``
 UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
  
   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended February 28, 2019
 
   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _________ to __________
 
Commission file number: 333-178210
 
SERVICE TEAM INC.
(Exact name of registrant as specified in its charter)
 
Nevada
61-1653214
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification No.)
 
18482 Park Villa Place, Villa Park, California 92861
(Address of principal executive offices) (Zip Code)
  
(714) 538-5214
(Registrant's telephone number, including area code)
 
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes       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 (Sec.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).         Yes       No  
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.  
 
 
Large accelerated filer           Accelerated filer           Non-accelerated filer          Smaller reporting company      Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes       No  
 
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of April 1, 2019:  8,852,873,544 common shares and 150,000 shares of preferred stock.
 
 

PART I — FINANCIAL INFORMATION
  
Item 1. Financial Statements.
 
 
TABLE OF CONTENTS
 
 
 
Page
Financial Statements
 
 
 
 
 
Consolidated Balance Sheets as of February 28, 2019 (unaudited) and August 31, 2018
3
 
Consolidated Statements of Operations for the three months and six months ended February 28, 2019 and 2018 (unaudited)
4
 
Consolidated Statement of Shareholders' Equity for the year ended August 31, 2018 (audited) and the six months ended February 28, 2019 (unaudited)
5
 
Consolidated Statement of Cash Flows for the six month periods ended February 28, 2019 and February 28, 2018 (unaudited)
6
 
Notes to the Consolidated Financial Statements (unaudited)
7
 


2


SERVICE TEAM INC.
 
CONSOLIDATED BALANCE SHEETS
 
AS OF FEBRUARY 28, 2019 (UNAUDITED) AND AUGUST 31, 2018
 



 
     
 
 
2/28/19
   
8/31/18
 
ASSETS
           
Cash
 
$
692
   
$
48,855
 
Accounts receivable, net
   
397,646
     
330,631
 
Total current assets
   
398,338
     
379,486
 
 
               
Property and equipment, net of depreciation
   
165,164
     
171,726
 
Prepaid expenses
   
14,000
     
14,000
 
TOTAL ASSETS
 
$
577,502
   
$
565,212
 
 
               
LIABILITIES & SHAREHOLDERS' (DEFICIT)
               
Accounts payable
 
$
114,419
   
$
101,030
 
Convertible notes payable, net
   
-
     
16,584
 
Convertible notes payable, net currently in default
   
133,137
     
107,832
 
Promissory Note Payable, net
   
62,895
     
67,092
 
Accrued expense
   
91,737
     
66,575
 
Accrued interest
   
31,731
     
20,940
 
TOTAL LIABILITIES
   
433,919
     
380,053
 
 
               
SHAREHOLDERS' EQUITY
               
Common stock, $0.001 par value, 20,000,000,000 authorized, 8,852,873,544 and 8,852,873,544 issued and outstanding as of February 28, 2019 and August 31, 2018, respectively.
   
8,852,874
     
8,852,874
 
Preferred stock – Series A, $0.001 par value, 150,000 authorized, 150,000 and 150,000 issued and outstanding as of February 28, 2019 and August 31, 2018, respectively.
   
(150
)
   
(150
)
Stock Payable
   
(7,095
)
   
-
 
Additional paid in capital
   
(5,611,302
)
   
(5,611,302
)
Accumulated deficit
   
(3,105,234
)
   
(3,056,563
)
TOTAL SHAREHOLDERS' EQUITY
   
143,583
     
185,159
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
 
$
577,502
   
$
565,212
 




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

3

SERVICE TEAM INC
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTH PERIODS ENDING
FEBRUARY 28, 2019 AND FEBRUARY 28, 2018 (UNAUDITED)
 
                 
 
                       
 
 
3 Months
   
3 Months
   
6 Months
   
6 Months
 
 
 
Ended
   
Ended
   
Ended
   
Ended
 
 
 
2/28/19
   
2/28/18
   
2/28/19
   
2/28/18
 
REVENUES
                       
Sales
 
$
919,177
   
$
844,875
   
$
1,913,066
   
$
1,776,334
 
 
                               
COST OF SALES
                               
Cost of sales
   
854,318
     
706,267
     
1,571,335
     
1,437,191
 
 
                               
Gross Margin
   
64,859
     
138,608
     
341,731
     
339,143
 
 
                               
