account for uncollectable accounts receivable. All accounts were considered collectable at period end and no allowance for bad debts was considered necessary. The allowance for doubtful accounts as of February 28, 2015, and August 31, 2014 was $12,323 and $2,802, respectively | |||||||||||||||||
Accounts Receivable and Revenue Concentrations | Accounts Receivable and Revenue Concentrations | ||||||||||||||||
The Company’s wholly owned subsidiary, Trade Leasing, Inc., has more than 400 customers. Three customers represented about 23%, 11% and 10% of total receivables as of February 28, 2015. One customer represented about 20% of total receivables as of August 31, 2014. | |||||||||||||||||
During the six months period ended February 28, 2015, the Company had one customer that represented 19% of total sales. During the three months ended August 31, 2014, the Company had one customer that represented about 22% of total sales. | |||||||||||||||||
Inventory | Inventory | ||||||||||||||||
The Company does not own inventory, materials are purchased as needed from local suppliers; therefore, there was no additional inventory on hand at February 28, 2015 or August 31, 2014. | |||||||||||||||||
Property and Equipment | Property and Equipment | ||||||||||||||||
Equipment, vehicles and furniture, which are recorded at cost, consist primarily of fabrication equipment and are depreciated using the straight-line method over the estimated useful lives of the related assets (generally 15 years or less). Costs incurred for maintenance and repairs are expensed as incurred and expenditures for major replacements and improvements are capitalized and depreciated over their estimated remaining useful lives. There was $994 of depreciation expense during the six months ended February 28, 2015. There was no depreciation expense recorded during the six month period ended February 28, 2014. | |||||||||||||||||
Net property and equipment were as follows at February 28, 2015 and August 31, 2014: | |||||||||||||||||
2/28/15 | 8/31/14 | ||||||||||||||||
Equipment | $ | 243,444 | $ | 243,444 | |||||||||||||
Vehicles | 15,000 | 15,000 | |||||||||||||||
Furniture | 1,500 | 1,500 | |||||||||||||||
Subtotal | 259,944 | 259,944 | |||||||||||||||
Less: accumulated depreciation | (251,297 | ) | (250,303 | ) | |||||||||||||
Total | $ | 8,647 | $ | 9,641 | |||||||||||||
Lease Commitments | Lease Commitments | ||||||||||||||||
Service Team Inc. leases a manufacturing facility at 10633 Ruchti Road, South Gate, California 90280 on a year-to-year basis for $7,000 per month. The location consists of three acres of land with two buildings a fabrication building of 6,000 square feet and a final assembly building of 12,000 square feet. The final assembly building includes a large spray booth capable of accommodating large trucks and office space for four offices. | |||||||||||||||||
Our principal executive offices are located in 600 square feet in a building at 18482 Park Villa Place, Villa Park, California 92861. The space is furnished by Hallmark Venture Group, Inc., a related party, at no charge. As a result of this contribution of office space, $0 and $3,000 of imputed rent expense was recorded for the six months ended February 28, 2015 and 2014, respectively. | |||||||||||||||||
Beneficial Conversion Features | Beneficial Conversion Features | ||||||||||||||||
From time to time, the Company may issue convertible notes that may contain an imbedded beneficial conversion feature. A beneficial conversion feature exists on the date a convertible note is issued when the fair value of the underlying common stock to which the note is convertible into is in excess of the remaining unallocated proceeds of the note after first considering the allocation of a portion of the note proceeds to the fair value of warrants, if related warrants have been granted. The intrinsic value of the beneficial conversion feature is recorded as a debt discount with a corresponding amount to additional paid in capital. The debt discount is amortized to interest expense over the life of the note using the effective interest method. | |||||||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments | ||||||||||||||||
