Attached files
file | filename |
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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.
4
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.
|
5
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.
6
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.
7
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
|
8