Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | |
Aug. 31, 2015 | Dec. 08, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | Service Team Inc. | |
Document Type | 10-K | |
Document Period End Date | Aug. 31, 2015 | |
Amendment Flag | false | |
Entity Central Index Key | 1,535,635 | |
Current Fiscal Year End Date | --08-31 | |
Entity Common Stock, Shares Outstanding | 13,430,624 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | No | |
Entity Voluntary Filers | Yes | |
Entity Well-known Seasoned Issuer | No | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | FY | |
Entity Public Float | $ 316,981 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Aug. 31, 2015 | Aug. 31, 2014 |
Consolidated Balance Sheets | ||
Cash | $ 5,843 | $ 7,457 |
Accounts receivable, net of allowances of $3,626 and $2,802, respectively | 179,292 | 186,026 |
Total current assets | 185,135 | 193,483 |
Property and equipment, net | 7,977 | 9,641 |
Prepaid expenses | 20,986 | 9,000 |
TOTAL ASSETS | 214,098 | 212,124 |
LIABILITIES & SHAREHOLDERS' (DEFICIT) | ||
Accounts payable | $ 112,596 | 172,117 |
Promissory note - related party | 27,158 | |
Convertible notes payable - related party, net | $ 32,318 | $ 2,693 |
Convertible note payable, net | 30,001 | |
Contingent Liability | 54,100 | $ 54,100 |
Accrued payroll costs | 77,738 | 53,710 |
Accrued interest | 6,367 | 3,987 |
TOTAL LIABILITIES | 313,120 | 313,765 |
Common stock, $0.001 par value, 74,000,000 authorized, 13,430,624 and 12,485,647 issued and outstanding as of August 31, 2015 and 2014, respectively | 13,431 | $ 12,486 |
Preferred stock | 100 | |
Subscription payable | 22,000 | |
Additional paid in capital | 1,612,788 | $ 955,650 |
Accumulated deficit | (1,747,341) | (1,109,777) |
TOTAL SHAREHOLDERS' (DEFICIT) | (99,022) | (101,641) |
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) | $ 214,098 | $ 212,124 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Aug. 31, 2015 | Aug. 31, 2014 |
Consolidated Balance Sheets | ||
Allowance for Accounts receivable | $ 3,626 | $ 2,802 |
Common Stock, par or stated value | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 74,000,000 | 74,000,000 |
Common Stock, shares issued | 13,430,624 | 12,485,647 |
Common Stock, shares outstanding | 13,430,624 | 12,485,647 |
CONSOLIDATED STATEMENT OF OPERA
CONSOLIDATED STATEMENT OF OPERATIONS - USD ($) | 12 Months Ended | |
Aug. 31, 2015 | Aug. 31, 2014 | |
Revenues [Abstract] | ||
Sales | $ 2,611,766 | $ 1,334,127 |
COST OF SALES | ||
Cost of sales | 2,334,822 | 1,096,704 |
Gross Margin | 276,944 | 237,423 |
OPERATING EXPENSES | ||
General & administrative expenses | 832,703 | 111,754 |
Depreciation expense | 1,989 | 303 |
Bad debts | 3,626 | 30,701 |
Total Operating Expenses | 838,318 | 142,758 |
OPERATING INCOME (LOSS) | (561,374) | 94,665 |
OTHER INCOME (EXPENSE) | ||
Interest Expense | (76,190) | (20,309) |
TOTAL OTHER INCOME (EXPENSE) | (76,190) | (20,309) |
NET INCOME (LOSS) | $ (637,564) | $ 74,356 |
Weighted average number of common shares outstanding - basic | 12,534,647 | 12,431,012 |
Weighted average number of common shares outstanding - diluted | 12,534,647 | 12,431,012 |
Net income (loss) per share - basic | $ (0.05) | $ 0.01 |
Net income (loss) per share - diluted | $ (0.05) | $ 0.01 |
CONSOLIDATED STATEMENT OF SHARE
CONSOLIDATED STATEMENT OF SHAREHOLDERS DEFICIT FOR THE YEARS - USD ($) | Common Amount | Preferred Stock | Additional Paid In Capital | Subscription Payable | Deficit Accumulated During Development Stage | Total |
Beginning Balance at Aug. 31, 2013 | $ 12,368 | $ 950,302 | $ (1,184,133) | $ (221,464) | ||
Beginning Balance (in shares) at Aug. 31, 2013 | 12,367,314 | |||||
Imputed Interest on Related Party Debt | 10,716 | 10,716 | ||||
Shares issued for Cash | $ 118 | 34,632 | $ 34,750 | |||
Shares Issued for Cash (in shares) | 118,333 | 171,576 | ||||
Net Income (Loss) | $ 74,356 | $ 74,356 | ||||
Ending Balance at Aug. 31, 2014 | $ 12,486 | 995,650 | $ (1,109,777) | $ (101,641) | ||
Ending Balance (in shares) at Aug. 31, 2014 | 12,485,647 | 12,485,647 | ||||
Imputed Interest on Related Party Debt | 683 | $ 683 | ||||
Beneficial conversion feature | 104,500 | 104,500 | ||||
Shares Issued for Note Conversion | $ 905 | 9,095 | 10,000 | |||
Shares Issued for Note Conversion (in shares) | 904,977 | |||||
Shares issued for Service | $ 100 | 498,900 | 499,000 | |||
Shares Issued for Service (in shares) | 100,000 | |||||
Shares issued for Cash | $ 40 | $ 3,960 | $ 4,000 | |||
Shares Issued for Cash (in shares) | 40,000 | 34,750 | ||||
Subscription Payable for Note Conversion | $ 22,000 | $ 22,000 | ||||
Net Income (Loss) | $ (637,564) | (637,564) | ||||
Ending Balance at Aug. 31, 2015 | $ 13,431 | $ 100 | $ 1,612,788 | $ (1,747,341) | $ (99,022) | |
Ending Balance (in shares) at Aug. 31, 2015 | 13,430,624 | 100,000 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Aug. 31, 2015 | Aug. 31, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net Income (Loss) | $ (637,564) | $ 74,356 |
Adjustments to reconcile net income (loss) with cash provided by (used in) operations: | ||
Stock based compensation expense | 499,000 | 0 |
Bad debt expense | 3,626 | 30,701 |
Depreciation expense | 1,989 | $ 303 |
Amortization of deferred financing costs | 5,514 | |
