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 UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
  
   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended November 30, 2012
 
   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _________ to __________
 
Commission file number: 333-178210
 
SERVICE TEAM INC.
(Exact name of registrant as specified in its charter)
 
Nevada
61-1653214
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification No.)
 
18482 Park Villa Place, Villa Park, California 92861
(Address of principal executive offices) (Zip Code)
  
(855) 830-8111
(Registrant's telephone number, including area code)
 
 
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  o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§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  x    No  o
 
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 o         Accelerated filer o         Non-accelerated filer o        Smaller reporting company x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  o    No  x
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:  7,707,500 common shares and no preferred stock as of January 11, 2013.
 
 
 
 
 

 
PART I — FINANCIAL INFORMATION
 
 
Item 1. Financial Statements.
 
 
TABLE OF CONTENTS
 
   
Page
Financial Statements
 
     
 
Balance Sheets as of August 31, 2012 (restated) and November 30, 2012 (unaudited)
3
 
Statements of Operations for the three month periods ended November 30, 2012, and November 30, 2011, and the period from June 6, 2011 (Inception) to November 30, 2012 (unaudited)
4
 
Statements of Shareholders’ Deficit from June 6, 2011 (Inception) to November 30,  2012 (unaudited) (restated)
5
 
Statements of Cash Flows for the three month periods ended November 30, 2012 and 2011 (unaudited) (restated), and the period from June 6, 2011 (Inception) to November 30, 2012 (unaudited) (restated)
6
 
Notes to Financial Statements  
    7-14
 
 
 
 
2

 

 
SERVICE TEAM INC
 
(A DEVELOPMENT STAGE COMPANY)
 
BALANCE SHEETS
 
AS OF NOVEMBER 30, 2012 AND AUGUST 31, 2012
 
 
       
   
11/30/12
(unaudited)
   
8/31/12
(restated)
 
ASSETS
           
Cash
   
10,282
     
71,621
 
Total Current Assets
   
10,282
     
71,621
 
                 
                 
TOTAL ASSETS
   
10,282
     
71,621
 
                 
LIABILITIES & SHAREHOLDERS' (DEFICIT)
               
Accounts Payable
   
6,722
     
-
 
Due Hallmark Venture Group Inc *
   
131,662
     
106,764
 
Contingent Liability
   
54,100
     
54,100
 
Accrued Payroll
   
28,838
     
50,259
 
TOTAL LIABILITIES
   
221,322
     
211,123
 
                 
Common stock, $.001 par value, 74,000,000 authorized, 7,707,500 and 7,707,500 issued and outstanding as of November 30, 2012 and August 31, 2012, respectively.
   
 7,708
     
 7,708
 
Additional paid in capital
   
259,024
     
256,044
 
Subscriptions receivable
   
-
     
(28,700)
 
(Deficit) accumulated during development stage
   
(477,772
)
   
(374,554
)
TOTAL SHAREHOLDERS' (DEFICIT)
   
(211,040
)
   
(139,502
)
                 
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT)
   
10,282
     
71,621
 
                 
* Related Party
               
                 
 
The accompanying notes are an integral part of these financial statements.
 

 
3

 
SERVICE TEAM INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE FISCAL QUARTERS ENDING NOVEMBER 30, 2012 AND 2011
AND FOR THE PERIOD FROM JUNE 6, 2011 (INCEPTION) TO NOVEMBER 30, 2012
(UNAUDITED)
 
               
Inception to
 
   
11/30/12
   
11/30/11
   
11/30/12
 
REVENUES
                 
Sales
 
$
180
   
$
33,091
   
$
71,516
 
                         
COST OF SALES
                       
Cost of sales
   
46,879
     
44,874
     
176,890
 
Gross Margin
   
(46,699
)
   
(11,783
)
   
(105,374
)
                         
OPERATING EXPENSES
                       
General & administrative expenses
   
53,539
     
27,272
     
362,842
 
Total Operating Expenses
   
53,539
     
27,272
     
362,842
 
                         
LOSS FROM OPERATIONS
   
(100,238
)
   
(39,055
)
   
(468,216
)
                         
OTHER INCOME (EXPENSE)
                       
Interest expense
   
(2,980
)
   
-
     
(9,556
)
Total Other Income (Expense)
   
(2,980
)
   
-
     
(9,556
)
                         
NET INCOME (LOSS)
 
$
(103,218
)
 
$
(39,055
)
 
$
(477,772
)
                         
Weighted average number of common shares outstanding - basic and fully diluted
   
7,707,500
     
 6,000,000
         
                         
Net (loss) per share - basic and fully diluted
 
$
(0.01
)
 
$
(0.01
)
       
 
The accompanying notes are an integral part of these financial statements.


