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EX-32.2 - Specialized Services, Inc.v208292_ex32-2.htm
EX-31.2 - Specialized Services, Inc.v208292_ex31-2.htm
EX-32.1 - Specialized Services, Inc.v208292_ex32-1.htm
EX-31.1 - Specialized Services, Inc.v208292_ex31-1.htm
  

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
  

 
FORM 10-Q
 

  
x
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
 
For the quarterly period ended March 31, 2010
 
¨
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
 
For the transition period from __________, 200__, to ________, 200__.
 
Commission File Number
0-32267
 
SPECIALIZED SERVICES, INC.
(Exact Name of Registrant as Specified in Charter)

Michigan
 
38-2781857
(State of Incorporation)
 
(I.R.S. Employer Identification No.)
     
23077 Greenfield Road, Suite 470, Southfield, MI
 
48075
(Address of Principal Executive Offices)
 
(ZIP Code)
 
 Registrant's Telephone Number, Including Area Code: (248) 557-1030
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 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 ¨ No x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See definition of “accelerated filer, large accelerated filer and smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Accelerated filer ¨
   
Non-accelerated filer ¨
Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨ No x

Transitional Small Business Disclosure Format (check one): Yes ¨ No x

There were 473,341  shares of the Registrant’s $.0001 par value common stock outstanding as of March 31, 2010

 
 

 

 
 
Contents
 
Part I – Financial Information
  3
       
Item 1.
 
Financial Statements
  F-1
       
Item 2.
 
Management’s Discussion and Analysis of Financial Condition and Results of Operation
  4
       
Item 3.
 
Quantitative and Qualitative Disclosures About Market Risk
  7
       
Item 4T.
 
Controls and Procedures
  7
       
Part II – Other Information
  7
       
Item 1.
 
Legal Proceedings
  7
       
Item 2.
 
Unregistered Sales of Equity Securities and Use of Proceeds
  7
       
Item 3.
 
Defaults Upon Senior Securities
  7
       
Item 4.
 
Submission of Matters to a Vote of Security Holders
  8
       
Item 5.
 
Other Information
  8
       
Item 6.
 
Exhibits
  8
       
Signatures
  8
 
2

 
 

 
Statements in this Form 10Q Quarterly Report may be “forward-looking statements.”  Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future events or conditions.  These statements are based on our current expectations, estimates and projections about our business based, in part, on assumptions made by our management.  These assumptions are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict.  Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors, including those risks discussed in this Form 10Q Quarterly Report, under “Management’s Discussion and Analysis of Financial Condition or Plan of Operation and in other documents which we file with the Securities and Exchange Commission.

In addition, such statements could be affected by risks and uncertainties related to our financial condition, factors that affect our industry, market and customer acceptance, changes in technology, fluctuations in our quarterly results, our ability to continue and manage our growth, liquidity and other capital resource issues, competition, fulfillment of contractual obligations by other parties and general economic conditions.  Any forward-looking statements speak only as of the date on which they are made, and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this Form 10Q Quarterly Report, except as required by law.
 
 
3

 

Item 1. Financial Statements
      
PART I – FINANCIAL INFORMATION
 
SPECIALIZED SERVICES, INC.
BALANCE SHEETS
AS OF MARCH 31, 2010 (UNAUDITED) AND DECEMBER 31, 2009 (AUDITED)
 
 
 
March 31,
2010
(Unaudited)
   
December
31, 2009
(Audited)
 
ASSETS
           
Current Assets
           
Cash
  $ 5,927     $ 7,314  
Accounts receivable, net
    72,012       77,440  
Prepaid interest
    29,233       35,483  
Total Current Assets
    107,172       120,237  
                 
Property and Equipment, Net
    83,623       92,548  
                 
TOTAL ASSETS
  $ 190,795     $ 212,785  
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
               
LIABILITIES
               
Current Liabilities
               
Accounts payable
  $ 27,954     $ 27,818  
Accrued expenses and taxes
    197,348       202,357  
Due to shareholders
    3,100       2,200  
Leases payable – current portion
    175,100       160,300  
Loans payable – related party
    5,768       5,768  
Line of credit
    53,144       52,294  
Total Current Liabilities
    462,414       450,737  
                 
