Document and Entity Information
Document and Entity Information - USD ($) | 3 Months Ended | |
Nov. 30, 2016 | Jan. 10, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | Service Team Inc. | |
Document Type | 10-Q | |
Document Period End Date | Nov. 30, 2016 | |
Amendment Flag | false | |
Entity Central Index Key | 1,535,635 | |
Current Fiscal Year End Date | --08-31 | |
Entity Common Stock, Shares Outstanding | 271,505,515 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | Yes | |
Entity Well-known Seasoned Issuer | No | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Entity Public Float | $ 0 |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Nov. 30, 2016 | Aug. 31, 2016 |
Assets | ||
Cash | $ 82,340 | |
Accounts receivable | 272,776 | |
Other current assets | 60,000 | |
Total current assets | 415,116 | |
Property and equipment, net | 51,962 | $ 53,781 |
Prepaid expenses - non-current | 14,000 | |
TOTAL ASSETS | 481,078 | |
LIABILITIES & SHAREHOLDERS' (DEFICIT) | ||
Accounts payable | 165,034 | |
Convertible notes payable - related party, net | 7,500 | |
Convertible note payable, net | 48,573 | |
Promissory note payable, net | 165,458 | |
Accrued expenses | 87,829 | |
Accrued interest | 12,968 | |
Total Current Liabilities | 487,362 | |
TOTAL LIABILITIES | 487,362 | |
Common stock, $0.001 par value, 500,000,000 authorized, and 263,426,001 issued and outstanding as of November 30, 2016 and 168,671,089 issued and outstanding as of August 31, 2016 respectively. | 263,426 | |
Preferred stock - Series A, $0.001 par value, 100,000 authorized, 100,000 and 100,000 issued and outstanding as of November 30, 2016 and August 31, 2016, respectively. | 100 | |
Additional paid in capital | 2,101,415 | |
Accumulated deficit | (2,371,225) | |
TOTAL SHAREHOLDERS' (DEFICIT) | (6,284) | 103,829 |
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) | $ 481,078 | |
Restated [Member] | ||
Assets | ||
Cash | 321,728 | |
Accounts receivable | 222,423 | |
Other current assets | 40,000 | |
Total current assets | 584,151 | |
Property and equipment, net | 53,781 | |
Prepaid expenses - non-current | 14,000 | |
TOTAL ASSETS | 651,932 | |
LIABILITIES & SHAREHOLDERS' (DEFICIT) | ||
Accounts payable | 137,998 | |
Convertible notes payable - related party, net | 6,768 | |
Convertible note payable, net | 34,040 | |
Promissory note payable, net | 246,387 | |
Accrued expenses | 104,649 | |
Accrued interest | 18,261 | |
Total Current Liabilities | 548,103 | |
TOTAL LIABILITIES | 548,103 | |
Common stock, $0.001 par value, 500,000,000 authorized, and 263,426,001 issued and outstanding as of November 30, 2016 and 168,671,089 issued and outstanding as of August 31, 2016 respectively. | 168,671 | |
Preferred stock - Series A, $0.001 par value, 100,000 authorized, 100,000 and 100,000 issued and outstanding as of November 30, 2016 and August 31, 2016, respectively. | 100 | |
Additional paid in capital | 2,139,874 | |
Accumulated deficit | (2,204,816) | |
TOTAL SHAREHOLDERS' (DEFICIT) | 103,829 | |
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) | $ 651,932 |
CONSOLIDATED BALANCE SHEETS (U3
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Nov. 30, 2016 | Aug. 31, 2016 |
Common Stock, par or stated value | $ 0.001 | |
Common Stock, shares authorized | 500,000,000 | |
Common Stock, shares issued | 263,426,001 | |
Common Stock, shares outstanding | 263,426,001 | |
Preferred Stock, par or stated value | $ 0.001 | $ .001 |
Preferred Stock, shares authorized | 100,000 | 100,000 |
Preferred Stock, shares issued | 100,000 | |
Preferred Stock, shares outstanding | 100,000 | |
Restated [Member] | ||
Common Stock, par or stated value | $ 0.001 | |
Common Stock, shares authorized | 500,000,000 | |
Common Stock, shares issued | 168,671,089 | |
Common Stock, shares outstanding | 168,671,089 | |
Preferred Stock, par or stated value | $ 0.001 | |
Preferred Stock, shares authorized | 100,000 | |
Preferred Stock, shares issued | 100,000 | |
Preferred Stock, shares outstanding | 100,000 |
CONSOLIDATED STATEMENT OF OPERA
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | |
Nov. 30, 2016 | Nov. 30, 2015 | |
Consolidated Statement Of Operations | ||
REVENUES | $ 867,294 | $ 925,103 |
COST OF SALES | ||
COST OF SALES | 767,776 | 639,641 |
GROSS MARGIN | 99,518 | 258,462 |
OPERATING EXPENSES | ||
General & administrative expenses | 167,349 | 182,218 |
Depreciation expense | 1,818 | 1,228 |
Total Operating Expenses | 169,167 | 183,446 |
INCOME (LOSS) FROM OPERATIONS | (69,649) | 102,016 |
OTHER INCOME (EXPENSE) | ||
Interest Expense | (96,760) | (40,950) |
Gain on contingent consideration | 54,100 | |
Total Other (Expense) Income | (96,760) | 13,150 |
NET INCOME (LOSS) | $ (166,409) | $ 115,166 |
Weighted average number of common shares outstanding - basic | 209,890,136 | 13,430,624 |
Weighted average number of common shares outstanding - Fully diluted | 209,890,136 | 31,753,048 |
Net income (loss) per share - basic | $ 0 | $ 0.01 |
Net income (loss) per share - fully diluted | $ 0 | $ 0 |
CONSOLIDATED STATEMENT OF SHARE
CONSOLIDATED STATEMENT OF SHAREHOLDERS' (DEFICIT) FOR THE YEAR (Unaudited) - USD ($) | Common Stock | Preferred Stock | Additional Paid-In Capital | Subscription Payable [Member] | Accumulated Deficit | Total |
Beginning Balance at Aug. 31, 2015 | $ 13,431 | $ 100 | $ 1,612,788 | $ 22,000 | $ (1,747,341) | $ (99,022) |
Beginning Balance (in shares) at Aug. 31, 2015 | 13,430,624 | 100,000 | ||||
Shares Issued for Note Conversion | $ 155,240 | 144,423 | (22,000) | 277,663 | ||
Shares Issued for Note Conversion (in shares) | 155,240,465 | |||||
Stock based compensation | 83,525 | 83,525 | ||||
Beneficial conversion feature | 299,138 | 299,138 | ||||
Net Income (Loss) | (457,475) | (457,475) | ||||
Ending Balance at Aug. 31, 2016 | $ 168,671 | $ 100 | 2,139,874 | (2,204,816) | 103,829 | |
Ending Balance (in shares) at Aug. 31, 2016 | 168,671,089 | 100,000 | ||||
Shares Issued for Note Conversion | $ 94,755 | (38,459) | 56,296 | |||
Shares Issued for Note Conversion (in shares) | 94,754,912 | |||||
Net Income (Loss) | (166,409) | (166,409) | ||||
Ending Balance at Nov. 30, 2016 | $ 263,426 | $ 100 | $ 2,101,415 | $ (2,371,225) | $ (6,284) | |
Ending Balance (in shares) at Nov. 30, 2016 | 263,426,001 | 100,000 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 3 Months Ended | |
Nov. 30, 2016 | Nov. 30, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net Income (Loss) | $ (166,409) | $ 115,166 |
Adjustments to reconcile net income (loss) with cash provided by (used in) operations: | ||
Debt discount amortization | 82,154 | 23,488 |
Deferred financing cost amortization | 8,774 | |
Depreciation | 1,818 | 1,228 |
Gain on contingent consideration | (54,100) | |
CHANGE IN OPERATING ASSETS AND LIABILITIES | ||
Accounts receivable | (50,353) | (22,742) |
Accrued expenses | (2,793) | (6,017) |