The Company adopted Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820 on June 6, 2011. Under this FASB, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value. | |||||||||||||||||
The Company has various financial instruments that must be measured under the new fair value standardincluding: cash, convertible notes payable, accrued expenses, promissory notes payable, accounts receivable and accounts payable. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows: | |||||||||||||||||
Level 1 – Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. The fair value of the Company’s cash is based on quoted prices and therefore classified as Level 1. | |||||||||||||||||
Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). | |||||||||||||||||
Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability. | |||||||||||||||||
Cash, accounts receivable, accounts payable, promissory notes, convertible notes and accrued expenses reported on the balance sheet are estimated by management to approximate fair market value due to their short term nature. | |||||||||||||||||
The following table presents assets and liabilities that were measured and recognized at fair value as of February 28, 2015 on a recurring basis: | |||||||||||||||||
Total | |||||||||||||||||
Realized | |||||||||||||||||
Description | Level 1 | Level 2 | Level 3 | Loss | |||||||||||||
$ | - | $ | - | $ | - | $ | - | ||||||||||
Total | $ | - | $ | - | $ | - | $ | - | |||||||||
The following table presents assets and liabilities that were measured and recognized at fair value as of August 31, 2014 on a recurring basis: | |||||||||||||||||
Total | |||||||||||||||||
Realized | |||||||||||||||||
Description | Level 1 | Level 2 | Level 3 | Loss | |||||||||||||
$ | - | $ | - | $ | - | $ | - | ||||||||||
Total | $ | - | $ | - | $ | - | $ | - | |||||||||
Income Taxes | Income Taxes | ||||||||||||||||
In assessing the realization of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on the level of historical operating results and the uncertainty of the economic conditions, the Company has recorded a full valuation allowance against its deferred tax assets at February 28, 2015 and August 31, 2014 where it cannot conclude that it is more likely than not that those assets will be realized. | |||||||||||||||||
Revenue Recognition | Revenue Recognition | ||||||||||||||||
Trade Leasing Division | |||||||||||||||||
The Trade Leasing Division receives orders from customers to build or repair truck bodies. The company builds the requested product. At the completion of the product the truck is delivered to the customer. If the customer accepts the product Trade Leasing Inc. issues an invoice to the customer for the job. The invoice is entered into our accounting system and is recognized as revenue at that time. | |||||||||||||||||
In the Trade Leasing Division we use the completed contract method for truck bodies built, which typically have construction periods of 15 days or less. Contracts are considered complete when title has passed, the customer has accepted the product and we do not retain risks or rewards of ownership of the truck bodies. Losses are accrued if manufacturing costs are expected to exceed manufacturing contract revenue. Manufacturing expenses are primarily composed of aluminum cost, which is the largest component of our raw materials cost and the cost of labor. | |||||||||||||||||
Service Products Division | |||||||||||||||||
The Service Products Division shut down in fiscal 2013 repaired or replaced electrical appliances (mostly televisions), covered by warranties or insurance companies. The Company had a price list of its services that sets forth a menu of charges for various repairs or replacements. At the completion of the repair, an invoice was prepared itemizing the parts used and fixed labor rate costs billed by the Company. The invoice was entered into our accounting system and recognized as revenue at that time. Our invoice was paid by the warranty insurance companies. We did not take title to the product at any point during this process. | |||||||||||||||||
As described above, in accordance with the requirements of ASC 605-10-599, the Company recognized revenue when (1) persuasive evidence of an arrangement exists (contracts); (2) delivery has occurred; (3) the seller’s price is fixed or determinable (per the customer’s contract); and (4) collectability is reasonably assured (based upon our credit policy). | |||||||||||||||||