Long – Term Liabilities
               
Leases payable
    91,753       106,553  
                 
Total Liabilities
    554,167       557,290  
                 
STOCKHOLDERS’ DEFICIT
               
Common Stock – $.0001 par value, 100,000,000 shares authorized; 473,341 and 473,341 shares issued and outstanding
    47       47  
Additional paid-in capital
    408,872       408,872  
Accumulated deficit
    (772,291 )     (753,424 )
Total Stockholders’ Deficit
    (363,372 )     (344,505 )
                 
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
  $ 190,795     $ 212,785  
 
The accompanying notes are an integral part of the financial statements.
 
 
F-1

 

SPECIALIZED SERVICES, INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
 
   
Three months
ended March 31,
2010
   
Three months
ended March 31,
2009
 
NET REVENUES
  $ 10,360     $ 15,681  
                 
OPERATING EXPENSES
    29,233       32,854  
                 
LOSS FROM OPERATIONS
    (18,873 )     (17,173 )
                 
OTHER INCOME (EXPENSE)
    6       0  
                 
NET LOSS BEFORE INCOME TAXES
    (18,867 )     (17,173 )
                 
PROVISION FOR INCOME TAXES (BENEFIT)
    0       0  
                 
NET LOSS
  $ (18,867 )   $ (17,173 )
                 
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND DILUTED
    473,341       473,341  
                 
NET LOSS PER SHARE: BASIC AND DILUTED
  $ (0.04 )   $ (0.04 )
 
The accompanying notes are an integral part of the financial statements.
 
 
F-2

 

SPECIALIZED SERVICES, INC.
STATEMENT OF STOCKHOLDERS’ DEFICIT (UNAUDITED)
AS OF MARCH 31, 2010
 
   
Common Stock
   
Additional
Paid in
   
Accumulated
       
   
Shares
   
Amount
   
Capital
   
Deficit
   
Total
 
Beginning balance, January 1, 2005
    18,000     $ 3,000     $ 21,948     $ (72,879 )   $ (45,931 )
                                         
Adjustment for stock split
    -       (2,100 )     2,100       -       -  
                                         
Shares issued
    25,996       1,300       -       -       1,300  
                                         
Distribution to shareholders
    -       -       -       (2,000 )     (2,000 )
                                         
Net income for the year ended December 31, 2005
    -       -       -       6,344       6,344  
                                         
Balance, December 31, 2005
    43,996       2,200       24,048       (68,535 )     (42,287 )
                                         
Shares issued
    16,000       800       -       -       800  
                                         
Net loss for the year ended December 31, 2006
    -       -       -       (12,371 )     (12,371 )
                                         
Balance, December 31, 2006
    59,996       3,000       24,048       (80,906 )     (53,858 )
                                         
Shares issued
    17,138       857       360,688       -       361,545  
                                         
Stock split, 1 to 10
    -       (3,471 )     3,471       -       0  
                                         
Net loss for the year ended December 31, 2007
    -       -       -       (497,229 )     (497,229 )
                                         
Balance, December 31, 2007
    77,134       386       388,207       (578,135 )     (189,542 )
                                         
Shares issued for services
    400,800       2,004       18,322       -       20,326  
                                         
Stock split, 1 to 50
    -       (2,342 )     2,342       -       0  
                                         
Outstanding share correction
    (4,593 )     (1 )     1               0  
                                         
Net loss for the year ended December 31, 2008
    -       -       -       (121,248 )     (121,248 )
                                         
Balance, December 31, 2008
    473,341       47       408,872       (699,383 )     (290,464 )
                                         
Net loss for the year ended December 31, 2009
    -       -       -       (54,041 )     (54,041 )
                                         
Balance, December 31, 2009
    473,341       47       408,872       (753,424 )     (344,505 )
                                         
Net loss for the three months ended March 31, 2010
    -       -       -       (18,867 )     (18,867 )
                                         
Balance, March 31, 2010
    473,341     $ 47     $ 408,872     $ (772,291 )   $ (363,372 )

The accompanying notes are an integral part of the financial statements.
 
