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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-K
(Mark One)
[ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended
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[ X ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from January 1, 2010 to September 30, 2010
000-28323
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Commission File Number
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
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(Exact name of registrant as specified in its charter)
NEVADA 98-0368586
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
64 DIVISION AVE. SUITE 106, LEVITTOWN, NY 11756-2999
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(Address of principal executive offices) (Zip Code)
(516) 605-0388
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(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
N/A N/A
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Securities registered pursuant to Section 12(g) of the Exchange Act:
Title of class
COMMON STOCK, $0.001 PAR VALUE
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Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.
Yes[ ] No[X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or 15(d) of the Act.
Yes[ ] No[X]
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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[X] No[ ]
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Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Website, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files).
Yes[ ] No[ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.
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
the definitions of "large accelerated filer," "accelerated filer" and
"smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes[X] No[ ]
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was last sold, or the average bid and asked price of such common equity, as of
the last business day of the registrant's most recently completed second fiscal
quarter.
AS OF JUNE 30, 2010, THE LAST BUSINESS DAY OF THE REGISTRANT'S MOST RECENTLY
COMPLETED SECOND FISCAL QUARTER, THE AGGREGATE MARKET VALUE OF VOTING COMMON
STOCK HELD BY NON-AFFILIATES OF THE REGISTRANT IS $6,608,337 BASED ON THE
AVERAGE HIGH AND LOW BID PRICE OF THE REGISTRANT'S VOTING COMMON STOCK ON SUCH
DATE.
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PAST 5 YEARS:
Indicate by check mark whether the issuer has filed all documents and reports
required to be filed by Section 12, 13, or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by
a court.
Yes[ ] No[ ]
APPLICABLE ONLY TO CORPORATE REGISTRANTS
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
9,093,185 COMMON SHARES OUTSTANDING AS OF FEBRUARY 21, 2011
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DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and the Part
of the Form 10-K (e.g. Part I, Part II, etc.) into which the document is
incorporated: (1) Any annual report to security holders; (2) Any proxy or
information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or
(c) of the Securities Act of 1933. The listed documents should be clearly
described for identification purposes.
NONE
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TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
TABLE OF CONTENTS
Page
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PART I
Item 1 Business 4
Item 1A Risk Factors 11
Item 1B Unresolved Staff Comments 12
Item 2 Properties 12
Item 3 Legal Proceedings 12
Item 4 Submission of Matters to a Vote of Security Holders 12
PART II
Item 5 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of 12
Equity Securities
Item 6 Selected Financial Data 14
Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 14
Item 7A Quantitative and Qualitative Disclosures About Market Risk 15
Item 8 Financial Statements and Supplementary Data 15
Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 16
Item 9A(T) Controls and Procedures 16
Item 9B Other Information 17
PART III
Item 10 Directors, Executive Officers and Corporate Governance 17
Item 11 Executive Compensation 19
Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder 20
Matters
Item 13 Certain Relationships and Related Transactions, and Director Independence 22
Item 14 Principal Accounting Fees and Services 23
PART IV
Item 15 Exhibits, Financial Statement Schedules 23
SIGNATURES 24
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PART I
ITEM 1. BUSINESS
THE STATEMENTS CONTAINED IN THIS ANNUAL REPORT ON FORM 10-K FOR THE PERIOD
JANUARY 1, 2010 TO SEPTEMBER 30, 2010, THAT ARE NOT PURELY HISTORICAL STATEMENTS
ARE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 21E OF THE
SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED, INCLUDING STATEMENTS REGARDING
THE COMPANY'S EXPECTATIONS, BELIEFS, HOPES, INTENTIONS OR STRATEGIES REGARDING
THE FUTURE. THESE FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES.
OUR ACTUAL RESULTS MAY DIFFER FROM THOSE INDICATED IN THE FORWARD-LOOKING
STATEMENTS. PLEASE READ THIS DOCUMENT AND ALSO SEE THE FACTORS AND RISKS
DISCUSSED IN OTHER REPORTS FILED FROM TIME TO TIME WITH THE SECURITIES AND
EXCHANGE COMMISSION.
GENERAL DEVELOPMENT OF BUSINESS
Tire International Environmental Solutions Inc. (the "Company" "we", "us", "our"
and "Tire") was incorporated under the laws of the State of Nevada on February
19, 1986 as Engle Mining Co., Inc. On January 27, 1999 the Company acquired all
of the outstanding stock of I Vision USA Inc. through a stock for stock exchange
in which the stockholders of I Vision USA Inc. received 8,000,000 common shares
of the Company in exchange for all of the stock of I Vision USA Inc. I Vision
USA Inc. was organized in the state of Delaware on December 15, 1998 and had
purchased all of the outstanding stock of I Vision Integral Inc. which was
organized in Canada during March 1998. I Vision USA Inc. and I Vision Integral
Inc. were organized for the purpose of conducting electronic commerce on the
World Wide Web. For reporting purposes, the acquisition is treated as an
acquisition of the Company by I Vision USA Inc. (reverse acquisition) and a
recapitalization of I Vision USA Inc. During September 1999 the Company acquired
all of the outstanding stock of La Societe De Services, Bergeron Conseils Et
Realisation Inc., and Ixiem Production Inc. by the issuance of 234,000 shares of
its common stock and a promissory note of $150,000 CDN. This debt was settled
for stock and the companies have since been discontinued or abandoned.
During fiscal year 2003 the Company and its subsidiaries ceased operations and
on April 1, 2004, the Company divested itself of all of its subsidiaries by way
of a divestiture agreement whereby the Company transferred all of the shares of
the subsidiaries in exchange for the assumption of all of the outstanding debt
of the subsidiaries.
On December 21, 2006 the Company issued a total of 500,000 post split common
shares pursuant to a debt settlement agreement between the Company and Mr.
Antonio Care. This issuance of shares effected a change in control of the
Company.
On February 8, 2007, the Company effected a reverse split of its shares of
common stock on the basis of 1 new share for every 100 shares held at the time
of the reverse split. Concurrent with the reverse split of its shares the
Company changed its name to Tire International Environmental Solutions Inc.
On March 13, 2007, the Company issued a total of 4,900,000 common shares at a
deemed price of $0.001 per shares in settlement of a total of $49,000 in related
party debt. The related party required the shares be issued to a total of
14 stockholders.
On December 7, 2007 the Company issued a total of 2,805,000 common shares at a
deemed price of $0.001 per common share in settlement of a total of $28,050 in
related party debt. The related party required the shares be issued to a total
of 14 stockholders.
During April 2008, the Company issued aggregate 291,000 shares of common stock
valued at $9,750 in consideration for consulting services, director's fee and
officer's fee.
On June 12, 2010, pursuant to a letter of default on accounts payable owed to a
Director and Officer of the Company, the Company restructured its related party
outstanding accounts payable totaling $443,024 as of March 31, 2010. The
accounts payable was restructured to a one year, 10% interest bearing
convertible promissory note dated June 1, 2010 and due on May 31, 2011. The
conversion price of the Note is $0.01.
The Company presently has no operations and is under contract to acquire all of
the outstanding stock of Tonmik Import Export Solutions, Inc. Upon the
completion of this acquisition the Company will be an operating company. It has
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entered in negotiations with several additional companies but has not yet
concluded any additional agreements.
The Company has not ever declared bankruptcy, has not ever been in receivership,
or similar proceedings.
The Company presently has no business operations.
On January 18, 2011 the Company entered into a Purchase Agreement with Antonio
Care, the Company's Chief Executive Officer. Under the Agreement, the Company is
acquiring all of the outstanding stock of Tonmik Import/Export Solutions, Inc
("Tonmik") in exchange for the Company's $1.7 million cash flow note. Tonmik is
a Montreal based distributor of recycled rubber products that are currently
manufactured using purchased recycled crumb rubber at its facility in China and
sold to big box retailers in the United States. Tonmik has been operating its
Chinese manufacturing facility for six years. The Company expects to develop a
fully integrated scrap-tire-to-finished product business capitalizing on the
consumer demand for Tonmik finished product order flow that could not be
maximized with just the product of the Tonmik Chinese facilities. The note is
payable in quarterly installments of interest at 10% per annum and principal to
the extent of 50% of Tonmik's free cash flow after all of its operating, debt
and any new equipment costs are satisfied with a final installment due on
December 31, 2015. The purchase of the Tonmik shares will be completed upon the
delivery of the Tonmik December 31, 2010 financial statements, certificates of
corporate good standing and the delivery of all of the Tonmik shares. Upon
completion of the acquisition of Tonmik the Company will become an operating
company. Tonmik reported for the nine months ended September 30, 2010 $2.7
million in revenue and $442,000 in Earnings Before Interest, Taxes, Depreciation
and Amortization ("EBITDA") and $1.1 million in revenue and $207,000 in EBITDA
is for the year ended December 31, 2009.
The Company intends to continue to seek, to investigate and, if such
investigation warrants, to acquire additional interests in business
opportunities presented to it by persons or firms who or which desire to seek
the perceived advantages of a corporation registered under the Securities Act of
1933. The Company will be focused on acquisitions that will complement its
acquisition of Tonmik and will contribute to the development of a fully
integrated operating organization recycling scrap tires into a finished product
business initially in the United States and ultimately worldwide. The Company
seeks to participate in a business venture that collects and processes scrap
tires into their rubber, steel and fiber components. The recovered rubber will
be the principal raw material for its finished products.
The Company seeks to produce and market recycled rubber products for use in
commercial and residential flooring applications, artificial playing fields,
playgrounds, landscaping and rubberized asphalt. The Company expects to combine
Tonmik's effective marketing and product development with proprietary technology
and the Company's management know-how to produce a fully integrated operating
model of recycled rubber producers who have directed their production to
high-value end products. In addition to their environmentally friendly
characteristics, the Company expects the Tonmik product lines, which are
beginning to realize high rates of acceptance in their respective markets, to
offer superior advantages in application and maintenance over traditional
counterparts. The Tonmik products are made from used tires that are shredded and
processed to produce metal-free rubber granules used as raw material for Tonmik
molded products, infill in artificial playing surfaces, solid and loose
residential and commercial playground safety surfaces, landscape mulch, and as
an asphalt additive. Tonmik has for the past six years manufactured its finished
molded products in China. During 2011 the Company expects to increase Tonmik's
productive capacity through the acquisitions of existing tire recycling
facilities in the United States.
Tonmik currently owns and operates a recycled rubber manufacturing facility in
China that molds recycled rubber granules into rubber pavers for sale to big box
retailers in the US and Canada. The Company expects that when installed at a
United States Facility Tonmik's production system and proprietary technology
will enable the Company to produce products at a competitive cost to its
customers while benefiting from negative cost raw material from the tires it
recycles. The Company expects to utilize all the rubber from the recycled tires
in the Tonmik finished products, sell the recovered steel to metal recyclers and
sell the recovered fiber to be used as fuel resulting in minimal wastage and an
environmentally friendly production cycle. The Company's objective will be
recycling 100% of the scrap tires it processes. The attractive characteristics
of the Company's products are expected to include elimination of exposed metal
and performance attributes such as improved safety characteristics, better
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drainage, durability and aesthetics.
The Company has signed a Joint Venture Agreement with Tires SpA.("TIRES"), an
Italian manufacturer of heavy industrial processing and recycling equipment.
Under the terms of the Agreement, as part of a purchase order by the Company the
terms of which are detailed below, the Company will own fifty percent (50%) of
the TIRES U.S. patent pending for the TIRES state-of-the-art tire recycling
plant. The patent covers the method and installation of recycling of used tires
for conversion into finished products (the "Waste to Value Technology") for the
North American market. The Agreement between the Company and TIRES calls for a
payment of (euro)11,100,000 ($14,476,000 million USD), of which (euro)7,700,000
($10,041,900 USD) is to be paid by way of cash and the remaining balance of
(euro)3,400,000 shall be paid via the issuance of common shares of the Company.
For the purpose of calculating the issuance price of the shares, the parties
have agreed to a Euro to USD rate of 1.2 bringing the amount due to $4,080,000
in USD. The parties have further agreed to issue the shares at a deemed price of
$0.50 per share. Therefore the Company will be required to issue a total of
8,160,000 shares of common stock to TIRES. The Company is evaluating several
alternative methods of processing to produce its fully integrated scrap tire to
finished product system. Ultimately the Company may or may not use all or any
portion of the TIRES patented system to produce the Tonmik products from scrap
tires.
Tonmik has five main product categories: Tonmik Pavers, Tonmik SportsFill,
Tonmik Pour & Play, Tonmik Mulch and Tonmik Construction Material. Tonmik Pavers
are 16"X16" or 24"X24" rubber flooring blocks used in numerous commercial and
residential applications including stairs, balconies, arenas, garages, gyms,
decking, flooring and around pools. Tonmik SportsFill is a product used as an
infill in high-end synthetic playing fields marketed to large field installation
companies whose target markets are professional athletic organizations as well
as collegiate and school systems. Tonmik Pour & Play is a loose playground
safety surface that has superior fall height protection and is sold to school
systems as well as commercial and residential markets. Tonmik Mulch is a
colorized rubber product used as a substitute for wood mulch in landscaping
applications and is marketed both commercially and residentially. Tonmik
Construction Material is a product used in an asphalt/rubber mix for road
construction.
TONMIK PRODUCTS
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The differing size, purity and surface characteristics of Tonmik's recycled
rubber granules or molded products determine their end use. The surface
characteristics are a result of specific tire recycling production processes:
Cryogenic(1) production generates granules with smooth edges that are
angular-shaped compared to ambiently(2) produced granules which are jagged in
shape. Molding of the ambiently produced rubber granules further modifies the
products and further increases the value of the products produced, while
retaining the metal-free characteristics of crumb rubber material.
Tonmik Flexible, Etna and Dutch Pavers- a series of molded rubber products
providing a low cost alternative to traditional stone flooring pavers or wood
decking which is sold through big box retailers distributors to homeowners and
commercial customers. These products provide a softer surface that are as or
more durable than their traditional counterparts with greater aesthetics as they
are available in a variety of colors, sizes and patterns. They are commonly used
on stairs, balconies, arenas, entrances, garages, patios, solariums,
playgrounds, polls, terraces, piers, gyms and as deck flooring.