OPERATING EXPENSES
                               
General & Administrative Expenses
   
204,303
     
205,194
     
330,763
     
353,250
 
Depreciation Expense
   
4,205
     
3,887
     
8,411
     
7,773
 
Total Operating Expenses
   
208,508
     
209,081
     
339,174
     
361,023
 
 
                               
INCOME (LOSS) FROM OPERATIONS
   
(143,649
)
   
(70,473
)
   
2,557
     
(21,880
)
 
                               
OTHER EXPENSE
                               
Interest Expense
   
(18,548
)
   
(93,313
)
   
(51,228
)
   
(220,190
)
Total Other Expense
   
(18,548
)
   
(93,313
)
   
(51,228
)
   
(220,190
)
 
                               
NET LOSS
 
$
(162,197
)
 
$
(163,750
)
 
$
(48,671
)
 
$
(242,070
)
 
                               
Weighted Average number of common shares outstanding - basic and fully diluted
   
8,852,873,544
     
6,516,354,316
     
8,852,873,544
     
4,928,637,507
 
 
                               
Net loss per share – basic and fully diluted
 
$
(0.00
)
 
$
(0.00
)
 
$
(0.00
)
 
$
(0.00
)

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

4


CONSOLIDATED STATEMENT OF SHAREHOLDERS DEFICIT FOR THE YEAR
ENDED AUGUST 31, 2018 AND THE SIX MONTHS ENDED FEBRUARY 28, 2019 (UNAUDITED)


 

 
 
Common Stock
   
Preferred Stock
   
Additional
Paid In
   
Stock
   
Accumulated
       
 
 
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
Payable
   
Deficit
   
Total
 
 
                                               
Balance, August 31, 2017
   
2,319,879,587
   
$
2,319,880
     
100,000
   
$
100
   
$
598,737
   
$
4,742
   
$
(2,701,796
)
 
$
221,663
 
Shares Issued for Note Conversions
   
6,427,625,957
     
6,427,626
     
-
     
-
     
(6,150,363
)
   
-
     
-
     
277,263
 
Shares Issued for Stock Payable
   
105,368,000
     
105,368
     
-
     
-
     
(100,626
)
   
(4,742
)
   
-
     
-
 
Stock Based Compensation
   
-
     
-
     
50,000
     
50
     
950
     
-
     
-
     
1,000
 
Beneficial Conversion Feature
   
-
     
-
     
-
     
-
     
40,000
     
-
     
-
     
40,000
 
Net Loss
   
-
     
-
     
-
     
-
     
-
     
-
     
(354,767
)
   
(354,767
)
Balance August 31, 2018
   
8,852,873,544
   
$
8,852,874
     
150,000
   
$
150
   
$
(5,611,302
)
 
$
-
   
$
(3,056,563
)
 
$
185,159
 
Stock Payable for Note Conversion
   
-
     
-
     
-
     
-
     
-
     
7,095
     
-
     
7,095
 
Net Income
   
-
     
-
     
-
     
-
     
-
     
-
     
(48,671
)
   
(48,671
)
Balance February 28, 2019
   
8,852,873,544
   
$
8,852,874
     
150,000
   
$
150
   
$
(5,611,302
)
   
7,095
   
$
(3,105,234
)
 
$
143,583
 


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




5

SERVICE TEAM INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 2019 AND 2018 (UNAUDITED)




 
 
2/28/19
   
2/28/18
 
Cash flows from operating activities
           
Net loss
 
$
(48,671
)
 
$
(242,070
)
 
               
Adjustments to reconcile net (loss) with cash provided by operations:
               
Debt discount amortization
   
40,437
     
187,080
 
Stock based compensation – related party
   
-
     
1,000
 
Depreciation
   
8,411
     
7,773
 
 
               
Change in operating assets and liabilities:
               
Accounts receivable
   
(67,015
)
   
(73,422
)
Accrued expenses
   
35,953
     
54,081
 
Accounts Payable
   
11,540
     
11,142
 
Net cash provided by operating activities
   
(19,345
)
   
(54,416
)
 
               
Cash flows from investing activities
               
Cash paid for purchase of fixed assets
   
-
     
(17,677
)
Net cash used in investing activities
   
-
     
(17,677
)
 
               
Cash flows from financing activities
               
Proceeds from promissory notes
   
47,756
     
61,405
 
Proceeds from convertible notes payable – related party
   
-
     
7,500
 
Proceeds from convertible notes payable
   
-
     
40,000
 
Payments on promissory notes
   
(76,574
)
   
(30,800
)
Net cash provided by (used in) financing activities
   
(28,818
)
   