Amortization of debt discount | 63,626 | $ 6,833 |
Imputed interest | 683 | 10,716 |
CHANGE IN OPERATING ASSETS AND LIABILITIES | ||
Accounts receivable | 3,108 | (106,487) |
Accrued expenses | 23,715 | 21,626 |
Accounts payable | (59,846) | 39,552 |
Net Cash Provided by (Used in) Operating Activities. | $ (96,149) | 77,600 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Cash paid for the purchase of fixed assets | (9,944) | |
Net Cash Used In Investing Activities | (9,944) | |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from sale of stock | $ 4,000 | $ 34,750 |
Debt discounts from issuance costs | (12,085) | |
Deferred financing costs | $ (17,500) | |
Proceeds from promissory note - related party | $ 5,280 | |
Proceeds from convertible note | $ 147,278 | 9,155 |
Repayments of convertible note | (5,000) | |
Repayments of promissory note - related party | $ (27,158) | (205,279) |
Net Cash Provided By (Used In) Financing Activities | 94,535 | (161,094) |
Net Increase (Decrease) In Cash and Cash Equivalents | (1,614) | (93,438) |
Cash at Beginning of Period | 7,457 | 100,895 |
Cash at End of Period | $ 5,843 | $ 7,457 |
Supplemental Disclosures | ||
Interest Paid | ||
Taxes Paid | ||
Non-cash transactions: | ||
Discount due to beneficial conversion feature | $ 104,500 | |
Debts converted into common shares | 10,000 | |
Debts converted into common shares payable | $ 22,000 | |
Transfer of accrued interest from Howard Nunn to Hallmark | $ 3,987 | |
Transfer from convertible debt to promissory note | $ 27,158 |
ORGANIZATION
ORGANIZATION | 12 Months Ended |
Aug. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
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 discontinued its warranty and repair operations. On June 5, 2013, Service Team Inc. acquired 100 percent of the outstanding stock of Trade Leasing, Inc. for 4,000,000 shares of its common stock. 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. Service Team Inc. and Trade Leasing Inc. have not been involved in a bankruptcy, receivership or any similar proceeding. The acquisition of Trade Leasing Inc. is a major change in the operations of Service Team Inc. Trade Leasing is operated as a separate division of Service Team Inc. The Company has established a fiscal year end of August 31. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Aug. 31, 2015 | |
Accounting Policies [Abstract] | |
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-K. 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 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. The Company has maintained a negative equity balance since inception (June 6, 2011) through August 31, 2015, of $99,022. The Company will be dependent upon the raising of additional capital through placement of our common stock in order to implement its business plan. There can be no assurance that the Company will be successful in order to continue as a going concern. The Company is funding its initial operations by issuing common shares and debt. 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 August 31, 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. The allowance for doubtful accounts as of August 31, 2015 and August 31, 2014 was $3,626 and $2,802, respectively. Accounts Receivable and Revenue Concentrations The Company's wholly owned subsidiary, Trade Leasing, Inc., has more than 400 customers. One customer represents about 20% and 12% of the total sales and 36% and 36% of total receivables during and as of the years ended August 31, 2015 and 2014, respectively. Inventory The Company does not own inventory; therefore, there was no inventory on hand at August 31, 2015. Property and Equipment Equipment, vehicles and furniture, which are recorded at cost, consist primarily of fabrication equipment and is depreciated using the straight-line method over the estimated useful lives of the related assets (generally fifteen 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 depreciation expense of $1,989 and $303 during the fiscal years ended August 31, 2015 or August 31, 2014. Net property and equipment were as follows at August 31, 2015 and August 31, 2014: 2015 2014 Equipment $ 243,444 $ 243,444 Vehicles 15,000 15,000 Furniture 1,500 1,500 Total fixed assets, gross 259,994 259,994 Less: accumulated depreciation (252,017 ) (250,353 ) Total fixed assets, net $ 7,977 $ 9,641 Lease Commitments Service Team Inc. has been leasing a manufacturing facility at 10633 Ruchti Road, South Gate, California 90280 on a year-to-year basis for $9,000 per month. The property was sold to a developer on September 1, 2015, and Service Team Inc. was required to move. Service Team Inc. leased a building at 1818 East Rosslyn Avenue, Fullerton, California 92834. effective October 1, 2015. The lease is for a period of 72 months with an option to extend the lease for an additional 72 months. The Company is in the process of moving to the new location at this time. The new facility is a 25,000 square foot concrete industrial building located on approximately three acres of land. This new facility is approximately double the size of the prior facility. Rent for the new facility is $10,000 per month for the first six months; and then $14,000 per month thereafter. The Company is responsible for the property taxes and insurance on the building. 