Tonmik SportsFill - a product used as an infill material in synthetic playing
fields, produced both cryogenically and ambiently, that is sold primarily to
contractors who install high-end synthetic fields. It is applied as infill in a
carpet of woven polyethylene strands to imitate a grass surface on synthetic
playing fields. These surfaces are superior to natural grass due to their
outstanding safety characteristics, playability, durability, drainage, and ease
of maintenance, among other attributes.
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(1) Cryogenic is a specialized production technique that creates rubberized
granules by freezing and shattering used tires which results in a clean
separation of the components of the tires.
(2) Ambient describes a production process that cuts and shreds used tires, and
employs a milling/grinding process.
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Tonmik Pour & Play - a loose playground safety surfacing material made from
tires to produce 1/4 to 1/2 inch recycled rubber sizes that are colorized for
different recreational applications in schools and municipalities, or sold
retail for backyard playgrounds. This product provides superior fall height
protection over all other playground safety flooring available today.
Tonmik Mulch - a colorized rubber mulch product used in landscaping
applications. Tonmik has chosen to manufacture this product along with its other
finished product lines because (i) there is growing acceptance of this product
nationally and (ii) both lines have identical feedstock sources, coloring,
packaging, sales, and home delivery processes.
Tonmik Construction Material - a product used as an additive to asphalt in road
construction which is sold either as a cryogenic or ambient product, depending
on demand and local Department of Transportation specifications.
On February 10, 2011 the Company completed an Investment Banking Engagement
Agreement with Stone & Youngberg, LLC ("Stone"). Under the Agreement, the
Company has retained Stone to act as sole manager for the anticipated debt
financing for the Company's new US tire recycling and finished product
manufacturing project (the "Project"). Compensation under the Agreement is based
on the successful completion by Stone of a privately placed corporate obligation
non-rated debt financing with net proceeds of $20 million for the Project. The
debt financing may qualify for tax exempt status in the Project state. The
Company as part of the Project is arranging for $10 million in new equity
capital to support the debt financing. The Company will also pay Stone for
expenses incurred under the Agreement.
This discussion of the proposed business is not meant to be restrictive of the
Company's virtually unlimited discretion to search for and enter into potential
business opportunities. Management anticipates that initially it may be able to
participate in only one potential fully integrated tire recycling US business
venture to complement Tonmik's Chinese operation because the Company has nominal
assets and limited financial resources. This lack of diversification should be
considered a substantial risk to stockholders of the Company because it will
have limited operations, which can be used to offset potential losses from any
one venture. The Company may seek a business opportunity with entities in tire
recycling and/or recycled rubber finished product manufacturing which have
recently commenced operations, or may wish to utilize the public marketplace in
order to raise additional capital in order to expand into new products or
markets, to develop a new product or service or for other corporate purposes.
The Company may acquire assets and establish wholly owned subsidiaries in
various businesses or acquire existing businesses as subsidiaries.
The Company anticipates that the selection of a business opportunity to
participate in the tire recycling and/or recycled rubber finished product
manufacturing will be complex and extremely risky. Due to general economic
conditions, rapid technological advances and shortages of available capital,
management believes that there are numerous firms in the tire recycling and/or
recycled rubber finished product manufacturing business seeking the perceived
benefits of a publicly registered corporation. Such perceived benefits may
include facilitating or improving the terms on which additional equity financing
may be sought, providing liquidity for incentive stock options or similar
benefits to key employees providing liquidity (subject to restrictions of
applicable statutes) for all stockholders and other factors. Potentially,
available business opportunities may occur in any of the different stages of the
tire recycling and/ or recycled rubber finished product manufacturing process
and at various stages of development, all of which will make the task of
comparative investigation and analysis of such business opportunities extremely
difficult and complex.
The Company presently has limited capital with which to provide the owners of
business opportunities with any significant cash or other assets. However,
management believes the Company will be able to raise additional capital for an
acquisition of merit. The Company may incur significant legal and accounting
costs in connection with the acquisition of a business opportunity, including
the costs of preparing Form 8-K, 10-Q or 10-K, agreements and related reports
and documents. The Exchange Act specifically requires that any merger or
acquisition candidate comply with all applicable reporting requirements, which
include providing audited financial statements to be included within the
numerous filings relevant to complying with the Exchange Act.
The analysis of new business opportunities will be undertaken by, or under the
supervision of, the officers and directors of the Company. Antonio Care, the
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Company's President, Marco Alfonsi, the Company's COO and Martin Sergi, the
Company's CFO will be the key Company personnel in the search, review and
negotiation with potential acquisition or merger candidates. In analyzing
prospective business opportunities, management will consider such matters as the
available technical, financial and managerial resources; working capital and
other financial requirements; history of operations, if any; prospects for the
future; nature of present and expected competition; the quality and experience
of management services which may be available and the depth of that management;
the potential for further research, development, or exploration; specific risk
factors not now foreseeable but which then may be anticipated to impact the
proposed activities of the Company; the potential for growth or expansion; the
potential for profit; the perceived public recognition of acceptance of
products, services, or trades; name identification; and other relevant factors.
The Company will not acquire or merge with any company for which audited
financial statements cannot be obtained at the closing of the proposed
transaction.
The Company will not restrict its search for any specific kind of tire recycling
and/or recycled rubber manufacturing firms, but may acquire a venture which is
in its preliminary or development stage, which is already in operation, or in
essentially any stage of its corporate life. It is impossible to predict at this
time the status of any business in which the Company may become engaged, in that
such business may need to seek additional capital, may desire to have its shares
publicly traded, or may seek other perceived advantages which the Company may
offer.
ACQUISITION OPPORTUNITIES
In implementing a structure for a particular business acquisition, the Company
may become a party to a merger, consolidation, reorganization, joint venture or
licensing agreement with another corporation or entity. It may also acquire
stock or assets of an existing business. On the consummation of a transaction,
it is probable that the present management and stockholders of the Company will
no longer be in control of the Company. In addition, the Company's directors
may, as part of the terms of the acquisition transaction, resign and be replaced
by new directors without a vote of the Company's stockholders or may sell their
stock in the Company. Any and all such sales will only be made in compliance
with the securities laws of the United States and any applicable state.
It is anticipated that any securities issued in any such reorganization would be
issued in reliance upon exemption from registration under applicable federal and
state securities laws. In some circumstances, however, as a negotiated element
of its transaction, the Company may agree to register all or a part of such
securities immediately after the transaction is consummated or at specified
times thereafter. If such registration occurs, of which there can be no
assurance, it will be undertaken by the surviving entity after the Company has
successfully consummated a merger or acquisition and the Company is no longer
considered a "shell" company. Until such time as this occurs, the Company does
not intend to register any additional securities. The issuance of substantial
additional securities and their potential sale into any trading market which may
develop in the Company's securities may have a depressive effect on the value of
the Company's securities in the future, if such a market develops, of which
there is no assurance.
While the actual terms of a transaction to which the Company may be a party
cannot be predicted, it may be expected that the parties to the business
transaction will find it desirable to avoid the creation of a taxable event and
thereby structure the acquisition in a so-called "tax-free" reorganization under
Sections 368(a) (1) or 351 of the Internal Revenue Code (the "Code"). In order
to obtain tax-free treatment under the Code, it may be necessary for the owners
of the acquired business to own 80% or more of the voting stock of the surviving
entity. In such event, the stockholders of the Company would retain less than
20% of the issued and outstanding shares of the surviving entity, which would
result in significant dilution in the equity of such stockholders.
As part of the Company's investigation, officers and directors of the Company
may personally meet with management and key personnel, may visit and inspect
material facilities, obtain analysis or verification of certain information
provided, check references of management and key personnel, and take other
reasonable investigative measures, to the extent of the Company's limited
financial resources and management expertise. The manner in which the Company
participates in an opportunity will depend on the nature of the opportunity, the
respective needs and desires of the Company and other parties, the management of
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the opportunity and the relative negotiation strength of the Company and such
other management.
With respect to any merger or acquisition, a negotiation with target company
management is expected to focus on the percentage of the Company, which the
target company stockholders would acquire in exchange for all of their
stockholdings in the target company. Depending upon, among other things, the
target company's assets and liabilities, the Company's stockholders will in all
likelihood hold a substantially lesser percentage ownership interest in the
Company following any merger or acquisition. The percentage ownership may be
subject to significant reduction in the event the Company acquires a target
company with substantial assets. Any merger or acquisition effected by the
Company can be expected to have a significant dilutive effect on the percentage
of shares held by the Company's then stockholders.
The Company will participate in a business opportunity only after the
negotiation and execution of appropriate written agreements. Although the terms
of such agreements cannot be predicted, generally such agreements will require
some specific representations and warranties by all of the parties thereto, will
specify certain events of default, will detail the terms of closing and the
conditions which must be satisfied by each of the parties prior to and after
such closing, will outline the manner of bearing costs, including costs
associated with the Company's attorneys and accountants, will set forth remedies
on default and will include miscellaneous other terms.
As stated hereinabove, the Company will not acquire or merge with any entity
which cannot provide independent audited financial statements within a
reasonable period of time after closing of the proposed transaction. The Company
is subject to all of the reporting requirements included in the Exchange Act.
Included in these requirements is the affirmative duty of the Company to file
independent audited financial statements as part of its Form 8-K to be filed
with the Securities and Exchange Commission upon consummation of a merger or
acquisition, as well as the Company's audited financial statements included in
its annual report on Form 10-K.
The Company does not intend to provide the Company's security holders with any
complete disclosure documents, including audited financial statements,
concerning an acquisition or merger candidate and its business prior to the
consummation of any acquisition or merger transaction.
COMPETITION
Tonmik derives the majority of its revenues from the sale of its five product
categories; the Company also expects to collect tipping fees from the collection
of scrap tires used to manufacture its products. Consequently, the Company
expects to compete directly with: (i) a large group of companies that
manufacture and distribute products that have been traditionally used in similar
applications that the Tonmik's products replace, (ii) a smaller universe of
marketers and processors of recycled rubber products who produce and sell
products in direct competition with the Tonmik, and (iii) a fairly large and
regionally-based universe of companies that compete with the Company for tire
supply. The Company views competition with each of these groups differently:
Competition with Traditional Products - The Company believes that Tonmik's
products are improved substitutes for traditional materials used in various
applications and compete directly with these traditional products for market
share. Using an imperfect measure, the potential size of the market for recycled
rubber products can be determined by assuming capture of a percentage of the
total existing market from the traditional products. The Company cannot predict
the market share that Tonmik products will capture.
Direct Competition with Recycled Tire Products - As rubberized alternatives
acquire market share from their traditional counterparts, the Company expects to
increasingly focus its attention on those businesses that are capable of
producing like products of similar and consistent quality and in volumes large
enough to attract the interest of national customers, such as artificial playing
field installation companies, national playground manufacturers and "Big Box"
national retailers. Currently, Tonmik's integrated multi-product approach puts
the Company in a position as a producer that sells and markets all of the rubber
output from its processes. The Company's competitors are fragmented and usually
not integrated, and none compete against the whole range of Tonmik's products.
If the Company can develop its fully integrated tire recycling to finished
product system it expects it will have competitive advantages over other less
integrated tire recycling companies.
9
--------------------------------------------------------------------------------
Competition with Tire Supply - The Company expects to compete with tire jockeys
in the respective areas where its facilities operate. Because of the regional
nature of the tire collection business, the absence of fully integrated
processors, and the high cost of handling and transporting used tires, the
availability of scrap tires throughout North America is a function of regional
tipping fees. Accordingly, tire supply is highly sensitive to price and the
Company determines its tipping fees to maximize its profitability, while at the
same time assuring availability. Unlike other tire recycling companies, the
Company's main business revenue is not expected to come from tipping fees as
they are only expected to represent small percentage of the Company's revenues.
The Company will remain an insignificant participant among firms that engage in
the acquisition of business opportunities. There are many established venture
capital and financial concerns which have significantly greater financial and
personnel resources and technical expertise than the Company. In view of the
Company's combined limited financial resources and limited management
availability, the Company will continue to be at a significant competitive
disadvantage compared to the Company's competitors.
REGULATION AND TAXATION
The Investment Company Act of 1940 defines an "investment company" as an issuer,
which is or holds itself out as being engaged primarily in the business of
investing, reinvesting or trading of securities. While the Company does not
intend to engage in such activities, the Company could become subject to
regulation under the Investment Company Act of 1940 in the event the Company
obtains or continues to hold a minority interest in a number of development
stage enterprises. The Company could be expected to incur significant
registration and compliance costs if required to register under the Investment
Company Act of 1940. Accordingly, management will continue to review the
Company's activities from time to time with a view toward reducing the
likelihood the Company could be classified as an "investment company."
The Company intends to structure a merger or acquisition in such manner as to
minimize federal and state tax consequences to the Company and to any target
company.
PATENTS
The Company owns no patents and no Internet domain names.
RESEARCH AND DEVELOPMENT
The Company has not undertaken any research and development activities during
each of its last three fiscal years.
EMPLOYEES
As of September 30, 2010, the Company had no employees.
On December 1, 2010, the Company entered into an employment agreement with Mr.
Antonio Care, a Chief Executive Officer of the Company. In consideration of his
performance of duties and responsibilities, the Company shall pay to Mr. Care a
base salary of $10,000 per month and an allowance of up to $333 per month for
the purpose of leasing, owning and /or maintaining a vehicle for use in
connection with the services for the Company.
Mr. Care has been the President, Director and sole owner of Tonmik Import Export
Solutions, Inc. since its inception on November 7, 2005. Mr. Care in such
capacity developed the Tonmik's Chinese operations, the Tonmik products and
Tonmik's customer list. The Company has entered into a purchase agreement to
acquire all of the outstanding stock of Tonmik. Mr. Care's know how and
proprietary developed manufacturing processes are key components of the
Company's plan to develop an integrated tire recycling to recycled rubber
finished product business.
On December 1, 2010, the Company entered into an employment agreement with Mr.
Marco Alfonsi, a Chief Operating Officer of the Company. In consideration of his
performance of duties and responsibilities, the Company shall pay to Mr. Alfonsi
a base salary of $10,000 per month and an allowance of up to $333 per month for
the purpose of leasing, owning and /or maintaining a vehicle for use in
connection with the services for the Company.
10
--------------------------------------------------------------------------------
Mr. Alfonsi has been a financial service professional for past 13 years.
Throughout his career, Mr. Alfonsi was directly and indirectly involved in
raising over $100 million dollars for small and medium sized business. Mr.
