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EX-31.2 - CERTIFICATION - SSTL, Inc.sstl_10k-ex3102.htm
EX-31.1 - CERTIFICATION - SSTL, Inc.sstl_10k-ex3101.htm

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-K

 

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended December 31, 2013

 

OR

 

¨ 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: 333-177792

 

SSTL, INC.

(Exact name of Registrant as specified in its charter)

 

Nevada 27-3952902
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
   

165 Pitt Rd.

Mooresville, NC 28115

28115
(Address of principal executive offices) (Zip Code)

 

Registrant’s telephone number: (404) 918-3780

 

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

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

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No þ

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No þ

 

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 þ No ¨

 

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 þ No ¨

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained herein, 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. ¨

 

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” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer  ¨ Accelerated filer  ¨
Non-accelerated filer  ¨ Smaller reporting company  þ

 

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

 

As of June 30, 2013, the aggregate market value of the voting stock held by non-affiliates of the Registrant was approximately $4,063,541 based on of the last price at which the Company sold its shares ($0.25 per share of common stock) as of March 31, 2013.

 

On April 7, 2014, we had 16,254,167 shares of common stock issued and outstanding.

 

 
 

 

TABLE OF CONTENTS

 

TO ANNUAL REPORT ON FORM 10-K

 

FOR YEAR ENDED DECEMBER 31, 2013

 

    Page
     
PART I   1
     
ITEM 1. BUSINESS 1
     
ITEM 1A. RISK FACTORS 4
     
ITEM 1B. UNRESOLVED STAFF COMMENTS  
     
ITEM 2. PROPERTIES 9
     
ITEM 3. LEGAL PROCEEDINGS 9
     
ITEM 4. MINE SAFETY DISCLOSURES  
     
PART II   10
     
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 10
     
ITEM 6. SELECTED FINANCIAL DATA  
     
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION 11
     
ITEM 8. FINANCIAL STATEMENTS 17
     
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES 17
     
ITEM 9A. CONTROLS AND PROCEDURES 17
     
ITEM 9B. OTHER INFORMATION 17
     
PART III   18
     
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 18
     
ITEM 11. EXECUTIVE COMPENSATION 18
     
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 19
     
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 20
     
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES 20
     
ITEM 15. EXHIBITS 21
     
SIGNATURES   22

 

i
 

 

CAUTION REGARDING FORWARD-LOOKING INFORMATION

 

This report contains forward-looking statements. All forward-looking statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future performance of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. Forward-looking statements usually contain the words “estimate,” “anticipate,” “believe,” “expect,” or similar expressions, and are subject to numerous known and unknown risks and uncertainties. In evaluating such statements, prospective investors should carefully review various risks and uncertainties identified in this Report, including the matters set forth under the captions “Risk Factors” and in the Company’s other SEC filings. These risks and uncertainties could cause the Company’s actual results to differ materially from those indicated in the forward-looking statements.

 

Although forward-looking statements in this annual report on Form 10-K reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties, and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the heading “Risks Relating to Our Business” below, as well as those discussed elsewhere in this annual report on Form 10-K. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this annual report on Form 10-K. We file reports with the Securities and Exchange Commission (“SEC”). You can read and copy any materials we file with the SEC at the SEC’s Public Reference Room, 100 F. Street, NE, Washington, D.C. 20549 on official business days during the hours of 10 a.m. to 3 p.m. You can obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including the Company.

 

We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this annual report on Form 10-K. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this annual report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.

 

ii
 

  

PART I

 

ITEM 1 – BUSINESS

 

SSTL, Inc .(“the Company”, “we”, “us” or “our”) was incorporated in the State of Nevada on November 10, 2010 (“Inception”) as GB Race Leasing, Inc. The name was changed to SSTL, Inc. on April 14, 2011. We are a developmental stage motorsports equipment leasing company that intends to offer to lease custom built racing vehicles for use in the National Association for Stock Car Auto Racing ("NASCAR") "Camping World” truck racing series.  

 

Each vehicle consists of a chassis and a truck body, with no engine or transmission, (the vehicles are referred to in the motorsports industry as “Racing Trucks" or "Race Truck Chassis "). The vehicles are offered for lease to potential clients that compete exclusively in the NASCAR Camping World Truck Series (“NCWTS”) of sanctioned NASCAR oval track racing events at intermediate and superspeedway tracks. We intend to offer to lease our vehicles to qualified companies and individuals for their use in racing competitions in the United States.

 

For the years ended December 31, 2013 and 2012 we had $60,000 in revenues in both years.

 

Our revenue is and is expected to be generated from leasing of race truck chassis and our RV to motorsports organizations competing in the NASACAR Camping World Truck Series. To date, all of our revenues have been from Pro-Driver Development, Inc., a corporation which is controlled by Mr. Steven Urvan. Mr. Urvan owns a majority interest in GB Investments, Inc., which owns approximately sixty six percent (66%) of our outstanding common stock. Pro-Driver provides funding, development and training to inexperienced race drivers specifically for NASCAR sanctioned racing.  

 

We intend to offer to lease our Racing Truck Chassis on a short term basis, usually from 7 to 10 days. Our Racing Trucks comply with NASCAR rules (the "Rules"). The Rules are established in an annual rule book published by NASCAR.

 

The Rules provide that each team that intends to compete in a sanctioned NASCAR event must have their competition racing trucks pass a complete technical inspection that is completed by NASCAR racing officials. The Rules specify the weight of vehicle, engine size, engine RPM limits, tire size and templates for body specifications, certain limits and other technical specifications.

 

Technical inspection is commenced by NASCAR before the first practice session of each race event. No competitor can enter the race track for practice without having completed a pre-practice technical inspection and having received a NASCAR official distributed practice decal, which is then attached to the front windshield of the race truck. A second technical inspection is required before the main qualifying event for the racing event.

 

We believe that our Racing Truck Chassis are in full compliance with NASCAR Rules. Our Racing Truck Chassis have previously been inspected and approved in race day directed NASCAR pre-practice technical and pre-qualifying NASCAR mandated inspections.

 

Our lessees must supply and install their own engines transmissions, driver seats and racing tires. Our Racing Trucks are designed to race at ½ mile oval tracks, intermediate distance oval tracks (1 mile to 1.5 mile) and "superspeedway" tracks, such as those tracks located at Daytona, Florida and Talladega, Alabama.

 

Engines for use in our Racing Trucks are available to be leased from independent engine builders and lessors on a per race basis, or certain engines may be purchased from independent engine suppliers. We do not lease or offer to sell engines.

 

NASCAR is the only professional sanctioning body that conducts races in which our Racing Trucks complete. NASCAR was established in 1948 to organize, sanction, and sponsor professional race events in automobile oval track and road course racing in North America. NASCAR is a separate and distinct entity from us and we do not have any formal contractual arrangements with NASCAR. 

 

1
 

 

On February 15, 2011, the Company acquired seven (7) customized NASCAR Racing Trucks from GB Investments, Inc. Each of the Racing Trucks we acquired conforms to the rules of NASCAR and is eligible to compete in the NASCAR Camping World Truck Series. The total purchase price for the seven (7) Racing Trucks was $140,000 USD.  We issued a total of 4,666,667 shares of our common stock valued at $0.03 per share to GB Investments, Inc. as payment for the Racing Trucks.

 

Additionally on February 15, 2011, we acquired a motor coach ("RV") for a purchase price of $150,000 from GB Investments, Inc. We issued a total of 5,000,000 shares of our common stock valued at $0.03 per share to GB Investments, Inc. as payment for the RV.

 

The Company intends to lease the RV as part of a "leasing package" which includes our Racing Trucks and the RV. We believe that offering the RV is desirable to potential lessees for the following reasons:

 

·The RV will provide overnight accommodations for lessee's personnel at less than the cost of lodging at a hotel or motel;
·The RV can be located on the grounds of the racing event, thereby saving time and expense of lessees personnel transportation between the lodging point and the track;
·Lessee’s personnel can travel to the event in the RV thereby saving on transportation costs.

 

We may attempt to acquire additional new or used Race Truck Chassis if our business grows and there is demand for more equipment than we have available. However, there can be no assurance that we will have available the necessary finances to acquire additional Race Truck Chassis, or even if we have the financial resources, that we will be able to obtain additional Race Truck Chassis at acceptable cost.

 

We intend to lease our Race Truck Chassis for any NASCAR Camping World Series events that are held at an approved track on the NASCAR race or test schedule(s). Our Race Truck Chassis and related transportation equipment such as our RV are also for rent for use on testing and practice days at various tracks and circuits.

 

Marketing of our Race Truck Chassis was conducted by Jason White, our former CEO, through March 4, 2013 directly with potential lessees. We are currently seeking to hire a marketing and sales person to provide the services formerly provided by Jason White. In addition, we intend to advertise the availability of our Race Truck Chassis in trade magazines and other trade periodicals.

 

On January 19, 2013, we sold two of our chassis for cash consideration $41,000 to an independent party.

 

Terms of Our Rental Agreement

 

As a condition to leasing our Race Truck Chassis or related equipment, potential lessees must provide us with evidence of their credit worthiness and ability to fulfill the leasing agreement, as well as the names of the drivers and ancillary personnel. We will determine from this information whether we will lease our Race Truck Chassis to the potential lessee.

 

Our Race Truck Chassis can lease for $15,000 per event or can be leased on a flat rate plan to be negotiated by the Company with the potential lessee. Our flat rate plan would include the use of the Race Truck Chassis over a set period of time for use in racing in multiple events for a specified type of racing track (superspeedway versus short track)  as well as for use in promotional and non-competition events.

 

Under the flat rate plan, our Company will be able to eliminate individual event preparation costs and race to race minor repair costs, by passing these costs to the lessee under a flat rate plan. We anticipate that lessees under a Flat Rate Plan will receive an approximate 20% reduction in price from our usual per race event option.