78,105
 
 
               
Net increase (decrease) in cash and cash equivalents
   
(48,163
)
   
6,012
 
Cash at beginning of period
   
48,855
     
80,810
 
Cash at end of period
 
$
692
   
$
86,822
 
 
               
Supplemental Disclosures
               
Interest Paid
 
$
-
   
$
-
 
Taxes Paid
 
$
-
   
$
-
 
 
               
Non-Cash Transactions
               
Beneficial conversion features
 
$
-
   
$
40,000
 
Conversions of debt to stock payable
 
$
7,095
   
$
-
 
Common shares issued for common stock payable
 
$
-
   
$
4,742
 
Common shares issued for debt conversions
 
$
-
   
$
215,169
 
 
               

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

 

6

SERVICE TEAM, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF FEBRUARY 28, 2019 (UNAUDITED)



NOTE 1 - ORGANIZATION
 
Organization
 
Service Team Inc. (the "Company") was incorporated pursuant to the laws of the State of Nevada on June 6, 2011.  The Company was organized to comply with the warranty obligations of electronic devices manufactured by companies outside of the United States.  The business proved to be unprofitable and the Company reduced its warranty and repair operations.  On June 5, 2013, Service Team Inc. acquired Trade Leasing, Inc. for 4,000,000 shares of its common stock, a commonly held company.  Trade Leasing, Inc., a California corporation, was incorporated on November 1, 2011, and commenced business January 1, 2013.  Trade Leasing, Inc. is principally involved in the manufacturing, maintenance and repair of truck bodies.   On September l, 2017, Service Team Inc. changed its state of domicile from the state of Nevada to the state of Wyoming.    
 
The Company has established a fiscal year end of August 31.
 
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Basis of Presentation
 
The consolidated financial statements presented in this report are the combined financial reports of Trade Leasing, Inc. and Service Team Inc. 
 
The Company maintains its accounting records on an accrual basis in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP).
 
The consolidated financial statements present the Balance Sheet, Statements of Operations, Shareholders' Deficit and Cash Flows of the Company. These consolidated financial statements are presented in United States dollars. The accompanying audited, consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q.  All adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations for the interim periods have been made and are of a recurring nature unless otherwise disclosed herein.
 
Principles of Consolidation
 
The accompanying consolidated financial statements include the accounts of Service Team Inc. and Trade Leasing, Inc. both of which are under common control and ownership. The consolidated financial statements herein contain the operations of the wholly-owned subsidiaries listed above. All significant inter-company transactions have been eliminated in the preparation of these financial statements. 
 
 
7

 
Use of Estimates
 
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period.  Actual results could differ from those estimates. 
  
Going Concern
 
The Company's financial statements are prepared using the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America, and have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The Company has an accumulated deficit as of February 28, 2019 of $3,105,234 and is dependent on raising capital through placement of our common stock in order to implement its business plan. There can be no assurance that the Company will be successful in order to continue as a going concern. The Company is funding its initial operations by issuing common shares and debt.  We cannot be certain that capital will be provided when it is required.

Cash and Equivalents
 
Cash and equivalents include investments with initial maturities of three months or less. The Company maintains its cash balances at credit-worthy financial institutions that are insured by the Federal Deposit Insurance Corporation ("FDIC") up to $250,000. There were no cash equivalents at February 28, 2019, or August 31, 2018.
 
Concentration of Credit Risk
 
Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, are cash and cash equivalents. The Company places its cash and temporary cash investments with credit quality institutions. At times, such investments may be in excess of FDIC insurance limits.
 
Accounts Receivable
 
All accounts receivable are due thirty (30) days from the date billed. If the funds are not received within thirty (30) days the customer is contacted to arrange payment. The Company uses the allowance method to account for uncollectable accounts receivable. All accounts were considered collectable at period end and no allowance for bad debts was considered necessary.

Accounts Receivable and Revenue Concentrations
 
The Company's wholly owned subsidiary, Trade Leasing, Inc., has more than 300 customers.  Three customers represented about 19%, 12% and 10% of total receivables  as of February 28, 2019.   Three customers represented 21%, 18% and 12% of total receivables as of August 31, 2018. During the six month period ended February 28, 2019, the Company had two customers that represented 19% and 12% of total sales. During the six month period ended February 28, 2018, the Company had one customer that represented 19% of total sales.
 
8


 
Inventory
 
The Company does not own inventory, materials are purchased as needed from local suppliers; therefore, there was no additional inventory on hand at February 28, 2019 or August 31, 2018. 
   
