The accompanying
notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part
of these consolidated financial statements.
The accompanying
notes are an integral part of these consolidated financial statements.
The accompanying
notes are an integral part of these consolidated financial statements.
NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS
AS OF MAY 31,
2019 (UNAUDITED)
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. On September l, 2017, Service Team Inc. changed its state of domicile from the state of Nevada to the
state of Wyoming.
The Company has
established a fiscal year end of August 31.
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 May 31, 2019 of $2,982,058. The
company will be 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 May 31, 2019, or August 31, 2018.
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 300 customers.
Three customers represented about
22%, 12% and 9% of total receivables
as of May 31, 2019.
Three customers
represented 21%, 18% and 12% of total receivables as of August 31, 2018. During the nine month period ended May 31, 2019, the Company
had two customers that represented 16% and 12% of total sales. During the nine month period ended May 31, 2018, the Company had
one customer that represented 16% 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 May 31, 2019 or
August 31, 2018.
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 $11,492 and $12,159 of depreciation expense during the nine months ended May 31, 2019 and 2018,
respectively.
Net property and equipment were as
follows at May 31, 2019 and August 31, 2018:
|
|
|
5/31/19
|
|
8/31/18
|
|
Equipment
|
|
$
|
366,820
|
|
|
$
|
364,210
|
|
|
Vehicles
|
|
|
15,000
|
|
|
|
15,000
|
|
|
Furniture
|
|
|
24,000
|
|
|
|
24,000
|
|
|
Leasehold improvements
|
|
|
52,827
|
|
|
|
52,827
|
|
|
Subtotal
|
|
|
458,647
|
|
|
|
456,037
|
|
|
Less: accumulated depreciation
|
|
|
(295,803
|
)
|
|
|
(284,311
|
)
|
|
Total Fixed Assets, Net
|
|
$
|
162,844
|
|
|
$
|
171,726
|
|
Lease Commitments
Service Team Inc. leases facilities
at 1818 Rosslynn Avenue, Fullerton, California, to manufacture its products. The 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.
As
of May 31, 2019, the deferred rent related to this lease was $9,333.
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 May 31, 2019 on a recurring basis:
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
Realized
|
|
Description
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Loss
|
|
Convertible Note Payable, net – in default
|
|
$
|
133,137
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Total
|
|
$
|
133,137
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
The following table presents assets
and liabilities that were measured and recognized at fair value as of August 31, 2018 on a recurring basis:
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
Realized
|
|
Description
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Loss
|
|
Convertible note payable, net – in default
|
|
|
107,832
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Convertible notes payable, net
|
|
|
16,584
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Total
|
|
$
|
124,416
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
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 May 31, 2019 and August 31, 2018 where it cannot conclude that it is more likely than not that those assets will
be realized.
Revenue Recognition
Trade Leasing Inc dba Delta Stag
Manufacturing
Service Team Inc, 100% owned subsidiary
Trade Leasing Inc dba Delta Stag Manufacturing 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 dba Delta Stag Manufacturing 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 Trade Leasing Inc 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.
On September 1, 2018, we adopted Accounting
Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements
in Accounting Standards Codification (ASC) Topic 605, Revenue Recognition (Topic 605). Results for reporting periods beginning
after September 1, 2018 are presented under Topic 606. The impact of adopting the new revenue standard was not material to our
financial statements and there was no adjustment to beginning retained earnings on September 1, 2018.
Under Topic 606, revenue is recognized
when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we
expect to be entitled to in exchange for those goods or services.
We determine revenue recognition through
the following steps:
●
identification
of the contract, or contracts, with a customer;
●
identification
of the performance obligations in the contract;
●
determination
of the transaction price;
●
allocation
of the transaction price to the performance obligations in the contract; and
●
recognition
of revenue when, or as, we satisfy a performance obligation.
Share Based Expenses
The Company accounts for the issuance
of equity instruments to acquire goods and/or services based on the fair value of the goods and services or the fair value of
the equity instrument at the time of issuance, whichever is more readily determinable. The Company's accounting policy for equity
instruments issued to consultants and vendors in exchange for goods and services follows the provisions of standards issued by
the FASB
.