 
4

 

SERVICE TEAM INC.
(A DEVELOPMENT STAGE COMPANY)
Statement of Shareholders' Deficit
June 6, 2011 (Inception) to November 30, 2012
(Unaudited) (Restated)
               
Additional Paid In Capital
   
Subscriptions Receivable
   
Deficit Accumulated During Development Stage
       
   
Common Stock
       
   
Shares
   
Amount
   
Total
 
June 6, 2011 (Inception) Founders' Shares
   
6,000,000
   
$
6,000
   
$
-
   
$
-
   
$
-
   
$
6,000
 
Contributed Capital
   
-
     
-
     
23,027
     
-
     
-
     
23,027
 
Net Loss
   
-
     
-
     
-
     
-
     
(50,997
)
   
(50,997
)
Balance, August 31, 2011
   
6,000,000
     
6,000
     
23,027
     
-
     
(50,997
)
   
(21,970
)
                                                 
Imputed Interest on Related Party Debt
   
-
     
-
     
7,409
     
-
     
-
     
7,409
 
Imputed Rent Expense
   
-
     
-
     
2,000
     
-
     
-
     
2,000
 
Contributed Capital from Related Party
   
-
     
-
     
8,640
     
-
     
-
     
8,640
 
Rescission Liability for Unregistered Sales
   
-
     
-
     
(54,100
)
   
-
     
-
     
(54,100
)
Shares Issued for Cash
   
1,580,500
     
1,581
     
138,525
     
-
     
-
     
140,106
 
Shares Issued for Subscription Receivable
   
127,000
     
127
     
28,573
     
(28,700
)
   
-
     
-
 
Stock Based Compensation
   
-
     
-
     
101,970
     
-
     
-
     
101,970
 
Net Loss
   
-
     
-
     
-
     
-
     
(323,557
)
   
(323,557
)
Balance,  August 31, 2012 (Restated)
   
7,707,500
   
$
7,708
   
$
256,044
   
$
(28,700
)
 
$
(374,554
)
 
$
(139,503
)
                                                 
Imputed Interest on Related Party Debt
   
-
     
-
     
2,980
     
-
     
-
     
2,980
 
Cash Received from Stock Receivables
   
-
     
-
     
-
     
28,700
     
-
     
28,700
 
Net Loss
   
-
     
-
     
-
     
-
     
(103,218
)
   
(103,218
)
Balance, November 30, 2012 (Unaudited)
   
7,707,500
   
$
7,708
   
$
259,024
   
$
-
   
$
(477,772
)
 
$
(211,040
)
                                                 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
5

 
 SERVICE TEAM, INC.
 
(A DEVELOPMENT STAGE COMPANY)
 
     STATEMENTS OF CASH FLOWS
 
FOR THE FISCAL QUARTERS ENDED NOVEMBER 30, 2012 AND 2011,
 
AND FOR THE PERIOD FROM JUNE 6, 2011 (INCEPTION) TO NOVEMBER 30, 2012
(UNAUDITED) (RESTATED)
 
               
 
   
Fiscal Quarter Ended November 30,
   
(Restated)
Fiscal Quarter Ended
November 30,
   
(Restated)
Inception to
November 30,
 
   
2012
   
2011
   
2012
 
CASH FLOWS FROM OPERATING ACTIVITIES
                 
                   
Net Loss
 
$
(103,218
)
 
$
(39,055
)
 
$
(477,772
)
                         
Adjustments to reconcile net loss with cash used in operations:
                       
Stock based compensation expense
   
-
     
-
     
101,970
 
Imputed rent expense
   
-
     
-
     
2,000
 
Imputed interest
   
2,980
     
833
     
10,389
 
                         
CHANGE IN OPERATING ASSETS AND LIABILITIES
                       
                         
Accounts Receivable
   
-
     
2,426
     
-
 
Accrued Payroll
   
(21,421
)
   
(3,080
)
   
28,838
 
Deposits & Prepaid Expenses
   
-
     
546
     
-
 
Accounts Payable
   
6,722
     
(263
   
6,722
 
Net Cash (Used in Operating Activities)
   
(114,937
)
   
(38,593
)
   
(327,853
)
                         
CASH FLOWS FROM FINANCING ACTIVITIES
                       
                         
Proceeds from sale of stock
   
28,700
     
-
     
174,806
 
Proceeds from loans with Hallmark Venture Group, Inc. *
   
24,898
     
40,250
     
131,662
 
Capital Contributions *
   
-
     
-
     
31,667
 
Net Cash Provided From Financing Activities
   
53,598
     
40,250
     
338,135
 
                         
Net Increase (decrease) In Cash and Cash Equivalents
   
(61,339
   
1,657
     
10,282
 
                         
Cash at Beginning of Period
   
71,621
     
-
     
-
 
                         
Cash at End of Period
 
$
10,282
   
$
1,657
   
$
10,282
 
                         
Supplemental Disclosures
                       
Interest Paid
 
$
-
   
$
-
   
$
-
 
Taxes Paid
 
$
-
   
$
-
   
$
-
 
                         
Non-cash transactions:
                       