 
F-3

 

SPECIALIZED SERVICES, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
 
   
Three
months
ended
March 31,
2010
   
Three
months
ended
March 31,
2009
 
Cash Flows from Operating Activities:
           
Net loss for the period
  $ (18,867 )   $ (17,173 )
                 
Adjustments to Reconcile Net Loss to Net Cash Provided by Operating Activities:
               
Depreciation and amortization
    15,175       17,594  
Changes in Assets and Liabilities
               
Decrease in accounts receivable
    5,428       3,645  
Increase (decrease) in accounts payable
    136       (167 )
(Decrease) in accrued expenses and taxes
    (5,009 )     0  
Increase in due to shareholder
    900       0  
Net Cash Provided by (Used in) Operating Activities
    (2,237 )     3,899  
                 
Cash Flows from Financing Activities:
               
Repayment of line of credit
    0       (2,518 )
Borrowings on line of credit
    850       0  
Payments on leases payable
    0       0  
Net Cash Provided by (Used in) Financing Activities
    850       (2,518 )
                 
Net Increase (Decrease) in Cash and Cash Equivalents
    (1,387 )     1,381  
                 
Cash and Cash Equivalents – Beginning
    7,314       3,661  
                 
Cash and Cash Equivalents – Ending
  $ 5,927     $ 5,042  
                 
Supplemental Cash Flow Information:
               
Cash paid for interest
  $ 0     $ 959  
Cash paid for income taxes
  $ 0     $ 0  

The accompanying notes are an integral part of the financial statements.
 
 
F-4

 
 
SPECIALIZED SERVICES, INC.
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2010
 
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business
Specialized Services, Inc. (“the Company”) was incorporated in Michigan in January, 1988. The Company aggregates (bundles) fuel products and services, and delivers these products and services to customers in a way that reduces the customers’ costs. In addition the Company has a competitive local exchange carrier license to provide telecommunications services to companies.

On October 5, 2005, the Company entered into an Agreement and Plan of Merger with and into Fifth Avenue Acquisition II Corp., a public shell company, with an effective date of October 6, 2005. The Company is the successor reporting company.

Basis of Accounting
The Company uses the accrual basis of accounting for financial statement reporting. Accordingly, revenues are recognized when products are delivered and services are rendered, and expenses are recognized when the obligation is incurred. The reported net revenues figure represents the total amount of fuel and telecommunications products and services that were purchased from the Company during the period by its customers, net of the Company’s cost of sales, as required under EITF 99-19 (ASC 605-45).  See Note 9.

Basic of Presentation
Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. We believe that the disclosures are adequate to make the financial information presented not misleading. These condensed financial statements should be read in conjunction with the audited financial statements and the notes thereto for the year ended December 31, 2009. All adjustments were of a normal recurring nature unless otherwise disclosed. In the opinion of management, all adjustments necessary for a fair statement of the results of operations for the interim period have been included. The results of operations for such interim periods are not necessarily indicative of the results for the full year.

Cash and Cash Equivalents
The Company considers certificates of deposit and other highly liquid investments with original maturities of three months or less to be cash equivalents.

Property and Equipment
Property and equipment are recorded at cost. Depreciation expense is computed using straight-line methods over the estimated useful life of each asset. See Note 2.

Fair Value of Financial Instruments
The Company’s financial instruments consist of cash and cash equivalents. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.

Loss Per Share
Loss per share has been calculated based on the weighted average number of shares of common stock outstanding during the period.
 
 
F-5

 
 
SPECIALIZED SERVICES, INC.
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2010
 
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Income Taxes
The Company, with the consent of its stockholders, had elected to be taxed as an S Corporation under the provisions of the Internal Revenue Code for periods prior to 2005. Instead of paying federal corporate income taxes, the stockholders of an S Corporation are taxed individually on their proportionate share of the Company’s taxable income.