Property and Equipment
 
Equipment, vehicles and furniture, which are recorded at cost, consist primarily of fabrication equipment and are depreciated using the straight-line method over the estimated useful lives of the related assets (generally 15 years or less). Costs incurred for maintenance and repairs are expensed as incurred and expenditures for major replacements and improvements are capitalized and depreciated over their estimated remaining useful lives. There was $8,411 and $7,773 of depreciation expense during the six months ended February 28, 2019 and 2018, respectively. 
   
Net property and equipment were as follows at February 28, 2019 and August 31, 2018: 
 
 
 
2/28/19
   
8/31/18
 
Equipment
 
$
366,059
   
$
364,210
 
Vehicles
   
15,000
     
15,000
 
Furniture
   
24,000
     
24,000
 
Leasehold improvements
   
52,827
     
52,827
 
Subtotal
   
457,886
     
456,037
 
Less: accumulated depreciation
   
(292,722
)
   
(284,311
)
Total Fixed Assets, Net
 
$
165,164
   
$
171,726
 
 
Lease Commitments
 
Service Team Inc. leases facilities at 1818 Rosslynn Avenue, Fullerton, California, to manufacture its products.   The facility is leased for six and one half years at a price of $10,000 per month, for the first six months; and, $14,000 per month thereafter.  Service Team Inc pays for the fire insurance and property taxes on the building estimated to be approximately $2,000 per month. The location consists of three acres of land and one building of approximately 30,000 square feet.   As of February 28, 2018, the deferred rent related to this lease was $10,333.

Our principal executive offices are located in 600 square feet in a building at 18482 Park Villa Place, Villa Park, California 92861. The space is furnished by Robert L. Cashman, a related party, at no charge.
 
Beneficial Conversion Features
 
From time to time, the Company may issue convertible notes that may contain an imbedded beneficial conversion feature. A beneficial conversion feature exists on the date a convertible note is issued when the fair value of the underlying common stock to which the note is convertible into is in excess of the remaining unallocated proceeds of the note after first considering the allocation of a portion of the note proceeds to the fair value of warrants, if related warrants have been granted. The intrinsic value of the beneficial conversion feature is recorded as a debt discount with a corresponding amount to additional paid in capital. The debt discount is amortized to interest expense over the life of the note using the effective interest method.
 
9

 
Fair Value of Financial Instruments
 
The Company adopted Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820 on June 6, 2011. Under this FASB, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value.
 
The Company has various financial instruments that must be measured under the new fair value standard including: cash, convertible notes payable, accrued expenses, promissory notes payable, accounts receivable and accounts payable. The Company's financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:   
  
Level 1 – Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.  The fair value of the Company's cash is based on quoted prices and therefore classified as Level 1. 
 
Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).
 
Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.
  
Cash, accounts receivable, accounts payable, promissory notes, convertible notes and accrued expenses reported on the balance sheet are estimated by management to approximate fair market value due to their short term nature.

The following table presents assets and liabilities that were measured and recognized at fair value as of February 28, 2019 on a recurring basis:

 
           
Total
 
 
           
Realized
 
Description
Level 1
 
Level 2
 
Level 3
 
Loss
 
Convertible Note Payable, net – in default
 
$
133,137
   
$
-
   
$
-
   
$
-
 
Total
 
$
133,137
   
$
-
   
$
-
   
$
-
 


10

 
The following table presents assets and liabilities that were measured and recognized at fair value as of August 31, 2018 on a recurring basis:
 
 
           
Total
 
 
           
Realized
 
Description
Level 1
 
Level 2
 
Level 3
 
Loss
 
 Convertible note payable, net – in default
 
$
107,832
   
$
-
   
$
-
   
$
-
 
Convertible notes payable, net
   
16,584
     
-
     
-
     
-
 
Total
 
$
124,416
   
$
-
   
$
-
   
$
-
 

Income Taxes

In assessing the realization of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on the level of historical operating results and the uncertainty of the economic conditions, the Company has recorded a full valuation allowance against its deferred tax assets at February 28, 2019 and August 31, 2018 where it cannot conclude that it is more likely than not that those assets will be realized.
  
Revenue Recognition
 
Trade Leasing Inc dba Delta Stag Manufacturing
 
Service Team Inc, 100% owned subsidiary Trade Leasing Inc dba Delta Stag Manufacturing receives orders from customers to build or repair truck bodies. The company builds the requested product. At the completion of the product the truck is delivered to the customer.  If the customer accepts the product Trade Leasing Inc dba Delta Stag Manufacturing issues an invoice to the customer for the job. The invoice is entered into our accounting system and is recognized as revenue at that time.

