UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2005
Commission file number: 0-21279
-----------------------
ABSOLUTE WASTE SERVICES, INC.
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(Name of small business issuer as specified in its charter)
FLORIDA 59-3223708
------------------------------ -----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
141 West Jackson Boulevard, Suite 2182, Chicago, Illinois 60604
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(Address of principal executive offices, including zip code)
(312) 427-5457
-------------------------
(Issuer's Telephone Number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
YES [X] NO [ ]
Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. YES [X] NO [ ]
As of June 30, 2005, the issuer had 60,469,250 shares of common stock,
$0.0001 par value, issued and outstanding.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
INDEX
Page
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Part I - Financial Information
Item 1. Financial Statements
Balance Sheet -
June 30, 2005............................................... 3
Statements of Operations -
Three months and Nine months ended
June 30, 2005 and 2004...................................... 4
Statements of Changes in Stockholders' Deficit
Nine months ended June 30, 2005............................. 5
Statements of Cash Flows -
Nine months ended
June 30, 2005 and 2004...................................... 6
Notes to Financial Statements............................... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations......................... 8
Item 3. Controls and Procedures........................................... 13
Part II - Other Information
Item 1. Legal
Proceedings.......................................................... 13
Item 2. Changes in Securities and Use of Proceeds......................... 13
Item 4. Submission of Matters to a Vote of Security Holders............... 13
Item 6.
Exhibits............................................................. 14
Signatures................................................................ 15
2
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements
Absolute Waste Services, Inc.
(f/k/a) Thermacell Technologies, Inc.
Balance Sheet
June 30, 2005
(Unaudited)
Assets
Cash $ --
============
--
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable $ 190,590
Accrued payroll taxes 273,812
Shareholder advances 46,678
------------
Total current liabilities 511,080
------------
Stockholders' deficit:
Common stock; $.0001 par value; 150,000,000 shares authorized;
60,469,250 shares issued and outstanding 6,047
Additional paid-in capital 16,365,114
Common stock payable 539,983
Accumulated deficit (17,422,224)
------------
Total stockholders' deficit (511,080)
------------
$ --
============
The accompanying notes are an integral part of the financial statements.
3
Absolute Waste Services, Inc.
(f/k/a) Thermacell Technologies, Inc.
Statements of Operations
(Unaudited)
Three Months Ended June 30, Nine Months Ended June 30,
---------------------------- ----------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
Sales $ -- $ -- $ -- $ --
------------ ------------ ------------ ------------
Cost of sales -- -- -- --
------------ ------------ ------------ ------------
Gross profit -- -- -- --
------------ ------------ ------------ ------------
Selling, general and administrative
expenses 121,639 13,546 173,629 51,135
------------ ------------ ------------ ------------
Net loss from operations (121,639) (13,546) (173,629) (51,135)
============ ============ ============ ============
Net loss per share $ (0.00) (0.00) (0.01) $ (0.00)
============ ============ ============ ============
Weighted average number of
common shares outstanding 34,387,245 13,000,000 20,208,293 13,000,000
============ ============ ============ ============
The accompanying notes are an integral part of the financial statements.
4
Absolute Waste Services, Inc.
(f/k/a) Thermacell Technologies, Inc.
Statements of Changes in Stockholders' Deficit
(Unaudited)
Nine Months Ended June 30, 2005
Common Stock
--------------------------- Additional
Number of Paid-in Common Stock Accumulated
Shares Amount Capital Payable Deficit Total
------------ ------------ ------------ ------------ ------------ ------------
Balance, September 30, 2004 13,000,000 $ 1,300 $ 16,179,984 $ 539,983 $(17,248,595) $ (527,328)
Net loss for the period -- -- -- -- (173,629) (173,629)
Stock issued for debt 47,469,250 4,747 185,130 -- -- 189,877
------------ ------------ ------------ ------------ ------------ ------------
Balance, June 30, 2005 60,469,250 $ 6,047 $ 16,365,144 $ 539,983 $(17,422,224) $ (511,080)
============ ============ ============ ============ ============ ============
The accompanying notes are an integral part of the financial statements.
