Service Team Inc. - FORM 10-K/A

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EXCEL - IDEA: XBRL DOCUMENT - Service Team Inc.	Financial_Report.xls
EX-32.1 - EXHIBIT 32.1 - Service Team Inc.	ex32x1.htm
EX-32.2 - EXHIBIT 32.2 - Service Team Inc.	ex32x2.htm
EX-31.2 - EXHIBIT 31.2 - Service Team Inc.	ex31x2.htm
EX-31.1 - EXHIBIT 31.1 - Service Team Inc.	ex31x1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

___________

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended August 31, 2012

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)

Registrant’s telephone number, including area code: 714-538-5214

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.001 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes o 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 o 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 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 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K 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. 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 filero
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company x

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

The aggregate market value of the registrant’s common stock held by non-affiliates as of February 29, 2012 was approximately $0 based upon the closing price of the common stock as quoted by the Over-the-Counter Bulletin Board (the “OTC Bulletin Board”) On August 31, 2012 the registrants’ common stock was not listed on the Over-the-Counter Bulletin Board.

As of January 15, 2013, there were 7,707,500 shares of the registrant’s common stock, par value $0.001 per share, outstanding.

EXPLANTION OF AMENDMENT

This amendment revises Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Part II, Item 8 Financial Statements to reflect the restatement of the Financial Statement to include the Contingent Liability and Offer of Rescission described below.

ITEM 7. 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 August 31, 2012, we had assets of $71,621 including current assets of $71,621. During the period from inception to August 31, 2012, we also received additional income from sales of approximately $71,336. This represents cash received in the 12 months of operation ending August 31, 2012. Sales increased from $6,450 for the fiscal year ended August 31, 2011, to $64,886 for the 12 months period ended August 31, 2012. We have no long term debt and no accounts payable. Our shareholder, Hallmark Venture Group, Inc., is owed $106,764 and accrued payroll for employees during the organization period totals $50,259. The amount owed Hallmark Venture Group, Inc. are 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. 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. During the organization of the Company, the Company sold 7,084,500 shares to the organizers for $7,575. The Company then sold 552,000 shares for $0.10 per share to friends and family of the organizers for a total of $62,775. The Company then sold, pursuant to its S-1/A Registration, 271,000 shares for a total of $271,000 which included a subscription receivable of $28,700. The subscription receivable was paid in cash in January, 2013.

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.

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. 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.

Results of Operations

Sales during the fiscal year ended August 31, 2012 were $64,886. Our cost of goods sold was $103,256 which consisted primarily of repair personnel salaries. Our general and administrative expenses were $278,611 reflecting organizational cost and professional services for auditing and filings with the SEC. We had a loss for operations of $381,867 and a net loss for the fiscal year of $323,557. 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 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. is a Great Britain based company that 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.

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition or results of operations.

TABLE OF CONTENTS

		Page
Financial Statements
	Report of Independent Registered Public Accounting Firm	F-2
	Balance Sheets as of August 31, 2012 (Restated) and 2011	F-3
	Statements of Operations for the year ended August 31, 2012, and the period from June 6, 2011 (Inception) to August 31, 2011 and 2012	F-4
	Statements of Shareholders’ Deficit from June 6, 2011 (Inception) to August 31, 2012 (Restated)	F-5
	Statements of Cash Flows for the year ended August 31, 2012 (restated) and the period from June 6, 2011 (Inception) to August 31, 2011 and 2012 (Restated)	F-6
	Notes to Financial Statements	F-7

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Service Team Inc.

(A Development Stage Company)

We have audited the accompanying balance sheets of Service Team Inc. (a development stage company) as of August 31, 2012 and 2011, and the related statements of operations, changes in shareholders' deficit, and cash flows for the year ended August 31, 2012 and the periods from June 6, 2011 (Inception) through August 31, 2012 and 2011. 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 audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit 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 audit 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 audit provides 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 Service Team Inc. as of August 31, 2012 and 2011, and the results of its operations, changes in shareholders' deficit and cash flows for the period described above 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 2 to the financial statements, the Company has suffered recurring losses from operations, which raises substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters also are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

As discussed in Note 7 to the financial statements, the 2012 financial statements have been restated to correct an error in the financial statements.