Alfonsi was registered in the Securities Industry holding Series 7, 63 and 24
licenses. Mr. Alfonsi is no longer registered. Prior to his involvement in the
financial services industry, Mr. Alfonsi has owned, operated, financed and sold
several businesses. Mr. Alfonsi successfully started and managed two companies
(ExecuteDirect.com, and Bakers Express of New York, Inc.).
On August 16, 2010, Tire International Environmental Solutions, Inc. (TRIE)
appointed Mr. Marco Alfonsi, to the Board of Directors. Mr. Alfonsi was also
appointed Chief Operating Officer of the Company.
On December 1, 2010, the Company entered into an employment agreement with Mr.
Cosimo Care, a Marketing Director and Manager of IT of the Company. In
consideration of his performance of duties and responsibilities, the Company
shall pay to Mr. Care a base salary of $2,500 per month and an allowance of up
to $333 per month for the purpose of leasing, owning and /or maintaining a
vehicle for use in connection with the services for the Company.
On December 1, 2010, the Company entered into an employment agreement with Mr.
Martin Sergi, a Chief Financial Officer of the Company. In consideration of his
performance of duties and responsibilities, the Company shall pay to Mr. Sergi a
base salary of $10,000 per month and an allowance of up to $333 per month for
the purpose of leasing, owning and /or maintaining a vehicle for use in
connection with the services for the Company.
Mr. Sergi has over 25 years of experience as Chief Executive Officer and Chief
Financial Officer of both Privately and Publicly Owned Companies. Mr. Sergi is
an innovator that was named Entrepreneur of the Year for emerging business by
Ernst & Young for the State of New Jersey in 2006. Mr. Sergi has raised for
firms which he led over $1 billion in debt and equity financing including public
equity, public bonds, bank secured and unsecured debt, and private equity; Mr.
Sergi has built companies from inception to $200 million in sales and $350
million in assets. Mr. Sergi has extensive experience in recycling,
manufacturing, energy and real estate. He has been an Officer and Director of
firms in the collection, processing and/or recycling of tires and other solid
waste streams continuously since 1985. Mr. Sergi is a pioneer in converting the
tire disposal industry into a new rubber recycling industry. Firms in which he
was Chief Executive Officer entered into partnership with Ford Motor Company to
recycle all of 8 million recalled Firestone Wilderness Tires from Ford Explorers
in 2003-2004 and utilized the recycled rubber from these tires into innovative
products such as color rubber playground safety flooring, rubber landscape mulch
and recycled rubber infill for the NCAA and NFL fields. From 1985 to 2000 Mr.
Sergi as Chief Executive Officer and Director of KTI Holding, Inc., a NASDAQ
national system firm ("KTI"), built KTI from inception into one of the largest
independent recycling companies in the United States; recycling over 10 million
tons of trash per year into usable products. While at KTI he developed
waste-to-energy plants utilizing municipal solid waste from hundreds of
municipalities into refuse derived fuel to produce 100 megawatts of power per
hour, which was sold to public utilities. He has restructured Power Purchase
Agreements to produce $120 million in cash and stock warrants from public
utilities, which were then exercised for an addition $30 million for KTI. From
2001 to 2003 Mr. Sergi was an Officer and Director of KTI's merger partner,
Casella Waste Systems. From 2003 to 2010, Mr. Sergi was the Chief Executive
Officer in the tire recycling industry of Recovery Technology Group, LLC ("RTG")
and PermaLife Products, LLC ("PermaLife"). These firms were substantial
participants in the tire recycling and crumb rubber manufacturing industries.
Mr. Sergi's extensive recycling experience will be an asset for the Company as
it develops its fully integrated tire recycling and finished product
manufacturing business.
In September, 2008 one of PermaLife's tire recycling plants had a significant
tire fire and ultimately permanently closed. Due to the loss, PermaLife's
principal lender called in their $8.7 million credit facility resulting in
PermaLife and several of its affiliates which Mr. Sergi was the Chief Executive
Officer filed for Chapter 11 Bankruptcy protection. PermaLife could not be
reorganized, was converted to Chapter 7 and its principal assets were recently
liquidated on behalf of the secured lender.
ITEM 1A. RISK FACTORS
The Company is a smaller reporting company and is not required to provide this
information.
11
--------------------------------------------------------------------------------
ITEM 1B. UNRESOLVED STAFF COMMENTS
The Company is a smaller reporting company and is not required to provide this
information.
ITEM 2. PROPERTIES
The Company does not own any plant or properties or any real estate. The Company
does not lease any property.
ITEM 3. LEGAL PROCEEDINGS.
The Company is not a party to any legal proceedings and is not aware of any
pending legal proceedings as of the date of this Report.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of the Company's stockholders during the
fiscal year ended December 31, 2009.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES.
MARKET INFORMATION, HOLDERS AND DIVIDENDS
The Company's common stock is presently quoted on the Over the Counter Bulletin
Board (OTC/BB) under the symbol "TRIE". The Company's common stock previously
traded on the OTC/BB under the symbol "IVIG". On June 27, 2000 the Company's
common stock ceased being quoted on the OTC/BB due to the Company's inability to
file its quarterly and annual reports. On June 16, 2008, the Company was
approved for quotation on the OTC/BB.
Following is a report of high and low closing bid prices for each quarterly
period for the period January 1 to September 30, 2010 and the fiscal year ended
December 31, 2009.
Period January 1 to September 30, 2010 High Low
--------------------------------------------------------------------------------
3rd Quarter ended September 30, 2010 1.22 0.74
2nd Quarter ended June 30, 2010 0.74 0.03
1st Quarter ended March 31, 2010 0.03 0.03
Year 2009
----------------------------------------------------
4th Quarter ended December 31, 2009 0.95 0.02
3rd Quarter ended September 30, 2009 0.95 0.03
2nd Quarter ended June 30, 2009 1.01 0.032
1st Quarter ended March 31, 2009 1.01 0.032
--------------------------------------------------------------------------------
The information as provided above for the period January 1 to September 30, 2010
and the fiscal year ended December 31, 2009 was provided by Pink Sheets. The
quotations provided herein may reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not represent actual transactions and
have not been adjusted for stock dividends or splits.
As of February 11, 2011, there were 115 record holders of the Company's common
stock (which number does not include the number of stockholders whose shares are
held by a brokerage house or clearing agency, but does include such brokerage
houses or clearing agencies as one record holder).
The Company has never paid a cash dividend on its common stock and does not
intend to pay cash dividends on its common stock in the foreseeable future.
12
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SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
NUMBER OF SECURITIES TO WEIGHTED-AVERAGE ISSUANCE UNDER EQUITY
BE ISSUED UPON EXERCISE EXERCISE PRICE OF COMPENSATION PLANS
OF OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, (EXCLUDING SECURITIES
WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN (A))
PLAN CATEGORY (A) (B) (C)
--------------------------------------------------------------------------------
Equity Compensation Plans approved by -0- N/A -0-
security holders
Equity Compensation Plans not approved
by security holders -0- -0- -0-
--------------------------------------------------------------------------------
Total -0- -0- -0-
================================================================================
The Company does not currently have any equity compensation plans.
RECENT SALES OF UNREGISTERED SECURITIES
On June 12, 2010, pursuant to a letter of default on accounts payable owed to
Antonio Care, a Director and Chief Executive Officer of the Company, the Company
restructured its related party outstanding accounts payable totaling $443,024 as
of March 31, 2010. The accounts payable was restructured to a one year, 10%
interest bearing convertible promissory note ("Note") dated June 1, 2010 and due
on May 31, 2011. The conversion price of the Note is $0.01. The Note remains
outstanding and no shares have yet been issued under the conversion feature.
On December 1, 2010, the Company entered into a three-month term consulting
contract with HAWK Associates Inc. ("HAWK"), an investor relations and
consulting firm. HAWK provides investor relations, financial media relations and
other appropriate consulting and advisory services. In consideration for such
services, HAWK: (i) will be paid a retainer fee of $8,000 per month; (ii) will
be paid a one-time cash setup fee of $2,000; and HAWK will accept payment of the
$8,000 per month retainer fee as follows: (i) $2,000 in cash payment and (ii)
$6,000 in restricted 144 stock, priced at the closing price of the stock on the
effective date of the contract. On December 1, the Company paid $4,000 in cash
and issued a total of 18,000 shares of restricted common stock of the Company
for cash consideration valued at $18,000.
On December 1, 2010, the Company entered into a consulting contract with
Aquiline Group Inc. ("AQUILINE"), a full service public relations and consulting
firm dedicated to the peak performance of private & public companies. AQUILINE
is expected to provide services for consulting, business advisory, shareholder
information and public/investor relations. In consideration for such services,
the Company: (i) paid a retainer fee of $50,000; (ii) issued a total of 120,000
shares of restricted common stock of the Company per quarter; and (iii) the term
of the contract shall be for the period beginning December 1, 2010 and ending
December 15, 2010, services were minimized from December 18, 2010 and resumed
January 3, 2011 in observation of national holidays. The contract shall continue
and renew quarterly until terminated in accordance with certain terms. On
December 1, the Company paid $50,000 in cash and issued a total of 120,000
shares of restricted common stock of the Company.
On December 8, 2010, Mr. Dean Petkanas, Interim Chief Operating Officer and
Acting Chief Financial Officer of the Company, informed the Board of Directors
of the Company after the Board did not renew his agreement and that he was
resigning as Interim Chief Operating Officer and Acting Chief Financial Officer
effective December 8, 2010. As part of the settlement Mr. Petkanas received
$15,452.71 with respect to the consulting fees of $15,000 owing to him pursuant
to his contract and reimbursement expense in the amount of $452.71 and 150,000
unregistered non-qualifying common stock options that can be exercised during
the next 5 years at $.30 per share.
There were no other unregistered securities sold or issued by the Company
without the registration of these securities under the Securities Act of 1933 in
reliance on exemptions from such registration requirements, within the period
13
--------------------------------------------------------------------------------
covered by this report, which have not been previously included in a Quarterly
Report on Form 10-Q or a Current Report on Form 8-K.
ITEM 6. SELECTED FINANCIAL DATA
The Company is a smaller reporting company and is not required to provide this
information.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
FORWARD-LOOKING STATEMENTS
This annual report contains forward-looking statements relating to future events
or our future financial performance. In some cases, you can identify
forward-looking statements by terminology such as "may", "should", "intends",
"expects", "plans", "anticipates", "believes", "estimates", "predicts",
"potential", or "continue" or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors which may cause our or our industry's
actual results, levels of activity or performance to be materially different
from any future results, levels of activity or performance expressed or implied
by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity or performance. You should not place undue reliance on these
statements, which speak only as of the date that they were made. These
cautionary statements should be considered with any written or oral
forward-looking statements that we may issue in the future. Except as required
by applicable law, including the securities laws of the United States, we do not
intend to update any of the forward-looking statements to conform these
statements to actual results, later events or circumstances or to reflect the
occurrence of unanticipated events.
In this annual report unless otherwise specified, all dollar amounts are
expressed in United States dollars and all references to "common shares" refer
to the common shares of our capital stock.
The management's discussion and analysis of our financial condition and results
of operations are based upon our financial statements, which have been prepared
in accordance with accounting principles generally accepted in the United States
of America ("GAAP").
LIQUIDITY AND CAPITAL RESOURCES
The Company has only $10,448 of cash as of the period covered by this report and
has no income as it has no current operations, nor has there been any income
since inception. Presently the operations of the Company were being funded by
loans from Mr. Care, the Company's President. On January 18, 2011 the Company
completed a Purchase Agreement with Mr. Care. Under the Agreement, the Company
is acquiring all of the outstanding stock of Tonmik Import/Export Solutions, Inc
("Tonmik") in exchange for the Company's $1.7 million cash flow note. Tonmik is
a Montreal based distributor of recycled rubber products to big box retailers
that are currently manufactured using purchased recycled crumb rubber at its
facility in China. Tonmik has been operating its Chinese manufacturing facility
for 6 years. The Company expects to develop a fully integrated
scrap-tire-to-finished product business capitalizing on the consumer demand for
Tonmik finished product order flow that could not be maximized with the Tonmik
Chinese facilities. The note is payable in quarterly installments of interest at
10% per annum and principal to the extent of 50% of Tonmik's free cash flow
after all of its operating, debt and any new equipment costs are satisfied with
a final installment due on December 31, 2015. The purchase of the Tonmik shares
will be completed upon the delivery of the Tonmik December 31, 2010 financial
statements, certificates of corporate good standing and the delivery of all of
the Tonmik shares. Upon completion of the acquisition of Tonmik the Company will
become an operating company. Tonmik reported for the nine months ended September
30, 2010 $2.7 million in revenue and $442,000 in Earnings Before Interest,
Taxes, Depreciation and Amortization ("EBITDA") and $1.1 million in revenue and
$207,000 in EBITDA is for year ended December 31, 2009. Based on present
operations without the completion of the Tonmik acquisition, the Company will
not be able to satisfy its cash requirements during the next twelve months, and
should the Company enter into additional agreements for a mergers or
acquisitions, the Company may be required to raise additional funds for the
project. There can be no assurance that the Company will be able to raise the
14
--------------------------------------------------------------------------------
additional funds that may be required. The Company at this time cannot predict
what the amount of funds required may be for any additional acquisition or
merger. The Company cannot accurately state at this time whether it will be
required to purchase any plant or equipment or have any significant changes in
the number of employees. It however does not anticipate making any such
purchases or hiring any additional employees until such time as it has completed
the Tonmik acquisition and/or an additional acquisition or a merger.
The Company has no material commitments for capital expenditures at this time
other than as a result of the acquisition of Tonmik which will be funded by the
issuance of its cash flow note of $1.7 million. The Company cannot predict what
commitments it may incur should it find additional suitable acquisitions for the
Company.
RESULTS OF OPERATIONS
At present, the Company has no operations and is seeking to complete the
purchase of Tonmik and find additional mergers or acquisitions. The Company will
focus its search to enterprises that are involved in any aspect of the tire
recycling and/or recycled rubber finished product manufacturing business or
industry. The Company may participate in a business venture of virtually any
size or nature.
Management anticipates that it may be able to participate in Tonmik and only one
additional potential business venture because the Company has nominal assets and
limited financial resources.
OFF-BALANCE SHEET ARRANGEMENTS
We have no 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 are material to stockholders.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
This Company is a smaller reporting company and is not required to provide this
information.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements and supplementary data required by this Item 8 are
listed in Item 15(a) (1) and begin on page F-1 of this Annual Report on Form
10-K.