The measurement date for the fair value of the equity instruments issued is determined at the earlier of
(i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant
or vendor's performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument
is recognized over the term of the consulting agreement.
Stock Based Compensation
In December of 2004, the FASB issued
a standard which applies to transactions in which an entity exchanges its equity instruments for goods or services and also applies
to liabilities an entity may incur for goods or services that are based on the fair value of those equity instruments. For any
unvested portion of previously issued and outstanding awards, compensation expense is required to be recorded based on the previously
disclosed methodology and amounts. Prior periods presented are not required to be restated. We adopted the standard as of inception. The
Company has not issued any stock options to its Board of Directors and officers as compensation for their services. If
options are granted, they will be accounted for at a fair value as required by the FASB ASC 718.
Net Loss Per Share
The Company adopted the standard issued
by the FASB, which requires presentation of basic earnings or loss per share and diluted earnings or loss per share. Basic income
(loss) per share ("Basic EPS") is computed by dividing net income (loss) available to common stockholders by the weighted
average number of common shares outstanding during the period. Diluted earnings per share ("Diluted EPS") are similarly
calculated using the treasury stock method except that the denominator is increased to reflect the potential dilution that would
occur if dilutive securities at the end of the applicable period were exercised. During the three and nine month periods
ended May 31, 2018, 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 May 2017, the Financial Accounting Standards
Board ("FASB") issued Accounting Standard Update ("ASU") 2017-09
, Compensation — Stock Compensation
(Topic 718): Scope of Modification Accounting.
ASU 2017-09, which provides guidance about which changes to the terms or
conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. Per ASU 2017-9, an entity
should account for the effects of a modification unless all the following are met: (1) the fair value (or calculated value or intrinsic
value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value
or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award
is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the
award, the entity is not required to estimate the value immediately before and after the modification, (2) the vesting conditions
of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified,
and (3) the classification of the modified award as an equity instrument or a liability instrument is the same as the classification
of the original award immediately before the original award is modified. The current disclosure requirements in Topic 718 apply
regardless of whether an entity is required to apply modification accounting under the amendments in ASU 2017-9. ASU 2017-9 is
effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2017. Early
adoption is permitted, including adoption in any interim period, for (1) public business entities for reporting periods for which
financial statements have not yet been issued and (2) all other entities for reporting periods for which financial statements have
not yet been made available for issuance. The amendments in this ASU should be applied prospectively to an award modified on or
after the adoption date. The adoption of
ASU 2017-9
did not have a material impact on the Company's financial
statements or related disclosures.
In January 2017, the FASB issued ASU 2017-04,
Intangibles
– Goodwill and Other (Topic 350)
. ASU 2017-04 simplifies the subsequent measurement of goodwill by removing the second
step of the two-step impairment test. The amendment requires an entity to perform its annual, or interim goodwill impairment test
by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount
by which the carrying amount exceeds the reporting unit's fair value; however, the loss recognized should not exceed the total
amount of goodwill allocated to that reporting unit. An entity still has the option to perform the qualitative assessment for a
reporting unit to determine if the quantitative impairment test is necessary. The amendment should be applied on a prospective
basis. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal
years. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1,
2017. The Company adopted the ASU in 2017.
In February 2016, the FASB issued 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 May 2014 the FASB issued ASU No.
2014-09, Revenue from Contracts with Customers. Since ASU 2014-09 was issued, several additional ASUs have been issued to clarify
various elements of the guidance. These standards provide guidance on recognizing revenue, including a five-step model to determine
when revenue recognition is appropriate. The standard requires that an entity recognize revenue to depict the transfer of control
of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled
in exchange for those goods or services. Adoption of the new standard is effective for reporting periods beginning after December
15, 2017. We adopted the new standard on September 1, 2018.