/s/ M&K CPAS, PLLC

www.mkacpas.com

Houston, Texas

November 11, 2012, except for Notes 2, 3 and 7, as to which the date is January 25, 2013

SERVICE TEAM INC
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
AS OF AUGUST 31, 2011 AND AUGUST 31, 2012 (RESTATED)

	August 31,
	(Restated) 2012			2011
ASSETS
Cash		71,621			-
Accounts receivable		-			6,450
Total Current Assets		71,621			6,450

Deposits		-			4,320
Prepaid expenses		-			2,002
Total Non-Current Assets		-			6,322

TOTAL ASSETS		71,621			12,772

LIABILITIES & SHAREHOLDERS' (DEFICIT)
Accounts payable		-			3,387
Due Hallmark Venture Group Inc *		106,764			13,200
Contingent Liability		54,100			-
Accrued Payroll		50,259			18,155
TOTAL LIABILITIES		211,123			34,742

Common stock, $.001 par value, 74,000,000 authorized, 7,707,500 and 6,000,000 issued and outstanding as of August 31, 2012 and 2011, respectively.		7,708			6,000
Additional paid in capital		256,044			23,027
Subscriptions receivable		(28,700	)		-
(Deficit) accumulated during development stage		(374,554	)		(50,997	)
TOTAL SHAREHOLDERS' (DEFICIT)		(139,502	)		(21,970	)

TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT)		71,621			12,772

* Related Party

The accompanying notes are an integral part of these financial statements.

SERVICE TEAM INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE FISCAL YEAR ENDING AUGUST 31, 2012
AND FOR THE PERIODS FROM JUNE 6, 2011 (INCEPTION) TO AUGUST 31, 2011 AND 2012

	For the fiscal year ended August 31,			Inception to August 31,			Inception to August 31,
	2012			2011			2012
REVENUES
Sales	$	64,886		$	6,450		$	71,336

OPERATING EXPENSES
Cost of sales		103,256			26,755			130,011
General & administrative expenses		278,611			30,692			309,303
Total Operating Expenses		381,867			57,447			439,314

LOSS FROM OPERATIONS		(316,981	)		(50,997	)		(367,978	)

OTHER INCOME (EXPENSE)
Interest expense		(6,576	)		-			(6,576	)
Total Other Income (Expense)		(6,576	)		-			(6,576	)

NET INCOME (Loss)	$	(323,557	)	$	(50,997	)	$	(374,554	)

Weighted average number of common shares outstanding - basic and fully diluted		6,803,671			6,679,500

Net (loss) per share - basic and fully diluted	$	(0.05	)	$	(0.02	)

The accompanying notes are an integral part of these financial statements.

SERVICE TEAM INC.

(A DEVELOPMENT STAGE COMPANY)

Statement of Shareholders' Deficit

June 6, 2011 (Inception) to August 31, 2012 (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	)	$	(139,502	)

The accompanying notes are an integral part of these financial statements.

SERVICE TEAM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE FISCAL YEAR ENDED AUGUST 31, 2012
AND FOR THE PERIODS FROM JUNE 6, 2011 (INCEPTION) TO AUGUST 31, 2011 AND 2012 (RESTATED)

	(Restated) Fiscal Year Ended August 31,			Inception to August 31,			(Restated) Inception to August 31,
	2012			2011			2012
CASH FLOWS FROM OPERATING ACTIVITIES

Net Loss	$	(323,557	)	$	(50,997	)	$	(374,554	)

Adjustments to reconcile net loss with cash used in operations:
Stock based compensation expense		101,970			-			101,970
Imputed rent expense		2,000			-			2,000
Imputed interest		7,409			-			7,409

CHANGE IN OPERATING ASSETS AND LIABILITIES

Accounts Receivable		6,450			(6,450	)		-
Accrued Payroll		32,104			18,155			50,259
Deposits & Prepaid Expenses		6,322			(6,322	)		-
Accounts Payable		(3,387	)		3,387			-
Net Cash (Used in Operating Activities)		(170,689	)		(42,227	)		(212,916	)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from sale of stock		140,106			6,106			146,106
Proceeds from loans with Hallmark Venture Group, Inc. *		93,564			13,200			106,764
Capital Contributions *		8,640			23,027			31,667
Net Cash Provided From Financing Activities		242,310			42,227			284,537