Prepaid expenses | (20,000) | (5,000) |
Accounts payable | 27,037 | 8,388 |
Net Cash Provided by (Used in) Operating Activities. | (128,546) | 69,185 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Cash paid for the purchase of fixed assets | (52,827) | |
Net Cash Used In Investing Activities | (52,827) | |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Payments on promissory notes - third party | (110,842) | |
Net Cash Provided By (Used In) Financing Activities | (110,842) | |
Net Increase (Decrease) In Cash and Cash Equivalents | (239,388) | 16,358 |
Cash at Beginning of Period | 321,728 | 5,843 |
Cash at End of Period | 82,340 | 22,201 |
Supplemental Disclosures | ||
Interest Paid | ||
Taxes Paid | ||
Non-cash transactions: | ||
Conversions of debt to common stock | $ 56,296 |
ORGANIZATION
ORGANIZATION | 3 Months Ended |
Nov. 30, 2016 | |
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 ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Nov. 30, 2016 | |
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 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 an accumulated deficit as of November 30, 2016 of $2,371,225 and is dependent on raising 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 November 30, 2016, or August 31, 2016. 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. 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 Three customers represented 21%, 18% and 12% of total receivables as of August 31, 2016. During the three month period ended November 30, 2016, the Company had two customers that represented 13% and 23% of total sales. During the three month period ended November 30, 2015, the Company had one customer that represented 19% 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 November 30, 2016 or August 31, 2016. 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 $1,818 and $1,228 of depreciation expense during the three months ended November 30, 2016 and 2015, respectively. Net property and equipment were as follows at November 30, 2016 and August 31, 2016: 11/30/16 8/31/16 Equipment $ 243,444 $ 243,444 Vehicles 15,000 15,000 Furniture 1,500 1,500 Leasehold improvements 52,827 52,827 Subtotal 312,771 312,771 Less: accumulated depreciation (260,809 ) (258,990 ) Total Fixed Assets, Net $ 51,962 $ 53,781 Lease Commitments Service Team Inc., effective September 1, 2015, leased new facilities at 1818 Rosslynn Avenue, Fullerton, California, to manufacture its products. The Company has moved from 10633 Ruchti Road, South Gate, California, effective October 1, 2015. The new facility is leased for six and one half years at a price of $10,000 per month, for the first six months; and, $14,000 per month thereafter. Service Team Inc pays for the fire insurance and property taxes on the building estimated to be approximately $2,000 per month. The location consists of three acres of land and one building of approximately 30,000 square feet. The facility is approximately one-third larger than the prior facility in South Gate. As of November 30, 2016, the deferred rent related to this lease was $19,333. 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 Robert L. Cashman, 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, 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 November 30, 2016 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, 2016 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 November 30, 2016 and August 31, 2016 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 . 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. During the three month period ended November 30, 2016, because the Company operations resulted in net losses, no additional dilutive securities were included in the Diluted EPS as that would be anti-dilutive to the resulting diluted earnings per share. Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02, "Leases (Topic 842)". Under this guidance, an entity is required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. This guidance offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. This guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard will have on our consolidated financial statements. In April 2015, the FASB issued ASU 2015-05 regarding Subtopic 350-40, "Intangibles - Goodwill and Other - Internal-Use Software." The amendments in ASU 2015-05 provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, the customer should account for the software license element of the arrangement consistent with other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The amendments in ASU 2015-05 are effective for annual and interim periods beginning after December 15, 2015. Early adoption is permitted. The amendments in ASU 2015-05 may be applied either prospectively to all arrangements entered into or materially modified after the effective date or retrospectively. The Company is currently evaluating the impact of the adoption of this standard will have on our consolidated financial statements. |
CAPITAL STOCK
CAPITAL STOCK | 3 Months Ended |
Nov. 30, 2016 | |
Capital Stock | |
CAPITAL STOCK | NOTE 3 – CAPITAL STOCK The Company's authorized capital is 500,000,000 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. On December 2, 2015 the Company increased its authorized capital stock to 500,000,000 common shares. 2016 On January 23, 2015, Service Team Inc. filed with the Secretary of State of Nevada a Certificate of Designation for 100,000 shares of Series A Preferred Stock. The Designation gives the Series A Preferred Stock 500 votes per share. Series A Preferred Stock were not entitled to receive dividends, any liquidation preference, or conversion rights. On October 16, 2015, the Designation of Preferred Stock was amended to allow Preferred Shareholders to receive dividends in an amount equal to dividends paid per share on Common Stock. On July 27, 2016, an amendment was filed to increase the voting rights of the preferred stock from 500 votes per share to 10,000 votes per share. The Series A share amendments valued according to the additional voting rights and dividend rights assigned. The value assigned to the dividend rights was derived from a model utilizing future economic value of the dividends and was $525 which was recorded on the grant date as stock based compensation. The value assigned to the voting rights was derived from a model utilizing control premiums to value the voting control of the preferred stock and was $83,000 which was recorded on the grant date as stock based compensation. On February 12, 2016, the Articles of Incorporation were amended to increase the authorized shares of capital stock to 500,000,000. During September 2015, Tangers Investment Group LLC was issued 1,990,950 shares as payment for the $22,000 of subscriptions payable accrued at August 31, 2015. On November 25, 2015, Tangers Investment Group LLC converted $8,095 of its Note in the amount of into 1,541,401 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. On January 11, 2016, Tangers Investment Group LLC converted $6,190 of its Note in the amount of into 1,695,890 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. On February 3, 2016, Tangers Investment Group LLC converted $2,876 of its Note in the amount of into 2,054,286 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. On February 10, 2016, Tangers Investment Group LLC converted $3,450 of its Note in the amount of into 2,464,286 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. On March 1, 2016, Tangers Investment Group LLC converted $3,327 of its Note in the amount of into 2,376,464 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. On March 4, 2016, Tangers Investment Group LLC converted $3,328 of its Note in the amount of into 2,016,964 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. On April 4, 2016, Tangers Investment Group LLC converted $13,000 of its Note in the amount of into 5,895,692 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. On April 5, 2016, Tangers Investment Group LLC converted $5,000 of its Note in the amount of into 1,883,239 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. On April 18, 2016, Tangers Investment Group LLC converted $13,621 of its Note in the amount of into 4,656,726 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. On April 28, 2016, Tangers Investment Group LLC converted $12,705 of its Note in the amount of into 4,411,458 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. On May 18, 2016, Tangers Investment Group LLC converted $13,870 of its Note in the amount of into 5,137,037 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. On June 9, 2016, Tangers Investment Group LLC converted $10,250 of its Note in the amount of into 5,061,728 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. On July 6, 2016, Tangers Investment Group LLC converted $7,455 of its Note in the amount of into 5,344,086 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. On July 21, 2016, Tangers Investment Group LLC converted $9,115 of its Note in the amount of into 6,534,050 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. On July 29, 2016, Tangers Investment Group LLC converted $9,100 of its Note in the amount of into 7,777,778 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. On August 4, 2016, Tangers Investment Group LLC converted $11,524 of its Note in the amount of into 12,663,736 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. On August 12, 2016, Tangers Investment Group LLC converted $8,287 of its Note in the amount of into 13,927,731 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. On August 23, 2016, Tangers Investment Group LLC converted $9,115 of its Note in the amount of into 15,319,328 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. On January 19, 2016, Vis Vires Group converted $2,365 of its Note in the amount of into 1,341,250 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. On February 1, 2016, Vis Vires Group converted $2,745 of its Note in the amount of into 1,098,000 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. On February 8, 2016, Vis Vires Group converted $4,695 of its Note in the amount of into 2,471,053 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. On February 18, 2016, Vis Vires Group converted $4,695 of its Note in the amount of into 2,471,053 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. On February 26, 2016, Vis Vires Group converted $5,435 of its Note in the amount of into 2,470,455 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. On March 8, 2016, Vis Vires Group converted $11,075 of its Note in the amount of into 3,572,581 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. On March 16, 2016, Vis Vires Group converted $3,990 of its Note in the amount of into 1,530,556 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. On February 1, 2016, LG Capital converted $2,470 of its Note in the amount of into 562,340 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. On February 12, 2016, LG Capital converted $2,500 of its Note in the amount of into 379,750 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. On February 29, 2016, LG Capital converted $2,485 of its Note in the amount of into 718,628 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. On March 7, 2016, LG Capital converted $3,183 of its Note in the amount of into 1,929,169 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. On March 14, 2016, LG Capital converted $5,101 of its Note in the amount of into 2,081,987 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. On March 29, 2016, LG Capital converted $5,214 of its Note in the amount of into 2,128,016 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. On March 28, 2016, LG Capital converted $5,485 of its Note in the amount of into 2,238,746 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. On March 31, 2016, LG Capital converted $5,277 of its Note in the amount of into 1,788,901 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. On April 29, 2016, LG Capital converted $13,503 of its Note in the amount of into 4,154,756 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. On May 9, 2016, LG Capital converted $13,026 of its Note in the amount of into 4,070,512 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. On February 3, 2016, JMJ Financial converted $1,435 of its Note in the amount of into 1,025,000 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. On February 10, 2016, JMJ Financial converted $1,728 of its Note in the amount of into 1,234,000 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. On February 12, 2016, JMJ Financial converted $1,813 of its Note in the amount of into 1,295,000 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. On February 16, 2016, JMJ Financial converted $2,447 of its Note in the amount of into 1,748,000 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. On March 1, 2016, JMJ Financial converted $2,618 of its Note in the amount of into 1,870,000 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. On March 7, 2016, JMJ Financial converted $2,912 of its Note in the amount of into 2,080,000 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. On March 11, 2016, JMJ Financial converted $4,125 of its Note in the amount of into 2,500,000 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. On March 17, 2016, JMJ Financial converted $7,105 of its Note in the amount of into 2,900,000 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. On March 23, 2016, JMJ Financial converted $6,928 of its Note in the amount of into 2,827,882 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 the twelve month period ended August 31, 2016, $299,138 of beneficial conversion features were recorded resulting from convertible debts issued during the same period. Please refer to Note 4 for further information regarding the discounts on the convertible debt transactions. As of August 31, 2016 the Company has not granted any stock options. During 2016 the Company did not sell any Common Shares. The only shares issued were for Conversion of Notes. 