 

Our lease agreement stipulates the race and race track in which the truck is used, the make of the truck and the body design, and the amount of damage the renter is responsible for. We take responsibility for minor crash damage that occurs in a given event to a limit of $500 in labor and parts.  Any damage in excess of this amount is the responsibility of the renter. The Company determines the extent of the damage and the costs to repair the damage.  In certain instances, special insurance can be obtained private party to insure the Race Truck Chassis against loss.

 

Our Race Truck Chassis and related equipment are managed from a facility in Mooresville, North Carolina.

 

2
 

 

Capital Requirement

  

For the next fiscal year, management estimates that the cost of operating the business will continue to require additional capital of up to One Hundred Twenty Five Thousand dollars ($125,000) consisting of: $5,000 for primary support personnel and drivers registration and licenses required for entry in select sanctioned racing events; $10,000 for travel and lodging consisting of ground and air travel expenses, rental cars fees, local bus transportation and hotel expenses; $3,000 for marketing and promotion; $20,000 for legal and accounting; $10,000 for engineers and consultants; $25,000 for replacement parts, $15,000 for fuels, lubricants and tires; $7,000 for event day racecar tractor and transporter rental; $15,000 for debt service of all Company notes payable; and $15,000 in miscellaneous expenses consisting of specialty vinyl and lettering services and apparel for competition vehicles; crew members and drivers expenses; fees for utilization of tracks for testing; non- race day fuel and tires; potential marketing costs for sponsors admission fees credentials, and hosting costs.

 

There can be no assurance that we will be able to raise any or all of the capital required. These factors indicate that we may be unable to continue as a going concern, particularly in the event that we cannot generate sufficient cash flow or raise sufficient capital to conduct our operations. Our financial statements do not include any adjustments to the value of our assets or the classification of our liabilities that might result if we would be unable to continue as a going concern.

 

Meeting our capital requirement will be directly contingent on Mr. Urvan and his decision to advance us capital in the event that we are not able to raise capital from other sources.

 

Additionally, our ability to attract lessees will, in part, be dependent upon the success of our lessees in the races in which they compete. The race event finishing positions, especially finishing among the first ten places, will enhance our ability to attract capital and event sponsors to offset the cost of competing in racing events. Should our lessees compete in races in which they finish in other than the first ten finishing places, those lessees ability to attract sponsors and advertising and promotion monies may be diminished.

   

Competition

 

We compete for lessees with other Race Truck Chassis rental organizations and racing teams that have excess Race Truck Chassis that they may wish to rent for any particular racing event. We believe that our Race Truck Chassis are equal to other Race Truck Chassis that may be offered to potential customers because of the Race Truck Chassis' manufacturer, structure, and design geometry. We have acquired our Race Truck Chassis from manufacturers that have sold their similarly designed chassis to racing teams that have experienced success with their chassis. Those racing teams that use similar designs as our chassis are, among others, Kevin Harvick, Incorporated (KHI), Ron Hopkins, Inc. (RHI), Roush Fenway Racing, and Kyle Busch Motorsports (KBM). These teams both lease, and actively race their chassis in competition currently. However, there can be no assurance that we will be able to attract lessees of any of these racing team/lessors to lease our similarly designed Chassis, or even if we attract such lessees, that they will achieve success using our Chassis.

 

We believe the success of race teams using similarly designed chassis; will allow us to compete for potential customers with other chassis leasing businesses, although we cannot give any assurances that our company can attract the same racing teams with similar success.

 

Relationship with our majority shareholder

 

Mr. Steven Urvan owns a majority interest in GB Investments, Inc., which owns approximately sixty six percent (66%) of our outstanding common stock while our directors and officers collectively own less than one per cent (1%) of our common stock. Mr. Urvan is also the majority shareholder of Pro-Driver Development, Inc., a Nevada corporation that provides funding, development and training to inexperienced race drivers specifically for NASCAR sanctioned racing.

 

3
 

 

Mr. Urvan is also majority stakeholder of TVP Investments, LLC. a limited liability company ("TVP"). In March of 2011, the Company established a $500,000 unsecured line of credit with TVP Investments, LLC (the "Line of Credit"). The terms of the Line of Credit provide for interest at 10% per annum on all outstanding balances. The availability of funds for draw down from this line of credit is subject to the approval of Mr.Urvan. As of December 31, 2013, we have drawn $175,000 on our line of credit.

 

Since the Inception of the Company we have borrowed monies from Mr. Urvan and his affiliates. On May 31, 2011 we borrowed $25,000 from TVP Investments, LLC ("TVP") a company whose managing member and majority membership interests are held by Mr. Urvan. As consideration for the loan, we issued an unsecured promissory demand note (the "Note, bearing interest at 10% per annum. The note was renewed on May 31, 2013.

  

The Company has recurring losses from operations and our auditor has stated that there is substantial doubt about the Company's ability to continue as a going concern. Further, continued losses could cause the Company to be unable to continue in the racing industry or to meet certain debt obligations. (See "Risk Factors" below). The Company believes that race equipment leasing requires significant capital outlays on a continual basis to successfully fund operations, but with adequate funding that profitable operations can be achieved. Without additional funding, the Company could discontinue operations. In addition, the current domestic recessionary trends, declines in GDP, and reduction in corporate hiring and marketing spending has made it more difficult for developmental stage racing equipment companies, such as ours, to attract lessees.

 

We have cash of $44,055 as of December 31, 2013 and $325,000 available on our line of credit.  Our monthly expenses are approximately $12,500. We estimate that we will need additional financing on during the second quarter of 2014.

 

We will need to obtain additional financing of approximately $125,000 to maintain continuing operations for the 12 month period commencing during the second quarter of 2014. We have not as yet sought to obtain the additional financing from sources other than our line of credit. There can be no assurance that such funding is, or will become available.

 

Revenue is expected to be derived from the leasing of Race Truck Chassis and our RV to motorsports organizations in the NASCAR Camping World Truck Series that are sanctioned by NASCAR and its affiliates.  There can be no assurance that we will be able to obtain any rental revenue in the future. We have conducted limited operations to date, and our operations will continue to be limited until such time as we are able to obtain additional funds to carry out our overall business plans.

 

Our Race Truck Chassis and RV motor coach are maintained and managed from a facility in Mooresville, North Carolina. We do not incur any rental fees for the property and space we occupy for our business.

 

ITEM 1A – RISK FACTORS

 

An investment in our securities is extremely risky. You should carefully consider the following risks, in addition to the other information presented in this prospectus, before deciding to buy our securities. If any of the following risks actually materialize, our business and prospects could be seriously harmed and, as a result, the price and value of our securities could decline and you could lose all or part of your investment. The risks and uncertainties described below are intended to be the material risks that are specific to us and to our industry.

 

RISKS RELATED TO THE BUSINESS AND FINANCIAL CONDITION

 

We have a limited operating history, with historical losses.

 

We have a short operating history and must be considered to be in the development stage. We have no history of earnings or profits and there is no assurance that we will operate profitably in the future. There is no meaningful historical financial data upon which to base planned operating expenses. As a result of this limited operating history, it is difficult to accurately forecast our potential revenue. We have accumulated a total loss of ($537,119) from inception in November, 2010 through December 31, 2013. We intend to lease professionally race prepared NASCAR Camping World Series Race Truck Chassis to companies and qualified individuals interested in competing in NASCAR events. There can be no assurance that we will be successful in leasing our Race Truck Chassis, and even if successful in leasing the equipment, that our operations will be profitable.

 

We estimate that for the 12 months ending April 2015 the cost of operating the business will require additional capital of a minimum of one hundred twenty five thousand ($125,000) and there can be no assurance that any or all of that additional capital will be available to the Company.

 

4
 

 

Our auditors have expressed substantial doubt as to whether our Company can continue as a going concern.

 

We have generated only limited revenues since our inception and have incurred substantial losses. Our business plans estimate that we will need to raise $125,000 in additional capital to fund our operations through April 2015 and there can be no assurance that we will be able to raise any or all of the capital required. These factors indicate that we may be unable to continue as a going concern, particularly in the event that we cannot generate sufficient cash flow or raise sufficient capital to conduct our operations. Our financial statements do not include any adjustments to the value of our assets or the classification of our liabilities that might result if we would be unable to continue as a going concern.

 

Our existing principal stockholders exercise control of our Company.

 

GB Investments, Inc. is the beneficial owner of approximately 66% of our issued and outstanding common stock. Mr. Urvan is a majority shareholder of GB Investments, Inc.

 

TVP Investments, LLC has established a line of credit of $500,000. The receipt of funds from this line of credit is subject to the approval of Mr. Urvan. As of December 31, 2013, we have drawn $175,000 on our line of credit. The terms of the line of credit contains annualized interest of 10%, and requires a maximum quarterly draw down on the line of $100,000 per quarter.  Mr. Urvan may have a conflict of interest should we determine to draw upon the line of credit. He will have to determine, whether it is in the best interest of TVP Investments, LLC to approve or decline the "loan” or as our control shareholder, if it is in our best interest to approve the loan.

 

In addition, Mr. Urvan is the majority shareholder of Pro Driver Development, Inc. a company to which we intend to lease our Race Truck Chassis. Mr. Urvan may have a conflict of interest should we determine to continue to lease our Race Truck Chassis to Pro Driver Development Inc.  He will have to determine, as the control shareholder of Pro Driver Development, Inc. whether it is in the best interest of our Company to approve or decline providing a Race Truck for a specific event or, as our controlling shareholder, it is in our best interest to lease a Race Truck to Pro Driver Development, Inc..

 

Further, Mr. Urvan will be able to determine the election of directors and all other matters subject to stockholder votes. This concentration of ownership may have the effect of delaying or preventing a change in control of the Company, even if this change in control would benefit stockholders.