Net Increase (decrease) In Cash and Cash Equivalents		71,621			-			71,621

Cash at Beginning of Period		-			-			-

Cash at End of Period	$	71,621		$	-		$	71,621

Supplemental Disclosures
Interest Paid	$	-		$	-		$	-
Taxes Paid	$	-		$	-		$	-

Non-cash transactions:
Shares issued for subscriptions receivable	$	(28,700	)	$	-		$	(28,700	)
Contingent Liability	$	(54,100	)	$	-		$	(54,100	)

* Related Party

The accompanying notes are an integral part of these financial statements.

SERVICE TEAM, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

AUGUST 31, 2012

NOTE 1 - ORGANIZATION

Organization

Service Team Inc. (the “Company”) was incorporated pursuant to the laws of the State of Nevada on June 6, 2011. The Company intends to commence business operations by servicing and repairing electrical appliances to fulfill the warranty obligations of manufacturers and insurance companies. 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.

The Company has established a fiscal year end of August 31.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Company maintains its accounting records on an accrual basis in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”).

The 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. The accompanying audited, financial statements have been prepared in accordance with the instructions to Form 10-K. 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.

Use of Estimates

The 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 the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

Going Concern

The Company's financial statements are prepared using the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America, and have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The Company has maintained a negative equity balance since inception (June 6, 2011) through August 31, 2012, of $374,554. 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 August 31, 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 $140,106 and subscription receivables of $28,700. Hallmark Venture Group, Inc. has also loaned the Company $106,764. 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.

Cash and Equivalents

Cash and equivalents include investments with initial maturities of three months or less. The Company maintains its cash balances at credit-worthy financial institutions that are insured by the Federal Deposit Insurance Corporation ("FDIC") up to $250,000. There were no cash equivalents at August 31, 2012 or August 31, 2011.

F-7

Concentration of Credit Risk

Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, are cash and cash equivalents. The Company places its cash and temporary cash investments with credit quality institutions. At times, such investments may be in excess of FDIC insurance limits.

Accounts Receivable 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.

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 as of year-end.

Property and Equipment

The Company does not own any property or equipment. Service Team rents on a month to month basis 1,200 square feet of office space in a building at 18482 Park Villa Place, Villa Park California 92861. The building is furnished for no charge by Hallmark Venture Group, a related party. During the year ended August 31, 2012, for two months of rent expense, the Company imputed rent expense of $2,000 due to this related party transaction. The Company rents 550 square feet of shop space at 2986 Fletcher Parkway, Unit C, El Cajon, California 92020. The Company pays a total of $1,500 per month for these spaces. The Company rents warehouse space as needed for $6.00 per month per pallet in a Bonded Customs Warehouse. The Company leases office furniture, computer equipment, electronic testing equipment and other equipment used for the conduct of its business. The lease is with Hallmark Venture Group, Inc. at a rate of $100 per month starting August 1, 2011, and is in force until canceled by either party. Hallmark Venture Group, Inc. is a related party to Service Team Inc. Our principal executive offices are located at 18482 Park Villa Place, Villa Park, California 92861.

Fair Value of Financial Instruments

The Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820 on June 6, 2011. Under this FASB, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value.

The Company has various financial instruments that must be measured under the new fair value standard including: cash and debt. The Company currently does not have non-financial assets or non-financial liabilities that are required to be measured at fair value on a recurring basis. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:

Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. The fair value of the Company’s cash is based on quoted prices and therefore classified as Level 1.

Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.

Cash, accounts receivable, accounts payable, and accrued expenses reported on the balance sheet are estimated by management to approximate fair market value due to their short term nature.

F-8

The following table presents assets that were measured and recognized at fair value as of August 31, 2012 on a recurring basis:

Total

Realized

Description

Level 1

Level 2

Level 3

Loss

Totals

The following table presents assets that were measured and recognized at fair value as of August 31, 2011 on a recurring basis:

Total

Realized

Description

Level 1

Level 2

Level 3

Loss

Totals

Income Taxes

In assessing the realization of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on the level of historical operating results and the uncertainty of the economic conditions, the Company has recorded a full valuation allowance against its deferred tax assets at August 31, 2012 and 2011 where it cannot conclude that it is more likely than not that those assets will be realized.