15
--------------------------------------------------------------------------------
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
(A Development Stage Company)
REPORT AND FINANCIAL STATEMENTS
December 31, 2009
and the Nine Months Ended September 30, 2010
(Stated in US Dollars)
F-1
PAGE
Report of Independent Registered Public Accounting Firm F-3
Balance Sheets as of December 31, 2009 and September 30, 2010 F-4
Statements of Operations for the years ended December 31, 2009
and the nine months ended September 30, 2010 F-5
Statements of Changes In Stockholders' Deficiency for the years
ended December 31, 2009 and the nine months ended F-6 to F-9
September 30, 2010
Statements of Cash Flows for the years ended December 31, 2009
and the nine months ended September 30, 2010 F-10 to F-11
Notes to Financial Statements F-12 to F-20
F-2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Officers and Directors
Tire International Environmental Solutions Inc.
We have audited the accompanying balance sheets of Tire International
Environmental Solutions Inc. (a Nevada development stage company) as of
September 30, 2010 and December 31, 2009, and the related statements of
operations, changes in stockholders' deficiency, and cash flows for the nine
months ended September 30, 2010 and the year ended December 31, 2009, and for
the period of December 15, 1998 (date of inception) to September 30, 2010. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States of America). Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement. The company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Tire International
Environmental Solutions Inc. as of September 30, 2010 and December 31, 2009, and
the results of its operations and its cash flows for the nine months ended
September 30, 2010 and the year ended December 31, 2009, and for the period of
December 15, 1998 (date of inception) to September 30, 2010, in conformity with
accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has cash flow constraints, an accumulated
deficit, and has suffered recurring losses from operations. These factors, among
others, raise substantial doubt about the Company's ability to continue as a
going concern. Management's plans in regard to these matters are also described
in Note 1. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Child, Van Wagoner & Bradshaw, PLLC
---------------------------------------------------------
Child, Van Wagoner & Bradshaw, PLLC
Certified Public Accountants
Salt Lake City, Utah
March 29, 2010
F-3
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
-----------------------------------------------
(A Development Stage Company)
BALANCE SHEETS
(Stated in U.S. Dollars)
As of September 30, As of December 31,
2010 2009
-------------------- ------------------
ASSETS
Current Assets
Cash $ 10,448 $ -
---------------------- --------------------
TOTAL ASSETS $ 10,448 $ -
====================== ====================
LIABILITIES and STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable and accrued liabilities $ 71,613 $ 74,580
Accounts payable - related parties 24,880 -
Loan payable - related parties 51,023 417,822
Convertible notes-related party (net discount of $295,755) 161,956 -
---------------------- --------------------
TOTAL CURRENT LIABILITIES 309,472 492,402
STOCKHOLDERS' DEFICIT
Preferred stock, $0.10 Par value
1,000,000 shares authorized, none issued - -
Common Stock $0.001 par value, authorized 100,000,000 shares
Issued and outstanding 8,930,185 shares at September 30, 2010 and December
31, 2009 8,930 8,930
Additional paid in capital 3,797,697 3,350,619
Accumulated deficit during the development stage (4,105,651) (3,851,951)
---------------------- --------------------
TOTAL STOCKHOLDERS' DEFICIT (299,024) (492,402)
---------------------- --------------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 10,448 $ -
====================== ====================
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS
F-4
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
-----------------------------------------------
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Stated in U.S. Dollars)
Nine months Year Ended December 15, 1998
Ended December 31, (Date of Inception) to
September 30, 2010 2009 September 30, 2010
---------------------- ------------------ -----------------------
REVENUE $ - $ - $ -
---------------------- ------------------ -----------------------
EXPENSES
General and Administrative 17,245 2,474 1,046,499
Professional fees 10,261 15,994 52,578
Salaries and consulting 55,876 4,296 71,768
---------------------- ------------------ -----------------------
NET INCOME (LOSS) FROM OPERATIONS (83,382) (22,764) (1,170,845)
OTHER INCOME AND EXPENSES
Interest expense (170,318) (8,538) (182,569)
---------------------- ------------------ -----------------------
(170,318) (8,538) (182,569)
Income( tax) benefit - - 2,235
---------------------- ------------------ -----------------------
Net income (loss) before Discontinued
Operations (253,700) (31,302) (1,351,179)
Discontinued operations of Subsidiary - - (2,754,472)
---------------------- ------------------ -----------------------
NET LOSS $ (253,700) $ (31,302) $ (4,105,651)
====================== ================== =======================
BASIC AND DILUTED LOSS PER SHARE $ (0.03) $ (0.00)
====================== =====================
Basic and diluted weighted average number
of shares 8,930,185 8,930,185
====================== =====================
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS
F-5
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCY
(Stated in U.S. Dollars)
Common Stock
-------------------------- Additional Paid
Shares Amount in Capital
--------- ------------- -------------------
Balance, December 15, 1998 (Date of Inception) 23,674 $ 24 $ 66,776
--------- ------------- -------------------
BALANCE, DECEMBER 31, 1998 23,674 24 66,776
Issuance of common stock
for all stock of iVision USA, Inc. January 27, 1999 80,000 80 (56,516)
Issuance of common stock
for services at $1.00 February 8, 1999 6,700 7 6,693
Issuance of common stock as part payment for all stock of
Bergeron Conseils Et Inc. and La Societe De Services
September 1, 1999 340 - 51,000
Issuance of common stock for all stock of Xiem Productions
Inc. September 15, 1999 2,000 2 299,998
Issuance of common stock for services at $1.00 November 15,
1999 410 - 410
Issuance of common stock for services at $1.00 December 2,
1999 2,000 2 1,998
Capital contributed - - 1,248,774
Net income (loss) - - -
--------- ------------- -------------------
BALANCE, DECEMBER 31, 1999 115,124 115 1,619,133
Issuance of common stock for services at $62.97 March 3,
2000 1,095 1 68,949
Issuance of common stock for cash at $150.00 August 21, 2000 6,000 6 899,994
Issuance of common stock for cash at $0.10 August 21, 2000 500 - 50
Net income (loss) - - -
--------- ------------- -------------------
BALANCE, DECEMBER 31, 2000 122,719 122 2,588,126
Issuance of common stock for services at $10.00 June 11,
2001 550 1 5,499
Net income (loss) - - -
--------- ------------- -------------------
BALANCE, DECEMBER 31, 2001 123,269 123 2,593,625
Issuance of common stock for services at $0.10 June 3, 2002 4,000 4 396
Issuance of common stock for services at $0.265 July 22,
2002 90,000 90 23,760
Issuance of common stock to cancel debt at $2.76 July 22,
2002 209,776 210 577,907
Net income (loss) - - -
--------- ------------- -------------------
BALANCE, DECEMBER 31, 2002 427,045 427 3,195,688
Issuance of common stock for cash at $10.03 on June 18,
2003. 7,140 7 71,627
TABLE CONTINUES ON NEXT PAGE
F-6
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCY
(Stated in U.S. Dollars)
Deficit
During Total
Development Stockholders'
Stage Deficiency
-------------------- -------------------------
Balance, December 15, 1998 (Date of Inception) $ (68,000) $ (1,200)
-------------------- -------------------------
BALANCE, DECEMBER 31, 1998 (68,000) (1,200)
Issuance of common stock
for all stock of iVision USA, Inc. January 27, 1999 393,899 337,463
Issuance of common stock
for services at $1.00 February 8, 1999 - 6,700
Issuance of common stock as part payment for all stock of
Bergeron Conseils Et Inc. and La Societe De Services
September 1, 1999 - 51,000
Issuance of common stock for all stock of Xiem Productions
Inc. September 15, 1999 - 300,000
Issuance of common stock for services at $1.00 November 15,
1999 - 410
Issuance of common stock for services at $1.00 December 2,
1999 - 2,000
Capital contributed - 1,248,774
Net income (loss) (1,653,806) (1,653,806)
-------------------- -------------------------
BALANCE, DECEMBER 31, 1999 (1,327,907) 291,341
Issuance of common stock for services at $62.97 March 3,
2000 - 68,950
Issuance of common stock for cash at $150.00 August 21, 2000 - 900,000
Issuance of common stock for cash at $0.10 August 21, 2000 - 50
Net income (loss) (1,744,015) (1,744,015)
-------------------- -------------------------
BALANCE, DECEMBER 31, 2000 (3,071,922) (483,674)
Issuance of common stock for services at $10.00 June 11,
2001 - 5,500
Net income (loss) (376,719) (376,719)
-------------------- -------------------------
BALANCE, DECEMBER 31, 2001 (3,448,641) (854,893)
Issuance of common stock for services at $0.10 June 3, 2002 - 400
Issuance of common stock for services at $0.265 July 22,
2002 - 23,850
Issuance of common stock to cancel debt at $2.76 July 22,
2002 - 578,117
Net income (loss) (35,700) (35,700)
-------------------- -------------------------
BALANCE, DECEMBER 31, 2002 (3,484,341) (288,226)
Issuance of common stock for cash at $10.03 on June 18,
2003. 71,634
F-7
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
-----------------------------------------------
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCY
(Stated in U.S. Dollars)
Common Stock
-------------------------- Additional Paid
Shares Amount in Capital
--------- ------------- -------------------
Net income (loss) - $ - $ -
--------- ------------- -------------------
BALANCE, DECEMBER 31, 2003 434,185 434 3,267,315
Net income (loss) - - -
--------- ------------- -------------------
BALANCE, DECEMBER 31, 2004 434,185 434 3,267,315
Net income (loss) - - -
--------- ------------- -------------------
BALANCE, DECEMBER 31, 2005 434,185 434 3,267,315
Issuance of Stock to retire Debt at $0.01 on December 21,
2006 500,000 500 4,500
Net income (loss) - - -
--------- ------------- -------------------
BALANCE, DECEMBER 31, 2006 934,185 934 3,271,815
Shares issued to pay for expenses at $0.01 on March 13, 2007 4,900,000 4,900 44,100
Shares issued to pay for expenses at $0.01 on December 7,
2007 2,805,000 2,805 25,245
Net income (loss) - - -
--------- ------------- -------------------
BALANCE, DECEMBER 31, 2007 8,639,185 8,639 3,341,160
Issuance of common stock for services 291,000 291 9,459
Net income (loss) - - -
--------- ------------- -------------------
BALANCE, DECEMBER 31, 2008 8,930,185 8,930 3,350,619
Net income (loss)
--------- ------------- -------------------
BALANCE, DECEMBER 31, 2009 8,930,185 8,930 3,350,619
Issuance of convertible notes - - 443,024
Stock-based compensation - - 4,054
Net income (loss) - - -
--------- ------------- -------------------
BALANCE, SEPTEMBER 30, 2010 8,930,185 $ 8,930 $ 3,797,697
========= ============= ===================
TABLE CONTINUES ON NEXT PAGE
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS
F-8
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
-----------------------------------------------
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCY
(Stated in U.S. Dollars)
Deficit
Accumulated
During Total
Development Stockholders'
Stage Deficit
-------------------- -------------------------
Net income (loss) $ (63,877) $ (63,877)
-------------------- -------------------------
BALANCE, DECEMBER 31, 2003 (3,548,218) (280,469)
Net income (loss) 206,969 206,969
-------------------- -------------------------
BALANCE, DECEMBER 31, 2004 (3,341,249) (73,500)
Net income (loss) (62,000) (62,000)
-------------------- -------------------------
BALANCE, DECEMBER 31, 2005 (3,403,249) (135,500)
Issuance of Stock to retire Debt at $0.01 on December 21,
2006 5,000
Net income (loss) (233,955) (233,955)
-------------------- -------------------------
BALANCE, DECEMBER 31, 2006 (3,637,204) (364,455)
Shares issued to pay for expenses at $0.01 on March 13, 2007 - 49,000
Shares issued to pay for expenses at $0.01 on December 7,
2007 - 28,050
Net income (loss) (145,487) (145,487)
-------------------- -------------------------
BALANCE, DECEMBER 31, 2007 (3,782,691) (432,892)
Issuance of common stock for services 9,750
Net income (loss) (37,958) (37,958)
-------------------- -------------------------
BALANCE, DECEMBER 31, 2008 (3,820,649) (461,100)
Net income (loss) (31,302) (31,302)
-------------------- -------------------------
BALANCE, DECEMBER 31, 2009 (3,851,951) (492,402)
Issuance of convertible notes 443,024
Stock-based compensation 4,054
Net income (loss) (253,700)
-------------------- -------------------------
BALANCE, SEPTEMBER 30, 2010 $ (4,105,651) $ (299,024)
==================== =========================
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS
F-9
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
-----------------------------------------------
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Stated in U.S. Dollars)
Nine months Ended Year Ended
September 30, 2010 December 31, 2009
-------------------- --------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period $ (253,700) $ (31,302)
Adjustment to reconcile net loss to cash used in operating
activities
Consulting fees settled with stock - -
Expenses paid with stock - -
Stock-based compensation on consulting services 4,054 -
Amortization of convertible notes discount 147,269 -
Imputed interest on the promissory notes 16,241 -
Changes in assets and liabilities:
Accounts payable and accrued liabilities (4,521) 17,010
Accounts payable - related parties 24,880 -
-------------------- --------------------
Cash used in operating activities - continued operations (65,777) (14,292)
Cash used in operating activities - discontinued operations - -
-------------------- --------------------
NET CASH FLOWS USED IN OPERATING ACTIVITIES (65,777) (14,292)
CASH FLOWS FROM INVESTING ACTIVITIES
Cash used in investing activities - continued operations - -
Cash used in investing activities - discontinued operations - -
-------------------- --------------------
NET CASH FLOWS USED IN INVESTING ACTIVITIES - -
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from related parties promissory notes 76,225 8,775
Proceeds from issuance of common stock - -
-------------------- --------------------
Cash provided by financing activities - continued operations 76,225 8,775
Cash used in financing activities - discontinued operations - -
-------------------- --------------------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 76,225 8,775
Net increase (decrease) in cash and cash equivalents 10,448 (5,517)
Cash and cash equivalents at beginning of period - 5,517
-------------------- --------------------
Cash and cash equivalents at end of period $ 10,448 $ -
==================== ====================
SUPPLEMENTAL DISCLOSURES:
Cash paid during the period for
Interest $ - $ -
==================== ====================
Income taxes $ - $ -
==================== ====================
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING AND INVESTING
ACTIVITIES:
Convert loan payable - related parties to Convertible
notes $ 443,024 $ -
==================== ====================
TABLE CONTINUES ON NEXT PAGE
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-10
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
-----------------------------------------------
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Stated in U.S. Dollars)
December 15, 1998
(Date of Inception)
To September 30, 2010
------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period $ (1,351,179)
Adjustment to reconcile net loss to cash used in operating
activities
Consulting fees settled with stock 8,250
Expenses paid with stock 59,205
Stock-based compensation on consulting services 4,054
Amortization of convertible notes discount 147,269
Imputed interest on the promissory notes 16,241
Changes in assets and liabilities:
Accounts payable and accrued liabilities 70,059
Accounts payable - related parties 24,880
------------------------
Cash used in operating activities - continued operations (1,021,221)
Cash used in operating activities - discontinued operations (1,977,551)
------------------------
NET CASH FLOWS USED IN OPERATING ACTIVITIES (2,998,772)
CASH FLOWS FROM INVESTING ACTIVITIES
Cash used in investing activities - continued operations -
Cash used in investing activities - discontinued operations (708,390)
------------------------
NET CASH FLOWS USED IN INVESTING ACTIVITIES (708,390)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from related parties promissory notes 494,047
Proceeds from issuance of common stock 3,359,549
------------------------
Cash provided by financing activities - continued operations 3,853,596
Cash used in financing activities - discontinued operations (135,986)
------------------------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 3,717,610
Net increase (decrease) in cash and cash equivalents 10,448
Cash and cash equivalents at beginning of period -
------------------------
Cash and cash equivalents at end of period $ 10,448
========================
SUPPLEMENTAL DISCLOSURES:
Cash paid during the period for
Interest $ 21,981
========================
Income taxes $ -
========================
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING AND INVESTING
ACTIVITIES:
Convert loan payable - related parties to Convertible
notes $ 443,024
========================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-11
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1- NATURE AND CONTINENCE OF OPERATIONS
a) Organization
The Company was incorporated under the laws of the State of Nevada on
February 19, 1986 with authorized common stock of 10,000,000 shares with a
par value of $0.0025. On April 25, 1998 the authorized common stock was
increased to 100,000,000 shares with a change in par value to $0.001 and on
February 9, 1999 the Company changed its name to IVision Group Ltd. On
April 15, 1998 the Company completed a reverse common stock split of two
shares of its outstanding stock for one share and on January 8, 1999, a
forward common stock split of one share of outstanding stock for four
shares. This report has been prepared showing after-stock-split shares with
a par value of $0.001 from inception. On January 27, 1999, the Company
acquired all of the outstanding stock of I Vision USA Inc. through a
stock-for-stock exchange in which the stockholders of I Vision USA Inc.