5
Absolute Waste Services, Inc.
(f/k/a) Thermacell Technologies, Inc.
Statements of Cash Flows
(Unaudited)
Nine Months Ended June 30,
----------------------
2005 2004
--------- ---------
Operating act
Net loss $(173,629) $ (51,135)
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Adjustments to reconcile net loss to net cash used by operating
activities:
Increase (decrease) in:
Accounts payable 56,335 (11,469)
Accrued payroll expenses 28,000 37,500
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Total adjustments 84,335 16,031
--------- ---------
--------- ---------
Net cash used by operating activities (89,294) (25,104)
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Financing activities
Proceeds from shareholder advance 89,294 25,000
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Net cash provided by financing activities 89,294 25,000
--------- ---------
Net decrease in cash -- (104)
Cash at beginning of period -- 131
--------- ---------
Cash at end of period $ -- $ 27
========= =========
Supplemental disclosures on non-cash transactions.
During the nine months ended June 30, 2005, the company converted $189,877 in
shareholder advances to stock.
The accompanying notes are an integral part of the financial statements.
6
Absolute Waste Services, Inc.
(f/k/a) Thermacell Technologies, Inc.
Notes to Financial Statements
Nine Months Ended June 30, 2005
(Unaudited)
1. Basis of Presentation
In the opinion of management, all adjustments consisting only of normal
recurring adjustments necessary for a fair statement of (a) the results of
operations for the three and nine months ended June 30, 2005 and 2004, (b) the
financial position at June 30, 2005, and (c) cash flows for the nine months
ended June 30, 2005 and 2004, have been made.
The unaudited financial statements and notes are presented as permitted by Form
10-QSB. Accordingly, certain information and note disclosures normally included
in the financial statements prepared in accordance with accounting principles
generally accepted in the United States of America have been omitted. The
accompanying financial statements and notes of Absolute Potential, Inc. (the
"Company") should be read in conjunction with the audited financial statements
and notes of the Company for the fiscal year ended September 30, 2004. The
results of operations for the nine-month period ended June 30, 2005 are not
necessarily indicative of those to be expected for the entire year.
Certain minor reclassifications have been made to the 2004 financial statements
to conform to the classifications used in 2005.
2. Bankruptcy Filing and Going Concern Considerations
The Company operated as a debtor-in-possession under a Plan of Reorganization,
under Chapter 11 of the bankruptcy code, dated February 25, 2002 until August
31, 2003. The Company has no current operations.
The accompanying financial statements have been prepared on a going concern
basis that contemplates the realization of assets and liabilities. As of June
30, 2005, the Company had no current operations, current liabilities in the
amount of $511,080 and an accumulated deficit in the amount of $17,422,224.
Currently, management is seeking a merger and is soliciting additional equity
investors to fund these deficits. However, these conditions raise substantial
doubt about the Company's ability to continue as a going concern. The financial
statements of the Company do not include any adjustments relating to the
recoverability of liabilities that might be necessary should the Company be
unable to continue as a going concern.
7
Absolute Waste Services, Inc.
(f/k/a) Thermacell Technologies, Inc.
Notes to Financial Statements
Nine Months Ended June 30, 2005
(Unaudited)
3. Per Share Calculations
Per share data was computed by dividing net loss by the weighted average number
of shares outstanding during the three and nine month periods ended June 30,
2005 and 2004. The weighted average shares outstanding for the three month
period ended June 30, 2005 and 2004 was 34,387,245 and 13,000,000 respectively.
The weighted average shares outstanding for the nine month period ended June 30,
2005 and 2004 was 16,969,773 and 13,000,000 respectively.
4. Shareholder Advances
On May 19, 2005, Augustine Fund, L.P., our largest shareholder, converted
$189,877 in advances previously made to us into 47,469,250 shares of our common
stock pursuant to a Conversion Agreement dated as of May 19, 2005. Augustine
advanced an additional $46,678 to us in the quarter ended June 30, 2005.