 

We must enter into and maintain a good working relationship with NASCAR

 

To be successful, we must create and maintain a good working relationship with the sanctioning body of the racing events in which our lessees may compete, NASCAR. Without a good relationship with NASCAR, NASCAR may at its sole discretion disallow our Race Truck Chassis from competing in any or all of their sanctioned events for an indefinite period of time. We do not have any continuing contractual relationship with NASCAR.

 

Our Race Truck Chassis are subject to changes in technology and competitiveness.  

 

Our Race Truck Chassis contain current technologies that may cease to be legal or competitive as the rules, and regulations of NASCAR may be modified and technologies are updated. Additionally, motorsports governing bodies are expected to regularly hold discussions with the manufacturers and competitors regarding implementing updated models and technologies that may have an adverse effect on our Company. To the extent that NASCAR may change its rules and regulations so that our Race Truck Chassis do not comply with the changed rules or regulations, our business will be adversely affected.

  

5
 

 

We face competition from better capitalized competitors.

 

Competition in the Race Truck chassis rental business is intense, and is defined by equipment availability, reliability, service and price. We believe that our lease pricing is competitive with other lease offerings. However, our competitors, which include other motorsport race teams who have excess Race Truck Chassis available for rent, may seek to compete aggressively on the basis of pricing or availability. To the extent that we choose to match our competitors’ downward pricing, it could have a material adverse impact on our results of operations. To the extent that we choose not to match or remain within a reasonable competitive distance from our competitors’ pricing, it could also have an adverse impact on our results of operations, as we may lose rentals to lower priced competitors.  There can be no assurance that we will be able to create or maintain a competitive position.

 

The success of our operations may be dependent upon the success of our lessees in racing events.

 

Our ability to fully implement our business plan and the success of our operations will be to a great extent, dependent upon the success of our lessees. If our lessees fail to qualify for races or finish poorly in races on a regular basis, the success of our operations will be adversely impacted. Generally, racing teams that fail to qualify cannot generate any purse revenue and may experience a reduction in fan interest and/or sponsorship appeal. We believe that if our lessees win, or finish within the top 10 finishing places in a race, our ability to attract additional lessees will be enhanced.  There can be no assurance that our lessees will win or finish within the first 10 finishers in any race.

 

We may incur liability for personal injuries.

 

Racing events can be dangerous to participants and to spectators. We maintain insurance policies that provide coverage within limits that in our judgment are sufficient to protect us from material financial loss due to liability for personal injuries sustained by, or death of, our personnel or spectators in the ordinary course of our business. Our insurance may not be adequate or available at all times and in all circumstances. In the event that damages for injuries sustained by our participants or spectators exceed our liability coverage or the insurance company denies coverage, our financial condition, results of operations and cash flows could be adversely affected to the extent claims and associated expenses exceed insurance recoveries.

 

We do not have total loss insurance for the racecars we lease or own.

 

Due to the high cost of property damage insurance, we have chosen not to carry total loss insurance for our Race Truck Chassis. In the event of a loss occurrence, we may lose or be liable for as much as the total value of the Race Truck which is damaged.  The loss could be as much as $125,000, which would be a material loss to us and could cause us to cease operations. While we are indemnified by our lessees for any property damage that may occur while the rented Race Truck is in the possession of lessees, there can be no assurance that the lessees have the financial capability to reimburse us for the damage occurring during their rental period. To the extent we are not reimbursed for such damage, our business would be adversely affected.

 

We will need additional financing, which may not be available.

 

Our future success will depend on our ability to raise additional funds and our ability rent our Race Truck Chassis on a regular basis. No commitments to provide additional funds have been made by management and no agreements with lessees have been entered into other than a Line of Credit Agreement with TVP Investments, LLC.  Funds available for use under the Line of Credit are solely within the discretion of TVP. Our ability to arrange additional financing in the future will depend in part upon the prevailing capital market conditions, as well as our business performance. There can be no assurance that we will be successful in our efforts to arrange additional financing on satisfactory terms. If additional financing is raised by the issuance of our shares, control of the Company may change and stockholders may suffer additional dilution. If adequate funds are not available, or are not available on acceptable terms, we may not be able to take advantage of opportunities, or otherwise respond to competitive pressures and remain in business.

 

6
 

 

We are dependent on our key personnel.

 

Our management is currently controlled and operated by our President and Secretary Treasurer Susan Lokey. Ms. Lokey is the sister of Mr. Urvan, our controlling shareholder. Our success will depend in large part upon the continued services of Ms. Lokey. Ms. Lokey presently devotes approximately 15% of her time to our business. The death or loss of the services of Ms. Lokey could have a material adverse effect on our business, financial condition and results of operations. We do not have "key man" life insurance on these individuals. In the event of the loss of any key personnel, there can be no assurance that we will be able to find competent replacements in a timely manner. Additionally, we are also dependant on the good will and good standing relationship with Mr. Urvan.

 

As of March 4, 2013, Jason White was no longer employed by the Company as Chief Executive Officer because of other time commitments of Mr. White. The Company is currently searching for a person to supervise marketing and sales activities.

   

Mr. Urvan owns a majority interest in GB Investments, Inc., which owns approximately sixty six percent (66%) of our outstanding common stock. Mr. Urvan is also the majority owner Pro-Driver Development, Inc., a Nevada corporation to which we have and intend to lease our vehicles .  

 

Mr. Urvan is also the majority shareholder of TVP Investments, LLC. a limited liability company ("TVP"). In March of 2011, the Company established a $500,000 unsecured line of credit with TVP Investments, LLC. Mr. Urvan's decisions regarding our business can have a profound effect on our operations.  Any impairment of the good will of Mr. Urvan will have a material adverse affect upon our ability to continue our operations.

 

Our business revenue generation model is unproven and could fail.

 

Our revenue model is new and evolving, and we cannot be certain that it will be successful. Our ability to generate revenue depends, among other things, on our ability to achieve success with our management team’s limited time devoted to our business in the motorsports industry. The potential profitability of this business model is unproven for companies of our size. Accordingly, we cannot assure you that our business model will be successful or that we can sustain revenue growth or achieve or sustain profitability. If our business model is not successful we could be forced to curtail our operations.

 

We will incur additional costs for being a small, public reporting company.

 

We will be a fully reporting and publicly traded company. There will be additional non-operating costs associated with being a public company of approximately $20,000 per year. Additionally, we have a management team that is inexperienced in managing publicly traded companies.

  

RISKS ASSOCIATED WITH OUR COMMON STOCK

 

There is no active trading market for our common stock and if a market for our common stock does not develop, our investors will be unable to sell their shares.

 

Even though our common shares are currently listed on the Over the Counter Bulletin Board in the United States under the symbol "SSTL" since February 5, 2013, there have been very little sales or purchases of our common shares reported. Failure to develop or maintain a liquid trading market could negatively affect our common share's value and make it difficult or impossible for you to sell your shares. Even if a liquid market for common shares does develop, the market price may be highly volatile. In addition to the uncertainties relating to future operating performance and the profitability of operations, factors such as variations in interim financial results or various, as yet unpredictable, factors, many of which are beyond our control, may have a negative effect on the market price of our common shares.

 

However, we cannot provide our investors with any assurance that our common stock will be actively traded on the OTC Bulletin Board or, if traded, that a public market will materialize. Further, the OTC Bulletin Board is not a listing service or exchange, but is instead a dealer quotation service for subscribing members. If our common stock is not quoted on the OTC Bulletin Board or if a public market for our common stock does not develop, then investors may not be able to resell the shares of our common stock that they have purchased and may lose all of their investment. If we establish a trading market for our common stock, the market price of our common stock may be significantly affected by factors such as actual or anticipated fluctuations in our operation results, general market conditions and other factors. In addition, the stock market has from time to time experienced significant price and volume fluctuations that have particularly affected the market prices for the shares of developmental stage companies, which may materially adversely affect the market price of our common stock.

 

7
 

 

Because we do not intend to pay any dividends on our common shares, investors seeking dividend income or liquidity should not purchase shares in this offering.

 

We do not currently anticipate declaring and paying dividends to our shareholders in the near future. It is our current intention to apply net earnings, if any, in the foreseeable future to increasing our working capital. Prospective investors seeking or needing dividend income or liquidity should, therefore, not purchase our common stock. There can be no assurance that we will ever have sufficient earnings to declare and pay dividends to the holders of our shares, and in any event, a decision to declare and pay dividends is at the sole discretion of our board of directors, who currently do not intend to pay any dividends on our common shares for the foreseeable future.

 

Sales of a substantial number of shares of our common stock into the public market by the selling stockholders may result in significant downward pressure on the price of our common stock and may affect the ability of our stockholders to realize any trading price of our common stock when and if a trading market develops for our common stock.

 

Sales of a substantial number of shares of our common stock in the public market could cause a reduction in the market price of our common stock, when and if such market develops. When this registration statement is declared effective, the selling stockholders may be reselling up to 11% of the issued and outstanding shares of our common stock. As a result of such registration statement, a substantial number of our shares of common stock which have been issued may be available for immediate resale when and if a market develops for our common stock, which could have an adverse effect on the price of our common stock. As a result of any such decreases in price of our common stock, purchasers who acquire shares from the selling stockholders may lose some or all of their investment.

 

Any significant downward pressure on the price of our common stock as the selling stockholders sell the shares of our common stock could encourage short sales by the selling stockholders or others. Any such short sales could place further downward pressure on the price of our common stock. 

 

Our stock is a penny stock. Trading of our stock may be restricted by the SEC's penny stock regulations which may limit a stockholder's ability to buy and sell our stock.

 

Our stock is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines "penny stock" to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors". The term "accredited investor" refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.

 

8
 

 

ITEM 1B – UNRESOLVED STAFF COMMENTS

 

None. 