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. 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 standard including: 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 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 August 31, 2015 on a recurring basis: Total Realized Description Level 1 Level 2 Level 3 Loss Convertible notes payable related party, net $ 32,318 $ - $ - $ - Convertible notes payable, net 30,001 - - - Totals $ 62,319 $ - $ - $ - 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 $ - $ - $ - $ - Totals $ - $ - $ - $ - 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 August 31, 2015 and 2014 where it cannot conclude that it is more likely than not that those assets will be realized. Revenue Recognition 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. As described above, in accordance with the requirements of ASC 605-10-599, the Company recognizes 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 . 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 Income (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. During the year ended August 31, 2015, as the Company reported a net loss from operations, the diluted shares outstanding exludedes the effective of dilutive securities due to the anti-dilutive effect. During the year ended August 31, 2014, because the Company did not have any potentially dilutive securities, there was no difference between the basic and diluted net income (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. In July 2013, the FASB issued ASU No. 2013-11: Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. |
CAPITAL STOCK
CAPITAL STOCK | 12 Months Ended |
Aug. 31, 2015 | |
Equity [Abstract] | |
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. 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. No preferred shares have been issued. As of August 31, 2014, the Company has not granted any stock options. 2015 On January 20, 2015, the Company authorized and issued 100,000 shares of Series A Preferred Stock to be granted to Hallmark Holdings 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. On January 23, 2015, the Company filed a Certificate of Designation to establish the rights and benefits of Class A preferred stock. During 2015, the company issued 40,000 shares in exchange for $4,000 from a third party investor. On August 26, 2015, Tangers Investment Group LLC converted $10,000 of its Note in the amount of into 904,977 shares of common stock. As the conversion was completed within the terms of the convertible note agreement, no gain or loss was recognized as a result of this conversion. During 2015, Tangers Investment Group LLC converted $22,000 of its Note into a stock payable. As the conversion was completed within the terms of the convertible note agreement, no gain or loss was recognized as a result of this conversion. During the twelve months ended August 31, 2015, $683 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 | 12 Months Ended |
Aug. 31, 2015 | |
DEBT TRANSACTIONS | |
DEBT TRANSACTIONS | NOTE 4 DEBT TRANSACTIONS Convertible Notes Payable Related Party US Affiliated On July 31, 2014, the Company issued a convertible note to US Affiliated (a related party) for $18,003 of cash consideration. The note bears interest at 6%, matures on July 31, 2015, and is convertible into common stock at 50% of the closing market price of the lowest 3 trading days during the previous 25 trading days prior to conversion. The Company recorded a debt discount equal to $18,003 due to this conversion feature. The note was amended during July 2015 to mature on November 30, 2015. The note had accrued interest of $1,170 and $90 as of August 31, 2015 and 2014, respectively. The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the conversion price floor and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.0005. In the event that the authorized shares were not sufficient, the Company has obtained authorization from a majority of shareholders such that the appropriate number of shares will be available or issuable for settlement to occur. The debt discount had a balance at August 31, 2015 and 2014 of $0 and $16,503, respectively. The Company recorded debt discount amortization expense of $16,503 and $1,500 during the years ended August 31, 2015 and 2014, respectively. On July 31, 2014, the Company issued a convertible note to US Affiliated (a related party) for $14,315 of cash consideration. The note bears interest at 6%, matures on July 31, 2015, and is convertible into common stock at 50% of the closing market price of the lowest 3 trading days during the previous 25 trading days prior to conversion. The Company recorded a debt discount equal to $14,315 due to this conversion feature. The note was amended during July 2015 to mature on November 30, 2015. The note had accrued interest of $930 and $72 as of August 31, 2015 and 2014, respectively. The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the conversion price floor and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.0005. In the event that the authorized shares were not sufficient, the Company has obtained authorization from a majority of shareholders such that the appropriate number of shares will be available or issuable for settlement to occur. The debt discount had a balance