2017 On September 1, 2016, Tangers Investment Group LLC converted $8,257 of its Note in the amount of into 16,851,020 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. On September 14, 2016, Tangers Investment Group LLC converted $5,937 of its Note in the amount of into 12,116,327 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. On October 18, 2016, Tangers Investment Group LLC converted $6,869 of its Note in the amount of into 9,862,168 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. On Novmeber 8, 2016, Tangers Investment Group LLC converted $6,523 of its Note in the amount of into 10,353,968 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. On November 10, 2016, Tangers Investment Group LLC converted $13,710 of its Note in the amount of into 21,761,905 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. On November 21, 2016, Tangers Investment Group LLC converted $15,000 of its Note in the amount of into 23,809,524 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. As of November 30, 2016 the Company has not granted any stock options. 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 | 3 Months Ended |
Nov. 30, 2016 | |
Debt Transactions | |
DEBT TRANSACTIONS | NOTE 4 – DEBT TRANSACTIONS Convertible Notes Payable – Related Party U.S. Affiliated On July 31, 2014, the Company issued a convertible note to Hallmark Venture Group inc. (a related party) for $18,003 of cash consideration. On September 31, 2014, Hallmark Venture Group Inc. sold the note to U S Affiliated Inc. (a related party). 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 February 29, 2016. During the period ended August 31, 2016, the note was sold to Tangiers and $13,572 of accrued interest was added to the note principal balance bringing the new principal balance up to $31,575. As there was an updated conversion feature on the new note, the discount of $31,575 was recorded with the offset to additional paid in capital. The debt discount was fully amoritzed during the period ended August 31, 2016 as a result of the conversions of the note by Tangiers. The note had accrued interest of $0 and $1,170 as of August 31, 2016 and August 31, 2015, respectively. The debt discount had a balance at August 31, 2016 and August 31, 2015 was $0 and $0, respectively. During the year ended August 31, 2016 the holder of the note converted $31,575 of the note and interest to common stock with a remaining balance of $1,904 which the Company repaid in cash during the same period thus repaying the note in full. 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 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. On May 12, 2016, the Company issued a convertible note to U.S. Affiliated, Inc. (a related party) for $7,500 of cash consideration. The note bears interest at 6%, matures on September 12, 2016, and is convertible into common stock at 50% of the average bid price of the stock during the 30 days prior to the conversion. The Company recorded a debt discount equal to $7,500 due to this conversion feature and amortized $6,768 during the year ended August 31, 2016, with a remaining debt discount balance of $732 as of August 31, 2016. During the three months ended November 30, 2016, $732 of the debt discount was amortized leaving a remaining debt discount of $0 as of November 30, 2016. The note had accrued interest of $250 and $137 as of November 30, 2016 and August 31, 2016, respectively. This note is currently in default. 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. Convertible Notes Payable – Third Party Vis Veres Group 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 $0 and $500 as of August 31, 2016 and August 31, 2015, respectively. During the year ended August 31, 2016, Vis Veres Group had converted the note into common shares within the terms of the agreement, therefore, there was no gain or loss recognized as a result of these conversions. The debt discounts had a balance at August 31, 2016 and August 31, 2015 of $0 and $29,857, respectively. The Company recorded debt discount amortization expense of $29,857 and $8,143 during the year ended August 31, 2016 and the year ended August 31, 2015, respectively. As the note has been fully converted, it is considered paid in full as of August 31, 2016. 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. JMJ Financial Group 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 $0 and $374 as of August 31, 2016 and August 31, 2015, respectively. During the year ended August 31, 2016, JMJ Financial had converted the note into common shares within the terms of the agreement, therefore, there was no gain or loss recognized as a result of these conversions. The debt discounts had a balance at August 31, 2016 and August 31, 2015 of $0 and $24,667, respectively. The Company recorded debt discount amortization expense of $24,667 and $3,111 during the year ended August 31, 2016 and the year ended August 31, 2015, respectively. As the note has been fully converted, it is considered paid in full as of August 31, 2016. 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. LG Capital Funding, LLC 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 $0 and $273 as of August 31, 2016 and August 31, 2015, respectively. During the year ended August 31, 2016, LG Capital converted the note into common shares within the terms of the agreement, therefore, there was no gain or loss recognized as a result of these conversions. The debt discounts had a balance at August 31, 2016 and August 31, 2015 of $0 and $23,097, respectively. The Company recorded debt discount amortization expense of $23,097 and $3,403 during the year ended August 31, 2016 and the year ended August 31, 2015, respectively. As the note has been fully converted, it is considered paid in full as of August 31, 2016. 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. On April 10, 2016, 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 $0 and $0 as of August 31, 2016 and August 31, 2015, respectively. During the year ended August 31, 2016, LG Capital converted the note into common shares within the terms of the agreement, therefore, there was no gain or loss recognized as a result of these conversions. The debt discounts had a balance at August 31, 2016 and August 31, 2015 of $0 and $0, respectively. The Company recorded debt discount amortization expense of $26,500 and $0 during the year ended August 31, 2016 and the year ended August 31, 2015, respectively. As the note has been fully converted, it is considered paid in full as of August 31, 2016. 