In 2005, the Company revoked its S-election and began paying tax as a C-corporation. Income taxes are accounted for under the assets and liability method.  Deferred  tax  assets  and  liabilities are recognized for the estimated future tax consequences attributable  to differences between the financial statement carrying amounts of existing  assets  and  liabilities and their respective  tax  bases and operating loss and tax credit  carry  forwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. See Note 5.

Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Concentrations of Credit Risk
The Company maintains its cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. The Company continually monitors its banking relationships and consequently has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents.

In addition, the Company extends credit to customers in the normal course of business. The Company monitors the account receivable balances and does not expect significant collection problems.

Recent Accounting Pronouncements
In May 2009, the FASB issued SFAS 165 (ASC 855-10) entitled “Subsequent Events”.  Companies are now required to disclose the date through which subsequent events have been evaluated by management. Public entities (as defined) must conduct the evaluation as of the date the financial statements are issued, and provide disclosure that such date was used for this evaluation. SFAS 165 (ASC 855-10) provides that financial statements are considered “issued” when they are widely distributed for general use and reliance in a form and format that complies with GAAP. SFAS 165 (ASC 855-10) is effective for interim and annual periods ending after June 15, 2009 and must be applied prospectively.
 
F-6

 
 
SPECIALIZED SERVICES, INC.
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2010
 
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent Accounting Pronouncements
In June 2009, the FASB issued SFAS 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles. (“SFAS 168” or ASC 105-10) SFAS 168 (ASC 105-10) establishes the Codification as the sole source of authoritative accounting principles recognized by the FASB to be applied by all nongovernmental entities in the preparation of financial statements in conformity with GAAP. SFAS 168 (ASC 105-10) was prospectively effective for financial statements issued for fiscal years ending on or after September 15, 2009 and interim periods within those fiscal years. The adoption of SFAS 168 (ASC 105-10) on July 1, 2009 did not impact the Company’s results of operations or financial condition. The Codification did not change GAAP, however, it did change the way GAAP is organized and presented.

As a result, these changes impact how companies reference GAAP in their financial statements and in their significant accounting policies. The Company implemented the Codification in this Report by providing references to the Codification topics alongside references to the corresponding standards.

With the exception of the pronouncements noted above, no other accounting standards or interpretations issued or recently adopted are expected to have a material impact on the Company’s financial position, operations or cash flows.

NOTE 2 – PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at March 31, 2010 and December 31, 2009:

   
March 31,
2010
   
December
31, 2009
 
Machinery and equipment
  $ 365,402     $ 365,402  
Furniture and fixtures
    25,793       25,793  
Transportation equipment
    21,494       21,494  
Subtotal
    412,689       412,689  
Less: Accumulated depreciation
    (329,066 )     (320,141 )
Property and equipment, net
  $ 83,623     $ 92,548  

NOTE 3 – LOANS PAYABLE – RELATED PARTIES

Loans payable to related parties are due to officers for funds advanced to the Company for working capital and are non-interest bearing and due upon demand. There was $5,768 due to a related party as of March 31, 2010 and December 31, 2009.

NOTE 4 – LINE OF CREDIT PAYABLE

The Company has a $100,000 unsecured line of credit available with First Place Bank, which is payable upon demand. The officers personally guarantee borrowings under this line of credit. At March 31, 2010 and December 31, 2009, $53,144 and $52,294, respectively, was owed under this line of credit. Interest rates fluctuate based on the prime rate plus 3.25%. The rates in effect at March 31, 2010 and December 31, 2009 were 6.5% and 6.5%, respectively.
 
 
F-7

 
 
SPECIALIZED SERVICES, INC.
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2010

NOTE 5 – INCOME TAXES

For the period ended March 31, 2010, the Company has incurred net losses and, therefore, has no tax liability. The net operating loss carry-forward is approximately $772,000 at March 31,2010, can be carried forward and applied against future taxable income and used to reduce income taxes owed, and will expire in various amounts through the year 2030.