at August 31, 2015 and 2014 of $0 and $13,122, respectively. The Company recorded debt discount amortization expense of $13,122 and $1,193 during the years ended August 31, 2015 and 2014, respectively. Howard Nunn Note On June 21, 2013, for value received, the Company gave a convertible promissory note to Howard Nunn, Jr., in the original principal amount of $23,003 (the "Nunn Note"). The Nunn Note has a maturity date of September 30, 2013, and principle and accrued interest at the rate of twelve percent (12%). The Note holder has an option to convert the Note into Common Stock at the price of $0.50 per share. During the three months ended November 30, 2013, the Company repaid $5,000 to Howard Nunn under the same note. On August 10, 2014, Hallmark Venture Group, Inc. acquired the Nunn 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. During the twelve month period ended August 31, 2015, the note and accrued interest have been repaid in full. 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 nine months ended May 31, 2015, and May 31, 2014, the Company repaid net funds of $27,158 and $190,964, respectively. During the twelve months ended August 31, 2015, and August 31, 2014, the Company has imputed interest at a reasonable rate of 10 percent totaling $683 and $10,716 respectively. Convertible Notes Payable Third Party On July 2, 2015, the Company issued a convertible note to Vis Veres Group for $38,000 of cash consideration. The note bears interest at 8%, matures on April 7, 2016, and is convertible into common stock at 55% of the lowest 3 closing market prices of the previous 20 trading days prior to conversion. The Company recorded a debt discount equal to $35,000 due to this conversion feature. The Company also recorded a $3,000 debt discount due to accrued interest required by the agreement to be accrued at the beginning of the note. The note had accrued interest of $500 as of August 31, 2015. The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the conversion price floor and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.00005. In the event that the authorized shares were not sufficient, the Company has obtained authorization from a majority of shareholders such that the appropriate number of shares will be available or issuable for settlement to occur. The debt discounts had a balance at August 31, 2015 of $29,857. The Company recorded debt discount amortization expense of $8,143 during the year ended August 31, 2015. On July 21, 2015, the Company issued a convertible note to JMJ Financial Group for $27,778 of cash consideration. The note bears interest at 12%, matures on July 21, 2016, and is convertible into common stock at 50% of the lowest 3 closing market prices of the previous 20 trading days prior to conversion. The Company recorded a debt discount equal to $22,500 due to this conversion feature. The Company also recorded a $5,278 debt discount due to accrued interest required by the agreement to be accrued at the beginning of the note. The note had accrued interest of $374 as of August 31, 2015. The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the conversion price floor and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.00005. In the event that the authorized shares were not sufficient, the Company has obtained authorization from a majority of shareholders such that the appropriate number of shares will be available or issuable for settlement to occur. The debt discounts had a balance at August 31, 2015 of $24,667. The Company recorded debt discount amortization expense of $3,111 during the year ended August 31, 2015. On July 15, 2015, the Company issued a convertible note to LG Capital Funding LLC for $26,500 of cash consideration. The note bears interest at 8%, matures on July 15, 2016, and is convertible into common stock at 50% of the lowest 3 closing market prices of the previous 20 trading days prior to conversion. The Company recorded a debt discount equal to $25,000 due to this conversion feature. The Company also recorded a $1,500 debt discount due to accrued interest required by the agreement to be accrued at the beginning of the note. The note had accrued interest of $273 as of August 31, 2015. The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the conversion price floor and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.00005. In the event that the authorized shares were not sufficient, the Company has obtained authorization from a majority of shareholders such that the appropriate number of shares will be available or issuable for settlement to occur. The debt discounts had a balance at August 31, 2015 of $23,097. The Company recorded debt discount amortization expense of $3,403 during the year ended August 31, 2015. Tangiers Capital Group Convertible Note On February 5, 2015, the Company issued a convertible note to Tangiers Capital Group for $55,000 of cash consideration. The note bears interest at 10%, matures on February 5, 2016, and is convertible into common stock at 50% of the lowest 3 closing market prices of the previous 20 trading days prior to conversion. The Company recorded a debt discount equal to $22,000 due to this conversion feature. The Company also recorded a $5,000 debt discount due to accrued interest required by the agreement to be