NOTE 3 – CAPITAL STOCK
The Company's authorized capital is
20,000,000,000 common shares with a par value of $0.001 per share and 150,000 preferred shares with a par value of $0.001 per share.
Common Shares
On February 12, 2016, the Articles
of Incorporation were amended to increase the authorized shares of capital stock to 500,000,000. On December 20, 2016,
the Articles of Incorporation were amended to increase the authorized share of capital stock to 1,000,000,000. On
January 19, 2017, the Articles of Incorporation were amended to increase the authorized share of capital stock to 2,000,000,000.
On February 16, 2017, the Articles of Incorporation were amended to increase the authorized share of capital stock to 3,000,000,000.
On April 27, 2017, the Articles of Incorporation were amended to increase the authorized share of capital stock to 4,500,000,000.
On June 13, 2017, the Articles of Incorporation were amended to increase the authorized share of capital stock to 8,000,000,000.
On June 28, 2017, the Articles of Incorporation were amended to increase the authorized share of capital stock to 10,000,000,000.
On August 22, 2017, the Company moved its state of domicile from Nevada to Wyoming, and increased its authorized common stock to
20,000,000,000.
Preferred Shares
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 December 30, 2016 the Articles of Incorporation were amended to increase
the authorized preferred shares to 150,000.
On July 25, 2017, the Articles of Incorporation
were amended to increase the voting rights of preferred shares to 100,000 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 $0 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 $54,000 which was recorded on the grant date as stock based compensation.
On December 4, 2017, the Company granted
50,000 additional Series A Preferred Stock shares to Robert Cashman, a related party. The value assigned to the new shares
was derived from a model utilizing control premiums to value the voting control of the preferred stock and was $1,000 which was
recorded on the grant date as stock based compensation.
Share Transactions
2019
On November 13, 2018, JMJ Financial
converted $7,095 of its Note into 129,000,000 shares of common stock. The shares have not been issued; therefore, a stock payable
of $7,095 has been recorded in equity. 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.
2018
On September 1, 2017, Crown Bridge
Partners LLC converted $4,742 of its Note dated 12-21-2016 into 105,368,000 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 September 2, 2017, Crossover Capital
LLC converted $4,975 of its Note dated 2-14-2017 into 103,000,000 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 September 11, 2017, Crown Bridge
Partners LLC converted $5,446 of its Note dated 12-21-2016 into 121,018,000 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 September 12 2017, LG Capital Funding
LLC Converted $6,048 of its Note dated 1-3-2017 into 120,964,400 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 19, 2017, Crossover Capital
LLC converted $6,075 of its Note dated 2-14-2017 into 125,000,000 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 October 6, 2017, Crown Bridge Partners
LLC converted $6,501 of its Note dated 12-21-2016 into 144,470,000 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 October 5,2017, Crossover Capital
LLC converted $6,925 of its Note dated 2-14-2017 into 142,000,000 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 October 31, 2017, Tangiers Investment
Group LLC converted $4,331 of its Note dated 6-13-2016 in the amount of into 125,000,000 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 October 31, 2017, Tangiers Investment
Group LLC converted $6,750 of its Note dated 6-13-2016 in the amount of into 192,857,143 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 2, 2017, LG Capital Funding
LLC Converted $6,681 of its Note dated 1-3-2017 into 133,622,200 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 4, 2017, Crossover Capital
LLC converted $8,075 of its Note dated 2-14-2017 into 165,000,000 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 November 8, 2017, Crown Bridge Partners
LLC converted $7,858 of its Note dated 12-21-2016 into 174,626,000 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 November 14, 2017, Crown Bridge
Partners LLC converted $9,421 of its Note dated 12-21-2016 into 198,242,000 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 November 15, 2017, Crown Bridge
Partners LLC converted $7,538 of its Note dated 12-21-2016 into 167,511,777 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 15, 2017, Crossover Capital
LLC converted $7,735 of its Note dated 2-14-2017 into 158,200,000 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 November 16, 2017, Tangiers Investment
Group LLC converted $13,613 of its Note in the amount of into 396,880,466 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 29, 2017, JMJ Financial
converted $13,270 of its Note dated 5-1-2017 into 132,700,000 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 December 5, 2017, Tangiers Investment
Group LLC converted $16,769 of its Note dated 7-18-2016 into 488,892,128 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 December 6, 2017, JMJ Financial
converted $4,700 of its Note dated 5-1-2017 into 94,000,000 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 December 13, 2017, JMJ Financial
converted $19,317 of its Note dated 5-1-2017 into 129,000,000 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. This conversion pays
the Note in full.