 

ITEM 2 – DESCRIPTION OF PROPERTIES

 

Our Race Truck Chassis and RV motor coach are maintained and managed from a facility in Mooresville, North Carolina. We do not incur any costs for the space we occupy.

 

ITEM 3 – LEGAL PROCEEDINGS

 

We are not a party to any material legal proceedings. We are not aware of any pending or threatened litigation against us that we expect will have a material adverse effect on our business, financial condition, liquidity, or operating results. However, legal claims are inherently uncertain, and we cannot assure you that we will not be adversely affected in the future by legal proceedings

 

ITEM 4 – MINE SAFETY DISCLOSURES

 

Not applicable.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9
 

  

PART II

 

ITEM 5 – MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 

Our common stock qualified for quotation on the OTCBB on February 5, 2013, under the symbol “SSTL”. No trades of our common stock occurred through the facilities of the OTCBB until February 8, 2013. The following table sets forth the range of the high and low bid prices per share of our common stock for each quarter (or portion thereof) as reported on the OTCBB or OTCQB, as applicable, beginning on February 8, 2013. These quotations represent interdealer prices, without retail markup, markdown or commission, and may not represent actual transactions. There currently is no liquid trading market for our common stock.

 

There can be no assurance that a significant active trading market in our common stock will develop, or if such a market develops, that it will be sustained.

 

    High     Low  
First Quarter (February 5, 2013 through March 31, 2013*   $ 0.25     $ 0.25  
There have been no trades reported during the Quarters ended June 30, September 30, and December 31, 2013                
                 
March 31, 2013*   $ 0.25     $ 0.25  

_______________

* Represents quoted prices but not actual trades.

 

As soon as practicable, and assuming we satisfy all necessary initial listing requirements, we intend to apply to have our common stock listed for trading on a national securities exchange, although we cannot be certain that our application will be approved.

 

Recent Sales of Unregistered Securities.

 

No unregistered securities were sold during the twelve months ended December 31, 2013 or 2012.

 

Re-Purchase of Equity Securities.

 

No equity securities were repurchased during the twelve months ended December 31, 2013 or 2012.

 

Dividends.

 

No dividends have been declared or paid during the twelve months ended December 31, 2013 or 2012.

 

Equity Compensation Plan Information.

 

We do not have an Equity Compensation Plan

 

 

ITEM 6 – SELECTED FINANCIAL DATA

 

As a “smaller reporting company’ as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.

 

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ITEM 7 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION

 

The following discussion and analysis of our results of operations and financial condition for the fiscal years ended December 31, 2013 and 2012 should be read in conjunction with our financial statements and the notes to those financial statements that are included elsewhere in this annual report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the “Risk Factors”, “Cautionary Notice Regarding Forward-Looking Statements” and “Description of Business” sections and elsewhere in this annual report. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” “predict,” and similar expressions to identify forward-looking statements. Although we believe the expectations expressed in these forward-looking statements are based on reasonable assumptions within the bound of our knowledge of our business, our actual results could differ materially from those discussed in these statements. Factors that could contribute to such differences include, but are not limited to, those discussed in the “Risk Factors” section of this report. We undertake no obligation to update publicly any forward-looking statements for any reason even if new information becomes available or other events occur in the future.

  

In addition to historical information, this Annual Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Actual results could differ materially from those projected in the forward-looking statements as a result of a number of factors, risks and uncertainties, including the risk factors set forth in Item 1A. above and the risk factors set forth in this Annual Report. Generally, the words “anticipate”, “expect”, “intend”, “believe” and similar expressions identify forward-looking statements. The forward-looking statements made in this Annual Report are made as of the filing date of this Annual Report with the SEC, and future events or circumstances could cause results that differ significantly from the forward-looking statements included here. Accordingly, we caution readers not to place undue reliance on these statements. We expressly disclaim any obligation to update or alter our forward-looking statements, whether, as a result of new information, future events or otherwise after the date of this document.

 

Plan of Operation

 

Overview

 

We are a developmental stage motorsports equipment leasing company that offers to lease custom built racing vehicles for use in the National Association for Stock Car Auto Racing ("NASCAR") "Camping World Series" truck racing vehicles. Each vehicle consists of a chassis and a truck body, with no engine or transmission, (the vehicles are referred to in the motorsports industry as "Race Truck Chassis "). The vehicles are offered for lease to potential clients that compete exclusively in the NASCAR Camping World Truck Series (“NCWTS”) of sanctioned NASCAR oval track racing events at intermediate and superspeedway tracks.  We offer to lease our vehicles to qualified companies and individuals for their use in racing competitions in the United States.

 

We acquire and modify our racecars to provide competitive racing equipment to companies and teams desiring to use our racecars to market their product or service by having our leased racing vehicles carry their corporate brand(s). We have conducted limited operations to date.

 

Trends & Outlook

 

Revenue--Our revenue is derived primarily from leasing NASCAR sanctioned race trucks to customers competing in the NASCAR Camping World Truck series. Additionally, we may receive additional revenue from customers and teams who lease of race prepared equipment for the purposes of testing and practice at both NASCAR approved and non-approved race tracks in North America.

 

Long-term, we cannot predict the growth or decline of our revenues. If certain standards set by potential chassis manufacturers are not met, our potential revenue would decrease. Such a decline in standards would be recognized through a decrease in the overall finishing positions of customers leasing our equipment for competition. Our success criteria includes but is not limited to on track customer success, race event attendance and television viewers with overall media coverage. We believe our equipment currently satisfies these standards for satisfactory overall finishes in conjunction with proven drivers. In the event the company fails to satisfy these standards, certain potential customers would not establish a business relationship with us.

 

Additionally, our success may be dependent on the economy and the international auto industry. A continued low growth rate of the economy could require companies to reduce their marketing and promotion budgets which would reduce potential spend for this sport. Also, the decrease in demand for the global auto industry’s products and services could reduce the amount and types of high level racing available to spectators.

 

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Operating Expenses

 

Our Operating expenses are currently attributed to the regular operations of the Company. These expenses include, but are not limited to, materials and parts, technical consulting, transportation, marketing, air and ground travel and administrative costs. These costs can vary depending on commodities such as fuel, the distance traveled, costs of advertising or changes in technical and engineering consulting fees.

 

Significant Accounting Policies

 

Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Note 1 of the Notes to Consolidated Financial Statements describes the significant accounting policies used in the preparation of the consolidated financial statements. Certain of these significant accounting policies are considered to be critical accounting policies, as defined below.

 

A critical accounting policy is defined as one that is both material to the presentation of our financial statements and requires management to make difficult, subjective or complex judgments that could have a material effect on our financial condition and results of operations. Specifically, critical accounting estimates have the following attributes: 1) we are required to make assumptions about matters that are highly uncertain at the time of the estimate; and 2) different estimates we could reasonably have used, or changes in the estimate that are reasonably likely to occur, would have a material effect on our financial condition or results of operations.

 

Estimates and assumptions about future events and their effects cannot be determined with certainty. We base our estimates on historical experience and on various other assumptions believed to be applicable and reasonable under the circumstances. These estimates may change as new events occur, as additional information is obtained and as our operating environment changes. These changes have historically been minor and have been included in the consolidated financial statements as soon as they became known.

 

Based on a critical assessment of our accounting policies and the underlying judgments and uncertainties affecting the application of those policies, management believes that our consolidated financial statements are fairly stated in accordance with accounting principles generally accepted in the United States, and present a meaningful presentation of our financial condition and results of operations. We believe the following critical accounting policies reflect our more significant estimates and assumptions used in the preparation of our consolidated financial statements:

 

Use of Estimates

 

These financial statements have been prepared in accordance with accounting principles generally accepted in the United States and, accordingly, require management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

 

Cash and Equivalents - We maintain our cash in bank deposit accounts, which at times, may exceed federally insured limits. We have not experienced any losses in such account.

 

Intangible and Long-Lived Assets - We follow SFAS No. 144, "Accounting for Impairment of Disposal of Long-Lived Assets," which established a "primary asset" approach to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for a long lived asset to be held and used. Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell. No impairment losses were recognized during the years ended December 31, 2013 and 2012.

 

Stock Based Compensation - We recognize expenses for stock-based compensation arrangements in accordance with provisions of Accounting Standards Codification 714. Accordingly, compensation cost is recognized for the excess of the estimated fair value of the stock at the grant date over the exercise price, if any. For equity instruments issued to non-employees, the estimated fair value of the equity instrument is recorded on the earlier of the performance commitment date or the date the services required are completed.

 

12
 

 

Year Ended December 31, 2013 as compared to the Year Ended December 31, 2012

 

Revenues – related parties

 

Total revenues were $60,000 for the years ended December 31, 2013, and December 31, 2012. The revenue in both years was as a result of related party customers leasing our competition racecars. The Company was not successful in attracting non-related party revenue and did not receive any revenue related to testing during the years ended December 31, 2013 or 2012.

 

Cost of Revenues

 

There were no costs of revenues in either the twelve months ending December 31, 2013 or the twelve months ending December 31, 2012.

 

Operating Expenses

 

Operating expenses for the year ended December 31, 2013 were $125,524 as compared to $198,779 for the year ended December 31, 2012. Expenses in 2013 included $60,524 for general & administrative and $65,000 for amortization and depreciation. The decrease in expenses in 2013 is directly attributable to a decrease in general and administrative costs, and a decrease in amortization and depreciation expenses that is attributable to the sale of equipment in January of 2013.

 

General and Administrative

 

Expenses included in 2013 were: $6,475 for dues and subscriptions, $33,828 for professional fees including legal and accounting and transfer agents and $20,221 in consulting fees.

 

Amortization and Depreciation

 

Amortization and depreciation are included in operating expenses and for the twelve months ended December 31, 2013 were $65,000, as compared to $85,000 for the year ended December 31, 2012. The decrease in depreciation and amortization expenses for 2013 is attributable to the sale of equipment in January of 2013.