Pursuant to the terms of the Conversion Agreement, June 30, 2005, Augustine
received the right to convert this advance into 11,669,460 shares of our common
stock, par value $0.0001 per share, at a conversion price of $0.004 per share.
The above transaction is not necessarily indicative of a transaction that would
have been entered into had a comparable transaction been entered into with
independent parties.
5. Subsequent Event
The Company is in the process of changing its name to Absolute Potential, Inc.
This change is expected to be effective by the next 10-QSB filing.
Item 2. Management's Plan of Operation
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Overview
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We were incorporated in Florida in August 1993. In November 2001, we filed a
voluntary petition for reorganization under Chapter 11 of the U. S. Bankruptcy
Code with the U.S. Bankruptcy Court. On August 30, 2002, the United States
Bankruptcy Court for the Middle District of Florida, Tampa Division, Case No.
01-20854-8G1 issued an order confirming our Plan of Reorganization under Chapter
11 of the Bankruptcy Code, dated as of February 25, 2002 (the "Plan"). Although
the Plan became effective on August 30, 2002 and we commenced implementation of
the Plan on that date, distributions of common stock to our pre-bankruptcy
creditors did not occur until July 31, 2003.
In July 2003, we changed our name to Absolute Waste Services, Inc. On August 23,
2003, we entered into an Agreement and Plan of Merger (the "Merger Agreement")
with Absolute Industries, LLC, a Texas limited liability company, pursuant to
which Absolute Industries, LLC merged into our newly formed wholly owned
subsidiary (the "Merger Sub"), with the Merger Sub being the surviving entity
and succeeding to the business operations of Absolute Industries, LLC (the
"Merger"). In June 2004, we and the former members of Absolute Industries, LLC
agreed to rescind the Merger Agreement and terminate the Merger ab initio, for
each party to return the other party the consideration received in connection
with the Merger, and to release each other from all claims relating to the
Merger Agreement and the Merger. In connection with this transaction, all of the
issued and outstanding stock of the Merger Sub was transferred to the former
members of Absolute Industries, LLC.
Prior to the Merger, we had no material assets, liabilities or business
operations. In substance, we were a publicly held shell corporation whose sole
business activity was the search for a suitable business opportunity. Because
the Merger Agreement has been rescinded and the Merger has been terminated ab
initio, and because we no longer have any ownership interest in Merger Sub and
therefore no longer engage in the type of business previously engaged in by the
Merger Sub, this Report on Form 10-QSB will treat us as a publicly held shell.
8
We are a company that is intended to serve as a vehicle for the acquisition of a
target business which we believe has significant growth potential. We are not
presently engaged in, and we will not engage in, any substantive commercial
business for an indefinite period of time. While we may seek to effect business
combinations with more than one target business, we will probably have the
ability, as a result of our limited resources, to effect only a single business
combination.
Current Trends
- --------------
As a result of the recent declines in the United States equity markets, many
privately held companies have been shut off from the public marketplace.
Additionally, as the economy has slowed, many companies are attempting to divest
non-core assets and divisions. Due to these factors, we believe that there are
substantial opportunities to effect attractive acquisitions and that, as a
public entity, we are well positioned to identify target acquisitions and to
effect a business combination to take advantage of these current trends.
Effecting a Business Combination
- --------------------------------
General
A business combination may involve the acquisition of, or merger with, a company
that does not need substantial additional capital but that desires to establish
a public trading market for its shares, while avoiding what it may deem to be
adverse consequences of undertaking a public offering itself. These include time
delays, significant expense, loss of voting control and compliance with various
federal and state securities laws. In the alternative, a business combination
may involve a company which may be financially unstable or in its early stages
of development or growth.