Share Based Expenses | Share Based Expenses | ||||||||||||||||
The Company accounts for the issuance of equity instruments to acquire goods and/or services based on the fair value of the goods and services or the fair value of the equity instrument at the time of issuance, whichever is more readily determinable. The Company's accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of standards issued by the FASB. The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor's performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement. | |||||||||||||||||
Stock Based Compensation | Stock Based Compensation | ||||||||||||||||
In December of 2004, the FASB issued a standard which applies to transactions in which an entity exchanges its equity instruments for goods or services and also applies to liabilities an entity may incur for goods or services that are based on the fair value of those equity instruments. For any unvested portion of previously issued and outstanding awards, compensation expense is required to be recorded based on the previously disclosed methodology and amounts. Prior periods presented are not required to be restated. We adopted the standard as of inception. The Company has not issued any stock options to its Board of Directors and officers as compensation for their services. If options are granted, they will be accounted for at a fair value as required by the FASB ASC 718. | |||||||||||||||||
Net Loss Per Share | Net Loss Per Share | ||||||||||||||||
The Company adopted the standard issued by the FASB, which requires presentation of basic earnings or loss per share and diluted earnings or loss per share. Basic income (loss) per share (“Basic EPS”) is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share (“Diluted EPS”) are similarly calculated using the treasury stock method except that the denominator is increased to reflect the potential dilution that would occur if dilutive securities at the end of the applicable period were exercised. As of February 28, 2015 and 2014, because the Company does not have any potentially dilutive securities, the accompanying presentation is only of basic loss per share. | |||||||||||||||||
Recent Accounting Pronouncements | Recent Accounting Pronouncements | ||||||||||||||||
In June 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-12, Compensation – Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. The new guidance requires that share-based compensation that require a specific performance target to be achieved in order for employees to become eligible to vest in the awards and that could be achieved after an employee completes the requisite service period be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation costs should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. This new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2015. Early adoption is permitted. Entities may apply the amendments in this Update either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The adoption of ASU 2014-12 is not expected to have a material impact on our financial position or results of operations. | |||||||||||||||||
In June 2014, the FASB issued ASU No. 2014-10: Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation, to improve financial reporting by reducing the cost and complexity associated with the incremental reporting requirements of development stage entities. The amendments in this update remove all incremental financial reporting requirements from U.S. GAAP for development stage entities, thereby improving financial reporting by eliminating the cost and complexity associated with providing that information. The amendments in this Update also eliminate an exception provided to development stage entities in Topic 810, Consolidation, for determining whether an entity is a variable interest entity on the basis of the amount of investment equity that is at risk. The amendments to eliminate that exception simplify U.S. GAAP by reducing avoidable complexity in existing accounting literature and improve the relevance of information provided to financial statement users by requiring the application of the same consolidation guidance