On December 14, 2017, Crown Bridge
Partners LLC converted $12,596 of its Note dated 12-21-2016 into 279,900,000 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 December 28, 2017, Tangiers Investment
Group LLC converted $20,621 of its Note dated 7-18-2016 into 601,195,335 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 12, 2018, Crown Bridge Partners
LLC converted $12,600 of its Note dated 12-21-2016 into 280,000,000 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 January 29, 2018, Crossover Capital
LLC converted $7,325 of its Note Dated 7-24-2017 into 150,000,000 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 16, 2018, Crossover Capital
LLC converted $12,325 of its Note Dated 7-24-2017 into 250,000,000 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 16, 2018, JMJ Financial converted
$6,505 of its Note dated 4-28-2017 into 351,000,000 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 19, 2018, Crown Bridge Partners
LLC converted $15,829 of its Note dated 12-21-2016 into 351,760,000 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 21, 2018, Tangiers Investment
Group LLC converted $19,201 of its Note dated 7-18-2016 into 548,564,286 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 May 22, 2018, Tangiers Investment
Group LLC converted $13,600 of its Note dated 11-10-2017 into 302,222,222 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, 2018, $40,000 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 May 31, 2019 and August 31,
2018, the Company has not granted any stock options.
During 2018 and 2019 the Company did not sell any Common Shares. The
only shares issued were for Conversion of Notes.
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.
NOTE
4 – DEBT TRANSACTIONS
Convertible Notes
Payable – Related Party
R.L. Cashman
On April 17, 2017, the Company issued a convertible note to
Robert Cashman (a related party) for $12,500 of cash consideration. The note bears interest at 10%, matures on April 17,
2018, 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 $12,500 due to this conversion feature and amortized $4,658 during the year ended
August 31, 2017, with a remaining debt discount of $7,842 amortized during the year ended August 31, 2018. The note was repaid
in full during the fiscal year ended August 31, 2018.
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
JMJ Financial Group
On April 28, 2017, the Company issued
a convertible note to JMJ Financial Group for $55,000 of cash consideration. The note bears interest at 12%, matures on April
28, 2018, 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 $37,080 due to this conversion feature. The Company also recorded
a $6,000 and $11,920 debt discounts due to accrued interest and origination fees required by the agreement to be accrued at the
beginning of the note. The note had accrued interest of $7,222 and $9,331 as of August 31, 2018 and May 31, 2019, respectively.
The debt discounts had a balance at August 31, 2017 of $36,164 and a balance of $0 at August 31, 2018. The Company recorded
debt discount amortization expense of $18,836 during the year ended August 31, 2017 and $36,164 during the year ended August 31,
2018. The Company converted $31,570 of principal and $12,222 of interest into shares during the year ended August 31,
2018. The Company converted $7,095 of principal into shares during the period ended November 30, 2018. 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 $0.00005. 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 January 3, 2017, the Company issued
a convertible note to LG Capital Funding LLC for $28,000 for cash consideration. The note bears interest at 8%, matures on
September 3, 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 $26,000 due to this conversion feature. The Company also
recorded a $2,000 debt discount due to issuance costs. The note had accrued interest of $84 as of August 31, 2017 and $0 at August
31, 2018. The debt discounts had a balance at August 31, 2017 of $9,589 and $0 at August 31, 2018. During the year
ended August 31, 2017, $15,930 of principal and $706 of accrued interest was converted into shares; see Note 3 for more information.