In Trade Leasing Inc we use the completed contract method for truck bodies built, which typically have construction periods of 15 days or less. Contracts are considered complete when title has passed, the customer has accepted the product and we do not retain risks or rewards of ownership of the truck bodies. Losses are accrued if manufacturing costs are expected to exceed manufacturing contract revenue.  Manufacturing expenses are primarily composed of aluminum cost, which is the largest component of our raw materials cost and the cost of labor. 

On September 1, 2018, we adopted Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (ASC) Topic 605, Revenue Recognition (Topic 605). Results for reporting periods beginning after September 1, 2018 are presented under Topic 606. The impact of adopting the new revenue standard was not material to our financial statements and there was no adjustment to beginning retained earnings on September 1, 2018.
 
11


 
Under Topic 606, revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

We determine revenue recognition through the following steps:
  identification of the contract, or contracts, with a customer;
  identification of the performance obligations in the contract;
  determination of the transaction price;
  allocation of the transaction price to the performance obligations in the contract; and
  recognition of revenue when, or as, we satisfy a performance obligation. 

Share Based Expenses
 
The Company accounts for the issuance of equity instruments to acquire goods and/or services based on the fair value of the goods and services or the fair value of the equity instrument at the time of issuance, whichever is more readily determinable. The Company's accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of standards issued by the FASB .  The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor's performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.
 
Stock Based Compensation
 
In December of 2004, the FASB issued a standard which applies to transactions in which an entity exchanges its equity instruments for goods or services and also applies to liabilities an entity may incur for goods or services that are based on the fair value of those equity instruments. For any unvested portion of previously issued and outstanding awards, compensation expense is required to be recorded based on the previously disclosed methodology and amounts. Prior periods presented are not required to be restated. We adopted the standard as of inception.  The Company has not issued any stock options to its Board of Directors and officers as compensation for their services.  If options are granted, they will be accounted for at a fair value as required by the FASB ASC 718.
 
Net Loss Per Share
 
The Company adopted the standard issued by the FASB, which requires presentation of basic earnings or loss per share and diluted earnings or loss per share. Basic income (loss) per share ("Basic EPS") is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share ("Diluted EPS") are similarly calculated using the treasury stock method except that the denominator is increased to reflect the potential dilution that would occur if dilutive securities at the end of the applicable period were exercised.  During the three and six month periods ended February 28, 2018 and 2017, because the Company operations resulted in net losses, no additional dilutive securities were included in the Diluted EPS as that would be anti-dilutive to the resulting diluted earnings per share.
 
 
12

Recent Accounting Pronouncements

In May 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2017-09 , Compensation — Stock Compensation (Topic 718): Scope of Modification Accounting.  ASU 2017-09, which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. Per ASU 2017-9, an entity should account for the effects of a modification unless all the following are met: (1) the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification, (2) the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified, and (3) the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The current disclosure requirements in Topic 718 apply regardless of whether an entity is required to apply modification accounting under the amendments in ASU 2017-9. ASU 2017-9 is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for (1) public business entities for reporting periods for which financial statements have not yet been issued and (2) all other entities for reporting periods for which financial statements have not yet been made available for issuance. The amendments in this ASU should be applied prospectively to an award modified on or after the adoption date. The adoption of  ASU 2017-9  is not expected to have a material impact on the Company's financial statements or related disclosures.
 
In January 2017, the FASB issued ASU 2017-04,  Intangibles – Goodwill and Other (Topic 350) . ASU 2017-04 simplifies the subsequent measurement of goodwill by removing the second step of the two-step impairment test. The amendment requires an entity to perform its annual, or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The amendment should be applied on a prospective basis. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company intends to early adopt the ASU in 2017.
 
In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)". Under this guidance, an entity is required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. This guidance offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. This guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard will have on our consolidated financial statements.
 
In May 2014 the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. Since ASU 2014-09 was issued, several additional ASUs have been issued to clarify various elements of the guidance. These standards provide guidance on recognizing revenue, including a five-step model to determine when revenue recognition is appropriate. The standard requires that an entity recognize revenue to depict the transfer of control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Adoption of the new standard is effective for reporting periods beginning after December 15, 2017. We will continue our evaluation until our adoption of the new standard.
  