Shares issued for subscriptions receivable
 
$
-
   
$
-
   
$
(28,700
)
Contingent Liability
 
$
-
   
$
-
   
$
(54,100
)
                         
* Related Party
                       
 
 
The accompanying notes are an integral part of these financial statements.
 
 
6

 

SERVICE TEAM INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
June 6, 2011 (Inception) to November 30, 2012 and
the Three Month Periods Ending November 30, 2012, and November 30, 2011
(Unaudited)
 
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
 
Background
 
Service Team Inc. was incorporated pursuant to the laws of the State of Nevada on June 6, 2011.  The Company intends to commence business operations by service and repair of electrical appliances to fulfill the warranty obligations of manufacturers and insurance companies.  It is a development stage company that has limited operating history and has earned minimal revenues.  Since the inception, the Company has been primarily devoting its activities to the following: developing a business plan, determining the market for the Company’s services, developing standardized procedures for repairing the appliances, a computerized tracking system for tracking work in progress in the repair facility and capital formation.  Service Team Inc. (“Company”) is in the initial development stage and has incurred losses since inception that total $477,772.
 
The Company has established a fiscal year end of August 31.
 
Basis of Presentation
 
The financial statements present the balance sheet, statements of operations, shareholders’ deficit and cash flows of the Company. These financial statements are presented in United States dollars and have been prepared in accordance with accounting principles generally accepted in the United States.  The accompanying unaudited, condensed financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements.
 
All adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations for the interim periods have been made and are of a recurring nature unless otherwise disclosed herein. The results of operations for such interim periods are not necessarily indicative of operations for a full year.
 
Development Stage Company
 
The Company is currently considered a development stage company.  As a development stage enterprise, the Company discloses the deficit accumulated during the development stage and the cumulative statements of operation and cash flows from inception to the current balance sheet date.  An entity remains in the development stage until such a time as, among other factors, revenues have been realized.  To date, the development stage of the Company’s operations consist of developing the business model, marketing concepts and beginning sales efforts.
 
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Going Concern
 
The Company’s financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern.  This contemplates the realization of assets and the liquidation of liabilities in the normal course of business.  Currently, the Company does not have sufficient cash nor material assets, nor does it have operations or a source of revenue sufficient to cover its operation costs and allow it to continue as a going concern.  The Company has a negative equity since inception (June 6, 2011) through November 30, 2012, of $211,040. The Company will be dependent upon the raising of additional capital through placement of our common stock in order to implement its business plan. There can be no assurance that the Company will be successful in order to continue as a going concern. The Company is funding its initial operations by issuing common shares and debt. As of November 30, 2012, the Company had sold 6,000,000 shares to Hallmark Venture Group, Inc. at $0.001 per share for net funds to the Company of $6,000 and received capital contributions of $31,667. The Company has also sold 1,707,500 shares to various individuals and received net funds of $168,806. Hallmark Venture Group, Inc. has also loaned the Company $131,622.  The major shareholder, Hallmark Venture Group, Inc., has committed to advancing additional funds as may be required for the operation of the Company. We cannot be certain that capital will be provided when it is required.
 
 
7

 
Property and Equipment
 
The Company does not own any property or equipment.  The Company leases furniture and equipment from Hallmark Venture Group, Inc., a related party. Hallmark Venture Group, Inc., a related party, is also supplying working capital for continued operations. Both leases are considered to be operating leases for reporting purposes.
 
Inventory
 
The Company does not own inventory.  Parts are supplied to the Company without charge by the manufacturers of the electrical appliance for use in making the warranty repairs as needed. Any unused parts are considered to be immaterial.
 
Lease Commitments
 
None. 
 
Revenue Recognition
 
Service Team Inc.’s business is to repair or replace electrical appliances, mostly televisions, covered by warranties or insurance companies.  The Company currently does business with one warranty insurance company and is soliciting business from several warranty insurance companies and Asian electronic manufacturers.  The Company has a price list of its services that sets forth a menu of charges for various repairs or replacements. We do not do business with individual customers.
 