We have not identified a target business or target industry
Our efforts in identifying a prospective target business will not be limited to
a particular industry and we may ultimately acquire a business in any industry
we deem appropriate. To date, we have not selected any target business on which
to concentrate our search for a business combination. While we intend to focus
on target businesses in the United States, we are not limited to those entities
and may consummate a business combination with a target business outside of the
United States. Accordingly, there is no basis to evaluate the possible merits or
risks of the target business or the particular industry in which we may
ultimately operate. To the extent we effect a business combination with a
financially unstable company or an entity in its early stage of development or
growth, including entities without established records of sales or earnings, we
may be affected by numerous risks inherent in the business and operations of
financially unstable and early stage or potential emerging growth companies. In
addition, to the extent that we effect a business combination with an entity in
an industry characterized by a high level of risk, we may be affected by the
currently unascertainable risks of that industry. An extremely high level of
risk frequently characterizes many industries which experience rapid growth. In
addition, although our management will endeavor to evaluate the risks inherent
in a particular industry or target business, there can be no assurance that we
will properly ascertain or assess all significant risk factors.
Sources of target businesses
We anticipate that target business candidates will be brought to our attention
from various unaffiliated sources, including securities broker-dealers,
investment bankers, venture capitalists, bankers and other members of the
financial community, who may present solicited or unsolicited proposals. Our
sole executive officer and his affiliates may also bring to our attention target
business candidates. While we do not presently anticipate engaging the services
of professional firms that specialize in business acquisitions on any formal
basis, we may engage these firms in the future, in which event we may pay a
finder's fee or other compensation. We do not currently intend to pay our
existing officer or our shareholders or any entity with which they are
affiliated any finder's fee or other compensation for services rendered to us
prior to or in connection with the consummation of a business combination.
Selection of a target business and structuring of a business combination
Subject to the requirement that our initial business combination must be with a
target business with a fair market value that is at least 80% of our net assets
at the time of such acquisition, we will have virtually unrestricted flexibility
in identifying and selecting a prospective target business. In evaluating a
prospective target business, we will consider, among other factors, the
following:
o financial condition and results of operation;
o growth potential;
o experience and skill of management and availability of additional
personnel;
9
o capital requirements;
o competitive position;
o stage of development of the target business's products, processes or
services;
o degree of current or potential market acceptance of the target
business's products, processes or services;
o proprietary features and degree of intellectual property or other
protection of the target business's products, processes or services;
o regulatory environment of the industry; and
o costs associated with effecting the business combination.
These criteria are not intended to be exhaustive. Any evaluation relating to the
merits of a particular business combination will be based, to the extent
relevant, on the above factors as well as other considerations deemed relevant
by our management in effecting a business combination consistent with our
business objective. In evaluating a prospective target business, we plan to
conduct an extensive due diligence review which will encompass, among other
things, meetings with incumbent management and inspection of facilities, as well
as review of financial and other information which will be made available to us.
We will endeavor to structure a business combination so as to achieve the most
favorable tax treatment to us, the target business and both companies'
shareholders. There can be no assurances, however, that the Internal Revenue
Service or appropriate state tax authority will agree with our tax treatment of
the business combination.
The time and costs required to select and evaluate a target business and to
structure and complete the business combination cannot presently be ascertained
with any degree of certainty. Any costs incurred with respect to the
identification and evaluation of a prospective target business with which a
business combination is not ultimately completed will result in a loss to us and
reduce the amount of capital available to otherwise complete a business
combination.
Fair market value of target business
We anticipate that the initial target business that we acquire will have a fair
market value equal to at least 80% of our net assets at the time of such
acquisition. The fair market value of such business will be determined by our
Board of Directors based upon standards generally accepted by the financial
community, such as actual and potential sales, earnings and cash flow and book
value. If our board is not able to independently determine that the target
business has a sufficient fair market value, we may obtain an opinion from an
unaffiliated, independent investment banking firm which is a member of the
National Association of Securities Dealers, Inc. with respect to the
satisfaction of such criteria. Since any opinion, if obtained, would merely
state that fair market value meets the 80% of net assets threshold, it is not
anticipated that copies of such opinion would be distributed to our
shareholders, although copies will be provided to shareholders who request it.