by all reporting entities. The elimination of the exception may change the consolidation analysis, consolidation decision, and disclosure requirements for a reporting entity that has an interest in an entity in the development stage. The amendments related to the elimination of inception-to-date information and the other remaining disclosure requirements of Topic 915 should be applied retrospectively except for the clarification to Topic 275, which shall be applied prospectively. For public companies, those amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. Early adoption is permitted. The adoption of ASU 2014-10 is not expected to have a material impact on our financial position or results of operations. |
SCHEDULE_OF_PROPERTY_AND_EQUIP
SCHEDULE OF PROPERTY AND EQUIPMENT (TABLES) | 6 Months Ended | ||||||||
Feb. 28, 2015 | |||||||||
SCHEDULE OF PROPERTY AND EQUIPMENT (TABLES) | |||||||||
SCHEDULE OF PROPERTY AND EQUIPMENT (TABLES) | Net property and equipment were as follows at February 28, 2015 and August 31, 2014: | ||||||||
2/28/15 | 8/31/14 | ||||||||
Equipment | $ | 243,444 | $ | 243,444 | |||||
Vehicles | 15,000 | 15,000 | |||||||
Furniture | 1,500 | 1,500 | |||||||
Subtotal | 259,944 | 259,944 | |||||||
Less: accumulated depreciation | (251,297 | ) | (250,303 | ) | |||||
Total | $ | 8,647 | $ | 9,641 |
FAIR_VALUE_MEASUREMENTS_TABLES
FAIR VALUE MEASUREMENTS (TABLES) | 6 Months Ended | ||||||||||||||||
Feb. 28, 2015 | |||||||||||||||||
FAIR VALUE MEASUREMENTS | |||||||||||||||||
FAIR VALUE MEASUREMENTS | The following table presents assets and liabilities that were measured and recognized at fair value as of February 28, 2015 on a recurring basis: | ||||||||||||||||
Total | |||||||||||||||||
Realized | |||||||||||||||||
Description | Level 1 | Level 2 | Level 3 | Loss | |||||||||||||
$ | - | $ | - | $ | - | $ | - | ||||||||||
Total | $ | - | $ | - | $ | - | $ | - | |||||||||
The following table presents assets and liabilities that were measured and recognized at fair value as of August 31, 2014 on a recurring basis: | |||||||||||||||||
Total | |||||||||||||||||
Realized | |||||||||||||||||
Description | Level 1 | Level 2 | Level 3 | Loss | |||||||||||||
$ | - | $ | - | $ | - | $ | - | ||||||||||
Total | $ | - | $ | - | $ | - | $ | - |
COMPONENTS_OF_INCOMETAX_EXPENS
COMPONENTS OF INCOMETAX EXPENSE (TABLES) | 6 Months Ended | ||||||||
Feb. 28, 2015 | |||||||||
COMPONENTS OF INCOMETAX EXPENSE | |||||||||
COMPONENTS OF INCOME TAX EXPENSE | The components of these differences are as follows at February 28, 2015 and August 31, 2014: | ||||||||
2/28/15 | 8/31/14 | ||||||||
Net tax loss carry-forwards | $ | 623,530 | $ | 548,338 | |||||
Statutory rate | 34 | % | 34 | % | |||||
Expected tax recovery | 212,000 | 186,435 | |||||||
Change in valuation allowance | (212,000 | ) | (186,435 | ) | |||||
Income tax provision | $ | - | $ | - | |||||
Components of deferred tax asset: | |||||||||
Non capital tax loss carry forwards | $ | 212,000 | $ | 186,435 | |||||
Less: valuation allowance | (212,000 | ) | (186,435 | ) | |||||
Net deferred tax asset | $ | - | $ | - |
SEGMENT_REPORTING_TABLES
SEGMENT REPORTING (TABLES) | 6 Months Ended | ||||||||||||
Feb. 28, 2015 | |||||||||||||
SCHEDULE OF SEGMENT REPORTING | |||||||||||||
Schedule of Summarized financial information concerning reportable segments | Summarized financial information concerning reportable segments is shown in the following table for the six months ended: | ||||||||||||
February 28, 2015: | |||||||||||||
Trade Leasing | Service Products | Total | |||||||||||
Revenues | $ | 1,166,021 | $ | - | $ | 1,166,021 | |||||||
Cost of Sales | (1,071,706 | ) | - | (1,071,706 | ) | ||||||||
Gross Margin | 94,315 | - | 94,315 | ||||||||||
Operating Expense | (169,115 | ) | (499,045 | ) | (668,160 | ) | |||||||
Operating Loss | (74,800 | ) | (499,045 | ) | (573,845 | ) | |||||||
Other Expense | - | (4,158 | ) | (4,158 | ) | ||||||||
Net Loss | $ | (74,800 | ) | $ | (503,203 | ) | $ | (578,003 | ) | ||||
February 28, 2014: | |||||||||||||
Trade Leasing | Service Products | Total | |||||||||||
Revenues | $ | 920,118 | $ | - | $ | 920,118 | |||||||
Cost of Sales | (650,183 | ) | (7,243 | ) | (657,426 | ) | |||||||
Gross Margin | 269,935 | (7,243 | ) | 262,692 | |||||||||