When an order is received to repair a television or other electrical appliance from the manufacturer or the warranty insurance company, the item is picked up and transported to our service facility by a parcel delivery service.  We examine it, determine what must be repaired, and repair it.  The decision to repair or replace the television, video recorder, laptop computer or cell phone is made by Service Team technicians.   The repaired or replaced appliance is then shipped back to the customer.  At the time of shipment, an invoice is prepared itemizing the charges and costs to the customer.  This invoice is entered into our accounting system and is recognized as revenue at that time.  Our invoice is paid by the warranty insurance companies or the television manufacturer.  We do not take title to the product.
 
As described above, in accordance with the requirements of ASC 605-10-599, the Company recognizes revenue when (1) persuasive evidence of an arrangement exists (contracts); (2) delivery has occurred; (3) the seller’s price is fixed or determinable (per the customer’s contract); and (4) collectability is reasonably assured (based upon our credit policy).
 
Use of Estimates and Assumptions
 
Preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and disclosures.  Accordingly, actual results could differ from those estimates.
 
Cash and Cash Equivalents
 
The Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents. There were no cash equivalents on November 30, 2012 or August 31, 2012.
 
 
8

 
Accounts Receivable Policy
 
All accounts receivable are due thirty (30) days from the date billed. If the funds are not received within thirty (30) days the customer is contacted to arrange payment. The Company uses the allowance method to account for uncollectable accounts receivable. All accounts were considered collectable at period end and no allowance for bad debts was considered necessary.
   
Fair Value
 
In accordance with the requirements of ASC 825 and ASC 820, the Company has determined the estimated fair value of financial instruments using available market information and appropriate valuation methodologies.  The fair value of financial instruments classified as current assets or liabilities approximate their carrying value due to the short-term maturity of the instruments.
 
Concentrations
 
At the present time, Service Team Inc. has one customer, the Warrantech division of AmTrust Financial Services, Inc, represents all of our sales.  The Company anticipates obtaining additional business from its other customers that will reduce the Company’s dependency on Warrantech.
 
Income Taxes

The Company has adopted ASC 740 for reporting purposes.  For the period from June 6, 2011 to November 30, 2012, the Company had net operating loss carry forwards of approximately $414,410 that may be available to reduce future years’ taxable income and will expire beginning in 2028.  Availability of loss usage is subject to change of ownership limitations under Internal Revenue Code 382. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the future tax loss carry forwards.
 
Contingent Liability

The Company has a contingent liability associated with the rescission offer (as noted below) made to investors due to the sale of unregistered stock.  The liability is equal to the number of shares of common stock sold of 541,000 times the selling price of $0.10 per share which equals $54,100.  As of November 30, 2012, and August 31, 2012, the estimated dollar value of the contingent liability is $54,100 and $54,100, respectively.

During the period from November 29, 2011 until June 1, 2012, the Company sold 541,000 shares to various individuals for a total cash consideration of $54,100.  The funds were used for operating capital of the Company including rent and payroll. These sales of our shares sold after the filing date of our S-1 Registration (November 29, 2011) may not be covered by a valid private placement exemption from the registration requirements due to possible integration with the public offering.  To be certain of our position we have elected to offer rescission for  all private sales made after November 29, 2011.  Our rescission offer covers twenty-five shareholders (25) for a total of 541,000 shares originally sold for $54,100.  

Net Loss Per Share
 
Basic loss per share includes no dilution and is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding for the period.  Dilutive loss per share reflects the potential dilution of securities that could share in the losses of the Company.  Because the Company does not have any potentially dilutive securities, the accompanying presentation is only of basic loss per share.
 
Stock Based Compensation
 
The Company has not adopted a stock option plan and has not granted any stock options. The President and Vice President of Service Team Inc. have purchased shares in the Company at par value, $0.001.  See “Related Party Transactions” in Note 5.
 
 
9

 
Share Based Expenses
 
In December 2004, the Financial Accounting Standards Board (“FASB”) issued ASC 718 and 505 “Share Based Payment.” This statement requires a public entity to expense the cost of employee services received in exchange for an award of equity instruments. This statement also provides guidance on valuing and expensing these awards, as well as disclosure requirements of these equity arrangements.  The Company adopted ASC 718 and 505 upon creation of the company and expenses share based costs in the period incurred.
 
Recent Accounting Pronouncements

In October 2012, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2012-04, “Technical Corrections and Improvements” in Accounting Standards Update No. 2012-04. The amendments in this update cover a wide range of Topics in the Accounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this update will be effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 is not expected to have a material impact on our financial position or results of operations.
 
In August 2012, the FASB issued ASU 2012-03, “Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22 (SEC Update)” in Accounting Standards Update No. 2012-03. This update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 is not expected to have a material impact on our financial position or results of operations.
 