The Company made cash payments of $5,770, to end with a balance of $6,300 as of August 31, 2017. The note was fully
converted into shares during the three months ended November 30, 2017. The Company recorded debt discount amortization expense
of $18,411 during the year ended August 31, 2017 and $9,589 during the three months ended November 30, 2017. The entire
balance of the Note has been converted to stock.
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 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 $7,272 and $10,890 and $3,850 as of November 30,
2017 and August 31, 2017. The debt discounts had a balance at November 30, 2017 and August 31, 2017 of $0 and $0, respectively.
The Company recorded debt discount amortization expense of $0 and $30,167 during the three months ended November 30, 2017 and the
year ended August 31, 2017, respectively. During the three months ended November 30, 2017 and the year ended August 31, 2017,
$4,982 of principal and $3,743 of interest and $33,518 of principal and $4,220 of accrued interest was converted into shares, respectively;
see Note 3 for more information. The note has now been fully converted as of November 30, 2017.
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 $0 and $8,401 and as of August 31, 2018 and August
31, 2017. The debt discounts had a balance at August 31, 2018 and August 31, 2017 of $0 and $0, respectively. The Company
recorded debt discount amortization expense of $24,185 and $3,315 during the year ended August 31, 2017 and the year ended August
31, 2016, respectively. $27,500 of principal and $39,694 of interest were converted into shares during the year ended August
31, 2018; see Note 3 for further information.
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 10, 2017, Service Team
Inc issued a 12% Convertible Promissory Note payable to Tangiers Investment Group LLC (the "Investor") in the principal
amount of $23,000. The Note, which is due on November 10, 2018, was funded by the Investor in the sum of $20,000 and $3,000 was
retained by the Investor through an original issue discount or "OID" for due diligence and legal expense related to this
transaction. The Note is convertible into shares of the Registrant's common stock, par value $0.001, at a conversion price of 50%
of the lowest trading price of the Company's common stock during the 25 consecutive trading days prior to the date on which Holder
elects to convert all or part of the Note. The Company recorded a $20,000 discount due to the beneficial conversion feature.
During the year ended August 31, 2018, $18,526 of discount amortization was recorded, to result in a remaining debt discount balance
of $4,474 as of August 31, 2018. During the three months ended November 30, 2018, the remaining discount balance of $4,474
was amortized leaving a remaining debt discount balance of $0 as of November 30, 2018. Accrued interest at August 31, 2018
and May 31, 2019 was $2,760 and $3,606, 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 $0.00005. 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 February 27, 2018, Service Team
Inc issued a 12% Convertible Promissory Note payable to Tangiers Investment Group LLC (the "Investor") in the principal
amount of $23,000. The Note, which is due on February 27, 2019, was funded by the Investor in the sum of $20,000 and $3,000 was
retained by the Investor through an original issue discount or "OID" for due diligence and legal expense related to this
transaction. The Note is convertible into shares of the Registrant's common stock, par value $0.001, at a conversion price of 50%
of the lowest trading price of the Company's common stock during the 25 consecutive trading days prior to the date on which Holder
elects to convert all or part of the Note. The Company recorded a $20,000 discount due to the beneficial conversion feature
and a $3,000 discount due to the original issue discount. During the year ended August 31, 2018, $11,658 of discount
amortization was recorded, to result in a remaining debt discount balance of $11,342 as of August 31, 2018. During the three
months ended November 30, 2018, the Company amortized $5,750 of the debt discount leaving a remaining balance of $5,592 as of November
30, 2018. Accrued interest at August 31, 2018 and May 31, 2019 was $2,760 and $4,830, 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.
Iconic Holdings LLC
On July 10, 2017, the Company issued
a convertible note to Iconic Holdings of $34,993 for consideration of certain machine tools. The note bears interest at 10%,
matures on July 10, 2018, 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 $31,812 due to this conversion feature. The Company
also recorded a $3,181 debt discount due to issuance fees. The note had accrued interest of $10,455 as of May 31, 2019 and $5,206
as of August 31, 2018. The debt discounts had a balance at August 31, 2017 of $25,118 and $0 as of August 31, 2018. The Company
recorded debt discount amortization expense of $9,875 during the year ended August 31, 2017 and $25,118 during the year ended August
31, 2018. 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 $0.00005. 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.