 

Gain on Sale of Equipment 

 

The Company On January 19, 2013, we sold two of our chassis for cash consideration $41,000 to an independent party and recognized a gain of $16,555 on the sale of this equipment. There was no similar sale of equipment during the twelve months ended December 31, 2012.

 

Interest Expense

 

Interest expense for the twelve months ended December 31, 2013 was $18,851 broadly in line with the $17,568 interest we incurred in the twelve months ended December 31, 2012.

  

Net Loss

 

The net loss for the twelve months ended December 31, 2013 was $67,820 as compared to a loss of $156,347 for the twelve months ended December 31, 2012 due to the factors discussed above.

 

13
 

 

Liquidity & Capital Resources

 

The financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. As at December 31, 2013 the Company had current assets, comprising of cash, of $44,055, current liabilities of $210,839 and a working capital deficit of $166,784. The Company has incurred losses since Inception to December 31, 2013 of $537,119 and further losses are anticipated in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and, or, obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. There is no assurance that these events will be satisfactorily completed.

 

Continued losses could cause the Company to be unable to continue in the racing industry or to meet debt obligations. The Company believes that racing requires significant capital outlays on a continual basis to successfully fund operations, but with adequate funding that profitable operations can be achieved.

 

The Company may raise additional capital through the sale of its equity securities, through an offering of debt securities, or through borrowings from financial institutions. By doing so, the Company hopes to generate profits from racing activities. Management believes that actions presently being taken to obtain additional funding provide the opportunity for the Company to continue as a going concern.

  

Cash Flows for the Year Ended December 31, 2013 Compared to the Year Ended December 31, 2012

 

Operating Activities

 

During the twelve months ended December 31, 2013 used $2,179 cash in operating activities, compared to $74,813 in the twelve months ended December 31, 2012.

 

During the twelve months ended December 31, 2013 we incurred losses of $67,220 which were largely offset by a net of $48,445 of non-cash expenses, a $15,000 reduction in accounts receivable and a $2,196 increase in accounts payable and accrued expenses.

 

By comparison during the twelve months ended December 31, 2012 we incurred losses of $156,347 which were partially offset by $85,000 of non-cash expenses, and increased by a reduction of $3,466 in accounts payable and accrued expenses.

 

Investing Activities

 

During the year ended December 31, 2013 we generated $41,000 from investing activities through the sale two of our chassis an independent party.

 

By comparison, during the twelve months ended December 31, 2012 we neither generated nor used funds in investing activities.

 

Financing Activities

 

During the twelve months ended December 31, 2013 we neither generated nor used funds in financing activities.

 

By comparison, during the twelve months ended December 31, 2012 we generated $75,000 from financing activities by way of advances under our related party line of credit.

 

14
 

 

Stockholder Matters

 

Total stockholders’ deficit was $102,215 on December 31, 2013, or $0.006 per share outstanding and was $33,549 or $0.002 per share outstanding on December 31, 2012.

 

Management expects to raise $125,000 in capital through the issuance of debt and equity and believes it will be able to raise sufficient capital over the next twelve months to finance operations. However, there can be no assurances that the Company will be successful in this regard or will be able to eliminate its operating losses. The accompanying financial statements do not contain any adjustments which may be required as a result of this uncertainty.

 

For the next fiscal year, management estimates that the cost of operating the business will continue to require additional capital of up to One Hundred Twenty Five Thousand dollars ($125,000) consisting of: $5,000 for primary support personnel and drivers registration and licenses required for entry in select sanctioned racing events; $10,000 for travel and lodging consisting of ground and air travel expenses, rental cars fees, local bus transportation and hotel expenses; $3,000 for marketing and promotion; $20,000 for legal and accounting; $10,000 for engineers and consultants; $25,000 for replacement parts, $15,000 for fuels, lubricants and tires; $7,000 for event day racecar tractor and transporter rental; $15,000 for debt service of all Company notes payable; and $15,000 in miscellaneous expenses consisting of specialty vinyl and lettering services and apparel for competition vehicles; crew members and drivers expenses; fees for utilization of tracks for testing; non- race day fuel and tires; potential marketing costs for sponsors admission fees credentials, and hosting costs.

  

The Company has no outstanding lease payments due for the lease of race cars at this time.

 

The Company intends to hold discussions with existing shareholders, new prospective shareholders and various lenders in pursuing the capital we need for the upcoming twelve months of operations. Additionally, the Company may elect to draw down additional proceeds from its line of credit with TVP Investments, LLC. There can be no assurance that we will be able to raise any additional equity or debt capital.

 

Mr. Urvan, our majority shareholder is also majority shareholder of TVP Investments, LLC. a limited liability company ("TVP"). In March of 2011, the Company established a $500,000 unsecured line of credit with TVP Investments, LLC (the "Line of Credit"). The terms of the Line of Credit provide for interest at 10% per annum on all outstanding balances. The availability of funds for draw down from this line of credit is subject to the approval of Mr. Urvan.  

 

As of December 31, 2013, we have drawn $175,000 on our line of credit.

 

The Company’s capital requirements consist of general working capital needs, scheduled principal and interest payments on debt when required, obligations, and capital expenditures. The Company’s capital resources consist primarily of cash generated from proceeds through the issuances of common stock. At December 31, 2013, the Company had cash on hand of $44,045.

 

Critical Accounting Policies

 

Basis of presentation

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. Without further funding, we anticipate running out of cash after during April 2014, and accordingly our current cash balances will not be sufficient to fund our operating expenses after April 2014. We have received only $135,000 in revenues since our inception through December 31, 2013 and have incurred a net loss of $537,119 and net cash used in operations of $188,695.  

 

Unless we begin generating more revenues in the near future, we anticipate that we will continue to incur net losses in the near term, and we may never be able to achieve profitability. We expect to continue to incur losses for the foreseeable future. In order to achieve profitable operations we need to generate significant revenues from leasing fees. We cannot be certain that our business strategies will be successful or that will we generate significant revenues and become profitable. Additionally, we will need to obtain additional public or private equity financings or debt financings in order to continue operations.

 

Use of estimates

 

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

 

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Revenue recognition

 

Upon the generation of revenue, the Company shall follow the guidance of the Securities and Exchange Commission's Staff Accounting Bulletin 104 for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when it has persuasive evidence of an arrangement that the services have been rendered to the customer, the sales price is fixed or determinable, and collectability is reasonably assured. Subscription revenues shall be recognized over the period benefited. Deferred revenues shall be recorded when cash has been collected, however the related service has not yet been provided.

 

Income taxes

 

The Company uses the liability method of accounting for Income Taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. A valuation allowance can be provided for a net deferred tax asset, due to uncertainty of realization.

 

Net loss per common share

 

Net loss per common share is computed pursuant to ASC No. 260 "Earnings per Share." Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period. There were no potentially dilutive debt or equity instruments issued or outstanding during the twelve months ended December 31, 2013 and 2012.

 

Recently Issued Accounting Pronouncements

 

We have reviewed all the recently issued, but not yet effective, accounting pronouncements and we do not believe that the future adoption of any such pronouncements may be expected to cause a material impact on our financial condition or the results of our operations.

 

Experienced and Dedicated Personnel

 

We intend to maintain a highly competitive team of experienced and technically proficient employees and motivate them through a positive work environment and stock ownership. We believe that employee ownership, which may be encouraged through a stock option plan, is essential for attracting, retaining and motivating qualified personnel. While we have not yet adopted a stock option plan, we intend to do so in the near future.

 

Financing Needs

 

Including the net proceeds from the private placement stock offering, the Company may only have sufficient funds to conduct its operations through April 2014. We have received $135,000 in revenues in from inception through December 31, 2013. It is anticipated that the Company will generate additional revenue in 2014; however, there can be no assurance that if in fact the Company does generate increased revenue in 2014, that such revenues would be sufficient to sustain or grow the operations. It is therefore anticipated that the Company will need additional capital in order to continue operations.

 

The Company presently does not have any available credit, bank financing or other external sources of liquidity, other than the net proceeds from the private placement offering and line of credit.   Due to its brief history and historical operating losses, the Company's operations have not been a source of liquidity. The Company will need to obtain additional capital in order to continue operations. In order to obtain capital, the Company may need to sell additional shares of its common stock or borrow funds from private lenders. There can be no assurance that additional financing will be available in amounts or on terms acceptable to the Company, if at all.

 

The Company cannot guarantee that it will be able to obtain additional capital. The Company will seek capital from the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. The recent downturn in the U.S. stock and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if the Company is able to raise the funds required, it is possible that it could incur unexpected costs and expenses, or experience unexpected cash requirements. Further, if the Company issues additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of the Company's common stock. If additional financing is not available or is not available on acceptable terms, the Company will have to curtail or may even cease its operations.

 

Recent Financings

 

As of March 31, 2014 we borrowed a total of $175,000 from TVP Investments, LLC pursuant to an unsecured demand promissory note. The note bears interest at 10% per annum.

 

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ITEM 8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

The financial statements required by Item 8 are submitted in a separate section of this report, beginning on F-1, and are incorporated herein and made a part hereof.

 

ITEM 9 – CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

On November 21, 2013, the Company was informed by its independent registered public accounting firm, Ronald R. Chadwick P.C. ("Chadwick"), that it would no longer be providing auditing services on an ongoing basis due to retirement. On November 22, 2013 the Board of Directors engaged Cutler & Co. LLC of Denver, Colorado as the Company’s new independent registered public accounting firm. 

 

We had no disagreements with either Chadwick or Cutler & Co LLC with respect to accounting or financial disclosure.