In July 2012, the FASB issued ASU 2012-02, “Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment” in Accounting Standards Update No. 2012-02. This update amends ASU 2011-08,Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment and permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles - Goodwill and Other - General Intangibles Other than Goodwill. The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entity’s financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance. The adoption of ASU 2012-02 is not expected to have a material impact on our financial position or results of operations.

In September 2011, the FASB issued ASU No. 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment. The guidance in ASU 2011-08 is intended to reduce complexity and costs by allowing an entity the option to make a qualitative evaluation about the likelihood of goodwill impairment to determine whether it should calculate the fair value of a reporting unit. The amendments also improve previous guidance by expanding upon the examples of events and circumstances that an entity should consider between annual impairment tests in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Also, the amendments improve the examples of events and circumstances that an entity having a reporting unit with a zero or negative carrying amount should consider in determining whether to measure an impairment loss, if any, under the second step of the goodwill impairment test. The amendments in this ASU are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted, including for annual and interim goodwill impairment tests performed as of a date before September 15, 2011, if an entity’s financial statements for the most recent annual or interim period have not yet been issued. The adoption of this guidance is not expected to have a material impact on the Company’s financial position or results of operations.
 
 
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NOTE 3 – FAIR VALUE OF FINANCIAL INSTRUMENTS
 
The Company adopted the FASB standard related to fair value measurement at inception. The standard defines fair value, establishes a framework for measuring fair value and expands disclosure of fair value measurements. The standard applies under other accounting pronouncements that require or permit fair value measurements and, accordingly, does not require any new fair value measurements. The standard clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The recorded values of long-term debt approximate their fair values, as interest approximates market rates. As a basis for considering such assumptions, the standard established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows.
  
 
· Level 1. Observable inputs such as quoted prices in active markets;
 
 
· Level 2. Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
 
 
· Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
 
The Company’s financial instruments are cash, accounts receivable, and accounts payable. The recorded values of cash, accounts receivable, and accounts payable approximate their fair values based on their short-term nature.
 
The following table presents assets that were measured and recognized at fair value as of August 31, 2012 and November 30, 2012, and the period then ended on a recurring basis:
 
                   
Total
 
                   
Realized
 
Description
 
Level 1
   
Level 2
 
Level 3
   
Loss
 
   
$
           -
   
$
               -
   
$
               -
   
$
-
 
 Totals
 
$
           -
   
$
               -
   
$
               -
   
$
-
 
 
NOTE 4 – CAPITAL STOCK
 
The Company’s authorized capital is 74,000,000 common shares with a par value of $0.001 per share and 100,000 preferred shares with a par value of $0.001 per share.  As of November 30, 2012, the Company had issued 6,000,000 shares of common stock in the Company at $0.001 per share to a related party in exchange for $6,000 cash and a capital contribution of $31,667. The Company has also sold 1,707,500 shares for $168,806.

No preferred shares have been issued.
 
As of August 31, 2012 and November 30, 2012, the Company has not granted any stock options.  

During the period from November 29, 2011 until June 1, 2012, the Company sold 541,000 shares to various individuals for a total cash consideration of $54,100.  The funds were used for operating capital of the Company including rent and payroll. These private sales of our shares sold after the filing date of our S-1 Registration (November 29, 2011) may not be covered by a valid private placement exemption from the registration requirements due to possible integration with the public offering. .  Our rescission offer covers twenty-five shareholders (25) for a total of 541,000 shares originally sold for $54,100.  

 
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Stock Based Compensation
 
We have accounted for stock based compensation under the provisions of FASB Accounting Standards codification (ASC) 718-10-55.  (Prior authoritative literature:  FASB Statement 123 (R), Share-based payment.)  This statement requires us to record any expense associated with the fair value of stock based compensation.  Determining fair value requires input of highly subjective assumptions, including the expected price volatility.  Changes in these assumptions can materially affect the fair value estimate.
  
NOTE 5 – RELATED PARTY TRANSACTIONS
 
On July 25, 2011, the Company entered into a lease agreement with Hallmark Venture Group, Inc. to lease furniture, office equipment, computers, work benches, test equipment, telephones and miscellaneous equipment and tools used to repair televisions and electrical appliances.  The lease calls for a payment of $100 a month for three years payable to Hallmark Venture Group, Inc., effective August 1, 2011.  Robert L. Cashman, Vice President and Secretary of Service Team Inc., is the beneficial owner of Hallmark Venture Group, Inc.  This is considered to be an operating lease for reporting purposes.
 