The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows:

   
March 31,
2010
   
December
31, 2009
 
Deferred tax asset attributable to:
           
Net operating loss carryover
  $ 262,000     $ 256,000  
Less: valuation allowance
    (262,000 )     (256,000 )
Net deferred tax asset
  $ -     $ -  

NOTE 6 – CAPITAL STOCK

The Company has 100,000,000 shares of $0.005 par value common stock authorized.

On October 8, 2007, the Company approved a 1 to 10 reverse stock split. Shares outstanding, average weighted shares outstanding, and loss per share have been adjusted to reflect this split.

During the year ended December 31, 2008, there were 20,040,000 shares of common stock issued for services valued at $20,326.

On December 20, 2008 the Company executed a 1 to 50 stock split. Shares outstanding, average weighted shares outstanding, and loss per share have been adjusted to reflect this split.

There were no shares issued during the three months ended March 31, 2010.

There were 473,341 shares of common stock outstanding as March 31, 2010.

There were no preferred shares issued and outstanding at March 31, 2010.

NOTE 7 – COMMITMENTS AND CONTINGENCIES

The Company neither owns nor leases any real property as of March 31, 2010. An officer has provided office services without charge.  There is no obligation for the officer to continue this arrangement.  Such costs are immaterial to the financial statements and accordingly are not reflected herein.  The officers and directors are involved in other business activities and most likely will become involved in other business activities in the future.
 
F-8

 
 
SPECIALIZED SERVICES, INC.
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2010
 
NOTE 8 – CAPITAL LEASES

The Company sold and leased back equipment during the year ended December 31, 2007.  The Company entered into five capital lease agreements.  All of the leases are for a term of 60 months with varying interest rates. The entire amount of interest due over the term of the leases has been capitalized as prepaid interest and is being amortized over the lease term. The future minimum rental payments due under this lease were as follows at March 31, 2010:

March 31, 2011
  $ 175,100  
                       2012
    57,921  
2013
    33,832  
2014
    0  
Total
  $ 266,853  

NOTE 9 – NET REVENUE

Net Revenue for the three months ended March 31, 2010 of $10,360 was comprised of gross billings of $970,071 less direct costs of $959,711.  Net Revenue for the three months ended March 31, 2009 of $15,681 was comprised of gross billings of $481,505 less direct costs of $465,824.

NOTE 10 – SUBSEQUENT EVENTS

The Company has analyzed its operations subsequent to March 31, 2010 and has determined that it does not have any other material subsequent events to disclose in these financial statements.
  
 
F-9

 
 
 
THIS FILING CONTAINS FORWARD-LOOKING STATEMENTS. THE WORDS “ANTICIPATED,” “BELIEVE,” “EXPECT,” “PLAN,” “INTEND,” “SEEK,” “ESTIMATE,” “PROJECT,” “WILL,” “COULD,” “MAY,” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THESE STATEMENTS INCLUDE, AMONG OTHERS, INFORMATION REGARDING FUTURE OPERATIONS, FUTURE CAPITAL EXPENDITURES, AND FUTURE NET CASH FLOW. SUCH STATEMENTS REFLECT THE COMPANY’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND FINANCIAL PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES, INCLUDING, WITHOUT LIMITATION, GENERAL ECONOMIC AND BUSINESS CONDITIONS, CHANGES IN FOREIGN, POLITICAL, SOCIAL, AND ECONOMIC CONDITIONS, REGULATORY INITIATIVES AND COMPLIANCE WITH GOVERNMENTAL REGULATIONS, THE ABILITY TO ACHIEVE FURTHER MARKET PENETRATION AND ADDITIONAL CUSTOMERS, AND VARIOUS OTHER MATTERS, MANY OF WHICH ARE BEYOND THE COMPANY’S CONTROL. SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES OCCUR, OR SHOULD UNDERLYING ASSUMPTIONS PROVE TO BE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY AND ADVERSELY FROM THOSE ANTICIPATED, BELIEVED, ESTIMATED, OR OTHERWISE INDICATED. CONSEQUENTLY, ALL OF THE FORWARD-LOOKING STATEMENTS MADE IN THIS FILING ARE QUALIFIED BY THESE CAUTIONARY STATEMENTS AND THERE CAN BE NO ASSURANCE OF THE ACTUAL RESULTS OR DEVELOPMENTS.
 