 

ITEM 9A – CONTROLS AND PROCEDURES

 

Evaluation of disclosure controls and procedures

 

Based upon an evaluation of the effectiveness of our disclosure controls and procedures performed by our Chief Executive Officer as of the end of the period covered by this report, our Chief Executive Officer concluded that our disclosure controls and procedures have not been effective as a result of a weakness in the design of internal control over financial reporting identified below.

 

As used herein, “disclosure controls and procedures” mean controls and other procedures of our company that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

Management’s Report on Internal Control over Financial Reporting

 

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f) under the Securities Exchange Act of 1934.  Our Chief Executive Officer/Chief Accounting Officer conducted an evaluation of the effectiveness of our control over financial reporting based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).  Based on management’s evaluation under the framework, management has concluded that our internal control over financial reporting was not effective as of December 31, 2013.

 

We identified material weaknesses in our internal control over financial reporting primarily attributable to (i) lack of segregation of incompatible duties; and (ii) insufficient Board of Directors representation. These weaknesses are due to our inadequate staffing during the period covered by this report and our lack of working capital to hire additional staff.  Management has retained an outside, independent financial consultant to record and review all financial data, as well as prepare our financial reports, in order to mitigate this weakness. Although management will periodically re-evaluate this situation, at this point it considers that the risk associated with such lack of segregation of duties and the potential benefits of adding employees to segregate such duties are not cost justified.  We intend to hire additional accounting personnel to assist with financial reporting as soon as our finances will allow. 

 

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.

 

Changes in Internal Control Over Financial Reporting

 

No changes in our internal control over financial reporting occurred during the year ended December 31, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

ITEM 9B – OTHER INFORMATION

 

None

 

17
 

 

PART III

 

ITEM 10 – DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

Directors and Executive Officer

  

Name Age Position
Susan T. Lokey 45 Chief Executive Officer, Chief Financial Officer. Secretary and Director

 

Susan T. Lokey – From 2006 until the date of this prospectus, Ms. Lokey has served as Chief Financial Officer of TVP Investments, LLC where she manages the financial and human resources components of the business. She joined TVP Investments, LLC in 2002 and served in various capacities until 2006, when she became CFO.  She was chosen as a director because she has over eighteen years experience in accounting, financial reporting and auditing as well as her experience as an executive manager of human resources. Prior to joining TVP Investments, LLC, Susan was Manager of the Sales Audit and Sales Accounting department at The Home Depot corporate offices. In this capacity, she had a staff of 120 accountants and auditors that provided daily key retail sales statistics to the President and Chief Financial Officer of the company.  Other positions include Treasury Specialist at Fosterlane Management Corporation managing the organization’s domestic and international assets and investment strategies and Financial Officer at Bartow County Bank. Susan received her Bachelors of Business Administration from Kennesaw State University in 1992 and is a Certified Public Accountant. She is licensed to practice in the State of Georgia. Ms. Lokey spends 15% of her time managing the affairs of our Company.

 

Management Compensation

 

There are no written employment agreements with management. Management compensation will be determined by the board of directors based upon revenues and profits, if any, of the Company.

 

ITEM 11 – EXECUTIVE COMPENSATION

 

Our current officers receive no cash compensation. On November 1, 2011, our former President and the Secretary were issued 400,000 and 100,000 shares respectively, of our common stock as a bonus. There are no current employment agreements between the Company and its executive officer or understandings regarding future compensation.

 

The directors and principal officers have agreed to work with no remuneration until such time as the Company receives sufficient revenues necessary to provide proper salaries. The officers and directors have the responsibility to determine the timing of remuneration for key personnel.

 

The Company does not intend to pay employee directors a separate fee for their services.

 

Name and
Principal Position
  Year     Salary ($)     Bonus ($)     Other Annual
Compensation
($)
    All Other
Compensation
($)
 
                               
Jason White, former President
    2011       0       8,000 (1)   0       0  
Chief Executive Officer                                    
Susan Lokey, President and     2012       0     2,000 (2)   $ 0     $ 0  
Chief Executive Officer, Secretary & Treasurer     2013       0     $ 0     $ 0     $ 0  

_______________

(1) Our former CEO was issued 400,000 shares of common stock at a value of $0.02 per share

(2) Ms. Lokey was issued 100,000 shares of common stock at a value of $0.02 per share.

 

Director Independence

 

Our board of directors is currently composed of one member, who does not qualify as independent directors in accordance with the published listing requirements of the NASDAQ Global Market.  The NASDAQ independence definition includes a series of objective tests, such as that the director is not, and has not been for at least three years, one of our employees and that neither the director, nor any of his family members has engaged in various types of business dealings with us.  In addition, our board of directors has not made a subjective determination as to each director that no relationships exist which, in the opinion of our board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, though such subjective determination is required by the NASDAQ rules.  Had our board of directors made these determinations, our board of directors would have reviewed and discussed information provided by the directors and us with regard to each director’s business and personal activities and relationships as they may relate to us and our management.

 

18
 

 

ITEM 12 – SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

The following table sets forth certain information regarding the beneficial ownership of the issued and outstanding shares of our common stock as of March 31, 2014 by the following persons:

 

  1. Each person who is known to be the beneficial owner five percent (5%) or more of our issued and outstanding shares of common stock;
  2. Each of our Directors and executive Officers; and
  3. All of our Directors and Officers as a group

 

Name  No. of Shares
Owned
   % of Stock
Outstanding (3)
 
         
Susan Lokey   100,000    0.06%
Directors & Officers as a Group   100,000    0.06%
           
GB Investments, Inc.(1)   10,766,667    66%
Jeffrey P. Bash   825,000    5.1%
Charles P. Arnold   825,000    5.1%
Cassin Farlow, LLC   825,000(2)   5.1%
           
Total   13,341,667    82.1%

_______________

(1) Steve Urvan has full investment authority for these shares.

(2) Includes 25,000 shares beneficially owned by Augustus B O'Connell who has investment authority over Cassin Farlow, LLC.

(3) Based on 16,254,167 shares issued and outstanding.

  

Long Term Incentive Awards

 

Option Grants in Last Fiscal Year

 

We did not award options to our executive officers in 2013 under any incentive plans.

 

Aggregate Option Exercises in Last Fiscal Year and Fiscal Year End Option Values

 

There were no option exercises by our executive officers in 2013.

 

Employment Contract and Termination of Employment Agreements

 

We have no employment agreements with any officers or employees.

 

Limitations on liability and indemnification of officers and directors

 

Our certificate of incorporation includes a provision that eliminates the personal liability of our directors for monetary damages for breach of fiduciary duty as a director, to the fullest extent permitted by Nevada Revised Statutes. Our certificate of incorporation also provides that we must indemnify our directors and officers to the fullest extent permitted by Nevada law and advance expenses to our directors and officers in connection with a legal proceeding to the fullest extent permitted by Nevada law, subject to certain exceptions. We are in the process of obtaining directors’ and officers’ insurance for our directors, officers and some employees for specified liabilities.

 

The limitation of liability and indemnification provisions in our certificate of incorporation may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duty. They may also have the effect of reducing the likelihood of derivative litigation against directors and officers, even though an action of this kind, if successful, might otherwise benefit us and our stockholders. Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions. However, we believe that these indemnification provisions are necessary to attract and retain qualified directors and officers.

 

19
 

 

SEC Policy on Indemnification

 

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

 

Long Term Incentive Plans

 

There are no long term incentive plans.

 

ITEM 13 – CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, and DIRECTOR INDEPENDENCE

 

Our majority shareholder is GB Investments, Inc.  Mr. Steven Urvan is the majority shareholder of GB Investments, Inc. Mr. Urvan is also the managing member of TVP Investments, LLC. In February 2011 the Company issued 9,666,667 shares of common stock to GB Investments, Inc. for assets valued at cost of $290,000.

 

On May 31, 2011, TVP Investments, LLC loaned $25,000 to us and we executed an unsecured promissory note, bearing interest at 10% per annum. The note was renewed on May 31, 2013.

 

TVP Investments, LLC has established a line of credit with the Company of $500,000.  The receipt of funds from this line of credit is subject to the approval of Mr. Urvan. To date, $175,000 has been drawn on the line of credit. The terms of the line of credit contains annualized interest of 10%..   Mr. Urvan may have a conflict of interest should we determine to draw upon the line of credit. He will have to determine, whether it is in the best interest of TVP Investments, LLC to approve or decline the "loan" or, as our control shareholder, if it is in our best interest to approve the loan.

 

Conflicts of Interest

 

Each officer and director is, so long as she or he is an officer or director, subject to the restriction that all opportunities contemplated by our plan of operation that come to his attention, either in the performance of his duties or in any other manner, will be considered opportunities of, and be made available to us and the companies that he is affiliated with on an equal basis.  A breach of this requirement will be a breach of the fiduciary duties of the officer or director.  If we or the companies to which the officer or director is affiliated each desire to take advantage of an opportunity, then the applicable officer or director would abstain from negotiating and voting upon the opportunity.  However, the officer or director may still take advantage of opportunities if we should decline to do so.  Except as set forth above, we have not adopted any other conflict of interest policy in connection with these types of transactions.

 

ITEM 14 – PRINCIPAL ACCOUNTING FEES AND SERVICES

 

Our current principal independent auditor is Cutler & Co. LLC, whom we engaged on November 22, 2013.  The following are the services provided and the amounts billed.

 

Audit Fees

 

The aggregate fees billed by Cutler & Co. LLC,, for professional services rendered for the audit of the Company’s annual financial statements for the fiscal year ended December 31, 2013, was $4,000. The aggregate fees billed by Ronald R Chadwick P.C (“Chadwick”) our former auditor, for professional services rendered for the audit of the Company’s annual financial statements for the fiscal year ended December 31, 2012, was $6,050.

 

Audited-Related Fees

 

For the year ended December 31, 2013 there were no fees billed by Cutler & Co. LLC for services reasonably related to the performance of the audit or review of the financial statements outside of those fees disclosed above under “Audit Fees”.