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. Tangiers Capital Group 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 issuance fees. The note had accrued interest of $0 and $3,119 as of August 31, 2016 and August 31, 2015, respectively. During the year ended August 31, 2016, Tangiers Capital had converted the note into common shares within the terms of the agreement, therefore, there was no gain or loss recognized as a result of these conversions. $22,000 of the conversion was recorded as subscription payable at August 31, 2015, and then the shares were subsequently issued during 2016. The debt discounts had a balance at August 31, 2016 and August 31, 2015 of $0 and $7,656, respectively. The Company recorded debt discount amortization expense of $7,656 and $19,344 during the year ended August 31, 2016 and the year ended August 31, 2015, respectively. As the note has been fully converted, it is considered paid in full as of August 31, 2016. 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. On November 25, 2015, the Company issued a convertible note to Tangiers Capital Group for $38,500 of cash consideration. The note bears interest at 12%, matures on November 25, 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 $35,000 due to this conversion feature. The Company also recorded a $3,500 debt discount due to issuance fees. The note had accrued interest of $4,620 as of August 31, 2016. The debt discounts had a balance at August 31, 2016 and August 31, 2015 of $9,039 and $0, respectively. The Company recorded debt discount amortization expense of $29,461 and $0 during the year ended August 31, 2016 and the year ended August 31, 2015, respectively. The Company recorded debt discount amortization of $9,039 during the three months ended November 30, 2016 leaving a remaining debt discount balance of $0. During the year ended August 31, 2016, $28,926 of principal was converted into common shares. During the three months ended November 30, 2016, the remaining balance of the note of $9,574 plus $4,620 of accrued interest on the note was fully converted into 28,967,347 common shares; thus, it is considered paid in full as of November 30, 2016. 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. On April 15, 2016, the Company issued a convertible note to Tangiers Capital Group for $27,500 of cash consideration. The note bears interest at 10%, matures on April 15, 2017, 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 $2,500 debt discount due to issuance fees. The note had accrued interest of $2,750 as of August 31, 2016. The debt discounts had a balance at August 31, 2016 and August 31, 2015 of $17,103 and $0, respectively. The Company recorded debt discount amortization expense of $10,397 and $0 during the year ended August 31, 2016 and the year ended August 31, 2015, respectively. The Company recorded debt discount amortization of $17,103 during the three months ended November 30, 2016 leaving a remaining debt discount balance of $0. During the three months ended November 30, 2016, principal of $27,402 plus $14,700 of accrued interest on the note was converted into 65,787,565 common shares; thus, the remaining balance of $98 remains as of November 30, 2016. 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. On May 6, 2016, the Company issued a convertible note to Tangiers Capital Group for $35,750 of cash consideration. The note bears interest at 10%, matures on May 6, 2017, 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 $32,500 due to this conversion feature. The Company also recorded a $3,250 debt discount due to issuance fees. The note had accrued interest of $4,469 and $3,575 as of November 30, 2016 and August 31, 2016, respectively. The debt discounts had a balance at August 31, 2016 and August 31, 2015 of $24,290 and $0, respectively. The Company recorded debt discount amortization expense of $11,460 and $0 during the year ended August 31, 2016 and the year ended August 31, 2015, respectively. The Company recorded debt discount amortization of $8,913 during the three months ended November 30, 2016 leaving a remaining debt discount balance of $15,377. 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. On June 13, 2016, the Company issued a convertible note to Tangiers Capital Group for $38,500 of cash consideration. The note bears interest at 10%, matures on June 13, 2017, 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 $35,000 due to this conversion feature. The Company also recorded a $3,500 debt discount due to issuance fees. The note had accrued interest of $4,813 and $3,850 as of November 30, 2016 and August 31, 2016, respectively. The debt discounts had a balance at August 31, 2016 and August 31, 2015 of $30,167 and $0, respectively. The Company recorded debt discount amortization expense of $8,333 and $0 during the year ended August 31, 2016 and the year ended August 31, 2015, respectively. The Company recorded debt discount amortization of $9,599 during the three months ended November 30, 2016 leaving a remaining debt discount balance of $20,569. 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. On July 18, 2016, the Company issued a convertible note to Tangiers Capital Group for $27,500 of cash consideration. The note bears interest at 10%, matures on July 18, 2017, 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 $2,500 debt discount due to issuance fees. The note had accrued interest of $3,438 and $2,750 as of November 30, 2016 and August 31, 2016, respectively. The debt discounts had a balance at August 31, 2016 and August 31, 2015 of $24,185 and $0, respectively. The Company recorded debt discount amortization expense of $3,315 and $0 during the year ended August 31, 2016 and the year ended August 31, 2015, respectively. The Company recorded debt discount amortization of $6,856 during the three months ended November 30, 2016 leaving a remaining debt discount balance of $17,329. 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. Robert Knudsen On December 2, 2015, the Company issued a convertible note to Robert Knudsen for $21,500 of accounts payable that was converted into this convertible note. The note bears interest at 12% and is due on demand, and is convertible into common stock at 45% of the lowest trading bid price during the 30 days prior to conversion. The Company recorded a debt discount equal to $21,500 due to this conversion feature. The note had accrued interest of $0 as of August 31, 2016. The debt discounts had a balance at August 31, 2016 and August 31, 2015 of $0 and $0, respectively. The Company recorded debt discount amortization expense of $21,500 and $0 during the year ended August 31, 2016 and the year ended August 31, 2015, 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 $0.00005. 