accrued at the beginning of the note. The note had accrued interest of $3,119 as of August 31, 2015. The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the conversion price floor and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.00005. In the event that the authorized shares were not sufficient, the Company has obtained authorization from a majority of shareholders such that the appropriate number of shares will be available or issuable for settlement to occur. The debt discounts had a balance at August 31, 2015 of $7,656. The Company recorded debt discount amortization expense of $19,344 during the year ended August 31, 2015. On August 26, 2015, Tangers Investment Group LLC converted $10,000 of its Note in the amount of into 904,977 shares of common stock. As the conversion was completed within the terms of the convertible note agreement, no gain or loss was recognized as a result of this conversion. During 2015, Tangers Investment Group LLC converted $22,000 of its Note into a stock payable. As the conversion was completed within the terms of the convertible note agreement, no gain or loss was recognized as a result of this conversion. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Aug. 31, 2015 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 5 - RELATED PARTY TRANSACTIONS Convertible Notes Payable Related Party US Affiliated On July 31, 2014, the Company issued a convertible note to US Affiliated (a related party) for $18,003 of cash consideration. The note bears interest at 6%, matures on July 31, 2015, and is convertible into common stock at 50% of the market price of the previous 25 trading days prior to conversion. The Company recorded a debt discount equal to $18,003 due to this conversion feature. The note was amended during July 2015 to mature on November 30, 2015. The note had accrued interest of $1,170 and $90 as of August 31, 2015 and 2014, respectively. The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the conversion price floor and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.0005. In the event that the authorized shares were not sufficient, the Company has obtained authorization from a majority of shareholders such that the appropriate number of shares will be available or issuable for settlement to occur. The debt discount had a balance at August 31, 2015 and 2014 of $0 and $16,503, respectively. The Company recorded debt discount amortization expense of $16,503 and $1,500 during the years ended August 31, 2015 and 2014, respectively. On July 31, 2014, the Company issued a convertible note to US Affiliated (a related party) for $14,315 of cash consideration. The note bears interest at 6%, matures on July 31, 2015, and is convertible into common stock at 50% of the market price of the previous 25 trading days prior to conversion. The Company recorded a debt discount equal to $14,315 due to this conversion feature. The note was amended during July 2015 to mature on November 30, 2015. The note had accrued interest of $930 and $72 as of August 31, 2015 and 2014, respectively. The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the conversion price floor and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.0005. In the event that the authorized shares were not sufficient, the Company has obtained authorization from a majority of shareholders such that the appropriate number of shares will be available or issuable for settlement to occur. The debt discount had a balance at August 31, 2015 and 2014 of $0 and $13,122, respectively. The Company recorded debt discount amortization expense of $13,122 and $1,193 during the years ended August 31, 2015 and 2014, respectively. Howard Nunn Note On June 21, 2013, for value received, the Company gave a convertible promissory note to Howard Nunn, Jr., in the original principal amount of $23,003 (the "Nunn Note"). The Nunn Note has a maturity date of September 30, 2013, and principle and accrued interest at the rate of twelve percent (12%). The Note holder has an option to convert the Note into Common Stock at the price of $0.50 per share. During the three months ended November 30, 2013, the Company repaid $5,000 to Howard Nunn under the same note. On August 10, 2014, Hallmark Venture Group, Inc. acquired the Nunn 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. During the twelve month period ended August 31, 2015, the note and accrued interest have been repaid in full. 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 nine months ended May 31, 2015, and May 31, 2014, the Company repaid net funds of $27,158 and $190,964, respectively. During the twelve months ended August 31, 2015, and August 31, 2014, the Company has imputed interest at a reasonable rate of 10 percent totaling $683 and $10,716 respectively. Preferred Stock Issued for Services On January 20, 2015, the Company authorized and issued 100,000 shares of Series A Preferred Stock to be granted to Hallmark Holdings 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. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Aug. 31, 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 available net operating loss carry forwards of approximately $617,079 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 August 31, 2015 and August 31, 2014: 2015 2014 Net tax loss carry-forwards $ 617,079 $ 548,338 Statutory rate 34 % 34 % Expected tax recovery 209,807 186,435 Change in valuation allowance (209,807 ) (186,435 ) Income tax provision $ - $ - Components of deferred tax asset: Non capital tax loss carry forwards $ 209,807 $ 186,435 Less: valuation allowance (209,807 ) (186,435 ) Net deferred tax asset $ - $ - |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Aug. 31, 2015 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 7 COMMITMENTS AND CONTINGENCIES None Operating Leases Service Team Inc. has been leasing a manufacturing facility at 10633 Ruchti Road, South Gate, California 90280 on a year-to-year basis for $9,000 per month. On September 1, 2015, the property was sold to a developer and Service Team Inc. was required to move. Service Team Inc. leased a building at 1818 East Rosslyn Avenue, Fullerton, California 92834. effective October 1, 2015. The lease is for a period of 72 months with an option to extend the lease for an additional 72 months. The Company is in the process of moving to the new location at this time. The new facility is a 25,000 square foot concrete industrial building located on approximately three acres of land. This new facility is approximately double the size of the prior facility. Rent for the new facility is $10,000 per month for the first six months; and then $14,000 per month thereafter. The Company is responsible for the property taxes on the building. 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. |
SEGMENT REPORTING
SEGMENT REPORTING | 12 Months Ended |
Aug. 31, 2015 | |
SEGMENT REPORTING | |
Segment Reporting Disclosure | NOTE 8 SEGMENT REPORTING Our operations are 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 The Trade Leasing segment is involved in the manufacture and repair of truck bodies. The Service Products segment specializes in electronics service, repair and sales. Summarized financial information concerning reportable segments is shown in the following table for the fiscal years ended: August 31, 2015: Trade Leasing Service Products Total Revenues $ 2,611,766 $ - $ 2,611,766 Cost of Sales 2,334,822 - 2,334,822 Gross Margin 276,944 - 276,944 Operating Expenses 280,422 557,896 838,318 Operating Income (Loss) (3,478 ) (557,896 ) (561,374 ) Other Income (Expense) (466 ) (75,724 ) (76,190 ) Net Income (Loss) $ (3,944 ) $ (633,620 ) $ (637,564 ) August 31, 2014: Trade Leasing Service Products Total Revenues $ 1,334,127 $ - $ 1,334,127 Cost of Sales (1,096,704 ) - (1,096,704 ) Gross Margin 237,423 - 237,423 Operating Expense (131,256 ) (11,502 ) (142,758 ) Operating Income (Loss) 106,167 (11,502 ) 94,665 Other Expense (10,716 ) (9,593 ) (20,309 ) Net Income (Loss) $ 95,451 $ (21,095 ) $ 74,356 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Aug. 31, 2015 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 9 SUBSEQUENT EVENTS Service Team Inc. has been leasing a manufacturing facility at 10633 Ruchti Road, South Gate, California 90280 on a year-to-year basis for $9,000 per month. On September 1, 2015, the property was sold to a developer and Service Team Inc. was required to move. Service Team Inc. leased a building at 1818 East Rosslyn Avenue, Fullerton, California 92834. effective October 1, 2015. The lease is for a period of 72 months with an option to extend the lease for an additional 72 months. The Company is in the process of moving to the new location at this time. The new facility is a 25,000 square foot concrete industrial building located on approximately three acres of land. This new facility is approximately double the size of the prior facility. Rent for the new facility is $10,000 per month for the first six months; and then $14,000 per month thereafter. The Company is responsible for the property taxes on the building. |
ACCOUNTING POLICIES (POLICIES)
ACCOUNTING POLICIES (POLICIES) | 12 Months Ended |
Aug. 31, 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-K. 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 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. The Company has maintained a negative equity balance since inception (June 6, 2011) through August 31, 2015, of $99,022. The Company will be dependent upon the raising of additional capital through placement of our common stock in order to implement its business plan. There can be no assurance that the Company will be successful in order to continue as a going concern. The Company is funding its initial operations by issuing common shares and debt. 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 August 31, 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 Policy | 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. The allowance for doubtful accounts as of August 31, 2015 and August 31, 2014 was $3,626 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. One customer represents about 20% and 12% of the total sales and 36% and 36% of total receivables during and as of the years ended August 31, 2015 and 2014, respectively. |
Inventory | Inventory The Company does not own inventory; therefore, there was no inventory on hand at August 31, 2015. |