received 8,000,000 common shares of the Company in exchange for all of the
stock of I Vision USA Inc. I Vision USA Inc. was organized in the state of
Delaware on December 15, 1998 and had purchased all of the outstanding
stock of I Vision Integral Inc. which was organized in Canada during March
1998. I Vision USA Inc. and I Vision Integral Inc. were organized for the
purpose of conducting electronic commerce on the World Wide Web. For
reporting purposes, the acquisition was treated as an acquisition of the
Company by I Vision USA Inc. (reverse acquisition) and a recapitalization
of I Vision USA Inc. The historical financial statements prior to January
27, 1999 are those of I Vision USA Inc. and its subsidiary I Vision
Integral Inc. During September 1999, the Company acquired all of the
outstanding stock of La Societe De Services, Bergeron Conseils Et
Realisation Inc., and Ixiem Production Inc. by the issuance of 234,000
shares of its common stock and a promissory note of $150,000 CDN. This debt
was settled for stock and the companies have since been discontinued or
abandoned.
The financial statements shown in this report include the accounts of the
Company and its wholly-owned subsidiaries as outlined in the notes above.
All material intercompany accounts and transactions have been eliminated.
These financial statements are presented from the inception date of
December 15, 1998 which was the date of incorporation of I Vision U.S.A,
Inc. as this company was the last operating entity.
During fiscal year 2003, the Company and its subsidiaries ceased operations
and on April 1, 2004, the Company divested itself of all of its
subsidiaries by way of a divestiture agreement whereby the Company
transferred all of the shares of the subsidiaries in exchange for the
assumption of all of the outstanding debt of the subsidiaries. The impact
of these divestitures on the balance sheet of the Company was to
substantially reduce the outstanding liabilities.
On December 21, 2006, the Company issued a total of 500,000 post split
common shares pursuant to a debt settlement agreement between the Company
and Mr. Antonio Care. This issuance of shares effected a change in control
of the Company.
On February 8, 2007, the Company effected a reverse split of its shares of
common stock on the basis of 1 new share for every 100 shares held at the
time of the reverse split. Concurrent with the reverse split of its shares
the Company changed its name to Tire International Environmental Solutions
Inc.
On March 13, 2007, the Company issued a total of 4,900,000 common shares at
a deemed price of $0.001 per share in settlement of a total of $49,000 in
related party debt. The related party required the shares be issued to a
total of 14 stockholders.
On December 7, 2007, the Company issued a total of 2,805,000 common shares
at a deemed price of $0.001 per common share in settlement of a total of
$28,050 in related party debt. The related party required the shares be
issued to a total of 14 stockholders.
F-12
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
The Company has been seeking acquisitions since it discontinued operations.
During the period covered by this report the Company has determined to
enter into the tire recycling industry and has signed a Joint Venture
Agreement more particularly described under Note 8.
NOTE 1- NATURE AND CONTINUES OF OPERATIONS
(CONTINUED)
b) Basis of presentation
On November 3, 2010, the Board of Directors of the Company, by quorum,
approved a change of the fiscal year end from December 31 to September 30
effective as of November 3, 2010. The change was made to align its fiscal
periods more closely with the seasonality of its business and improve
comparability with industry peers.
c) Going Concern
As of September 30, 2010, the Company has an accumulated deficit of
$4,105,651 and remains in the development stage due to its lack of business
operations. While the Company has entered into a Joint Venture agreement
and determined to pursue opportunities in the tire recycling industry. It
will be required to raise substantial capital to pursue its business plan
and complete its joint venture agreement. At the time of this report no
capital has been raised for operations. These factors create an uncertainty
about the Company's ability to continue as a going concern.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Revenue Recognition
Revenues are recognized in accordance with SEC Staff Accounting Bulletin
(SAB) No. 104, "Revenue Recognition in Financial Statements." Under SAB
104, product revenues (or service revenues) are recognized when
persuasive evidence of an arrangement exists, delivery has occurred (or
service has been performed), the sales price is fixed and determinable
and collectability is reasonably assured.
b) Cash and Cash Equivalents
The Company considers all highly liquid instruments purchased with
original maturities of less than three months to be cash equivalents.
c) Comprehensive Income
Since 1999, the Company adopted ASC 220, "Comprehensive Income", for the
reporting of comprehensive income and its components.
d) Income Taxes
Income taxes are computed using the asset and liability method. Under
this method, deferred income tax assets and liabilities are determined
based on the differences between the financial and tax bases of assets
and liabilities and are measured using the currently enacted tax rates
and laws. ASC 740 requires recording a valuation allowance against
deferred tax assets if based on the weight of available evidence, it is
more likely than not that some or all of its deferred tax assets will
not be realized.
e) Depreciation and Amortization
Property and equipment are stated at cost. Depreciation is calculated on
a diminishing balance basis over the estimated useful lives of the
assets, generally five to seven years. Trademarks and patents are
depreciated on a straight-line basis over a period of twenty years.
Maintenance and repairs are charged to operations when incurred.
Betterments and renewals are capitalized.
F-13
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
f) Estimates and Assumptions
Management uses estimates and assumptions in preparing financial
statements in accordance with generally accepted accounting principles.
Those estimates and assumptions affect the reported amounts of assets
and liabilities, the disclosure of contingent assets and liabilities,
and the reported revenues and expenses. Actual results could vary from
the estimates that were assumed in preparing the financial statements.
g) Basic and Diluted Net Income (Loss) Per
Share
Basic net income (loss) per share is computed by dividing net loss
available to common stockholders by the weighted average number of
shares outstanding during the period. Diluted net income (loss) per
share is computed using the weighted average number of common shares and
common equivalent shares outstanding during the period. Common
equivalent shares consist of shares issuable upon the exercise of stock
warrants.
h) Allowance for Doubtful Accounts
The Company provides an allowance for uncollectible accounts. The
allowance is based upon management's periodic analysis of receivables,
evaluation of current economic conditions and other pertinent factors.
Ultimate losses may vary from current estimates and, as additions to the
allowance become necessary, they are charged against earnings in the
period they become known. Losses are charged and recoveries are credited
to the allowance.
i) Impairment of Long-Lived Assets
The Company evaluates the recoverability of long-lived assets using
future undiscounted cash flows attributed to such assets. The Company
recognizes impairment of long-lived assets in the event the net book
value of such assets exceeds the future undiscounted cash flows
attributable to such assets.
j) Advertising Costs
The Company recognizes advertising expense on the cost of communication
advertising in the period in which the advertising space or airtime is
used. There were no advertising costs for the periods ended September
30, 2010 and December 31, 2009.
k) Concentration of Credit Risk
Financial instruments that potentially subject the Company to
significant concentration of credit risk consist primarily of cash and
accounts receivable. Cash is deposited with high credit, quality
financial institutions. Accounts receivable are typically unsecured and
are derived from revenues earned from customers located throughout the
United States. The Company performs ongoing credit evaluations of its
customers and maintains reserves for potential credit losses;
historically, such losses have been within management's expectations.
l) Fair Value of Financial Instruments
The Company's financial instruments, including cash, accounts
receivable, accounts payable, notes payable and long-term obligations
are carried at cost, which approximates their fair value because of the
short-term maturity of these instruments.
F-14
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
NOTE 3 - NEW ACCOUNTING STANDARDS-
Recent Accounting Pronouncements
In April 2010, the FASB codified the consensus reached in Emerging Issues Task
Force Issue No. 08-09, "Milestone Method of Revenue Recognition." FASB ASU No.
2010-29 "Revenue Recognition - Milestone Method (Topic 605)" provides guidance
on defining a milestone and determining when it may be appropriate to apply the
milestone method of revenue recognition for research and development
transactions. FASB ASU No. 2010 - 29 is effective for fiscal years beginning on
or after June 15, 2010, and is effective on a prospective basis for milestones
achieved after the adoption date. The Company does not expect this ASU will have
a material impact on its financial position or results of operations when it
adopts this update for the fiscal year beginning October 1, 2010.
NOTE 4 - RELATED PARTY TRANSACTIONS
I. Stockholder loans:
On June 12, 2010, pursuant to a letter of default on accounts payable owed
to a Director and Officer of the Company, the Company restructured its
related party outstanding accounts payable totaling $443,024 as of March
31, 2010. The accounts payable was restructured to a one year, 10% interest
bearing convertible promissory note ('Note") dated June 1, 2010 and due on
May 31, 2011. The conversion price of the Note is $0.01. As of June 12,
2010, using the guidance provided in ASC 470-20-25, we evaluated the Note
and concluded that the convertible promissory note did have an embedded
beneficial conversion feature. The embedded beneficial conversion feature
was valued and had been recognized as additional paid-in-capital by
allocating a portion of the proceeds equal to the intrinsic value of the
feature. The resulting discount on the Note is amortized to interest
expense using the effective interest method over the life of the Note.
The carrying value and terms of the Note is as following:
September 30, 2010
-------------------
Face value due May 31, 2011 $ 443,024
Less: Unamortized discount (295,755)
---------------------
Carrying value: $ 147,269
=======
During the nine months ended September 30, 2010, the Company accrued
interest of $14,687 related to the Note. An amount of $161,956 is reflected
on the Company's balance sheets as Convertible note - related parties
including the carrying value of $147,269 disclosed above, as well as
accrued interest to September 30, 2010 totaling $14,687.
During the nine months ended September 30, 2010, Mr. Care, an officer and
Director of the Company, made loans to the Company in the amount of
$40,023. The loans bear 10% interest and are due on demand. As of September
30, 2010, the Company accrued interest in the amount of $1,431.
During the nine months ended September 30, 2010, the Company received
operating funds from two of our shareholders in the amount of $11,000. The
loans bear 10% interest and are due on demand. As of September 30, 2010,
the Company accrued interest in the amount of $123. Subsequent to the
period ended September 30, 2010, the Company paid principal in the amount
of $10,000 in cash.
II. Consulting Services
On April 16, 2010, Mr. Dean Petkanas joined the Board of Directors of the
Company and on June 11, 2010, Mr. Dean Petkanas was appointed Interim Chief
F-15
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
NOTE 4 - RELATED PARTY TRANSACTIONS (CONTINUED)
Operating Officer and Acting Chief Financial Officer of the Company.
During the two month period from April 1, 2010 to June 1, 2010, Mr.
Petkanas invoiced, and was paid, consulting fees by the Company in the
amount of $10,000.
On June 12, 2010, the Company entered into an engagement agreement (the
"Engagement") with Mr. Petkanas. This Engagement became effective on June
1, 2010 and expired on September 30, 2010 (the "Interim Period") subject to
an additional six month renewal upon the mutual written consent of the
parties (the "Remaining Period"). The Remaining Period shall begin on
October 1, 2010 and end on March 31, 2011 and shall be subject to an
additional twelve month renewal upon mutual written consent of the parties.
Pursuant to the Engagement, (i) the Company shall pay Mr. Petkanas a fee at
the annual base rate of Sixty Thousand Dollars ($60,000); (ii) the annual
base rate will be increased to One Hundred and Forty Thousand Dollars
($140,000) upon the Company securing financing of at least Two and One Half
Million Dollars ($2,500,000) during the Interim Period and Remaining
Period; (iii) upon the Company completing any merger that provides a going
concern value to the Company whereby financing of at least Two and One Half
Million Dollars ($2,500,000) is placed for the purposes of internal growth,
a merger, or consolidation with another going concern. The Company will pay
Mr. Petkanas an additional bonus compensation in the sum of One Hundred
Thousand Dollars ($100,000); (iv) the Company shall issue Mr. Petkanas
options to purchase One Hundred and Fifty Thousand (150,000) shares of
common stock of the Company with an exercise price equal to Thirty cents
($.30) and expiring in five (5) years from the date of issue for the
Engagement during the Interim Period, which date of issue is June 1, 2010,
and in the event the Interim Period is extended through the Remaining
Period , the Company shall issue to Mr. Petkanas options to purchase Three
Hundred and Fifty Thousand (350,000) shares of common stock of the Company
with an exercise price equal to Thirty cents ($.30) and expiring in five
(5) years from date of issue of the Engagement.