As of August 31, 2012 and November 30, 2012, the Company has received $31,667 and $31,667, respectively, in contributed capital from Hallmark Venture Group, Inc., and $106,764 and $131,622, respectively, in non-interest bearing loans. The contribution does not bear interest.  We, therefore, as of November 30, 2012 and 2011, imputed interest of $2,980 and $833, respectively, charging expense with that amount and increasing Additional Paid in Capital.  The loans from Hallmark Venture Group, Inc. are for general operating costs and are to be repaid as funds are available. Hallmark Venture Group, Inc. and its beneficial owner, Robert L. Cashman, is Secretary and Director and controlling shareholder of Service Team, Inc.
 
During the second quarter of 2012, the Company has also issued 500,000 shares to its President, Carlos Arreola, for a cash payment of $500; and 100,000 shares to its Vice President, Douglas K. Dungee, for a cash payment of $100.  These shares were priced at par value, $0.001 per share.  This resulted in a charge to expenses of $59,400 in stock based compensation as provided by FASB Accounting Standards Codification (“ASC”) 718-10-55; due to the fact that the cash value to non-related party investors is at $0.10 per share. See “Stock Based Compensation” in Note 4. 
 
During the third quarter of 2012, the Company issued 380,000 shares to various individuals, priced at par value $0.001 per share, totaling cash receipts of $380. This resulted in a charge to expenses of $37,620 in stock based compensation as provided by ASC 718-10-55; due to the fact that the cash value to non-related party investors is at $0.10 per share. See “Stock Based Compensation” in Note 4. No preferred shares have been issued.
 
NOTE 6 – INCOME TAXES
 
As of November 30, 2012, the Company has $414,410 of net estimated tax loss carry forwards for tax purposes, commencing in the fiscal year 2013 which may be applied against future taxable income.   Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization has not been determined to be more likely than not to occur.
 
 
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The actual income tax provisions differ from the expected amounts calculated by applying the statutory income tax rate to the Company’s loss before income taxes.  The components of these differences are as follows:
 
   
Inception to 
November 30,
 2012
   
Inception to
August 31,
2012
 
 Net tax loss carry-forwards
 
$
414,410
     
314,554
 
 Statutory rate    
   
34
%
   
34
%
 Expected tax recovery
   
140,899
     
106,818
 
 Change in valuation allowance
   
(140,899
)
   
(106,818
)
 Income tax provision
 
$
-
     
-
 
                 
 Components of deferred tax asset:
               
 Non capital tax loss carry forwards 
 
$
140,899
     
106,818
 
 Less: valuation allowance   
   
(140,899
)
   
(106,818
)
 Net deferred tax asset 
 
$
-
     
-
 
 
NOTE 7 – SUBSEQUENT EVENTS
 
The Company has evaluated subsequent events through the date the financial statements were issued and filed with the Securities and Exchange Commission.   The Company has determined that there were no such events that warrant disclosure or recognition in the financial statements.
 
NOTE 8 – RESTATEMENT OF FINANCIAL STATEMENTS

The Company has restated its previously issued financial statements related to the previously reported item:

During the period from November 29, 2011 until June 1, 2012, the Company sold 541,000 shares to various individuals for a total cash consideration of $54,100.  The funds were used for operating capital of the Company including rent and payroll. These private sales of our shares sold after the filing date of our S-1 Registration (November 29, 2011) may not be covered by a valid private placement exemption from the registration requirements due to possible integration with the public offering.  Our rescission offer covers twenty-five shareholders (25) for a total of 541,000 shares originally sold for $54,100.  

The total impact of the correction of this error is a decrease in additional paid in capital of $54,100 and an increase in contingent liability of $54,100, as a non-cash transaction, with no impact to net income.  As a result, the Company’s total liabilities have increased and total equity has decreased by $54,100 as of August 31, 2012.

 
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The following is a summary of the restatement of the balance sheet as of August 31, 2012.  There was no impact to the statement of operations for the fiscal year ended August 31, 2012.
 
         
   
8/31/12
Previously Reported
 
 Adjustments
 
8/31/12
As Restated
 
ASSETS
             
Cash
   
71,621
 
 
71,621
 
Total Current Assets
   
71,621
 
 
71,621
 
                 
                 
TOTAL ASSETS
   
71,621
 
 
71,621
 
                 
LIABILITIES & SHAREHOLDERS' (DEFICIT)
               
Accounts Payable
   
-
 
 
-
 
Due Hallmark Venture Group Inc *
   
106,764
 
 
106,764
 
Contingent Liability
   
-
 
54,100
 
54,100
 
Accrued Payroll
   
50,259
 
 
50,259
 
TOTAL LIABILITIES
   
157,023
 
54,100 
 
211,123
 
                 
Common stock, $.001 par value, 74,000,000 authorized, 7,707,500 issued and outstanding
as of August 31, 2012.
   