 

For the year ended December 31, 2012, there were no fees billed by Chadwick for services reasonably related to the performance of the audit or review of the financial statements outside of those fees disclosed above under “Audit Fees”.

 

Tax Fees

 

For the year ended December 31, 2013 the Company incurred no fees from Cutler & Co. LLC for services for tax compliance, tax advice and tax planning work.

 

For the year ended December 31, 2012 the Company incurred no fees from Chadwick for services for tax compliance, tax advice and tax planning work.

 

20
 

 

All Other Fees

 

For the year ended December 31, 2013 and December 31, 2012, there were no other fees billed by Cutler & Co. LLC or Chadwick for products and services outside of those fees disclosed above under “Audit Fees”, “Audit-Related Fees” and “Tax Fees”.

 

Audit Committee Pre-Approval Policies and Procedures

 

The policy of the board of directors is to pre-approve all audit and permissible non-audit services provided by our independent auditors. These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services. The independent auditor and management are required to periodically report to the board of directors regarding the extent of services provided by the independent auditor in accordance with this pre-approval. The chair of the board of directors is also authorized, pursuant to delegated authority, to pre-approve additional services of up to $5,000 per engagement on a case-by-case basis, and such approvals are communicated to the full board of directors at its next meeting.

  

ITEM 15 – EXHIBITS

 

(1) Financial Statements

 

The following consolidated financial statements of the Company are included in Part II, Item 8 of this Report:

 

Reports of Independent Registered Public Accounting Firms
 
Balance Sheets at December 31, 2013 and 2012
 
Statements of Operations for the Years Ended December 31, 2013 and 2012 and the Period from November 10, 2010 (Inception) to December 31, 2013
 
Statements of Changes Stockholders’ Equity (Deficit) for the Period from November 10, 2010 (Inception) to December 31, 2013
 
Statements of Cash Flows for the Years Ended December 31, 2013 and 2012 2012 and the Period from November 10, 2010 (Inception) to December 31, 2013
 
Notes to Financial Statements

 

(2) Financial Statement Schedules

 

Schedules are omitted because the required information is not present or is not present in amounts sufficient to require submission of the schedule or because the information required is given in the consolidated financial statements or the notes thereto.

 

(3) Exhibits

  

Exhibit # Description
3(i).1 Articles of Incorporation of SSTL, Inc., as amended *
3(ii).1 Corporate Bylaws for SSTL, Inc. *
31.1 Section 302 Certification by the Corporation’s Chief Executive Officer
31.2 Section 302 Certification by the Corporation’s Chief Financial Officer
32.1 Section 906 Certification by the Corporation’s Chief Executive Officer
32.2 Section 906 Certification by the Corporation’s Chief Financial Officer
101.INS XBRL Instance Document
101.SCH XBRL Schema Document
101.CAL XBRL Calculation Linkbase Document
101.DEF XBRL Definition Linkbase Document
101.LAB XBRL Label Linkbase Document
101.PRE XBRL Presentation Linkbase Document

_______________

* Previously filed with Form S-1

 

21
 

  

SIGNATURES

 

In accordance with Section 13 or 15(d) of the Exchange Act, the company caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  SSTL, Inc.
   
   
Date: April 11, 2014 By: /s/ Susan Lokey
    Susan Lokey
    Chief Executive Officer

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.

 

Name   Title   Date
         
/s/ Susan Lokey   Chief Executive Officer, Chief Financial Officer and Treasurer,   April 11, 2014
    (Principal Executive Officer and Principal Financial Officer)    
         
/s/Susan Lokey   Secretary and Treasurer   April 11, 2014

   

 

 

 

 

 

 

 

 

 

 

 

 

 

22
 

 

SSTL, Inc.

(A Development Stage Company)

 

FINANCIAL STATEMENTS

 

For The Years Ended

December 31, 2012 and 2013

 

 

SSTL, Inc.

(A Development Stage Company)

Financial Statements

 

TABLE OF CONTENTS

 

  Page
   
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F-1 - F-2
   
FINANCIAL STATEMENTS  
   
Balance sheets F-3
Statements of operations F-4
Statements of change in stockholders’ equity (deficit) F-5
Statements of cash flows F-6
Notes to financial statements F-7

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

23
 

 

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

Board of Directors

SSTL, Inc.

Mooresville

North Carolina, 28115

 

We have audited the accompanying balance sheets of SSTL, Inc. as of December 31, 2013 and the related statement of operations, changes in stockholders' deficit and cash flows for the year then ended. 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. The financial statements as of December 31, 2012 and for the year ended December 31, 2012 and the period from November 10, 2010 (Inception) to December 31, 2012 were audited by another auditor who expressed an unqualified opinion on March 22, 2013. Our opinion, in so far as it related to the period from November 10, 2010 (Inception) to December 31, 2012, is based solely on the report of the other auditor.

 

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 SSTL, Inc. as of December 31, 2013, and the results of its operations and its cash flows for the year then ended 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 losses from operations since Inception (November 1, 2010) and currently does not have sufficient available funding to fully implement its business plan. These factors raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

 

Arvada, Colorado

April 8, 2014

 

 

 

 

 

 

 

12191 W. 64th Avenue, Suite 205B, Arvada, Colorado 80004  •  Phone: 303.968.3281  •  Fax: 303.456.7488  •  www.cutlercpas.com

 

F-1
 

 

RONALD R. CHADWICK, P.C.

Certified Public Accountant

2851 South Parker Road, Suite 720

Aurora, Colorado 80014

Telephone (303)306-1967

Fax (303)306-1944

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

Board of Directors

SSTL, Inc.

Mooresville, North Carolina

 

I have audited the accompanying balance sheet of SSTL, Inc. as of December 31, 2012, and the related statements of operations, stockholders' equity and cash flows for the year then ended, and for the period from November 10, 2010 (Inception) through December 31, 2012. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audit.

 

I conducted my audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion.

 

In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of SSTL, Inc. as of December 31, 2012, and the results of its operations and its cash flows for the years then ended, and for the period from November 10, 2010 (Inception) through December 31, 2012 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 a loss from operations that raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Aurora, Colorado Ronald R. Chadwick, P.C.
March 22, 2013 RONALD R. CHADWICK, P.C.

 

F-2
 

 

SSTL, Inc.

(A Development Stage Company)

BALANCE SHEETS

 

   December 31, 2013   December 31, 2012 
ASSETS          
Current assets          
Cash  $44,055   $5,234 
Accounts receivable - related party       15,000 
Total current assets   44,055    20,234 
           
Fixed assets - net   65,415    154,861 
           
Total Assets  $109,470   $175,095 
           
LIABILITIES & STOCKHOLDERS' DEFICIT          
           
Current liabilities          
Accounts payable  $9,537   $3,302 
Accrued Expenses   900     
Accrued interest payable   402    5,342 
Related party note payable   25,000    25,000 
Related party line of credit   175,000    175,000 
Total current liabilities   210,839    208,644 
           
Total Liabilities   210,839    208,644 
           
Stockholders' Equity          
Preferred stock, $0.001 par value; 25,000,000 shares authorized; none issued and outstanding        
Common stock, $0.001 par value; 100,000,000 shares authorized; 16,254,167 shares issued and outstanding   16,254    16,254 
Additional paid in capital   419,496    419,496 
Deficit accumulated during the development stage   (537,119)   (469,299)
Total Stockholders' Deficit   (101,369)   (33,549)
           
Total Liabilities and Stockholders' Deficit  $109,470   $175,095 

 

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

 

F-3
 

 

SSTL, Inc.

(A Development Stage Company)

STATEMENTS OF OPERATIONS

 

   For the Twelve Months Ended   Period From
Nov. 10, 2010
(Inception) To
 
   December 31, 2013   December 31, 2012   December 31, 2013 
Revenues - related party  $60,000   $60,000   $135,000 
                
Operating expenses:               
Amortization & depreciation   65,000    85,000    225,139 
General and administrative   60,524    113,779    442,536 
Total operating expenses   125,524    198,779    667,675 
                
Gain (loss) from operations   (65,524)   (138,779)   (532,675)
                
Other income (expense):               
Insurance income           19,077 
Gain on sale of equipment   16,555        16,555 
Interest expense - related party   (18,851)   (17,568)   (40,076)
Total income (expense)   (2,296)   (17,568)   (4,444)
                
                
Income (loss) before provision for income taxes   (67,820)   (156,347)   (537,119)
                
Provision for income tax            
                
Net income (loss)  $(67,820)  $(156,347)  $(537,119)
                
Net income (loss) per share:               
Basic and fully diluted  $(0.00)*  $(0.01)     
                
                
Weighted average number of common shares outstanding:               
Basic and fully diluted   16,254,167    16,254,167      

_______________

* denotes a loss of less than $(0.01) per share.

 

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

 

F-4
 

 

SSTL, Inc.

(A Development Stage Company)

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

 

   Common Stock
($.001 Par)
   Additional   Deficit Accumulated During The Development   Total
Stockholders'
 
   Shares   Amount   Paid in Capital   Stage   Equity (Deficit) 
Balances at (inception) November 10, 2010      $   $   $   $ 
                          
Net income (loss) for the period                    
                          
Balances at December 31, 2010                    
                          
Shares issued for assets   9,666,667    9,667    280,333        290,000 
                          
Capital contributions - related party           5,000        5,000 
                          
Shares issued for cash   1,887,500    1,887    34,863        36,750 
                          
Shares issued for services   4,700,000    4,700    99,300        104,000 
                          
Net income (loss) for the year               (312,952)   (312,952)
                          
Balances at December 31, 2011   16,254,167    16,254    419,496    (312,952)   122,798 
                          
Net income (loss) for the year               (156,347)   (156,347)
                          
Balances at December 31, 2012   16,254,167    16,254    419,496    (469,299)   (33,549)
                          
Net income (loss) for the year               (67,820)   (67,820)
                          
Balances at December 31, 2013   16,254,167   $16,254   $419,496   $(537,119)  $(101,369)

 

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

 

F-5
 

 

SSTL, Inc.