As of September 30, 2010, the Company owed Mr. Petkanas $15,000 in fees
pursuant to the Engagement, which amount is reflected on the balance sheet
as accounts payable-related parties. These fees were paid in full in
December subsequent to the period ended September 30, 2010.
Subsequent to the period ended September 30, 2010, Mr. Petkanas resigned as
Interim Chief Operating Officer and Acting Chief Financial Officer of the
Company. As part of the settlement, the Company entered into a
non-qualified stock incentive plan stock option agreement with Dean
Petkanas. (refer to Note 10 - Subsequent Events)
NOTE 5 - COMMON STOCK
The Company is authorized to issue 100,000,000 shares of $.001 par value common
stock.
On February 8, 2007, the Company effected a 100 for 1 reverse stock split. All
share and per share amounts have been restated to reflect the split as if it had
occurred at the beginning of the earliest period presented. As of September 30,
2010, December 31, 2009 and 2008, the Company had 8,930,185 shares of common
stock outstanding.
On April 1, 2008, the Company issued a total of 141,000 common shares in
settlement of $8,250 of outstanding debt relating to consulting fees for fiscal
2007 which were invoiced from the consultants during fiscal 2008.
On April 25, 2008 the Company issued a total of 150,000 shares to officers and
directors as compensation for officers' and directors' fees of $1,500 for fiscal
2008.
There were no new common shares issued in 2009 and 2010.
F-16
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
NOTE 6 - STOCK OPTION
As discussed in Note 4 above, effective June 1, 2010, the Company granted
options for One Hundred and Fifty Thousand (150,000) shares of common stock of
the Company with an exercise price equal to thirty cents ($.30) per common share
and expiring in five (5) years from the date of issue for the Agreement. Under
ASC 718, the grant date fair value of the options, which has been determined
based upon the fair value (using the Black Sholes method) of the Company's
shares on the grant date, is expensed over the Interim Period. The Company has
recognized stock-based expense as consulting fee of $4,054 with respect to the
vested portion at September 30, 2010, and unrecognized compensation expense
totaling $805 is expected to be recognized in the fiscal year 2011.
The following table summarized information on the Company's option:
Weighted Average
Number Granted Date Fair Value
Options Outstanding at December 31, 2009 - $ -
Granted Options 150,000 $ 0.03
Vested 150,000 $ 0.03
----------- ----------------------------
Options Outstanding and Vested at September 30, 2010 150,000 $ 0.03
=========== ============================
NOTE 7 - INCOME TAXES
No provision was made for federal income tax, since the Company had a
significant net operating loss. Net operating loss carryforwards may be used to
reduce taxable income through the year 2030. The availability of the Company's
net operating loss carryforwards are subject to limitation if there is a 50% or
more positive change in the ownership of the Company's stock, unless the same or
similar business is carried on. The Company has recorded a 100% valuation
allowance for the deferred tax asset due to the uncertainty of its realization.
The components of the net deferred tax asset are summarized below for the years
ended September 30, 2010 and December 31, 2009:
September 30, December 31,
2010 2009
---- ----
Deferred tax asset
$ 264,399 $ 175,604
Less valuation allowance
(264,399) (175,604)
---------------- ---------------
Net deferred tax assets $ - $ -
================ ===============
The net operating loss carryforward for federal and state income tax purposes
was approximately $755,425. The carryforwards begin to expire in fiscal year
2019. Deferred tax assets have been reduced by a valuation allowance because of
uncertainties as to future recognition of taxable income to assure realization.
The net change in the valuation allowance for the year ended September 30, 2010
was $88,795, for the year ended December 31, 2009 was $10,956. The figures for
2010 and 2009 reflect those of the Company only, as all subsidiaries are now
gone.
The Company adopted the provisions of uncertain tax positions as addressed in
ASC 740-10-65-1 on January 1, 2007. As a result of the implementation of ASC 740
F-17
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
the Company recognized approximately no increase in the liability for
unrecognized tax benefits.
The Company has no tax positions at September 30, 2010 and December 31, 2009 for
which the ultimate deductibility is highly certain but for which there is
uncertainty about the timing of such deductibility.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Effective June 16, 2010, the Company has signed a Joint Venture Agreement (the
"Agreement") with Tires SpA.("TIRES"), an Italian manufacturer of heavy
industrial processing and recycling equipment. Under the terms of the Agreement,
as part of a purchase order by the Company the terms of which are detailed
below, the Company will own fifty percent (50%) of the TIRES U.S. patent pending
for the TIRES state-of-the-art tire recycling plant, which patent covers the
method and installation of recycling of used tires for conversion into finished
products (the "Waste to Value Technology") for the North American market. The
Agreement between the Company and TIRES calls for a payment of (euro)11,100,000
($14,476,000 million USD), of which (euro)7,700,000 ($10,041,900 USD) is to be
paid by way of cash and the remaining balance of (euro)3,400,000 shall be paid
via the issuance of common shares of the Company. For the purpose of calculating
the issuance price of the shares, the parties have agreed to a Euro to USD rate
of 1.2 bringing the amount due to $4,080,000 in USD. The parties have further
agreed to issue the shares at a deemed price of $0.50 per share. Therefore the
Company will be required to issue a total of 8,160,000 shares of common stock to
TIRES.
o 1,000,000(euro) ($1,304,140 USD) and the issuance of a total of
1,140,000 shares of common stock of the Company to be paid by July
30, 2010, on the same date of the delivery of the first module of
the "Refiner Full" plant;
o 1,000,000(euro) ($1,304,140 USD) and the issuance of a total of
1,140,000 shares of common stock of the Company to be paid by
November 30, 2010, on the same date of delivery of the second module
of the "Refiner Full" plant;
o 1,000,000(euro) ($1,304,140 USD) and the issuance of a total of
1,140,000 shares of common stock of the Company to be paid by
December 31, 2010, on the same date of delivery of the third module
of the "Refiner Full" plant;
o 1,000,000(euro) ($1,304,140 USD) and the issuance of a total of
1,140,000 shares of common stock of the Company to be paid by
January 31, 2011, on the same date of delivery of the fourth and
last module of the "Refiner Full" plant;
o 925,000(euro) ($1,206,330 USD) and the issuance of a total of
900,000 shares of common stock of the Company to be paid by February
28, 2011, on the on the same date of delivery of the first module of
the "Quadruple Rubber Tiles" plant;
o 925,000(euro) ($1,206,330 USD) and the issuance of a total of
900,000 shares of common stock of the Company to be paid by March
31, 2011, on the on the same date of delivery of the second module
of the "Quadruple Rubber Tiles" plant;
o 925,000(euro) ($1,206,330 USD) and the issuance of a total of
900,000 shares of common stock of the Company to be paid by March
31, 2011, on the on the same date of delivery of the third module of
the "Quadruple Rubber Tiles" plant;
o 925,000(euro) ($1,206,330 USD) and the issuance of a total of
900,000 shares of common stock of the Company to be paid by March
31, 2011, on the on the same date of delivery of the fourth and last
module of the "Quadruple Rubber Tiles" plant;
F-18
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
Upon the issuance of the first shares to TIRES, TIRES shall have the right to
appoint a representative to the Board of Directors of the Company.
According to the agreement between the parties, if the initial payment is not
made by July 30, 2010, the contract shall be null and void. The Company is
currently negotiating with several potential funders but was not be able to make
the payment date of July 30, 2010. Currently, there is an amended agreement to
extend the payment date to March 18, 2011.
NOTE 9 - RECLASSIFICATION
During the nine months ended September 30, 2010, the Company reclassified
certain items on the financial statements in the column showing December 15,
1998 (Date of Inception) to September 30, 2010 and in the column showing the
year end December 31, 2009 to conform to the presentation in the September 30,
2010 financial statements.
NOTE 10 - SUBSEQUENT EVENTS
Subsequent to the period covered by this report, the Company received further
loans totaling $329,191 from several shareholders of the Company. The loans bear
10% interest and are due on demand.
On December 1, 2010, the Company entered into a three-month term consulting
contract with HAWK Associates Inc. ("HAWK), an investor relations and consulting
firm. HAWK will provide investor relations, financial media relations and other
appropriate consulting and advisory services. In consideration for such
services, the Company: (i) will pay a retainer fee of $8,000 per month; (ii)
will pay a one-time cash setup fee of $2,000; and HAWK will accept payment of
the $8,000 per month retainer fee as follows: (i) $2,000 in cash payment and
(ii) $6,000 in restricted 144 stock, priced at the closing price of the stock on
the effective date of the contract. On December 1, the Company paid $4,000 in
cash and issued a total of 18,000 shares of restricted common stock of the
Company for cash consideration valued at $18,000.
On December 1, 2010, the Company entered into a consulting contract with
Aquiline Group Inc.("AQUILINE), a full service public relations and consulting
firm dedicated to the peak performance of private & public companies. AQUILINE
will provide services for consulting, business advisory, shareholder information
and public/investor relations. In consideration for such services, the Company:
(i) will pay a retainer fee of $50,000 per month; (ii) will issue a total of
120,000 shares of restricted common stock of the Company per quarter; and (iii)
the term of the contract is for the period beginning December 1, 2010 and ending
December 15, 2010, services were minimized from December 18, 2010 and resumed
January 3, 2011 in observation of national holidays. The contract shall continue
and renew quarterly until terminated in accordance with certain terms. On
December 1, the Company paid $50,000 in cash and issued a total of 120,000
shares of restricted common stock of the Company.
On December 1, 2010, the Company entered into an employment agreement with Mr.
Antonio Care, a Chief Executive Officer of the Company. In consideration of his
performance of duties and responsibilities, the Company shall pay to Mr. Care a
base salary at the rate of $10,000 per month and an allowance of up to $333 per
month for the purpose of leasing, owning and /or maintaining a vehicle for use
in connection with the services for the Company.
On December 1, 2010, the Company entered into an employment agreement with Mr.
Marco Alfonsi, a Chief Operating Officer of the Company. In consideration of his
performance of duties and responsibilities, the Company shall pay to Mr. Alfonsi
a base salary at the rate of $10,000 per month and an allowance of up to $333
per month for the purpose of leasing, owning and /or maintaining a vehicle for
use in connection with the services for the Company.
On December 1, 2010, the Company entered into an employment agreement with Mr.
Cosimo Care, a Marketing Director and Manager of IT of the Company. In
consideration of his performance of duties and responsibilities, the Company
shall pay to Mr. Care a base salary at the rate of $2,500 per month and an
allowance of up to $333 per month for the purpose of leasing, owning and /or
maintaining a vehicle for use in connection with the services for the Company.
F-19
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
On December 1, 2010, the Company entered into an employment agreement with Mr.
Martin Sergi, a Chief Financial Officer of the Company. In consideration of his
performance of duties and responsibilities, the Company shall pay to Mr. Sergi a
base salary at the rate of $10,000 per month and an allowance of up to $333 per
month for the purpose of leasing, owning and /or maintaining a vehicle for use
in connection with the services for the Company. On December 1, 2010, the
Company paid $10,000 in cash pursuant to the contract.
On December 8, 2010, Mr. Dean Petkanas, Interim Chief Operating Officer and
Acting Chief Financial Officer of the Company, informed the Board of Directors
of the Company after the Board did not be renew his agreement that he was
resigning as Interim Chief Operating Officer and Acting Chief Financial Officer
effective December 8, 2010. As part of the settlement, Mr. Petkanas received
$15,452.71 with respect to the consulting fees of $15,000 owing to him pursuant
to his contract described in Note 4 above and reimbursement expense in the
amount of $452.71 and 150,000 unregistered non-qualifying common stock options
that can be exercised during the next 5 years at $.30 per share.
Subsequent to September 30, 2010 the Company amended its Joint Venture Agreement
with Tires SpA (refer to Note 8-Commitments and Contingency) allowing the
deferring all required payments under the agreement. The payments under this
amendment are required to commence on March 18, 2011.
NOTE 10 - SUBSEQUENT EVENTS-CONTINUED
On December 14, 2010 the Company completed a Financial Advisory and Investment
Banking Engagement Agreement with CIM Securities, LLC of Centennial, Colorado
("CIM"). Under the agreement, the Company has retained CIM to provide the
Company financial advisory services in its effort to raise capital, identify
Merger and Acquisition targets and negotiate license agreements. Compensation
under the agreement is based on the successful completion by the Company of
privately placed capital financings, mergers, acquisitions or licensing
agreements in which CIM provided financial advisory services. The Company has
paid CIM a non-refundable deposit of $25,000 against fees and expenses incurred
under the agreement. The term of the agreement is for six months which, upon
certain circumstances, can be reduced to 2 months or extended to 30 months.
On January 18, 2011 the Company completed a Purchase Agreement with Antonio
Care, the Company's Chief Executive Officer. Under the Agreement, the Company is
acquiring all of the outstanding stock of Tonmik Import/Export Solutions, Inc
("Tonmik") in exchange for the Company's $1.7 million cash flow note. Tonmik is
a Montreal based distributor of recycled rubber products to big box retailers
that are currently manufactured using purchased recycled crumb rubber at its
facility in China. Tonmik has been operating its Chinese manufacturing facility
for 6 years. The Company expects to develop a fully integrated
scrap-tire-to-finished product business capitalizing on the consumer demand for
Tonmik finished product order flow that could not be maximized with the Tonmik
Chinese facilities. The note is payable in quarterly installments of interest at
10% per annum and principal to the extent of 50% of Tonmik's free cash flow
after all of its operating, debt and any new equipment costs are satisfied with
a final installment due on December 31, 2015. The purchase of the Tonmik shares
will be completed upon the delivery of the Tonmik December 31, 2010 financial
statements, certificates of corporate good standing and the delivery of all of
the Tonmik shares. Upon completion of the acquisition of Tonmik, the Company
will become an operating company. Based on Tonmik's unaudited financial
statements, it reported for the nine months ended September 30, 2010 $2.7
million in revenue and $442,000 in Earnings Before Interest, Taxes, Depreciation
and Amortization ("EBITDA") and $1.1 million in revenue and $207,000 in EBITDA
is for year ended December 31, 2009.