 7,708
 
 
 7,708
 
Additional paid in capital
   
310,144
 
(54,100 
)
256,044
 
Subscriptions receivable
   
(28,700
)
 
(28,700)
 
(Deficit) accumulated during development stage
   
(374,554
)
 
(374,554
)
TOTAL SHAREHOLDERS' (DEFICIT)
   
(85,402
)
(54,100 
)
(139,502
)
                 
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT)
   
71,621
 
 
71,621
 
                 
* Related Party
               

 
 
 
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
 
Overview of Our Company
 
Service Team Inc. is a technology based company specializing in the electronics service and repair industry. The Company is principally involved in the maintenance and repair of television sets and similar electronic devices. The Company operates a complete repair and service center at 2986 Fletcher Parkway, Unit C, El Cajon,  California  92111. The center is staffed with full-time technicians and a complete set of electronic testing equipment to repair televisions. The Company also has the ability to repair circuit boards and other components of most electronic devices.
 
Our Business
 
Most electronic devices today are produced in foreign countries, mostly Asia. These companies have minimal local presence and do not have the ability to honor the warranty commitments that retailers require to sell their products. Service Team Inc. is able to fulfill the warranty requirements of these foreign manufacturers so that they may sell their product in the United States. In addition, there are warranty service companies selling additional warranties and extended warranties on electronic devices after the manufacturer’s warranties have expired. Service Team Inc. will provide the actual repair required by these warranty insurance companies. Service Team has developed a procedure of shipping containers to warranty claimants and having the television or other electrical appliance such as video recorders, laptop computers and cell phones shipped to Service Team’s repair center in San Diego, California.    Service Team then repairs or replaces the television or other electrical appliance and returns it to the owner. This will allow the Company to expand into a regional organization. This type of service is expected to represent a major portion of our warranty repair business.  The Company plans to expand its service operations to include repairs to televisions, video recorders, laptop computers and cell phones.   To date Service Team has only been repairing Televisions.  The Company plans to expand its service operations to include repairs to televisions, video recorders, laptop computers and cell phones. This would allow us to develop sales from broader base of customers.  Effective in January 2013 Service Team Inc, entered into an Agreement with Service Power Inc., to provide local service personnel in more than 20,000 locations in the United States and Canada.   Service Power Inc. a Great Britain based company has a worldwide network of electrical appliance repair persons.  Our agreement with Service Power Inc., is expected to enable our expansion.

Service Team Inc. has developed computer software that equips a customer service representative to diagnose the problems of most televisions over the phone on the customer’s first call. The software directs the customer service representative to the local repairman that can make the necessary repairs and then orders the parts sent to the field repair man to go to the customer’s location and repair the appliance.  This propriety software was developed by Service Team Inc. over the last year.  On television sets that cannot be repaired, Service Team removes the working parts and sells them as used parts to other repair centers.  Service Team has a price list of services that sets forth a menu of charges for various repairs or replacements.  This price list is given to our warranty provider customers when we start to do repairs for them.  We do not do business with individual consumers.
 
Liquidity and Capital Resources

As of November 30, 2012, we had assets of $10,282 including current assets of $10,282.   We have no long term debt; accounts payable of $6,722; and accrued expenses of $28,838. Our major shareholder, Hallmark Venture Group, Inc., is owed $131,622.   The amount owed Hallmark Venture Group, Inc. were funds advanced to pay our on-going expenses.   Hallmark Venture Group, Inc. is prepared to advance us additional funds as needed. There is no firm payback date. It is to be repaid when we have funds available. Accrued expenses are for work performed by employees during the organizational stage of the Company. There is no firm date which these are to be paid. It is to be repaid when we have funds available.  Since inception we have also raised $266,732 from the sale of our common stock.  We believe our ability to achieve commercial success and continued growth will be dependent upon our continued access to capital either through additional sale of our equity or cash generated from operations. We will seek to obtain additional working capital through the sale of our securities. We will attempt to obtain additional capital through bank lines of credit; however, we have no agreements or understandings with third parties at this time.

 
 
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Rescission Offer
 
The Company has a contingent liability associated with the rescission offer (as noted below) made to investors due to the sale of unregistered stock.  The liability is equal to the number of shares of common stock sold of 541,000 times the selling price of $0.10 per share which equals $54,100.  As of November 30, 2012, and August 31, 2012, the estimated dollar value of the contingent liability is $54,100 and $54,100, respectively.
 
During the period from November 29, 2011 until June 1, 2012, the Company sold 541,000 shares to various individuals for a total cash consideration of $54,100.  The funds were used for operating capital of the Company including rent and payroll. These sales of our shares sold after the filing date of our S-1 Registration (November 29, 2011) may not be covered by a valid private placement exemption from the registration requirements due to possible integration with the public offering.  To be certain of our position we have elected to offer rescission for  all private sales made after November 29, 2011.  Our rescission offer covers twenty-five shareholders (25) for a total of 541,000 shares originally sold for $54,100. .
 