Crown Bridge Partners, LLC
On December 21, 2016, the Company issued
a convertible note to Crown Bridge Partners, LLC. for $42,500 of cash consideration. The note bears interest at 6%,
matures on December 21, 2017, 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 $36,000 due to this conversion feature. The
Company also recorded a $6,500 debt discount due to issuance fees. The note had accrued interest of $0 as of August 31, 2017 and
August 31, 2018. The debt discounts had a balance at August 31, 2017 of $13,041 and $0 at August 31, 2018.
The Company recorded debt discount amortization expense of $29,459 during the year ended August 31, 2017 and $13,041 during the
year ended August 31, 2018. During the year ended August 31, 2017, $10,954 of principal and $13,502 of interest were converted
into shares and during the year ended August 31, 2018, principal of $31,546 and interest of $5,217 was converted into shares; see
Note 3 for more information.
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 12, 2017, the Company issued
a convertible note to Crown Bridge Partners, LLC. for $63,750 of cash consideration. The note bears interest at 6%, matures
on June 12, 2018, 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 $52,600 due to this conversion feature. The Company also
recorded a $11,150 debt discount due to issuance fees. The note had accrued interest of $1,453 as of May 31, 2019 and $363 as of
August 31, 2018. The debt discounts had a balance at August 31, 2017 of $49,777 and $0 at August 31, 2018.
The Company recorded debt discount amortization expense of $13,973 during the year ended August 31, 2017 and $49,682 during the
year ended August 31, 2018. The Company converted $39,524 in principal and $1,500 in accrued interest into shares during
the year ended August 31, 2018; see Note 3 for more information. 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 $0.00005. 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.
Crossover Capital Fund, LLC
On February 14, 2017, the Company
issued a convertible note to Crossover Capital Fund, LLC for $40,000 of cash consideration. The note bears interest at 10%,
matures on February 14, 2018, 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 $34,000 due to this conversion feature. The
Company also recorded a $6,000 debt discount due to issuance fees. The note had accrued interest of $0 as of August 31, 2017 and
August 31, 2018. The debt discounts had a balance at August 31, 2017 of $18,301 and $0 at August 31, 2018. The
Company recorded debt discount amortization expense of $21,699 during the year ended August 31, 2017 and $18,301 during the year
ended August 31, 2018. During the year ended August 31, 2018 principal of $32,487 and interest of $1,298 was converted into
shares; see Note 3 for more information.
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 24, 2017, the Company issued
a convertible note to Crossover Capital Fund, LLC for $40,000 of cash consideration. The note bears interest at 10%, matures
on July 24, 2018, 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 $40,000 due to this conversion feature. The note had accrued
interest of $7,355 as of May 31, 2019 and $2,821 at August 31, 2018. The debt discounts had a balance at August 31,
2017 of $35,836 and $0 at August 31, 2018. The Company recorded debt discount amortization expense of $4,164 during
the year ended August 31, 2017 and $35,836 during the year ended August 31, 2018. During the year ended August 31, 2018,
the Company converted $17,106 in principal and $2,544 of accrued interest into shares; see Note 3 for more information. 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 $0.00005. 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
Forward Financing
On December 11, 2017, the Company issued a promissory note to
Forward Financing for $61,405 of cash consideration. The note bears interest at 41%, matures on June 20, 2018. The Company
recorded a debt discount equal to $26,579 due to the unpaid interest which was added to the principal balance to be repaid during
the 6 month note. During the year ended August 31, 2018, the company amortized $26,579 of the debt discount into interest
expense leaving a remaining total debt discount on the note of $0 as of August 31, 2018. During the year ended August 31,
2018, the Company repaid $87,984 in principal on the note in cash leaving a net balance on the note of $0. As of August 31,
2018; this note was repaid in full.