Subsequent to September 30, 2010 the Company, Tonmik and Mr. Antonio Care
entered a settlement agreement with a Company and Tonmik creditor requiring the
Company, Tonmik and Mr. Care to pay $25,000 on or before March 15, 2011, as of
February 21, 2011 $12,500 was paid and $12,500 remains outstanding. A judgment
in Canada was entered against the Company, Tonmik and Mr. Care to record the
obligations under the settlement.
On February 10, 2011 the Company completed an Investment Banking Engagement
Agreement with Stone & Youngberg, LLC ("Stone"). Under the Agreement, the
F-20
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
Company has retained Stone to act as sole manager for the anticipated debt
financing for the Company's new US tire recycling and finished product
manufacturing project (the "Project"). Compensation under the Agreement is based
on the successful completion by Stone of a privately placed corporate obligation
non-rated debt financing with net proceeds of $20 million for the Project. The
debt financing may qualify for tax exempt status in the Project state. The
Company, as part of the Project, is arranging for $10 million in new equity
capital to support the debt financing. The Company will also pay Stone for
expenses incurred under the Agreement.
The Company has evaluated subsequent events from the balance sheet date through
the date of issue of these financial statements and has determined there are no
additional events to disclose.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
There are not currently and have not been any disagreements between us and our
accountants on any matter of accounting principles, practices or financial
statement disclosure.
ITEM 9A(T). CONTROLS AND PROCEDURES.
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Under the supervision and with the participation of our management, including
our principal executive officer and principal financial officer, we conducted an
evaluation of our disclosure controls and procedures, as of September 30, 2010.
Based on this evaluation, our principal executive officer and principal
financial officer concluded that our disclosure controls and procedures are
effective in alerting them on a timely basis to material information relating to
our Company required to be included in our reports filed or submitted under the
Exchange Act.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting. Our internal control over financial reporting
is designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles.
All internal control systems, no matter how well designed, have inherent
limitations and may not prevent or detect misstatements. Therefore, even those
systems determined to be effective can only provide reasonable assurance with
respect to financial reporting reliability and financial statement preparation
and presentation. In addition, projections of any evaluation of effectiveness to
future periods are subject to risk that controls become inadequate because of
changes in conditions and that the degree of compliance with the policies or
procedures may deteriorate.
Management assessed the effectiveness of the Company's internal control over
financial reporting as of September 30, 2010. In making the assessment,
management used the criteria issued by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO) in Internal Control-Integrated Framework.
Based on its assessment, management concluded that, as of September 30, 2010,
the Company's internal control over financial reporting was effective to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles.
This annual report does not include an attestation report of the Company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the Company's
registered public accounting firm pursuant to the rules of the Securities and
Exchange Commission that permit the Company to provide only management's report
in this annual report.
16
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CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes (including corrective actions with regard to significant
deficiencies or material weaknesses) in our internal controls over financial
reporting that occurred during the quarter ended September, that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
ITEM 9B. OTHER INFORMATION
There are no items that required disclosure in a Form 8-K during the fourth
quarter of the year covered by this Form 10-K that were not reported by the
Company.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.
DIRECTORS, EXECUTIVE OFFICERS PROMOTERS AND CONTROL PERSONS
The following table sets forth certain information, as of December 31, 2009,
with respect to our directors and executive officers.
NAME AGE POSITION
--------------------------------------------------------------------------------
Antonio Care 41 President, Chief Executive Officer and Director
Marco Alfonsi 50 Chief Operating Officer and Director
Martin Sergi 53 Chief Financial Officer and Director
The Company's directors are elected by the holders of the Company's common
stock. Cumulative voting for directors is not permitted. The term of office of
directors of the Company ends at the next annual meeting of the Company's
stockholders or when their successors are elected and qualified. The term of
office of each officer of the Company ends at the next annual meeting of our
Board of Directors, expected to take place immediately after the next annual
meeting of stockholders, or when his successor is elected and qualifies. Except
as otherwise indicated below, no organization by which any officer or director
previously has been employed is an affiliate, parent, or subsidiary of the
Company.
ANTONIO CARE - Mr. Care was elected to our Board of Directors and was appointed
President and Chief Executive Officer on March 25, 2008. Mr. Care has over 18
years of experience in the field of Finance, import/export, business and market
development, business planning and product line management. Mr. Care has held
executive management positions at Uniglobe Investment Inc. and Tire
International Environmental Solutions Inc. His experience and leadership were
focused on assessing new opportunities, recruiting reputable management teams,
launching new products and developing new markets within different industries
such as the medical, the pharmaceutical and the rubber recycling industry.
From October 2005 to the present, Mr. Care was employed by Tire International
Environmental Solutions Inc. as a consultant dealing with business acquisitions
and financing. From March 2001 to October 2005, Mr. Care founded Care Importing
Inc. He served on the Board of Directors and was the President and Chief
Executive Officer.
On December 1, 2010, the Company entered into an employment agreement with Mr.
Antonio Care, a Chief Executive Officer of the Company. In consideration of his
performance of duties and responsibilities, the Company shall pay to Mr. Care a
base salary of $10,000 per month and an allowance of up to $333 per month for
the purpose of leasing, owning and /or maintaining a vehicle for use in
connection with the services for the Company.
Mr. Care has been the President, Director and sole owner of Tonmik Import Export
Solutions, Inc. since its inception on November 7, 2005. Mr. Care in such
capacity developed the Tonmik's Chinese operations, the Tonmik products and
Tonmik's customer list. The Company has entered into a purchase agreement to
acquire all of the outstanding stock of Tonmik. Mr. Care's know how and
proprietary developed manufacturing processes are key components of the
Company's plan to develop an integrated tire recycling to recycled rubber
finished product business.
17
--------------------------------------------------------------------------------
Mr. Care is not a director or officer of any other reporting companies.
MARCO ALFONSI - On December 1, 2010, the Company entered into an employment
agreement with Mr. Marco Alfonsi, to serve as Chief Operating Officer and
Director of the Company. In consideration of his performance of duties and
responsibilities, the Company shall pay to Mr. Alfonsi a base salary of $10,000
per month and an allowance of up to $333 per month for the purpose of leasing,
owning and /or maintaining a vehicle for use in connection with the services for
the Company.
Mr. Alfonsi has been a financial service professional for past 13 years.
Throughout his career, Mr. Alfonsi was directly and indirectly involved in
raising over $100 million dollars for small and medium sized business. Mr.
Alfonsi was registered in the Securities Industry holding Series 7, 63 and 24
licenses. Mr. Alfonsi is no longer registered. Prior to his involvement in the
financial services industry, Mr. Alfonsi has owned, operated, financed and sold
several businesses. Mr. Alfonsi successfully started and managed two companies
(ExecuteDirect.com, and Bakers Express of New York, Inc.).
On August 16, 2010, Tire International Environmental Solutions, Inc. (TRIE)
appointed Mr. Marco Alfonsi, to the Board of Directors. Mr. Alfonsi was also
appointed Chief Operating Officer of the Company.
COSIMO CARE - On December 1, 2010, the Company entered into an employment
agreement with Mr. Cosimo Care, to serve as Marketing Director and Manager of IT
of the Company. In consideration of his performance of duties and
responsibilities, the Company shall pay to Mr. Care a base salary of $2,500 per
month and an allowance of up to $333 per month for the purpose of leasing,
owning and /or maintaining a vehicle for use in connection with the services for
the Company. Mr. Care is the brother of the Chief Executive Officer.
MARTIN SERGI - On December 1, 2010, the Company entered into an employment
agreement with Mr. Martin Sergi, to serve as Chief Financial Officer and
Director of the Company. In consideration of his performance of duties and
responsibilities, the Company shall pay to Mr. Sergi a base salary of $10,000
per month and an allowance of up to $333 per month for the purpose of leasing,
owning and /or maintaining a vehicle for use in connection with the services for
the Company.
Mr. Sergi has over 25 years of experience as Chief Executive Officer and Chief
Financial Officer of both Privately and Publicly Owned Companies. Mr. Sergi is
an innovator that was named Entrepreneur of the Year for emerging business by
Ernst & Young for the State of New Jersey in 2006. Mr. Sergi has raised for
firms which he led over $1 billion in debt and equity financing including public
equity, public bonds, bank secured and unsecured debt, and private equity; Mr.
Sergi has built companies from inception to $200 million in sales and $350
million in assets. Mr. Sergi has extensive experience in recycling,
manufacturing, energy and real estate. He has been an Officer and Director of
firms in the collection, processing and/or recycling of tires and other solid
waste streams continuously since 1985. Mr. Sergi is a pioneer in converting the
tire disposal industry into a new rubber recycling industry. Firms in which he
was Chief Executive Officer entered into partnership with Ford Motor Company to
recycle all of 8 million recalled Firestone Wilderness Tires from Ford Explorers
in 2003-2004 and utilized the recycled rubber from these tires into innovative
products such as color rubber playground safety flooring, rubber landscape mulch
and recycled rubber infill for the NCAA and NFL fields. From 1985 to 2000 Mr.
Sergi as Chief Executive Officer and Director of KTI Holding, Inc., a NASDAQ
national system firm ("KTI"), built KTI from inception into one of the largest
independent recycling companies in the United States; recycling over 10 million
tons of trash per year into usable products. While at KTI he developed
waste-to-energy plants utilizing municipal solid waste from hundreds of
municipalities into refuse derived fuel to produce 100 megawatts of power per
hour, which was sold to public utilities. He has restructured Power Purchase
Agreements to produce $120 million in cash and stock warrants from public
utilities which were then exercised for an addition $30 million for KTI. From
2001 to 2003 Mr. Sergi was an Officer and Director of KTI's merger partner,
Casella Waste Systems. From 2003 to 2010, Mr. Sergi was the Chief Executive
Officer in the tire recycling industry of Recovery Technology Group, LLC ("RTG")
and PermaLife Products, LLC ("PermaLife"). These firms were substantial
participants in the tire recycling and crumb rubber manufacturing industries.
Mr. Sergi's extensive recycling experience will be an asset for the Company as
it develops its fully integrated tire recycling and finished product
manufacturing business.
18
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In September, 2008 one of PermaLife's tire recycling plants had a significant
tire fire and ultimately permanently closed. Due to the loss, PermaLife's
principal lender called in their $8.7 million credit facility resulting in
PermaLife and several of its affiliates which Mr. Sergi was the Chief Executive
Officer filed for Chapter 11 Bankruptcy protection. PermaLife could not be
reorganized, was converted to Chapter 7 and its principal assets were recently
liquidated on behalf of the secured lender.
The Company has 4 employees at this time.
There are no family relationships among directors, executive officers, or
persons nominated or chosen by the Company to become directors or executive
officers. However Mr. Cosimo Care is the brother of Mr. Antonio Care, the
Company's Chief Executive Officer.
Mr. Sergi filed for bankruptcy protection as the Chief Executive Officer for
PermaLife Products, LLC and its affiliates as further described above. None of
our executive officers or directors have been convicted in or has pending any
criminal proceeding, been subject to any order, judgment or decree enjoining,
barring, suspending or otherwise limiting involvement in any type of business,
securities or banking activity or been found to have violated any federal, state
or provincial securities or commodities laws.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on a review of Forms 3, 4, and 5 and amendments thereto furnished to the
registrant during its most recent fiscal year, there were no persons who did not
file on a timely basis reports required by Section 16(a) of the Exchange Act
during the most recent fiscal year:
CODE OF ETHICS
As of the date of this report, the Company has not adopted a code of ethics that
applies to its principal executive officer, principal financial officer,
principal accounting officer or controller or persons performing similar
functions. The Company intends to review and finalize the adoption of a code of
ethics at such time as it concludes a merger or acquisition and commences
business operations. Upon adoption, the Company will file a copy of its code of
ethics with the Securities and Exchange Commission as an exhibit to its annual
report for the period during which the code of ethics is adopted.
NOMINATING COMMITTEE
There have been no material changes to the procedures by which security holders
may recommend nominees to the Company's board of directors.
AUDIT COMMITTEE
At this time, the Company is not required to have an audit committee. Further,
since there are not sufficient independent members of the Board it is not
feasible at this time to have an audit committee. The Board of Directors
performs the same functions as an audit committee. The Board of Directors in
performing its functions as an audit committee has determined that Martin Sergi,
our CFO, would qualify as an audit committee financial expert.
ITEM 11. EXECUTIVE COMPENSATION.
COMPENSATION DISCUSSION AND ANALYSIS
The following table sets forth information for the individuals who served as the
senior executive officers of the Company during any portion of the last two
fiscal years.
SUMMARY COMPENSATION TABLE
Non-Equity Nonqualified
Stock Option Incentive Plan Deferred All Other
Name and Period Salary Bonus Awards Awards Compensation Compensation Compensation Total
Principal Position Ended ($) ($) ($) ($) ($) ($) ($) ($)
----------------------------------------------------------------------------------------------------------------
Antonio Care
President & PEO 9/30/2010 -0- -0- -0- -0- -0- -0- -0- -0-
Marco Alfonsi
COO 9/30/2010 -0- -0- -0- -0- -0- -0- -0- -0-
Antonio Care
President & PEO 12/31/2009 -0- -0- -0- -0- -0- -0- -0- -0-
Jacqueline Danforth
PFO & Secretary 12/31/2009 -0- -0- 500 -0- -0- -0- -0- 500
----------------------------------------------------------------------------------------------------------------
19
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Jacqueline Danforth the Company's prior CFO received a total of 50,000 shares at
a deemed price of $0.01 per share for her services as Chief Financial Officer
during fiscal 2008.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
There were no stock options granted during the fiscal year ended September 30,
2010. The Company presently has no stock option or stock award plans.
DIRECTOR COMPENSATION
--------------------------------------------------------------------------------------------------------------
Name Fees
Earned Nonqualified
or Non-Equity Deferred
Paid in Stock Option Incentive Plan Compensation All Other
Cash Awards Awards Compensation Earnings Compensation Total
($) ($) ($) ($) ($) ($) ($)
--------------------------------------------------------------------------------------------------------------
Antonio Care -0- -0- -0- -0- -0- -0- -0-
--------------------------------------------------------------------------------------------------------------
Marco Alfonsi -0- -0- -0- -0- -0- -0- -0-
--------------------------------------------------------------------------------------------------------------
Martin Sergi -0- -0- -0- -0- -0- -0- -0-
--------------------------------------------------------------------------------------------------------------
The Company has made no contractual arrangements for the remuneration of its
directors, except that they will be entitled to receive reimbursement for
actual, demonstrable out-of-pocket expenses, including travel expenses, if any,
made on the Company's behalf.