Property and Equipment: | Property and Equipment Equipment, vehicles and furniture, which are recorded at cost, consist primarily of fabrication equipment and is depreciated using the straight-line method over the estimated useful lives of the related assets (generally fifteen 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 depreciation expense of $1,989 and $303 during the fiscal years ended August 31, 2015 or August 31, 2014. Net property and equipment were as follows at August 31, 2015 and August 31, 2014: 2015 2014 Equipment $ 243,444 $ 243,444 Vehicles 15,000 15,000 Furniture 1,500 1,500 Total fixed assets, gross 259,994 259,994 Less: accumulated depreciation (252,017 ) (250,353 ) Total fixed assets, net $ 7,977 $ 9,641 |
Lease Commitments | Lease Commitments Service Team Inc. has been leasing a manufacturing facility at 10633 Ruchti Road, South Gate, California 90280 on a year-to-year basis for $9,000 per month. The property was sold to a developer on September 1, 2015, and Service Team Inc. was required to move. Service Team Inc. leased a building at 1818 East Rosslyn Avenue, Fullerton, California 92834. effective October 1, 2015. The lease is for a period of 72 months with an option to extend the lease for an additional 72 months. The Company is in the process of moving to the new location at this time. The new facility is a 25,000 square foot concrete industrial building located on approximately three acres of land. This new facility is approximately double the size of the prior facility. Rent for the new facility is $10,000 per month for the first six months; and then $14,000 per month thereafter. The Company is responsible for the property taxes and insurance on the building. 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. |
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 standard including: 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 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 August 31, 2015 on a recurring basis: Total Realized Description Level 1 Level 2 Level 3 Loss Convertible notes payable related party, net $ 32,318 $ - $ - $ - Convertible notes payable, net 30,001 - - - Totals $ 62,319 $ - $ - $ - 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 $ - $ - $ - $ - Totals $ - $ - $ - $ - |
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 August 31, 2015 and 2014 where it cannot conclude that it is more likely than not that those assets will be realized. |
Revenue Recognition | Revenue Recognition 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. As described above, in accordance with the requirements of ASC 605-10-599, the Company recognizes 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 . |
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 Income (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. During the year ended August 31, 2015, as the Company reported a net loss from operations, the diluted shares outstanding exludedes the effective of dilutive securities due to the anti-dilutive effect. During the year ended August 31, 2014, because the Company did not have any potentially dilutive securities, there was no difference between the basic and diluted net income (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. In July 2013, the FASB issued ASU No. 2013-11: Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. |
Property and Equipment (TABLES)
Property and Equipment (TABLES) | 12 Months Ended |
Aug. 31, 2015 | |
Property and Equipment (TABLES) | |
Property and Equipment (TABLES) | Net property and equipment were as follows at August 31, 2015 and August 31, 2014: 2015 2014 Equipment $ 243,444 $ 243,444 Vehicles 15,000 15,000 Furniture 1,500 1,500 Total fixed assets, gross 259,994 259,994 Less: accumulated depreciation (252,017 ) (250,353 ) Total fixed assets, net $ 7,977 $ 9,641 |
FAIR VALUE MEASUREMENTS (TABLES
FAIR VALUE MEASUREMENTS (TABLES) | 12 Months Ended |
Aug. 31, 2015 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | The following table presents assets and liabilities that were measured and recognized at fair value as of August 31, 2015 on a recurring basis: Total Realized Description Level 1 Level 2 Level 3 Loss Convertible notes payable related party, net $ 32,318 $ - $ - $ - Convertible notes payable, net 30,001 - - - Totals $ 62,319 $ - $ - $ - 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 $ - $ - $ - $ - Totals $ - $ - $ - $ - |
COMPONENTS OF INCOME TAX EXPENS
COMPONENTS OF INCOME TAX EXPENSE (TABLES) | 12 Months Ended |
Aug. 31, 2015 | |
COMPONENTS OF INCOMETAX EXPENSE | |
COMPONENTS OF INCOME TAX EXPENSE | 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 August 31, 2015 and August 31, 2014: 2015 2014 Net tax loss carry-forwards $ 617,079 $ 548,338 Statutory rate 34 % 34 % Expected tax recovery 209,807 186,435 Change in valuation allowance (209,807 ) (186,435 ) Income tax provision $ - $ - Components of deferred tax asset: Non capital tax loss carry forwards $ 209,807 $ 186,435 Less: valuation allowance (209,807 ) (186,435 ) Net deferred tax asset $ - $ - |
SEGMENT REPORTING (TABLES)
SEGMENT REPORTING (TABLES) | 12 Months Ended |
Aug. 31, 2015 | |
SEGMENT REPORTING (TABLES): | |