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. Promissory Notes Payable – Third Party On Deck Capital On August 23, 2016, the Company issued a promissory note to On Deck Capital for $243,750 of cash consideration. The note bears interest at 33%, matures on May 20, 2017. The Company recorded a debt discount equal to $82,500 due to the unpaid interest which was added to the principal balance to be repaid during the 9 month note. The Company also recorded a $6,250 debt discount due to origination fees due at the beginning of the note. During the year ended August 31, 2016, the company amortized $2,637 of the debt discounts into interest expense leaving a remaining total debt discount on the note of $86,363 as of August 31, 2016. During the three months ended November 30, 2016, the Company amortized $29,912 of the debt discounts into interest expense, leaving a remaining total debt discount on the note of $56,209 as of November 30, 2016. During the three months ended November 30, 2016, the Company repaid $110,842 of the note with cash on hand, leaving a remaining principal balance of $221,667 on the note as of November 30, 2016. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Nov. 30, 2016 | |
Related Party Transactions | |
RELATED PARTY TRANSACTIONS | NOTE 5- RELATED PARTY TRANSACTIONS Convertible Notes Payable – Related Party U.S. Affiliated On July 31, 2014, the Company issued a convertible note to Hallmark Venture Group inc. (a related party) for $18,003 of cash consideration. On September 31, 2014, Hallmark Venture Group Inc. sold the note to U S Affiliated Inc. (a related party). 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 February 29, 2016. During the period ended August 31, 2016, the note was sold to Tangiers and $13,572 of accrued interest was added to the note principal balance bringing the new principal balance up to $31,575. As there was an updated conversion feature on the new note, the discount of $31,575 was recorded with the offset to additional paid in capital. The debt discount was fully amoritzed during the period ended August 31, 2016 as a result of the conversions of the note by Tangiers. The note had accrued interest of $0 and $1,170 as of August 31, 2016 and August 31, 2015, respectively. The debt discount had a balance at August 31, 2016 and August 31, 2015 was $0 and $0, respectively. During the year ended August 31, 2016 the holder of the note converted $31,575 of the note and interest to common stock with a remaining balance of $1,904 which the Company repaid in cash during the same period thus repaying the note in full. 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. On July 31, 2014, the Company issued a convertible note to Hallmark Venture Group Inc. (a related party) for $14,315 of cash consideration. . On September 30, 2014, Hallmark Venture Group Inc. sold the note to U S Affiliated Inc. (a related party). 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 February 29, 2016. During the year ended August 31, 2016, the note was sold to Tangiers and $10,799 of accrued interest was added to the note principal balance bringing the new principal balance up to $25,114. As there was an updated conversion feature on the new note, the discount of $25,114 was recorded with the offset to additional paid in capital. The debt discount was fully amoritzed during the year ended August 31, 2016 as a result of the conversions of the note by Tangiers. The note had accrued interest of $0 and $930 as of August 31, 2016 and August 31, 2015, respectively. The debt discount had a balance at August 31, 2016 and August 31, 2015 of $0 and $0, respectively. During the year ended August 31, 2016 the holder of the note converted $25,114 of the note and interest to common stock thus repaying the note in full. 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. On May 12, 2016, the Company issued a convertible note to U.S. Affiliated, Inc. (a related party) for $7,500 of cash consideration. The note bears interest at 6%, matures on September 12, 2016, and is convertible into common stock at 50% of the average bid price of the stock during the 30 days prior to the conversion. The Company recorded a debt discount equal to $7,500 due to this conversion feature and amortized $6,768 during the year ended August 31, 2016, with a remaining debt discount balance of $732 as of August 31, 2016. During the three months ended November 30, 2016, $732 of the debt discount was amortized leaving a remaining debt discount of $0 as of November 30, 2016. The note had accrued interest of $250 and $137 as of November 30, 2016 and August 31, 2016, respectively. This note is currently in default. 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. Lease Commitments Service Team Inc., effective September 1, 2015, leased new facilities at 1818 Rosslynn Avenue, Fullerton, California, to manufacture its products. The Company has moved from 10633 Ruchti Road, South Gate, California, effective October 1, 2015. The new facility is leased for six and one half years at a price of $10,000 per month, for the first six months; and, $14,000 per month thereafter. Service Team Inc pays for the fire insurance and property taxes on the building estimated to be approximately $2,000 per month. The location consists of three acres of land and one building of approximately 30,000 square feet. The facility is approximately one-third larger than the prior facility in South Gate. As of November 30, 2016, the deferred rent related to this lease was $19,333. 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 | 3 Months Ended |
Nov. 30, 2016 | |
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 $863,541 as of November 30, 2016, that will be offset against future taxable income. The available net operating loss carry forwards will expire in various years through 2035. 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 November 30, 2016 and August 31, 2016: 11/30/16 8/31/16 Net tax loss carry-forwards $ 863,541 $ 734,607 Statutory rate 34 % 34 % Expected tax recovery 293,604 249,766 Change in valuation allowance (293,604 ) (249,766 ) Income tax provision $ $ — Components of deferred tax asset: Non capital tax loss carry forwards $ 293,604 $ 249,766 Less: valuation allowance (293,604 ) (249,766 ) Net deferred tax asset $ — $ — |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Nov. 30, 2016 | |
Commitments And Contingencies | |