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 customer who owns the television or other electrical appliance is contacted and provided with a questionnaire in order to determine the part required for replacement. The part is then shipped to the customer’s residence from the Company’s office and the closest of 20,000 labor centers sends a technician to the residence with instructions from the Company on the specific problem requiring attention. At the completion of the repair, an invoice is prepared itemizing the parts used and fixed labor rate costs billed by the labor center to the Company. The invoice is entered into our accounting system and is recognized as revenue at that time. Our invoice is paid by the warranty insurance companies. We do not take title to the product at any point during this process.

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).

Concentrations

At the present time, Service Team Inc. has one customer, the Warrantech division of AmTrust Financial Services, Inc, represents all of our sales. Accounts receivable as of August 31, 2012 and 2011, were $0 and $6,450, respectively, all from AmTrust Financial Services, Inc. The Company anticipates obtaining additional business from its other customers that will reduce the Company’s dependency on Warrantech.

Lease Commitments

Company terminated its lease on the property on June 1, 2012, by paying a cancellation fee of $22,185. The Company currently receives office space free of charge, and without lease commitment, through its relationship with Hallmark Venture Groups; rent expense is imputed at a rate of $1,000 per month for this office space.

F-9

Share Based Expenses

The Company accounts for the issuance of equity instruments to acquire goods and/or services based on the fair value of the goods and services or the fair value of the equity instrument at the time of issuance, whichever is more readily determinable. The Company's accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of standards issued by the FASB. The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor's performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.

Stock Based Compensation

In December of 2004, the FASB issued a standard which applies to transactions in which an entity exchanges its equity instruments for goods or services and also applies to liabilities an entity may incur for goods or services that are based on the fair value of those equity instruments. For any unvested portion of previously issued and outstanding awards, compensation expense is required to be recorded based on the previously disclosed methodology and amounts. Prior periods presented are not required to be restated. We adopted the standard as of inception. The Company has not issued any stock options to its Board of Directors and officers as compensation for their services. If options are granted, they will be accounted for at a fair value as required by the FASB ASC 718.

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 August 31, 2012 and 2011, the estimated dollar value of the contingent liability is $54,100 and $0, respectively.

Development Stage Company

The Company is considered a development-stage company, with limited operating revenues during the periods presented, as defined by the FASB. The FASB requires companies to report their operations, shareholders deficit and cash flows since inception through the date that revenues are generated from management’s intended operations, among other things. Management has defined inception as June 6, 2011. Since inception, the Company has incurred losses of $374,554. The Company’s working capital has been primarily generated through the sales of common stock. Management has provided financial data since June 6, 2011, “Inception”, in the financial statements. An entity remains in the development stage until such a time as, among other factors, significant 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.

Net Loss Per Share

The Company adopted the standard issued by the FASB, which requires presentation of basic earnings or loss per share and diluted earnings or loss per share. Basic income (loss) per share (“Basic EPS”) is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share (“Diluted EPS”) are similarly calculated using the treasury stock method except that the denominator is increased to reflect the potential dilution that would occur if dilutive securities at the end of the applicable period were exercised. As of August 31, 2012 and 2011, because the Company does not have any potentially dilutive securities, the accompanying presentation is only of basic loss per share.

Recent Accounting Pronouncements

In December 2011, FASB issued Accounting Standards Update (“ASU”) 2011-11, Balance Sheet - Disclosures about Offsetting Assets and Liabilities” to enhance disclosure requirements relating to the offsetting of assets and liabilities on an entity's balance sheet. The update requires enhanced disclosures regarding assets and liabilities that are presented net or gross in the statement of financial position when the right of offset exists, or that are subject to an enforceable master netting arrangement. The new disclosure requirements relating to this update are retrospective and effective for annual and interim periods beginning on or after January 1, 2013. The update only requires additional disclosures, as such, we do not expect that the adoption of this standard will have a material impact on our results of operations, cash flows or financial condition.

In September 2011, 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.