Summarized financial information concerning reportable segments (TABLES) | Summarized financial information concerning reportable segments is shown in the following table for the fiscal years ended: August 31, 2015: Trade Leasing Service Products Total Revenues $ 2,611,766 $ - $ 2,611,766 Cost of Sales 2,334,822 - 2,334,822 Gross Margin 276,944 - 276,944 Operating Expenses 280,422 557,896 838,318 Operating Income (Loss) (3,478 ) (557,896 ) (561,374 ) Other Income (Expense) (466 ) (75,724 ) (76,190 ) Net Income (Loss) $ (3,944 ) $ (633,620 ) $ (637,564 ) August 31, 2014: Trade Leasing Service Products Total Revenues $ 1,334,127 $ - $ 1,334,127 Cost of Sales (1,096,704 ) - (1,096,704 ) Gross Margin 237,423 - 237,423 Operating Expense (131,256 ) (11,502 ) (142,758 ) Operating Income (Loss) 106,167 (11,502 ) 94,665 Other Expense (10,716 ) (9,593 ) (20,309 ) Net Income (Loss) $ 95,451 $ (21,095 ) $ 74,356 |
Organization Narrative (Details
Organization Narrative (Details Narrative) | Jun. 05, 2013shares |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of shares of common stock acquired in Trade Leasing Inc. | 4,000,000 |
SUMMARY OF SIGNIFICANT ACCOUN22
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |
Aug. 31, 2015 | Aug. 31, 2014 | |
Accounts Receivable, Net [Abstract] | ||
Allowance for Accounts receivable | $ 3,626 | $ 2,802 |
Accounts Receivable and Revenue Concentrations | ||
One customer South Bay Ford represents of the total sales. | 20.00% | 12.00% |
South Bay Ford represents of thetotal receivables . | 36.00% | 36.00% |
Lease of California office premises per month | $ 10,000 |
SUMMARY OF SIGNIFICANT ACCOUN23
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 12 Months Ended | |
Aug. 31, 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 | 259,994 | 259,994 |
Less: accumulated depreciation | (252,017) | (250,353) |
Total fixed assets, net | 7,977 | 9,641 |
Depreciation Expense | $ 1,989 | $ 303 |
SUMMARY OF SIGNIFICANT ACCOUN24
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - Fair Value, Measurements, Recurring [Member] - Level 1 [Member] - USD ($) | Aug. 31, 2015 | Aug. 31, 2014 |
Convertible notes payable - related party, net | $ 32,318 | |
Convertible notes payable, net | 30,001 | |
Total | $ 62,319 |
CAPITAL STOCK (Details)
CAPITAL STOCK (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |
May. 31, 2014 | Feb. 28, 2014 | Aug. 31, 2015 | Aug. 31, 2014 | |
Capital stock transactions details | ||||
Common Stock, par or stated value | $ 0.001 | $ 0.001 | ||
Common Stock, shares authorized | 74,000,000 | 74,000,000 | ||
Preferred Stock, shares authorized | 100,000 | |||
Preferred Stock, par or stated value | $ .001 | |||
Shares issued for cash to investor | $ 9,750 | $ 25,000 | $ 4,000 | $ 34,750 |
Shares issued for cash to investor (in shares) | 55,000 | 63,333 | 34,750 | 171,576 |
Imputed interest | $ 683 | $ 10,716 |
DEBT TRANSACTIONS (Details Narr
DEBT TRANSACTIONS (Details Narrative) - USD ($) | Aug. 10, 2015 | Jun. 21, 2014 |
Convertible Notes Payable [Abstract] | ||
Convertible promissory note issued to Howard Nunn, in the original principal amount | $ 23,003 | |
Interest accrued at the rate of twelve percent | 12.00% | |
Conversion price of the note into Common Stock at the price | $ 0.50 | |
Howard Nunn under the same note and repaid | $ 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 Conversion price | $ 0.75 |
Components of tax expense (Deta
Components of tax expense (Details) - USD ($) | Aug. 31, 2015 | Aug. 31, 2014 |
Components of tax expense details | ||
Net tax loss carry-forwards | $ 617,079 | $ 548,338 |
Statutory rate | 34.00% | 34.00% |
Expected tax recovery | $ 209,807 | $ 186,435 |
Change in valuation allowance | (209,807) | (186,435) |
Income tax provision | $ 0 | $ 0 |
Components of tax expense (De28
Components of tax expense (Details 2) - USD ($) | Aug. 31, 2015 | Aug. 31, 2014 |
Components of Deferred Tax Assets [Abstract] | ||
Non capital tax loss carry forwards | $ 209,807 | $ 186,435 |
Less: valuation allowance | (209,807) | (186,435) |
Net deferred tax asset | $ 0 | $ 0 |
Operating Leases (Details)
Operating Leases (Details) | 12 Months Ended |
Aug. 31, 2015USD ($) | |
Leases, Operating [Abstract] | |
Lease of California office premises per month | $ 10,000 |
SEGMENT REPORTING (Details)
SEGMENT REPORTING (Details) - USD ($) | 12 Months Ended | |
Aug. 31, 2015 | Aug. 31, 2014 | |
Revenues | $ 2,611,766 | $ 1,334,127 |
Cost of sales | 2,334,822 | 1,096,704 |
Gross Margin | 276,944 | 237,423 |
Total Operating Expenses | 838,318 | 142,758 |
OPERATING INCOME (LOSS) | (561,374) | 94,665 |
TOTAL OTHER INCOME (EXPENSE) | (76,190) | (20,309) |
NET INCOME (LOSS) | (637,564) | 74,356 |
Trade Leasing | ||
Revenues | 2,611,766 | 1,334,127 |
Cost of sales | 2,334,822 | (1,096,704) |
Gross Margin | 276,944 | 237,423 |
Total Operating Expenses | 280,422 | (131,256) |
OPERATING INCOME (LOSS) | (3,478) | 106,167 |
TOTAL OTHER INCOME (EXPENSE) | (466) | (10,716) |
NET INCOME (LOSS) | $ (3,944) | $ 95,451 |
Service Products | ||
Revenues | ||
Cost of sales | ||
Gross Margin | ||
Total Operating Expenses | $ 557,896 | $ (11,502) |
OPERATING INCOME (LOSS) | (557,896) | (11,502) |
TOTAL OTHER INCOME (EXPENSE) | (75,724) | (9,593) |
NET INCOME (LOSS) | (633,620) | (21,095) |
Segment Total | ||
Revenues | 2,611,766 | 1,334,127 |
Cost of sales | 2,334,822 | (1,096,704) |
Gross Margin | 276,944 | 237,423 |
Total Operating Expenses | 838,318 | (142,758) |
OPERATING INCOME (LOSS) | (561,374) | 94,665 |
TOTAL OTHER INCOME (EXPENSE) | (76,190) | (20,309) |
NET INCOME (LOSS) | $ (637,564) | $ 74,356 |