The following discussion and analysis of our financial condition and plan of operations should be read in conjunction with our financial statements and related notes appearing elsewhere herein. This discussion and analysis contains forward-looking statements including information about possible or assumed results of our financial conditions, operations, plans, objectives and performance that involve risk, uncertainties and assumptions. The actual results may differ materially from those anticipated in such forward-looking statements. For example, when we indicate that we expect to increase our product sales and potentially establish additional license relationships, these are forward-looking statements. The words expect, anticipate, estimate or similar expressions are also used to indicate forward-looking statements.

 
OVERVIEW OF THE COMPANY
 
Specialized Services, Inc., was founded in January 1988 as a Michigan s-corporation and in 2005 changed to a c-corporation. The Company is in the fuel services distribution business, principally to its truck fleet customers ("Fuel Services"). Through our distribution group, we negotiate with fuel providers, such as truck stops across the United States, for volume discounts for our fleet customers. The Company also negotiates with its truck fleet customers, based upon their fuel use requirements and committed volume needs, in order to provide the best prices discounts. The Fuel Services provided by the Company include coordination of our truck stop directory with negotiated pricing with truck stops and cost per gallon on a cost plus basis or a discount at point of sale, together with use of a fuel credit card provided by a third party biller. These cards are made available to fleet truck drivers, so that over the road purchases of fuel can be tracked, volume commitments and discounts evaluated and efficiencies provided to our customers and increased truck flow to the truck stop providers of fuel.
 
 
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We have established a tracking system to monitor fuels costs across the US, because of the substantial variation and constant fluctuation of fuel costs. Our Fuel Services program determines the amounts due our trucking company customers, based upon invoices from all truck stops, collection of rebates earned by our trucking fleets, for which we are paid a monthly fee that we negotiate. We believe our Fuel Services program and the initiatives we have implemented have lowered our cost structure, improved the economics we can offer our truck fleet customers and strengthened our ability to add to our services program.

OUR BUSINESS PLAN

Since its inception, the Company's strategy has been to grow as a Fuel Services provider to truck fleet customers in the US. The Company seeks to continue to expand its position as a regional leader in servicing fuel distribution and in offering enhanced services to the fuel user industry.

Our business strategy is to use our competitive strengths to achieve sales and earnings growth. As principal elements of our strategy, we intend to:

 
·
Grow Sales to New Fuel Users: We are moving beyond our historic market of truck fleets principally in the Midwest and have targeted two key growth sectors. First, we are focusing on branding our Fuel Services program for retailers, including highway stations and truck stops nationally, which have demonstrated significant sales volume. Second, we are concentrating on neighborhood retailers such as independent gas stations.

 
·
Grow Related Services: Develop a network of diesel fuel distribution to 160 major markets in the US utilizing our established Fuel Services network and programs; Establish an in-transit service of providing truck tire, wheel and battery repairs across the US and Canada; Offer truck freight brokerage services for freight; and Offer pre-paid fuel cards for major suppliers of truck fuel nationally.

 
·
Continue to Improve Working Capital Management and Reduce Costs: We intend to improve our working capital management primarily by improving our turnover rates. To do this, we will continue to improve procurement management practices, further develop our central procurement operations, improve ad forecasting with our customers, effectively manage alternative channels of fuel product sourcing, invest in systems enhancements and invest in expanding our tanker truck fleet. In addition, to strengthen our position as a low-cost distributor of fuel products, we have instituted a "culture of thrift" among our employees and developed initiatives to reduce our expenses through our low cost pursuit program.

 
·
Look for partners with larger facilities within the same sector as a growth strategy.
 
 
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LIQUIDITY AND CAPITAL RESOURCES

In order to achieve our business plan goals, the Company anticipates needing to raise additional capital from the sale of restricted shares over the coming 12 month period.

The Company intends to finance our future development activities and working capital needs largely from the sale of public equity securities with additional funding from a private placement or secondary offering and other traditional financing sources, including term notes  until such time that funds provided by operations are sufficient to fund working capital requirements.