(A Development Stage Company)

STATEMENTS OF CASH FLOWS

(Unaudited)

 

   For the Twelve Months Ended   Period From
Nov. 10, 2010
(Inception) To
 
   December 31, 2013   December 31, 2012   December 31, 2013 
Cash Flows From Operating Activities:               
Net income (loss)  $(67,820)  $(156,347)  $(537,119)
                
Adjustments to reconcile net loss to net cash provided by (used for) operating activities:               
Amortization & depreciation   65,000    85,000    225,139 
Compensatory stock issuances           104,000 
Gain on fixed asset sales   (16,555)       (16,555)
Changes in operating assets and liabilities               
Accounts receivable   15,000         
Accounts payable and accrued expenses  $2,196   $(3,466)  $35,840 
Net cash provided by (used for) operating activities   (2,179)   (74,813)   (188,695)
                
Cash Flows From Investing Activities:               
Fixed assets - purchases           (25,000)
Fixed assets - sales proceeds   41,000        41,000 
Net cash provided by (used for) investing activities   41,000        16,000 
                
Cash Flows From Financing Activities:               
Note payable - borrowings       75,000    225,000 
Note payable - payments           (50,000)
Issuance of stock for cash           36,750 
Paid in capital           5,000 
Net cash provided by (used for) financing activities       75,000    216,750 
                
Net Increase (Decrease) In Cash   38,821    187    44,055 
                
Cash At The Beginning Of The Period   5,234    5,047     
                
Cash At The End Of The Period  $44,055   $5,234   $44,055 
                
                
Schedule Of Non-Cash Investing And Financing Activities               
                
Common stock issued for assets  $   $   $290,000 
                
Supplemental Disclosure:               
                
Cash paid for interest  $23,790   $13,157   $39,673 
Cash paid for income taxes  $   $   $ 

 

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

 

F-6
 

 

SSTL, Inc.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2013 AND 2012 AND

THE PERIOD FROM NOVEMBER 10, 2010 TO DECEMBER 31, 2013

 

NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

SSTL, Inc. (the “Company”) was incorporated in the State of Nevada on November 10, 2010. The Company designs and assembles motorsport racing vehicles for its own use, and plans to compete in organized racing events. The Company has currently only conducted limited activities and is considered to be in the development stage.

 

Use of estimates and Assumptions

 

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

 

Cash and cash equivalents

 

The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents.

 

Accounts receivable

 

The Company reviews accounts receivable periodically for collectability and establishes an allowance for doubtful accounts and records bad debt expense when deemed necessary. At December 31, 2013 the Company had no balance of accounts receivable and consequently no allowance for doubtful accounts.

 

Property and equipment

 

Property and equipment are recorded at cost and depreciated under straight line methods over each item's estimated useful life. The Company uses a three year life for racing vehicles, and five years for transport vehicles and furniture and fixtures.

 

Revenue recognition

 

The Company shall follow the guidance of the Securities and Exchange Commission's Staff Accounting Bulletin 104 for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when it has persuasive evidence of an arrangement that the services have been rendered to the customer, the sales price is fixed or determinable, and collectability is reasonably assured. Subscription revenues shall be recognized over the period benefited. Deferred revenues shall be recorded when cash has been collected, however the related service has not yet been provided.

 

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Advertising costs

 

Advertising costs are expensed as incurred. The Company recorded no advertising costs for during the twelve months ended December 31, 2013 or 2012.

 

Income tax

 

The Company accounts for income taxes pursuant to ASC 740. Under ASC 740 deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

Net income (loss) per share

 

The net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares of common outstanding. Warrants, stock options, and common stock issuable upon the conversion of the Company's preferred stock (if any), are not included in the computation if the effect would be anti-dilutive and would increase the earnings or decrease loss per share.

 

The Company had no potentially dilutive debt or equity instruments issued and outstanding during the twelve months ended December 31, 2013 or 2012.

 

Financial Instruments

 

The carrying value of the Company’s financial instruments, as reported in the accompanying balance sheets, approximates fair value due to their short term maturities.

 

Long-Lived Assets

 

In accordance with ASC 350, the Company regularly reviews the carrying value of intangible and other long-lived assets for the existence of facts or circumstances, both internally and externally, that may suggest impairment. If impairment testing indicates a lack of recoverability, an impairment loss is recognized by the Company if the carrying amount of a long-lived asset exceeds its fair value.

 

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Products and services, geographic areas and major customers

 

The Company currently earns revenue from leasing its racing vehicles on a month to month basis. All Company revenues in 2013 and 2012 were from one customer, a company related by common control.

 

Stock based compensation

 

The Company accounts for employee and non-employee stock awards under ASC 718, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to non-employees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable.

 

Dividends

 

The Company has not adopted any policy regarding payment of dividends. No dividends have been paid during any of the periods shown.

 

Recent accounting pronouncements

 

We have reviewed all the recently issued, but not yet effective, accounting pronouncements and we do not believe that the future adoption of any such pronouncements may be expected to cause a material impact on our financial condition or the results of our operations.

 

NOTE 2. GOING CONCERN

 

The financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. As at December 31, 2013 the Company had current assets, comprising of cash, of $44,055, current liabilities of $210,839 and a working capital deficit of $166,784. The Company has incurred losses since Inception to December 31, 2013 of $537,119 and further losses are anticipated in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and, or, obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. There is no assurance that these events will be satisfactorily completed.

 

Continued losses could cause the Company to be unable to continue in the racing industry or to meet debt obligations. The Company believes that racing requires significant capital outlays on a continual basis to successfully fund operations, but with adequate funding that profitable operations can be achieved.

 

The Company may raise additional capital through the sale of its equity securities, through an offering of debt securities, or through borrowings from financial institutions. By doing so, the Company hopes to generate profits from racing activities. Management believes that actions presently being taken to obtain additional funding provide the opportunity for the Company to continue as a going concern.

 

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NOTE 3. FIXED ASSETS

 

Fixed asset values recorded at cost are as follows:

 

   Dec. 31,   Dec. 31, 
   2013   2012 
Racing vehicles and equipment  $105,000   $165,000 
Transport vehicles   150,000    150,000 
    255,000    315,000 
Less accumulated depreciation   (189,585)   (160,139)
           
Total  $65,415   $154,861 

 

On January 19, 2013, we sold two of our chassis for cash consideration $41,000 to an independent party and recognized a gain on sale of $16,555.

 

Depreciation expense for the twelve months ended December 31, 2013 and 2012 was $65,000 and $85,000, respectively.

 

NOTE 4. RELATED PARTY NOTE PAYABLE

 

On May 31, 2011, a company controlled by our controlling shareholder loaned $25,000 to us and we executed an unsecured promissory note, bearing interest at 10% per annum. The note was renewed on May 31, 2013.

 

This related party note payable of $25,000 was outstanding as at December 31, 2013 and 2012.

 

NOTE 5. RELATED PARTY LINE OF CREDIT

 

As at December 31, 2012 and 2013 the Company had drawn down $175,000 under a $500,000 unsecured line of credit with a company controlled by our controlling shareholder, bearing interest at 10% per annum, with $100,000 currently due and $75,000 due in January 2014. Interest expense for 2013 and 2012 was $18,851 and $17,568 with accrued interest payable at December 31, 2013 and 2012 of $402 and $5,342.

 

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NOTE 6. RELATED PARTY TRANSACTIONS

 

In 2011:

 

·a major shareholder was issued 9,666,667 common shares for fixed assets valued at $290,000, 1,000,000 shares for consulting services provided to the Company valued at $30,000, and purchased 100,000 shares for $1,000 cash.

 

·other founders were issued 3,700,000 common shares for services valued at $74,000.

 

During the twelve months ended December 31, 2013 and 2012, all of the Company revenues of $60,000 in each year were derived from month to month equipment lease fees from a company controlled by a major shareholder.

 

The Company occupies racing storage and shop space from a Company under common control on a verbal, as agreed, month to month basis and pays no rent.

 

As at December 31, 2012 and 2013 the Company owed a company controlled by our controlling shareholder $25,000 for working capital advances, bearing interest at 10% and due on demand.

 

As at December 31, 2012 and 2013 the Company had drawn down $175,000 under a $500,000 unsecured line of credit with a company controlled by our controlling shareholder, bearing interest at 10% per annum, with $100,000 currently due and $75,000 due in January 2014. Interest expense for 2013 and 2012 was $18,851 and $17,568 with accrued interest payable at December 31, 2013 and 2012 of $402 and $5,342.

 

NOTE 7. INCOME TAXES

 

Deferred income taxes arise from the temporary differences between financial statement and income tax recognition of net operating losses. These loss carryovers are limited under the Internal Revenue Code should a significant change in ownership occur.

 

At December 31, 2013 and 2012 the Company had net operating loss carryforwards of approximately $537,000 and $469,000 which begin to expire in 2031. The deferred tax asset of $108,000 and $94,000 created by the net operating loss has been offset by a 100% valuation allowance. The change in the valuation allowance for the years ended December 31, 2013 and 2012 was $14,000 and $31,000.

 

NOTE 8. SUBSEQUENT EVENTS

 

As of March 31, 2014 we borrowed a total of $175,000 from a related party pursuant to an unsecured demand promissory note. The note bears interest at 10% per annum.

   

In accordance with ASC 855-10, “Subsequent Events” the Company has analyzed its operations subsequent to December 31, 2013 to the date these financial statements were available to be issued on April 11, 2014, and has determined that, other than as disclosed above, it does not have any material subsequent events to disclose in these financial statements.

 

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