Results of Operations

Sales during the quarter ended November 30, 2012 were $180 compared to $33,091  for the quarter ended November 30, 2011.   Our cost of goods sold was $46,879 which consisted primarily of repair personnel salaries .  We had a loss for operations of $100,238.  Beginning in March 2012 our shipping costs started increasing rapidly. By May 2012 the costs had increased so much that we elected to discontinue shipping the TV sets to our repair center. We developed a working arrangement with TV repair service personnel to repair our warranty claims in major population areas. This proved very hard to manage service on a timely basis. We gradually lost nearly all of our warranty customers.  Effective in January 2013 Service Team Inc, entered into an Agreement with Service Power Inc. to provide local service personnel in more than 20,000 locations in the United States and Canada. Service Power Inc. a Great Britain based company has a worldwide network of electrical appliance repair persons.  Our major customer Warrentech, a division of Am Trust Financial Services Inc. has started sending us warranty repair jobs. We are currently receiving the claims in California, and Arizona. As we perform in these areas Warrentech will add additional states to our area.
 
Item 3.  Quantitative and Qualitative Disclosures About Market Risk.
 
Not Applicable
 
Item 4.  Controls and Procedures.
 
Evaluation of Disclosure Controls and Procedures
 
We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a – 15(c) and 15d – 15(e)). Based upon that evaluation, our principal executive officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer, as appropriate to allow timely decisions regarding required disclosure.
 
Inherent Limitations of Internal Controls
 
Our Principal Executive Officer does not expect that our disclosure controls or internal controls will prevent all error and all fraud. Although our disclosure controls and procedures were designed to provide reasonable assurance of achieving their objectives, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute assurance that the objectives of the system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented if there exists in an individual a desire to do so. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
 
Changes in Internal Control over Financial Reporting
 
There were no changes in our internal control over financial reporting, other than those stated above, during our most recent quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
 
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PART II—OTHER INFORMATION
 
Item 1.  Legal Proceedings.
 
Orbital Enterprises, Inc. and Robert N. Meyer, an individual, vs. Robert L. Cashman, an individual, Carlos Arreola, an individual, Hallmark Venture Group, Inc., Service Team Inc., a California corporation, et. al.  Superior Court, State of California, County of San Diego (Central), Case No. 37-2012-00101746-CU-BT-CTL.  The parties to this action were affiliated in business together doing business as Orbital Enterprises, Inc.  Orbital Enterprises, Inc. became insolvent and discontinued business operations.    Meyer, the controlling shareholder, retained Orbital Enterprises, Inc. and Cashman and Arreola started what is now Service Team Inc.   Meyer does business as Orbital Enterprises, Inc. and Orbital Laboratories, Inc. and Cashman and Arreola do business as Service Team Inc.  The parties separated amicably  .Approximately six months later the action referred to herein was filed against the defendants alleging:  (a) breach of fiduciary duty, (b) claim and delivery, (c) interference with economic advantage and (d) two claims for indemnification. The defendants filed a motion to dismiss as their initial pleading.  The motion was heard and the court gave the parties until March 16, 2013, to correct the pleadings and for Orbital Enterprises, Inc. (whose authority to do business in California is suspended and its corporate charter in Nevada is revoked) to correct its corporate status in Nevada and California.  The case has been abated until March 16, 2013.  Counsel for the defendants believes that the action is frivolous and without merit, and that it will be dismissed.
 
Item 1A. Risk Factors.
 
Not applicable.
 
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.
 
None during the fiscal quarter ended November 30, 2012
 
Item 3. Defaults Upon Senior Securities.
 
None.
 
Item 4.  Mine Safety Disclosures.
 
Not applicable.
  
Item 5. Other Information.
 
None.
 
Item 6. Exhibits.
 
(a)  
The following exhibits are filed with this report.
 
31.1  Certification by Chief Executive Officer pursuant to Sarbanes Oxley Section 302.
 
31.2  Certification by Chief Financial Officer pursuant to Sarbanes Oxley Section 302.
 
32.l  Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350.
 
32.2  Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
 
101   Interactive Data Files
 
 
 
 
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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
Service Team Inc.
 
       
Date  January 16, 2013
By:
/s/ Carlos Arreola
 
   
Carlos Arreola
 
   
Chief Executive Officer and President
Principal Executive Officer
 
       
     
       
Date  January 16, 2013
By:
/s/ Robert L. Cashman
 
   
Robert L. Cashman
 
   
Chief Financial Officer
Principal Financial and Accounting Officer
 
       
 
 
 
 
 
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