Rights of dissenting shareholders
A business combination may require the approval of the holders of the
outstanding shares of both participating companies. Shareholders who vote
against a business combination in certain instances may be entitled to dissent
and to obtain payment for their shares. The requirement of approval of our
shareholders in any business combination may be limited to those transactions
identified as a merger or a consolidation. We may enter into a business
combination that would not require the approval of our shareholders, in which
case our shareholders may not be entitled to dissent and obtain payment for
their shares. Accordingly, unless the acquisition requires shareholder approval,
we will not provide shareholders with a disclosure document containing audited
or unaudited financial statements prior to such acquisition.
Prior to any business combination for which shareholder approval is required, we
intend to provide our shareholders disclosure documentation concerning the
business opportunity or target company and its business. Such disclosure will in
all likelihood be in the form of a proxy statement which will be distributed to
shareholders at least 20 days prior to any shareholder's meeting.
Competition
- -----------
In identifying, evaluating and selecting a target business, we expect to
encounter intense competition from other entities having a business objective
similar to ours. Many of these entities are well established and have extensive
experience identifying and effecting business combinations directly or through
affiliates. Many of these competitors possess greater technical, human and other
resources than us and our financial resources will be relatively limited when
contrasted with those of many of these competitors. While we believe there are
numerous potential target businesses that we could acquire, our ability to
compete in acquiring certain sizable target businesses will be limited by our
available financial resources. This inherent competitive limitation gives others
10
an advantage in pursuing the acquisition of a target business. Further, if we
need to seek shareholder approval of a business combination, that may delay the
completion of a transaction.
Any of these obligations may place us at a competitive disadvantage in
successfully negotiating a business combination. Our management believes,
however, that our status as a public entity and potential access to the United
States public equity markets may give us a competitive advantage over
privately-held entities having a similar business objective as us in acquiring a
target business with significant growth potential on favorable terms.
Employees
- ---------
Thomas F. Duszynski is our sole employee, director and officer. Mr. Duszynski is
not obligated to contribute any specific number of hours per week and intends to
devote only as much time as he deems necessary to our affairs. The amount of
time he will devote in any time period will vary based on the availability of
suitable target businesses to investigate. We do not intend to have any full
time employees prior to the consummation of a business combination. We have no
salaried employees and we anticipate that none of our officers, directors or
principal shareholders will receive any compensation for any assistance they may
provide us. Our management expects to use consultants, attorneys and accountants
as necessary, and does not anticipate a need to engage any full-time employees
so long as we are seeking and evaluating business opportunities. The need for
employees and their availability will be addressed in connection with the
decision whether or not to acquire or participate in a specific business
opportunity.
Our Office
- ----------
Our office is located at 141 West Jackson Boulevard, Suite 2182, Chicago,
Illinois 60604, and the telephone number is (312) 427-5457. Our office is
located in the office of Augustine Fund, L.P.; Thomas Duszynski, our sole
employee, director and officer, is a principal of Augustine Fund, L.P. We
anticipates that our office will remain at the offices of Augustine Fund, L.P.
until an acquisition has been concluded. All corporate records will be
maintained at this office, and it is anticipated that all shareholders' meetings
will take place in Chicago, Illinois. In the event that a merger or acquisition
takes place, no assurance can be given that the corporate records or
headquarters will continue to be maintained at 141 West Jackson Boulevard, Suite
2182, Chicago, Illinois 60604, or that shareholders' meetings will be held in
Chicago, Illinois. We are not responsible for reimbursement for out-of-pocket
office expenses, such as telephone, postage or supplies. There are no written
documents memorializing the foregoing. We consider our current office space
adequate for our current operations.
There are no agreements or understandings with respect to our offices subsequent
to the completion of an acquisition. Upon a merger or acquisition, we will
likely relocate our office to that of the acquisition candidate.