F-10

In June 2011, the FASB issued ASU 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income,” which is effective for annual reporting periods beginning after December 15, 2011. ASU 2011-05 will become effective for the Company on October 1, 2012. This guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. In addition, items of other comprehensive income that are reclassified to profit or loss are required to be presented separately on the face of the financial statements. This guidance is intended to increase the prominence of other comprehensive income in financial statements by requiring that such amounts be presented either in a single continuous statement of income and comprehensive income or separately in consecutive statements of income and comprehensive income. The adoption of ASU 2011-05 is not expected to have a material impact on our financial position or results of operations.

In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs,” which is effective for annual reporting periods beginning after December 15, 2011. This guidance amends certain accounting and disclosure requirements related to fair value measurements. Additional disclosure requirements in the update include: (1) for Level 3 fair value measurements, quantitative information about unobservable inputs used, a description of the valuation processes used by the entity, and a qualitative discussion about the sensitivity of the measurements to changes in the unobservable inputs; (2) for an entity’s use of a nonfinancial asset that is different from the asset’s highest and best use, the reason for the difference; (3) for financial instruments not measured at fair value but for which disclosure of fair value is required, the fair value hierarchy level in which the fair value measurements were determined; and (4) the disclosure of all transfers between Level 1 and Level 2 of the fair value hierarchy. ASU 2011-04 will become effective for the Company on October 1, 2012. We are currently evaluating ASU 2011-04 and have not yet determined the impact that adoption will have on our financial statements.

In April 2011, the FASB issued ASU 2011-02, “Receivables (Topic 310): A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring.” This amendment explains which modifications constitute troubled debt restructurings (“TDR”). Under the new guidance, the definition of a troubled debt restructuring remains essentially unchanged, and for a loan modification to be considered a TDR, certain basic criteria must still be met. For public companies, the new guidance is effective for interim and annual periods beginning on or after June 15, 2011, and applies retrospectively to restructuring occurring on or after the beginning of the fiscal year of adoption. The adoption of this ASU did not have a material impact on our financial statements.

NOTE 3 – 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.

On June 6, 2011, the Company issued 6,000,000 shares of common stock in the Company at $0.001 per share to Hallmark Venture Group, Inc., a related party, in exchange for $6,000 cash.

On December 14, 2011, the Company issued 500,000 shares of common stock in the Company, at $0.001 per share to Carlos Arreola, President of the Company, a related party, in exchange for $500 cash. As a result of this transaction, $49,500 in additional stock based compensation expense was recognized as substantially all other sales of common stock were valued at $0.10 per share.

On December 14, 2011, the Company issued 100,000 shares of common stock in the Company, at $0.001 per share to Douglas Dungee, Assistant Vice President of the Company, a related party, in exchange for $100 cash. As a result of this transaction, $9,900 in additional stock based compensation expense was recognized as substantially all other sales of common stock were valued at $0.10 per share.

On August 22, 2012, the Company issued 50,000 shares of common stock in the Company, at $0.001 per share Gary Bryant, in exchange for $50 cash. As a result of this transaction, $4,950 in additional stock based compensation expense was recognized as substantially all other sales of common stock were valued at $0.10 per share.

During the 12 months ended August 31, 2012, the Company issued 380,000 shares of common stock in the Company, at $0.001 per share, to three accredited investors who were not related parties, in exchange for $380 cash. As a result of these transactions, $37,620 in additional stock based compensation expense was recognized as substantially all other sales of common stock were valued at $0.10 per share.

During the 12 months ended August 31, 2012, the Company issued 677,500 shares of common stock in the Company to various non-related party, accredited investors, in exchange for $139,075 cash and $28,700 in subscriptions receivable.

F-11

From June 6, 2011 through August 31, 2012, no preferred shares have been issued.

From June 6, 2011 through August 31, 2012, the Company has not granted any stock options.

NOTE 4 – 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 the Company, is the beneficial owner of Hallmark Venture Group, Inc. This is considered to be an operating lease for reporting purposes.

During the period from June 6, 2011 to August 31, 2011, the Company received $31,667 in contributed capital from Hallmark Venture Group, Inc.