COMMITMENTS AND CONTINGENCIES | NOTE 7 – COMMITMENTS AND CONTINGENCIES Litigation None. Operating Leases Service Team Inc., effective September 1, 2015, leased new facilities at 1818 Rosslynn Avenue, Fullerton, California, to manufacture its products. The Company has moved from 10633 Ruchti Road, South Gate, California, effective October 1, 2015. The new facility is leased for six and one half years at a price of $10,000 per month, for the first six months; and, $14,000 per month thereafter. Service Team Inc pays for the fire insurance and property taxes on the building estimated to be approximately $2,000 per month. The location consists of three acres of land and one building of approximately 30,000 square feet. The facility is approximately one-third larger than the prior facility in South Gate. As of November 30, 2016, the deferred rent related to this lease was $19,333. 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. Contingent Consideration During the period from November 29, 2011 until June 1, 2012, the Company sold 541,000 shares to various individuals for a total cash consideration of $54,100. The funds were used for operating capital of the Company including rent and payroll. Our rescission offer covers twenty-five shareholders (25) for a total of 541,000 shares originally sold for $54,100. During the three month period ended November 30, 2015, as the rescission offer expired, the $54,100 was reversed from the liability resulting in a gain in other income and expense of $54,100 as the Company is no longer required to return funds to investors. In addition, the Company has not been requested by any investor to repay funds from these stock sales during the period from November 29, 2011 through June 1, 2012. |
SEGMENT REPORTING
SEGMENT REPORTING | 3 Months Ended |
Nov. 30, 2016 | |
Segment Reporting | |
Segment Reporting | NOTE 8 – SEGMENT REPORTING Our operations during the three month periods ending November 30, 2016 and November 30, 2015, 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 — 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 three months ended: November 30, 2016: Trade Leasing Service Products Total Revenues $ 867,294 $ — $ 867,294 Cost of sales 767,776 — 767,776 Gross margin 99,518 — 99,518 Operating expenses 159,700 9,467 169,167 Operating loss (60,182 ) (9,467 ) (69,649 ) Other expense (82,154 ) (14,606 ) (96,760 ) Net income (loss) $ (142,336 ) $ (24,073 ) $ (166,409 ) November 30, 2015: Trade Leasing Service Products Total Revenues $ 925,103 $ — $ 925,103 Cost of sales 639,641 — 639,641 Gross margin 285,462 — 285,462 Operating expenses 179,392 4,054 183,446 Operating profit (loss) 106,070 (4,054 ) 102,016 Other income — 13,150 13,150 Net income (loss) $ 106,070 $ 9,096 $ 115,166 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Nov. 30, 2016 | |
Subsequent Events | |
SUBSEQUENT EVENTS | NOTE 9 – SUBSEQUENT EVENTS On December 29, 2016, Tangers Investment Group LLC converted $4,327 of its Note in the amount of into 8,079,514 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. |
SUMMARY OF SIGNIFICANT ACCOUN16
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Nov. 30, 2016 | |
Summary Of Significant 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 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 an accumulated deficit as of November 30, 2016 of $2,371,225 and is dependent on raising 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 November 30, 2016, or August 31, 2016. |
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. |
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 Three customers represented 21%, 18% and 12% of total receivables as of August 31, 2016. During the three month period ended November 30, 2016, the Company had two customers that represented 13% and 23% of total sales. During the three month period ended November 30, 2015, the Company had one customer that represented 19% 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 November 30, 2016 or August 31, 2016. |
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 $1,818 and $1,228 of depreciation expense during the three months ended November 30, 2016 and 2015, respectively. Net property and equipment were as follows at November 30, 2016 and August 31, 2016: 11/30/16 8/31/16 Equipment $ 243,444 $ 243,444 Vehicles 15,000 15,000 Furniture 1,500 1,500 Leasehold improvements 52,827 52,827 Subtotal 312,771 312,771 Less: accumulated depreciation (260,809 ) (258,990 ) Total Fixed Assets, Net $ 51,962 $ 53,781 |
Lease Commitments | Lease Commitments Service Team Inc., effective September 1, 2015, leased new facilities at 1818 Rosslynn Avenue, Fullerton, California, to manufacture its products. The Company has moved from 10633 Ruchti Road, South Gate, California, effective October 1, 2015. The new facility is leased for six and one half years at a price of $10,000 per month, for the first six months; and, $14,000 per month thereafter. Service Team Inc pays for the fire insurance and property taxes on the building estimated to be approximately $2,000 per month. The location consists of three acres of land and one building of approximately 30,000 square feet. The facility is approximately one-third larger than the prior facility in South Gate. As of November 30, 2016, the deferred rent related to this lease was $19,333. 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 Robert L. Cashman, 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, 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 November 30, 2016 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, 2016 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 November 30, 2016 and August 31, 2016 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 . |
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. During the three month period ended November 30, 2016, because the Company operations resulted in net losses, no additional dilutive securities were included in the Diluted EPS as that would be anti-dilutive to the resulting diluted earnings per share. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02, "Leases (Topic 842)". Under this guidance, an entity is required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. This guidance offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. This guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard will have on our consolidated financial statements. In April 2015, the FASB issued ASU 2015-05 regarding Subtopic 350-40, "Intangibles - Goodwill and Other - Internal-Use Software." The amendments in ASU 2015-05 provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, the customer should account for the software license element of the arrangement consistent with other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The amendments in ASU 2015-05 are effective for annual and interim periods beginning after December 15, 2015. Early adoption is permitted. The amendments in ASU 2015-05 may be applied either prospectively to all arrangements entered into or materially modified after the effective date or retrospectively. The Company is currently evaluating the impact of the adoption of this standard will have on our consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN17
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Nov. 30, 2016 | |
Summary Of Significant Accounting Policies Tables | |