Reports to Security Holders
- ---------------------------
We are subject to reporting obligations under the Exchange Act. These
obligations include an annual report under cover of Form 10-KSB, with audited
financial statements, unaudited quarterly reports and the requisite proxy
statements with regard to annual shareholder meetings. The public may read and
copy any materials we file with the Commission at the Commission's Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may
obtain information of the operation of the Public Reference Room by calling the
Commission at 1-800-SEC-0030. The Commission maintains an Internet site
(http://www.sec.gov) that contains reports, proxy and information statements and
other information regarding issuers that file electronically with the
Commission.
We will not acquire a target business if audited financial statements cannot be
obtained for the target business. Additionally, our management will provide
shareholders with audited financial statements, prepared in accordance with
generally accepted accounting principles, of the prospective target business as
part of the proxy solicitation materials sent to shareholders to assist them in
assessing the target business. Our management believes that the requirement of
having available audited financial statements for the target business will not
materially limit the pool of potential target businesses available for
acquisition.
New Regulations
- ---------------
On June 30, 2005, the SEC adopted rules regarding publicly reporting "shell
companies", and the Company will be considered a shell company under the new
definition. The rules are designed to ensure that investors in shell companies
who acquire operations have timely access to the same type of information as is
available to investors in public companies generally. Most of these rules will
become effective on August 22, 2005.
11
As adopted, the rules will:
o require a public shell company to report on Form 8-K an event that
causes it to cease being a shell company and to include in that Form
8-K the same type of detailed financial and other information about
the company as is required to register a class of securities under the
Exchange Act;
o prohibit a public shell company from using Form S-8 (the abbreviated
registration statement used to register securities issued under
employee benefit plans) until 60 days after it ceases to be a shell
company; and
o require every public company to check a box on the cover of all annual
and quarterly reports to identify whether or not it is a shell
company.
Liquidity and Capital Resources
- -------------------------------
We do not have sufficient funds to engage in significant operating activities.
Our future operating activities are expected to be funded by loans from a major
shareholder. However, none of our shareholders has any obligation to provide
such loans to us.
As of June 30, 2005, we had accounts payable of $190,590, and a payroll tax
obligation of $273,812. We do not have sufficient cash reserves to satisfy these
amounts. We anticipate that we will need to borrow funds from a major
shareholder in order to satisfy these obligations. However, none of our
shareholders has any obligation to provide such loans to us.
Critical Accounting Policies
- ----------------------------
Management's Plan of Operation discusses our audited consolidated financial
statements, which have been prepared in accordance with accounting policies
generally accepted in the United States. The preparation of these audited
consolidated financial statements requires us to make estimates and assumptions
that affect the assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period.
We believe the following critical accounting policies require significant
judgments, estimates and assumptions used in the preparation of the audited
consolidated financial statements.
Basic loss per common share (EPS) is computed by dividing loss available to our
common stockholders by the weighted average number of shares of common stock
outstanding for the year. Diluted EPS reflect the potential dilution from the
exercise or conversion of securities into common stock. Diluted EPS is not
presented because it is anti-dilutive.
We issue stock in lieu of cash for certain transactions. The fair value of our
common stock, which is based on comparable cash purchases or the value of
services, whichever is more readily determinable, is used to value the
transaction.
We record the receipt of payment for common stock that has not been issued to
the stockholder as a common stock payable in the financial statements.
We follow Financial Accounting Standards Board Statement No. 121 (FASB No. 121),
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of." FASB No. 121 requires that long-lived assets and certain
identifiable intangibles to be held and used by an entity be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of these assets may not be recoverable. In performing the review
of recoverability, we estimate the future cash flows that are expected to result
from the use of the assets and their eventual disposition. Because events and
circumstances frequently do not occur as expected, there will usually be
differences between the estimated and actual future cash flows, and these
differences may be material.
Deferred tax assets and liabilities are recognized for the estimated future tax
consequences attributable to differences between the financial statements
carrying amounts of existing assets and liabilities and their respective income
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. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized as income in the
period that included the enactment date.
Material Off-Balance Sheet Arrangements
- ---------------------------------------
We have no material off-balance sheet arrangements.