COMPENSATION COMMITTEE
We do not currently have a compensation committee. The Company's Executive
Compensation is currently approved by the Board of Directors of the Company in
the case of the Company's Principal Executive Officer. For all other executive
compensation contracts, the Principal Executive Officer negotiates and approves
the contracts and compensation.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information, as of February 11, 2011, with
respect to the beneficial ownership of the Company's Common Stock by each person
known by the Company to be the beneficial owner of more than 5% of the
outstanding common stock. Information is also provided regarding beneficial
ownership of common stock if all outstanding options, warrants, rights and
conversion privileges (to which the applicable 5% stockholders have the right to
exercise in the next 60 days) are exercised and additional shares of common
stock are issued.
20
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TITLE OF NAME AND ADDRESS OF BENEFICIAL AMOUNT AND NATURE OF BENEFICIAL OWNER PERCENT OF
CLASS OWNER CLASS (1)
-----------------------------------------------------------------------------------------------------------
Common Bello Investments Ltd. 570,000 common shares held directly 6.4%
P.O. Box 7768 Banklane
Nassau, Bahamas
Common Bic International Ltd. 525,000 common shares held directly 5.9%
Cor 12 Bayment Ave & Calle Al Mar,
Belize City, Belize
Common Antonio Care 500,000 common shares held directly 5.6%
3886 Avenue des Generaux
Laval, Quebec H7E 5K7
Common Maria Stella Care(2) 550,000 common shares held directly 6.2%
6349 Chartrand Street
Montreal, North Quebec
Common Bruna Care(2) 550,000 common shares held directly 6.2%
6349 Chartrand Street
Montreal, North Quebec
Common Cede & Co(2) 588,120 common shares held directly 6.6%
P.O. Box 222 Bowling Green Station,
New York NY 10274
Common Crisis Management Inc. 550,000 common shares held directly 6.2%
Cor 12 Bayment Ave & Calle Al Mar,
Belize City, Belize
Common Harmony International Ltd. 570,000 common shares held directly 6.4%
P.O. Box 7768 Banklane
Nassau, Bahamas
Common Pina Dicesare 1,000,000 common shares held directly 11.2%
3886 Avenue des Generaux
Laval, Quebec H7E 5K7
--------------------------------------------------------------------------------
(1) Based on 9,093,185 shares of common stock issued and outstanding. (2) Maria
Stella Care, and Bruna Care, stockholders of the Company, are the sisters and
brother of Antonio Care, who is an officer and director of the
Company. Pina Discesare is the wife of Mr. Care. Mr. Care disclaims any
beneficial ownership.
(3) Cede & Co. holds the shares, the Company has no knowledge of whether any of
the respective shareholders holding shares under Cede & Co. are more than 5%
shareholders of the Company.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information, as of February 11, 2011, with
respect to the beneficial ownership of the Company's common stock by each of the
Company's officers and directors, and by the officers and directors of the
Company as a group. Information is also provided regarding beneficial ownership
of common stock if all outstanding options, warrants, rights and conversion
privileges (to which the applicable officers and directors have the right to
exercise in the next 60 days) are exercised and additional shares of common
stock are issued.
TITLE OF NAME OF BENEFICIAL OWNER AMOUNT AND NATURE OF BENEFICIAL OWNER PERCENT OF
CLASS CLASS (1)
--------------------------------------------------------------------------------
Common Antonio Care 500,000 held directly 5.6%
Common Marco Alfonsi No shares held directly 0%
Common Martin Sergi No shares held directly 0%
--------------------------------------------------------------------------------
COMMON ALL OFFICERS AND DIRECTORS AS A 550,000 COMMON SHARES 5.6%
GROUP
================================================================================
(1) Based on 9,093,185 shares of common stock issued and outstanding.
21
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CHANGES IN CONTROL
None.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
REVIEW, APPROVAL OR RATIFICATION OF TRANSACTIONS WITH RELATED PERSONS
The Company does not currently have any written policies and procedures for the
review, approval or ratification of any transactions with related persons.
PROMOTERS AND CERTAIN CONTROL PERSONS
None
PARENTS
There are no parents of the Company
DIRECTOR INDEPENDENCE
As of the date of this Annual Report, we have no independent director.
The Company has developed the following categorical standards for determining
the materiality of relationships that the Directors may have with the Company. A
Director shall not be deemed to have a material relationship with the Company
that impairs the Director's independence as a result of any of the following
relationships:
1. the Director is an officer or other person holding a salaried position
of an entity (other than a principal, equity partner or member of such
entity) that provides professional services to the Company and the
amount of all payments from the Company to such entity during the most
recently completed fiscal year was less than two percent of such
entity's consolidated gross revenues; 2. the Director is the beneficial
owner of less than five (5%) per cent of the outstanding equity
interests of an entity that does business with the Company;
3. the Director is an executive officer of a civic, charitable or cultural
institution that received less than the greater of one million
($1,000,000) dollars or two (2%) per cent of its consolidated gross
revenues, as such term is construed by the New York Stock Exchange for
purposes of Section 303A.02(b)(v) of the Corporate Governance Standards,
from the Company or any of its subsidiaries for each of the last three
(3) fiscal years; 4. the Director is an officer of an entity that is
indebted to the Company, or to which the Company is indebted, and the
total amount of either the Company's or the business entity's
indebtedness is less than three (3%) per cent of the total consolidated
assets of such entity as of the end of the previous fiscal year; and
5. the Director obtained products or services from the Company on terms
generally available to customers of the Company for such products or
services. The Board retains the sole right to interpret and apply the
foregoing standards in determining the materiality of any relationship.
The Board shall undertake an annual review of the independence of all
non-management Directors. To enable the Board to evaluate each non-management
Director, in advance of the meeting at which the review occurs, each
non-management Director shall provide the Board with full information regarding
the Director's business and other relationships with the Company, its affiliates
and senior management.
Directors must inform the Board whenever there are any material changes in their
circumstances or relationships that could affect their independence, including
all business relationships between a Director and the Company, its affiliates,
or members of senior management, whether or not such business relationships
would be deemed not to be material under any of the categorical standards set
forth above. Following the receipt of such information, the Board shall
re-evaluate the Director's independence.
22
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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table sets forth the fees billed to the Company for professional
services rendered by the Company's principal accountant, for the nine months
ended September 30, 2010 and the year ended December 31, 2009:
-----------------------------------------------------------------------------------------------------------
SERVICES SEPTEMBER 30, 2010 DECEMBER 31, 2009
$ $
-----------------------------------------------------------------------------------------------------------
Audit fees 13,000 13,000
-----------------------------------------------------------------------------------------------------------
Audit related fees 0 0
-----------------------------------------------------------------------------------------------------------
Tax fees 750 750
-----------------------------------------------------------------------------------------------------------
TOTAL FEES 13,750 13,250
-----------------------------------------------------------------------------------------------------------
Audit fees consist of fees for the audit of the Company's annual financial
statements or the financial statements of the Company's subsidiaries or services
that are normally provided in connection with the statutory and regulatory
filings of the annual financial statements.
Audit-related services include the review of the Company's financial statements
and quarterly reports that are not reported as Audit fees.
Tax fees included tax planning and various taxation matters.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
FINANCIAL STATEMENTS
The following financial statements of the Company are filed as part of this
Annual Report on Form 10-K as follows:
-----------------------------------------------------------------------------------------------------------
Report of Independent Registered Public Accounting Firm F-3
-----------------------------------------------------------------------------------------------------------
Balance Sheets F-4
-----------------------------------------------------------------------------------------------------------
Statements of Operations and Comprehensive Loss F-5
-----------------------------------------------------------------------------------------------------------
Statement of Changes in Stockholders' Deficiency F-6 and F-7
-----------------------------------------------------------------------------------------------------------
Statements of Cash Flows F-8
-----------------------------------------------------------------------------------------------------------
Notes to the Financial Statements F-9 to F-15
-----------------------------------------------------------------------------------------------------------
All other schedules have been omitted because they are not applicable, not
required under the instructions, or the information requested is set forth in
the consolidated financial statements or related notes there to.
23
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EXHIBITS
NUMBER EXHIBIT REFERENCE
------------------------------------------------------------------------------------------------------------------------------------
3.1 Articles of Incorporation and Incorporated by reference to the Exhibits previously filed with the Company's
Amendments Current Report on Form 10SB12G filed with the Securities and Exchange
Commission on Dec. 1, 1999
3.1.2 Amended and Restated Articles of Incorporated by reference to the Exhibits previously filed with the
Incorporation Company's Current Report on Form 10-KSB filed with the Securities and
Exchange Commission on July 22, 2003
3.1.3 Certificate of Amendment to Articles Incorporated by reference to the Exhibits previously filed with the
of Incorporation Company's Current Report on Form 10-KSB filed with the Securities and
Exchange Commission on April 15, 2008
3.1.4 Certificate of Change Incorporated by reference to the Exhibits previously filed with the
Company's Current Report on Form 10-KSB filed with the Securities and
Exchange Commission on April 15, 2008
3.2 Bylaws Incorporated by reference to the Exhibits previously filed with the
Company's Current Report on Form 10SB12G filed with the Securities and
Exchange Commission on Dec. 1, 1999
3.2.1 Amended and Restated Bylaws Incorporated by reference to the Exhibits previously filed with the
Company's Form 10-KSB filed with the Securities and Exchange Commission on
April 2, 2007
10.1 Divestiture Agreement between IVision Incorporated by reference to the Exhibits previously filed with the
Group Ltd. and Crisis Management Inc. Company's Form 10-QSB filed with the Securities and Exchange Commission on
October 30, 2006.
31.1 Section 302 Certification - Principal Filed herewith
Executive Officer
31.2 Section 302 Certification - Principal Filed herewith
Financial Officer
32.1 Certification Pursuant to 18 U.S.C. Filed herewith
Section 1350 as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act
of 2002
32.2 Certification Pursuant to 18 U.S.C. Filed herewith
Section 1350 as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act
of 2002
====================================================================================================================================
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
By: /s/ Antonio Care
Name: Antonio Care
Title: President, Principal Executive Officer and Member of the Board of
Directors
Date: February 17, 2011
By: /s/ Martin Sergi
Name: Martin Sergi
Title: Principal Financial Officer, Secretary, Treasurer and Member of the Board
of Directors
Date: February 17, 2011
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated, who constitute the entire board of directors:
By: /s/ Antonio Care
Name: Antonio Care
Title: President, Principal Executive Officer and Member of the Board of
Directors
Date: February 17, 2011
By: /s/ Martin Sergi
Name: Martin Sergi
Title: Principal Financial Officer and Member of the Board of Directors
Date: February 17, 2011
By: /s/ Marco Alfonsi
Name: Marco Alfonsi
Title: Chief Operating Officer and Member of the Board of Directors
Date: February 17, 2011
24
--------------------------------------------------------------------------------
RULE 13A-14(A)/15D-14(A) CERTIFICATION
I, Antonio Care, certify that:
(1) I have reviewed this annual report on Form 10-K of Tire International
Environmental Solutions Inc.;
(2) Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
(3) Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
(4) The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
(a) designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
(c) evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(d) disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting; and
(5) The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the Registrant's ability to record, process,
summarize and report financial information; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Date: February 21, 2011 By: /s/ Antonio Care
======================= ==================================
Name: Antonio Care
Title: Principal Executive Officer
26
--------------------------------------------------------------------------------
RULE 13A-14(A)/15D-14(A) CERTIFICATION
I, Martin Sergi, certify that:
(1) I have reviewed this annual report on Form 10-K of Tire International
Environmental Solutions Inc.;
(2) Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
(3) Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
(4) The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
(a) designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
(c) evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(d) disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting; and
(5) The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the Registrant's ability to record, process,
summarize and report financial information; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Date: February 21, 2011 By: /s/ Martin Sergi
======================= ==================================
Name: Martin Sergi
Title: Principal Financial Officer
26
--------------------------------------------------------------------------------
EXHIBIT 32
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
CERTIFICATION PURSUANT TO
18 U.S.C. Section 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Tire International Environmental
Solutions Inc. (the "Company") on Form 10-K for the year ending September 30,
2010 as filed with the Securities and Exchange Commission on the date hereof
(the "Report"), I, Antonio Care, as Principal Executive Officer of the Company,
hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in this Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
Date: February 21, 2011 By: /s/ Antonio Care
---------------------------
Name: Antonio Care
Title: Principal Executive Officer
A signed original of this written statement required by Section 1350 of Title 18
of the United States Code has been provided to the Company and will be retained
by the Company and furnished to the Securities and Exchange Commission or its
staff upon request.
The foregoing certification is being furnished as an exhibit to the Report
pursuant to Item 601(b)(32) of Regulation S-K and Section 1350 of Title 18 of
the United States Code and, accordingly, is not being filed with the Securities
and Exchange Commission as part of the Report and is not to be incorporated by
reference into any filing of the Company under the Securities Act of 1933 or the
Securities Exchange Act of 1934 (whether made before or after the date of the
Report, irrespective of any general incorporation language contained in such
filing.)
27
--------------------------------------------------------------------------------
EXHIBIT 32
TIRE INTERNATIONAL ENVIRONMENTAL SOLUTIONS INC.
CERTIFICATION PURSUANT TO
18 U.S.C. Section 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Tire International Environmental
Solutions Inc. (the "Company") on Form 10-K for the year ending September 30,
2010 as filed with the Securities and Exchange Commission on the date hereof
(the "Report"), I, Jacqueline Danforth, as Principal Financial Officer of the
Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in this Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
Date: February 21, 2011 By: /s/ Martin Sergi
---------------------------
Name: Martin Sergi
Title:Principal Financial Officer
A signed original of this written statement required by Section 1350 of Title 18
of the United States Code has been provided to the Company and will be retained
by the Company and furnished to the Securities and Exchange Commission or its
staff upon request.
The foregoing certification is being furnished as an exhibit to the Report
pursuant to Item 601(b)(32) of Regulation S-K and Section 1350 of Title 18 of
the United States Code and, accordingly, is not being filed with the Securities
and Exchange Commission as part of the Report and is not to be incorporated by
reference into any filing of the Company under the Securities Act of 1933 or the
Securities Exchange Act of 1934 (whether made before or after the date of the
Report, irrespective of any general incorporation language contained in such
filing.)
28
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