IOU Financial
On March 30, 2018, the Company issued a promissory note to IOU
Financial for $120,000 of cash consideration. The note bears interest at 32%, matures on March 30, 2019. The Company recorded
a debt discount equal to $38,630 due to the unpaid interest which was added to the principal balance to be repaid during the 12
month note. During the year ended August 31, 2018, the company amortized $16,299 of the debt discount into interest expense
leaving a remaining total debt discount on the note of $22,331 as of August 31, 2018. During the year ended August 31, 2018,
the Company repaid $69,206 in principal on the note in cash leaving a balance on the note of $73,200 owed as of August 31, 2018.
During the period ended February 28, 2019, the company amortized $22,331 of the debt discount into interest expense leaving a remaining
total debt discount on the note of $0 as of February 28, 2019. During the period ended February 28, 2019, the Company repaid
$89,424 in principal on the note in cash leaving a balance on the note of $0 owed as of February 28, 2019.
On January 22, 2019, the Company issued a promissory note to
IOU Financial for $75,000 of cash consideration. The note bears interest at 32%, matures on October 23, 2019. The Company
recorded a debt discount equal to $16,954 due to the unpaid interest which was added to the principal balance to be repaid during
the 9 month note. During the period ended May 31, 2019, the company amortized $7,982 of the debt discount into interest expense
leaving a remaining total debt discount on the note of $8,972 as of May 31, 2019. The proceeds of the loan were used to pay
$27,244 to IOU Financial to pay the note dated March 30, 2018 in full. And the remaining amount $47,776 was added to working
capital. During the period ended May 31, 2019, the Company repaid $45,781 in principal on the note in cash leaving a balance
on the note of $46,173 owed as of May 31, 2019.
NOTE 5- RELATED PARTY TRANSACTIONS
Convertible Note
Payable – Related Party
On April 17, 2017, the Company issued a convertible note to
Robert Cashman (a related party) for $12,500 of cash consideration. The note bears interest at 10%, matures on April 17,
2018, 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 $12,500 due to this conversion feature and amortized $4,658 during the year ended
August 31, 2017, with a remaining debt discount of $7,842 amortized during the year ended August 31, 2018. The note was repaid
during the fiscal year ended August 31, 2018.
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.
Preferred Stock Issued for Services
On December 4, 2017, the Company granted
50,000 additional Series A Preferred Stock shares to Robert Cashman, a related party. The value assigned to the new shares
was derived from a model utilizing control premiums to value the voting control of the preferred stock and was $1,000 which was
recorded on the grant date as stock based compensation.
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 $776,279 as of May 31, 2019, 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 May 31, 2019 and August 31, 2018:
|
|
|
5/31/19
|
|
8/31/18
|
|
Net tax loss carry-forwards
|
|
$
|
776,279
|
|
|
$
|
896,914
|
|
|
Statutory rate
|
|
|
21
|
%
|
|
|
21
|
%
|
|
Expected tax recovery
|
|
|
163,019
|
|
|
|
188,352
|
|
|
Change in valuation allowance
|
|
|
(163,019
|
)
|
|
|
(188,352
|
)
|
|
Income tax provision
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of deferred tax asset:
|
|
|
|
|
|
|
|
|
|
Non capital tax loss carry forwards
|
|
$
|
163,019
|
|
|
$
|
188,352
|
|
|
Less: valuation allowance
|
|
|
(163,019
|
)
|
|
|
(188,352
|
)
|
|
Net deferred tax asset
|
|
$
|
—
|
|
|
$
|
—
|
|
NOTE 7 – COMMITMENTS AND CONTINGENCIES
Litigation
None.
Operating
Leases
Service Team Inc. leases facilities
at 1818 Rosslynn Avenue, Fullerton, California, to manufacture its products. The 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.
As
of May 31, 2019, the deferred rent related to this lease was $9,333.
NOTE 8 – SUBSEQUENT EVENTS
None