Schedule of Net property and equipment | Net property and equipment were as follows at November 30, 2016 and August 31, 2016: 11/30/16 8/31/16 Equipment $ 243,444 $ 243,444 Vehicles 15,000 15,000 Furniture 1,500 1,500 Leasehold improvements 52,827 52,827 Subtotal 312,771 312,771 Less: accumulated depreciation (260,809 ) (258,990 ) Total Fixed Assets, Net $ 51,962 $ 53,781 |
Schedule of fair value of assets and liabilities measured on recurring basis | The following table presents assets and liabilities that were measured and recognized at fair value as of November 30, 2016 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, 2016 on a recurring basis: Total Realized Description Level 1 Level 2 Level 3 Loss $ — $ — $ — $ — Total $ — $ — $ — $ — |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 3 Months Ended |
Nov. 30, 2016 | |
Income Taxes Tables | |
Schedule of Income Tax Provions and Components | 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 November 30, 2016 and August 31, 2016: 11/30/16 8/31/16 Net tax loss carry-forwards $ 863,541 $ 734,607 Statutory rate 34 % 34 % Expected tax recovery 293,604 249,766 Change in valuation allowance (293,604 ) (249,766 ) Income tax provision $ $ — Components of deferred tax asset: Non capital tax loss carry forwards $ 293,604 $ 249,766 Less: valuation allowance (293,604 ) (249,766 ) Net deferred tax asset $ — $ — |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 3 Months Ended |
Nov. 30, 2016 | |
Segment Reporting Tables | |
Summarized financial information concerning reportable segments | Summarized financial information concerning reportable segments is shown in the following table for the three months ended: November 30, 2016: Trade Leasing Service Products Total Revenues $ 867,294 $ — $ 867,294 Cost of sales 767,776 — 767,776 Gross margin 99,518 — 99,518 Operating expenses 159,700 9,467 169,167 Operating loss (60,182 ) (9,467 ) (69,649 ) Other expense (82,154 ) (14,606 ) (96,760 ) Net income (loss) $ (142,336 ) $ (24,073 ) $ (166,409 ) November 30, 2015: Trade Leasing Service Products Total Revenues $ 925,103 $ — $ 925,103 Cost of sales 639,641 — 639,641 Gross margin 285,462 — 285,462 Operating expenses 179,392 4,054 183,446 Operating profit (loss) 106,070 (4,054 ) 102,016 Other income — 13,150 13,150 Net income (loss) $ 106,070 $ 9,096 $ 115,166 |
Organization Narrative (Details
Organization Narrative (Details Narrative) | Jun. 05, 2014shares |
Organization Narrative Details Narrative | |
Number of shares of common stock acquired in Trade Leasing Inc. | 4,000,000 |
SUMMARY OF SIGNIFICANT ACCOUN21
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 3 Months Ended | 12 Months Ended | ||
Nov. 30, 2016USD ($) | Nov. 30, 2015 | Aug. 30, 2016 | Aug. 31, 2016USD ($) | |
Allowance for Accounts receivable | $ 3,626 | |||
Lease of California office premises per month | 10,000 | |||
Cash insured by the Federal Deposit Insurance Corporation ("FDIC") | $ 250,000 | $ 250,000 | ||
Accounts Receivable One [Member] | ||||
Total Receivable | .23 | .21 | ||
Accounts Receivable Two [Member] | ||||
Total Receivable | .11 | .18 | ||
Accounts Receivable Three [Member] | ||||
Total Receivable | .10 | .12 | ||
Sales Revenue One [Member] | ||||
Total Revenue | .13 | .19 | ||
Sales Revenue Two [Member] | ||||
Total Revenue | .23 |
SUMMARY OF SIGNIFICANT ACCOUN22
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 3 Months Ended | ||
Nov. 30, 2016 | Nov. 30, 2015 | Aug. 31, 2016 | |
Total fixed assets, gross | $ 312,771 | $ 312,771 | |
Less: accumulated depreciation | (260,809) | (258,990) | |
Total fixed assets, net | 51,962 | 53,781 | |
Depreciation Expense | 1,818 | $ 1,228 | |
Equipment | |||
Total fixed assets, gross | 243,444 | 243,444 | |
Vehicles | |||
Total fixed assets, gross | 15,000 | 15,000 | |
Furniture | |||
Total fixed assets, gross | 1,500 | 1,500 | |
Leasehold improvements | |||
Total fixed assets, gross | $ 52,827 | $ 52,827 |
CAPITAL STOCK (Details)
CAPITAL STOCK (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Nov. 30, 2016 | Nov. 30, 2015 | May 31, 2015 | Feb. 28, 2015 | Aug. 31, 2016 | |
Capital Stock Details | |||||
Common Stock, par or stated value | $ 0.001 | ||||
Common Stock, shares authorized | 500,000,000 | ||||
Preferred Stock, shares authorized | 100,000 | 100,000 | |||
Preferred Stock, par or stated value | $ 0.001 | $ .001 | |||
Shares issued for cash to investor | $ 4,000 | $ 9,750 | $ 25,000 | ||
Shares issued for cash to investor (in shares) | 22,000 | 55,000 | 63,333 | ||
Imputed interest | $ 683 |
DEBT TRANSACTIONS (Details Narr
DEBT TRANSACTIONS (Details Narrative) - USD ($) | Aug. 10, 2016 | Jun. 21, 2015 |
Debt Transactions Details Narrative | ||
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 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | Nov. 30, 2016 | Aug. 31, 2016 |
Income Taxes Details | ||
Net tax loss carry-forwards | $ 863,541 | $ 734,607 |
Statutory rate | 34.00% | 34.00% |
Expected tax recovery | $ 293,604 | $ 249,766 |
Change in valuation allowance | (293,604) | (249,766) |
Income tax provision | $ 0 | $ 0 |
INCOME TAXES (Details 2)
INCOME TAXES (Details 2) - USD ($) | Nov. 30, 2016 | Aug. 31, 2016 |
Income Taxes Details 2 | ||
Non capital tax loss carry forwards | $ 209,807 | $ 293,604 |
Less: valuation allowance | (209,807) | (293,604) |
Net deferred tax asset | $ 0 | $ 0 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | 3 Months Ended |
Nov. 30, 2016USD ($) | |
Commitments And Contingencies Details | |
Lease of California office premises per month | $ 10,000 |
SEGMENT REPORTING (Details)
SEGMENT REPORTING (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Nov. 30, 2016 | Nov. 30, 2015 | Aug. 31, 2016 | |
Revenues | $ 867,294 | $ 925,103 | |
Cost of sales | 767,776 | 639,641 | |
Gross Margin | 99,518 | 258,462 | |
Total Operating Expenses | 169,167 | 183,446 | |
TOTAL OTHER INCOME (EXPENSE) | (96,760) | 13,150 | |
NET INCOME (LOSS) | (166,409) | 115,166 | $ (457,475) |
Trade Leasing | |||
Revenues | 867,294 | 925,103 | |
Cost of sales | 767,776 | 639,641 | |
Gross Margin | 99,518 | 285,462 | |
Total Operating Expenses | 159,700 | 179,392 | |
OPERATING INCOME (LOSS) | (60,182) | 106,070 | |
TOTAL OTHER INCOME (EXPENSE) | (82,154) | ||
NET INCOME (LOSS) | (142,336) | 106,070 | |
Service Products | |||
Revenues | |||
Cost of sales | |||
Gross Margin | |||
Total Operating Expenses | 9,467 | 4,054 | |
OPERATING INCOME (LOSS) | (9,467) | (4,054) | |
TOTAL OTHER INCOME (EXPENSE) | (14,606) | 13,150 | |
NET INCOME (LOSS) | (24,073) | 9,096 | |
Segment Total | |||
Revenues | 867,294 | 925,103 | |
Cost of sales | 767,776 | 639,641 | |
Gross Margin | 99,518 | 285,462 | |
Total Operating Expenses | 169,167 | 183,446 | |
OPERATING INCOME (LOSS) | (69,649) | 102,016 | |
TOTAL OTHER INCOME (EXPENSE) | (96,760) | 13,150 | |
NET INCOME (LOSS) | $ (166,409) | $ 115,166 |