Operating Expense | (289,792 | ) | (42,038 | ) | (331,830 | ) | |||||||
Operating Loss | (19,857 | ) | (49,281 | ) | (69,138 | ) | |||||||
Other Expense | - | (17,745 | ) | (17,745 | ) | ||||||||
Net Loss | $ | (19,857 | ) | $ | (67,026 | ) | $ | (86,883 | ) |
ORGANIZATION_NARRATIVE_DETAILS
ORGANIZATION NARRATIVE (DETAILS) | Jun. 05, 2013 |
ORGANIZATION NARRATIVE (DETAILS) | |
Number of shares of common stock acquired in Trade Leasing Inc. A commonly held company | 4,000,000 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (DETAILS) (USD $) | Feb. 28, 2015 | Aug. 31, 2014 |
Accounts Receivable. | ||
The allowance for doubtful accounts . | $12,323 | $2,802 |
Going Concern | ||
Working capital deficiency | 171,608 | |
Accumulated deficit | 1,687,780 | |
Company had sold shares to Hallmark Venture Group, Inc | 6,000,000 | |
Per share value of shares sold | $0.00 | |
Net funds to the company | 6,000 | |
Capital contributions received | 23,027 | |
Company had sold shares to individuals | 1,969,014 | |
Received funds | 340,383 | |
Hallmark Venture Group, Inc loaned the company | 166,279 | |
Cash and Equivalents | ||
Company maintains cash balances up to | $250,000 |
ACCOUNTS_RECEIVABLE_AND_REVENU
ACCOUNTS RECEIVABLE AND REVENUE CONCENTRATIONS (DETAILS) (USD $) | 3 Months Ended | 6 Months Ended | |
Aug. 31, 2014 | Feb. 28, 2015 | Feb. 28, 2014 | |
Accounts Receivable and Revenue Concentrations {1} | |||
Three customers | 11.00% | 23.00% | |
One customer total receivables . | 20.00% | 10.00% | |
Total sales | 22.00% | 19.00% | |
Property and Equipment. | |||
Depreciation expense of Property and Equipment. | $994 | $0 | |
Lease Commitments | |||
Imputed rent expense was recorded of lease commitments. | 0 | 3,000 | |
Company leases manufacturing facility California 90280 | $0 | $7,000 |
NET_PROPERTY_AND_EQUIPMENT_DET
NET PROPERTY AND EQUIPMENT (DETAILS) (USD $) | Feb. 28, 2015 | Aug. 31, 2014 |
NET PROPERTY AND EQUIPMENT (DETAILS) | ||
Equipment | $243,444 | $243,444 |
Vehicles | 15,000 | 15,000 |
Furniture | 1,500 | 1,500 |
Total fixed assets, gross | 259,944 | 259,944 |
Less: accumulated depreciation | -251,297 | -250,303 |
Total fixed assets, net | $8,647 | $9,641 |
ASSETS_THAT_WERE_MEASURED_AND_
ASSETS THAT WERE MEASURED AND RECOGNISED AT FAIR VALUE (DETAILS) (USD $) | Feb. 28, 2015 | Aug. 31, 2014 |
Level 1 | ||
Convertible notes payable | $0 | $0 |
Total Realized Loss | 0 | |
Level 2 | ||
Convertible notes payable | 0 | |
Total Realized Loss | 0 | 0 |
Level 3 | ||
Convertible notes payable | 0 | |
Total Realized Loss | 0 | 0 |
Total Realized Loss | ||
Convertible notes payable | 0 | |
Total Realized Loss | $0 | $0 |
STOCK_ISSUES_DETAILS
STOCK ISSUES (DETAILS) (USD $) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |
31-May-14 | Feb. 28, 2015 | Feb. 28, 2014 | Aug. 31, 2014 | |
STOCK ISSUES | ||||
No of shares of common stock sold to a Unrelated investor | 55,000 | 40,000 | 63,333 | |
Value of shares of common stock sold to a Unrelated investor | 9,750 | 4,000 | 25,000 | |
Interest expense was imputed from a promissory note with related party Hallmark Venture Group, Inc. | $10,716 | |||
Interest Rate for Hallmark Venture Group, Inc. | 10.00% |
CAPTIAL_STOCK_TRANSACTIONS_DET
CAPTIAL STOCK TRANSACTIONS (DETAILS) (USD $) | Feb. 28, 2015 | Aug. 31, 2014 |
Capital stock transactions details | ||
Authorized common shares | 74,000,000 | |
Common shares par value | $0.00 | |
Preferred shares with a par value of $0.001 per share | $100,000 | |
Preferred shares par value | $0.00 | |
Company authorized and issued shares of Series A Preferred Stock | 100,000 | |
Shares grant the holder to right to vote on shareholder equal to 500 votes per share | $100,000 | |
Value of Series A Preferred Stock shares | $499,000 |
CONVERTIBLE_NOTE_PAYABLE_DETAI
CONVERTIBLE NOTE PAYABLE (DETAILS) (USD $) | Feb. 28, 2015 | Feb. 05, 2015 | Aug. 31, 2014 | Aug. 10, 2014 |
CONVERTIBLE NOTE PAYABLE (DETAILS) | ||||
Convertible promissory note sold to Tangiers, in the original principal amount | $50,000 | |||
Interest accrued rate | 10.00% | |||
Variable Conversion Price | 55.00% | |||
Discount rate | 45.00% | |||
Fixed Conversion Price | $0.00 | |||
Original issuance discount was recorded in accordance with the agreement | 5,000 | |||