12
Item 3. Controls and Procedures
- -------------------------------
(a) Evaluation of Disclosure Controls and Procedures.
-------------------------------------------------
Disclosure controls and procedures are designed to ensure that information
required to be disclosed in the reports filed or submitted under the Exchange
Act is recorded, processed, summarized and reported, within the time period
specified in the Commission's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed in the reports filed under the
Exchange Act is accumulated and communicated to management, as appropriate, to
allow timely decisions regarding required disclosure. Our current principal
executive officer, who is also our principal financial officer, evaluated the
effectiveness of our disclosure controls and procedures as of the end of the
quarterly period covered by this report pursuant to Rule 15d-15(b) promulgated
under the Exchange Act. Based upon that evaluation, our principal executive and
financial officer has concluded that our disclosure controls and procedures were
effective in alerting management in a timely fashion to all material information
required to be included in our periodic filings with the Commission.
(b) Changes in Internal Controls.
-----------------------------
There were no significant changes in our internal control over financial
reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred
during the period covered by this report that have materially affected, or are
reasonably likely to materially affect, our internal controls over financial
reporting.
PART II
Item 1. Legal Proceedings
- --------------------------
The Commission has notified us that it is considering initiating administrative
proceedings to have our common stock deregistered. We have submitted a written
response to the Commission's notice and are engaged in discussions with the
Commission regarding this notice. We cannot predict whether such administrative
proceedings will go forward, and, if so, what the outcome of those proceedings
will be.
In the ordinary course of our business, we may at times be subject to various
legal proceedings. However, except as set forth above, we are not party to, and
are not aware of, pending or threatened litigation that we currently anticipate
would have a material adverse effect on our business or operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
- -------------------------------------------------------------------
On May 19, 2005, Augustine Fund, L.P., our largest shareholder, converted
$189,877 in advances previously made to us into 47,469,250 shares of our common
stock pursuant to a Conversion Agreement dated as of May 19, 2005. Augustine
advanced an additional $46,678 to us in the quarter ended June 30, 2005.
Pursuant to the terms of the Conversion Agreement, June 30, 2005, Augustine
received the right to convert this advance into 11,669,460 shares of our common
stock, par value $0.0001 per share, at a conversion price of $0.004 per share.
No commissions were paid in connection with these issuances of these securities.
The issuances of these shares and rights to purchase were completed pursuant to
Section 4(2) of the Securities Act of 1933 on the basis that Augustine is an
accredited investor affiliated with our sole officer and director.
Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
On June 15, 2005, we received the written consent dated June 15, 2005, from the
holders of 54,976,438 shares of our common stock, representing approximately
90.9% of our outstanding voting stock, approving an amendment to our certificate
of incorporation that changes our name from "Absolute Waste Services, Inc." to
"Absolute Potential, Inc." We anticipate sending an information statement to our
shareholders regarding this vote after clearing comments from the Commission.
The name change described herein will be deemed ratified and effective at a date
that is a least 20 days after the date the information statement has been mailed
to our shareholders.
13
Item 6. Exhibits
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The following exhibits are being filed as part of this Report on Form 10-QSB:
Exhibit 10.11 - Conversion Agreement dated May 19, 2005 by and between Absolute
Waste Services, Inc. and Augustine Fund, L.P. (incorporated by reference to
Exhibit 10.2 to Form 10-KSB for fiscal year ended September 30, 2003, filed May
27, 2005)
Exhibit 31.1 - Certification of CEO/CEO pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
Exhibit 32.1 - Certification of CEO/CFO pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
14
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, we have duly caused this report to be signed on our
behalf by the undersigned, thereunto duly authorized.
ABSOLUTE WASTE SERVICES, INC.
(Registrant)
By: /s/ Thomas F. Duszynski Date: August 12, 2005
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Thomas F. Duszynski
Chief Executive Officer,
Chief Financial Officer and Director
(Principal Executive Officer and
Principal Financial and Accounting Officer)