During the period from June 6, 2011 to August 31, 2012, $106,764, in non-interest bearing loans have been advanced to the Company from Hallmark Venture Group, Inc. The loans are non-interest bearing; therefore, the Company imputed interest of $7,409, charging interest 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 the Company.

On June 6, 2011, the Company issued 6,000,000 shares of common stock in the Company at $0.001 per share to Hallmark Venture Group, Inc., a related party, in exchange for $6,000 cash.

During the period from June 1, 2012 through August 31, 2012, the Company recorded imputed rent expense of $2,000 for the use of the building at 18482 Park Villa Place, Villa Park California 92861 furnished at no charge by Hallmark Venture Group, a related party.

NOTE 5 – INCOME TAXES

The Company accounts for income taxes under standards issued by the FASB. Under those standards, deferred tax assets and liabilities are recognized for future tax benefits or consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for significant deferred tax assets when it is more likely than not that such assets will not be realized through future operations.

No provision for federal income taxes has been recorded due to the net operating loss carry forwards totaling approximately $314,172 as of August 31, 2012 that will be offset against future taxable income. The available net operating loss carry forwards of approximately $314,172 will expire in various years through 2031. 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.

Deferred tax asset and the valuation account are as follows:


	August 31, 2012			August 31, 2011
Deferred tax asset:
NOL carry forward	$	106,818		$	17,339
Valuation allowance		(106,818	)		(17,339	)
Total:		-			-

F-12

The components of income tax expense are as follows:


	August 31, 2012			August 31, 2011
Current federal tax	$	-		$	-
Current state tax		-			-
Change in NOL benefit		106,818			17,339
Change in valuation allowance		(106,818	)		(17,339	)
Total:	$	-			-

NOTE 6 – COMMITMENTS AND CONTINGENCIES

Litigation

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 November 16, 2012, 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 November 16, 2012. Counsel for the defendants believes that the action is frivolous and without merit, and that it will be dismissed.

Operating Leases

The minimum lease payments required over the next five years is shown below.

Minimum Lease Payments

2013	$	1,200
2014		1,100
2015		-
2016		-
2017		-
	$	2,300

The Company previously leased space at 7111 Engineer Road, San Diego, California. The Company terminated its lease on the property on June 1, 2012, by paying a cancellation fee of $22,185.

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 August 31, 2012 and 2011, the estimated dollar value of the contingent liability is $54,100 and $0, respectively.

NOTE 7 – RESTATEMENT OF FINANCIAL STATEMENTS

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

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.

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)
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 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

NOTE 8 – SUBSEQUENT EVENTS

On September 9, 2012 the Company’s common stock was quoted on the OTC-BB with the symbol SVTE.

There were no additional subsequent events through the date that the financial statements were issued.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

The following documents are filed as part of this report:

1. Financial Statements

INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm			F-2

Balance Sheets			F-3

Statements of Operations			F-4

Statement of Shareholder' Deficit			F-5

Statements of Cash Flows			F-6

Notes to the Financial Statements			F-7

2. Financial Statement Schedules

None.

3. Exhibits

3.1	Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s registration statement on Form S-1 filed on November 29, 2011).

3.2	Bylaws (incorporated by reference to Exhibit 3.1 to the Company’s registration statement on Form S-1 filed on November 29, 2011).

31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a).*

31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a).*

32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350.*

32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350.*

101	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Balance Sheets at August 31, 2012 and August 31, 2011, (ii) the Statements of Operations and Comprehensive Income (Loss) for the years ended August 31, 2012 and 2011, (iii) the Statements of Stockholders’ Equity for the years ended August 31, 2012 and 2011, (iv) Statements of Cash Flows for the years ended August 31, 2012 and 2011 and (v) the notes to the Financial Statements. *

* Filed herewith.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		SERVICE TEAM INC

Date: January 25, 2013	By:	/s/ Carlos Arreola
		President, Chief Executive Officer

Pursuant to the requirements of 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.

SIGNATURE	TITLE	DATE

/s/ Carlos Arreola	President, Chief Executive Officer	January 25, 2013
Carlos Arreola	(principal executive officer)

/s/ Robert L Cashman	Vice President, Secretary, Chief Financial Officer, Chief Accounting Officer	January 25, 2013
Robert L. Cashman

Attached files

Service Team Inc. Reports

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