Hallmark Venture Group, Inc. acquired the Note, with principal amount | 27,158 | |||
Accured Interest on Hallmark Venture Group Inc. | 3,987 | |||
Hallmark Venture Group, Inc. acquired the Note, to Howard Nunn, Jr. for shares of Services Team Inc | 80,000 | |||
Increase to additional paid in capital and a reduction of debt due to the discount. | 23,003 | |||
Beneficial conversion feature discount resulting from the conversion price below the market price of 0.40 provided a value | 22,000 | |||
Beneficial conversion feature discount resulting from the conversion price below the market price | $0.29 | $0.75 | ||
Debt discount was amortized | 2,025 | 0 | ||
Accrued interest related to the First Tangiers note | 347 | 0 | ||
Accrued interest amount due on debt | $3,297 | $3,297 |
DEBT_PROMISSORY_NOTE_RELATED_P
DEBT PROMISSORY NOTE RELATED PARTY (DETAILS) (USD $) | 6 Months Ended | |
Feb. 28, 2015 | Feb. 28, 2014 | |
DEBT PROMISSORY NOTE RELATED PARTY (DETAILS) | ||
Repaid funds during the period | $27,000 | $33,720 |
Interest imputed at a rate of 10% | $683 | $9,532 |
RELATED_PARTY_PROMISSORY_NOTE_
RELATED PARTY PROMISSORY NOTE (DETAILS) (USD $) | 6 Months Ended | |
Feb. 28, 2015 | Feb. 28, 2014 | |
RELATED PARTY PROMISSORY NOTE (DETAILS) | ||
Repaid funds during the period | $27,000 | $33,720 |
Interest imputed at a rate of 10% | 683 | 9,532 |
Related party contribution of office space imputed rent expense | $0 | $3,000 |
COMMON_STOCK_EXCHANGED_FOR_PRE
COMMON STOCK EXCHANGED FOR PREFERRED STOCK (DETAILS) (USD $) | Jan. 20, 2015 |
COMMON STOCK EXCHANGED FOR PREFERRED STOCK (DETAILS) | |
Company authorized and issued shares of Series A Preferred Stock | 100,000 |
Shares grant the holder to right to vote on shareholder equal to 500 votes per share | 100,000 |
Value of Series A Preferred Stock shares | $499,000 |
INCOME_TAXES_DETAILS
INCOME TAXES (DETAILS) (USD $) | Feb. 28, 2015 |
INCOME TAXES (DETAILS) | |
Net operating loss carry forwards totaling | $623,530 |
The available net operating loss carry forwards of approximately | $623,530 |
COMPONENTS_OF_TAX_EXPENSE_DETA
COMPONENTS OF TAX EXPENSE (DETAILS) (USD $) | Feb. 28, 2015 | Aug. 31, 2014 |
COMPONENTS OF TAX EXPENSE (DETAILS) | ||
Net tax loss carry-forwards | $623,530 | $548,338 |
Statutory rate | 34.00% | 34.00% |
Expected tax recovery | 212,000 | 186,435 |
Change in valuation allowance | -212,000 | -186,435 |
Income tax provision | $0 |
NET_DEFERRED_TAX_ASSETS_DETAIL
NET DEFERRED TAX ASSETS (DETAILS) (USD $) | Feb. 28, 2015 | Aug. 31, 2014 |
Components of deferred tax asset: | ||
Non capital tax loss carry forwards | $212,000 | $186,435 |
Less: valuation allowance | -212,000 | -186,435 |
Net deferred tax asset | $0 |
OPERATING_LEASES_DETAILS
OPERATING LEASES (DETAILS) (USD $) | Feb. 28, 2015 |
OPERATING LEASES (DETAILS) | |
Minimum lease payment required over the period of next 12 months | $84,000 |
Lease amount per month for office space | $7,000 |
RENT_EXPENSES_DETAILS
RENT EXPENSES (DETAILS) (USD $) | 6 Months Ended | |
Feb. 28, 2015 | Feb. 28, 2014 | |
RENT EXPENSES (DETAILS) | ||
Office Space imputed rent expenses | $0 | $3,000 |
SUMMARIZED_FINANCIAL_INFORMATI
SUMMARIZED FINANCIAL INFORMATION CONCERNING REPORTABLE SEGMENTS FOR FEBRUARY 28 2015 (DETAILS) (USD $) | Trade Leasing | Service Products | Segment Total |
Segment Revenues at Aug. 31, 2014 | $1,166,021 | $1,166,021 | |
Segment Cost of Sales | -1,071,706 | -1,071,706 | |
Segment Gross Margin | 94,315 | 94,315 | |
Segment Operating Expense | -169,115 | -499,045 | -668,160 |
SegmentOperating Loss | -74,800 | -499,045 | -573,845 |
Segment Other Expense | -4,158 | -4,158 | |
Segment Net Loss at Feb. 28, 2015 | ($74,800) | ($503,203) | ($578,003) |
SUMMARIZED_FINANCIAL_INFORMATI1
SUMMARIZED FINANCIAL INFORMATION CONCERNING REPORTABLE SEGMENTS FOR FEBRUARY 28 2014 (DETAILS) (USD $) | Trade Leasing | Service Products | Segment Total |
Segment Revenues at Aug. 31, 2013 | $920,118 | $920,118 | |
Segment Cost of Sales | -650,183 | -7,243 | -657,426 |
Segment Gross Margin | 269,935 | -7,243 | 262,692 |
Segment Operating Expense | -289,792 | -42,038 | -331,830 |
Segment Operating Loss | -19,857 | -49,281 | -69,138 |
Segment Other Expense | -17,745 | -17,745 | |
Segment Net Loss at Feb. 28, 2014 | ($19,857) | ($67,026) | ($86,883) |