The Company may receive proceeds in the future from the exercise of warrants and options outstanding as of March 31, 2010 in accordance with the following schedule:

   
Approximate
Number of
Shares
   
Approximate
Proceeds
 
                 
Non-Plan Options and Warrants
    -0-       -0-  

During the coming year, based on our anticipated growth/contraction, the Company has no plans to add or reduce the number of empolyees.
 
Results of Operations - Comparative Three Month Periods Ended March 31, 2010 and 2009
 
Throughout this comparative discussion, we refer to changes in the Economic conditions affecting our company and the industry as a whole.  For purposes of understanding the impact on the Company’s financials, the resulting decrease in Gross Billings and overall company financial picture, over the reported period was principally a result of changes in the general economic environment and specifically the higher costs of fuel because of lower refinery production. In addition, many of our trucking customers were tied to the automotive industry and with the downturn in the general economic condition and the financial collapse within the automotive industry, services and gross billings declined drastically.  Additional information is provided where applicable.
 
Our Revenues from Operations decreased for the three months ended March 31, 2010 where we posted $10,360 as compared to $15,681 for the same period in 2009 primarily as a result of reduced demand due to the econmic conditions facing our industry.

We achieved a reduction in Operating Expenses for the three months ended March 31, 2010 posting Operating Expenses of $29,233 as compared to Operating Expenses of $32,854 for the same period in 2009,  due to our focus on streamlining our operations to adjust to the reducted demand.

We recognized an increase in Net Losses for the three months ended March 31, 2010 as compared to the same period in 2009,  posting a Net Loss of $18,867 for the period ending March 31, 2010 verses $17,173 for the same period ending in 2009, primarily due to decreases in revenues.
 
 
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OFF-BALANCE SHEET ARRANGEMENTS

 
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

 
Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4T. Controls and Procedures
 
 
Changes in Internal Control Over Financial Reporting
 
No change in the Company’s internal control over financial reporting occurred during the quarter ended March 31, 2010, that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II—OTHER INFORMATION
 
 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the three month period ended March 31, 2010, there was no modification of any instruments defining the rights of holders of the Company’s common stock and no limitation or qualification of the rights evidenced by the Company’s common stock as a result of the issuance of any other class of securities or the modification thereof.

DURING THE PERIOD FROM 12/31/09 – 3/31/10 –No common or preferred stock was issued by the Company.

Item 3. Defaults upon Senior Securities

There have been no defaults in any material payments during the covered period.
 
 
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Item 4. Submission of Matters to a Vote of Security Holders

During the three month period ended March 31, 2010, the Company did not submit any matters to a vote of its security holders.
 

The Company does not have any other material information to report with respect to the three month period ended March 31, 2010.

Item 6. Exhibits and Reports on Form 8-K
 
(a)
 
Exhibits included herewith are:
 
31.1
  
Certification of the Chairman of the Board, Chief Executive Officer, and Chief Financial Officer (This certification required as Exhibit 31 under Item 601(a) of Regulation S-K is filed as Exhibit 99.1 pursuant to SEC interim filing guidance.) (2)
31.2
  
Certification of the Principal Accounting Officer (This certification required as Exhibit 31 under Item 601(a) of Regulation S-K is filed as Exhibit 99.2 pursuant to SEC interim filing guidance.) (2)
32
  
Written Statements of the Chief Executive Officer, Chief Financial Officer, and Principal Accounting Officer (This certification required as Exhibit 32 under Item 601(a) of Regulation S-K is furnished in accordance with Item 601(b)(32)(iii) of Regulation S-K as Exhibit 99.3 pursuant to SEC interim filing guidance.) (2)
SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
SPECIALIZED SERVICES, INC.
     
Dated: January 18, 2011
By:
/s/ David E. Joseph
   
Chief Executive Officer and Chairman of the
Board (Principal Executive Officer and Principal
Financial Officer)
     
Dated: January 18, 2011
By:
/s/ Michael B. Jackson, CFO
   
Principal Accounting Officer
 
 
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