 
13

NOTE 3 – CAPITAL STOCK
 
The Company's authorized capital is 20,000,000,000 common shares with a par value of $0.001 per share and 150,000 preferred shares with a par value of $0.001 per share.  

Common Shares

On February 12, 2016, the Articles of Incorporation were amended to increase the authorized shares of capital stock to 500,000,000.   On December 20, 2016, the Articles of Incorporation were amended to increase the authorized share of capital stock to 1,000,000,000.    On January 19, 2017, the Articles of Incorporation were amended to increase the authorized share of capital stock to 2,000,000,000.   On February 16, 2017, the Articles of Incorporation were amended to increase the authorized share of capital stock to 3,000,000,000.   On April 27, 2017, the Articles of Incorporation were amended to increase the authorized share of capital stock to 4,500,000,000.  On June 13, 2017, the Articles of Incorporation were amended to increase the authorized share of capital stock to 8,000,000,000.   On June 28, 2017, the Articles of Incorporation were amended to increase the authorized share of capital stock to 10,000,000,000.  On August 22, 2017, the Company moved its state of domicile from Nevada to Wyoming, and increased its authorized common stock to 20,000,000,000.
 
Preferred Shares

On January 23, 2015, Service Team Inc. filed with the Secretary of State of Nevada a Certificate of Designation for 100,000 shares of Series A Preferred Stock.  The Designation gives the Series A Preferred Stock 500 votes per share.   Series A Preferred Stock were not entitled to receive dividends, any liquidation preference, or conversion rights.  On October 16, 2015, the Designation of Preferred Stock was amended to allow Preferred Shareholders to receive dividends in an amount equal to dividends paid per share on Common Stock.  On July 27, 2016, an amendment was filed to increase the voting rights of the preferred stock from 500 votes per share to 10,000 votes per share. The Series A share amendments valued according to the additional voting rights and dividend rights assigned. The value assigned to the dividend rights was derived from a model utilizing future economic value of the dividends and was $525 which was recorded on the grant date as stock based compensation.  The value assigned to the voting rights was derived from a model utilizing control premiums to value the voting control of the preferred stock and was $83,000 which was recorded on the grant date as stock based compensation.  On December 30, 2016 the Articles of Incorporation were amended to increase the authorized preferred shares to 150,000.

On July 25, 2017, the Articles of Incorporation were amended to increase the voting rights of preferred shares to 100,000 votes per share. The Series A share amendments valued according to the additional voting rights and dividend rights assigned. The value assigned to the dividend rights was derived from a model utilizing future economic value of the dividends and was $0 which was recorded on the grant date as stock based compensation.  The value assigned to the voting rights was derived from a model utilizing control premiums to value the voting control of the preferred stock and was $54,000 which was recorded on the grant date as stock based compensation.

On December 4, 2017, the Company granted 50,000 additional Series A Preferred Stock shares to Robert Cashman, a related party.  The value assigned to the new shares was derived from a model utilizing control premiums to value the voting control of the preferred stock and was $1,000 which was recorded on the grant date as stock based compensation.  

 
Share Transactions

2019
 
On November 13, 2018, JMJ Financial converted $7,095 of its Note into 129,000,000 shares of common stock. The shares were not issued as of November 30, 2018; therefore, a stock payable of $7,095 has been recorded in equity. As the conversion was completed within the terms of the convertible note agreement, no gain or loss was recognized as a result of this conversion
14


2018

On September 1, 2017, Crown Bridge Partners LLC converted $4,742 of its Note dated 12-21-2016 into 105,368,000 shares of common stock. As the conversion was completed within the terms of the convertible note agreement, no gain or loss was recognized as a result of this conversion.

On September 2, 2017, Crossover Capital LLC converted $4,975 of its Note dated 2-14-2017 into 103,000,000 shares of common stock. As the conversion was completed within the terms of the convertible note agreement, no gain or loss was recognized as a result of this conversion.

On September 11, 2017, Crown Bridge Partners LLC converted $5,446 of its Note dated 12-21-2016 into 121,018,000 shares of common stock. As the conversion was completed within the terms of the convertible note agreement, no gain or loss was recognized as a result of this conversion.

On September 12 2017, LG Capital Funding LLC Converted $6,048 of its Note dated 1-3-2017 into 120,964,400 shares of common stock. As the conversion was completed within the terms of the convertible note agreement, no gain or loss was recognized as a result of this conversion.
 
On September 19, 2017, Crossover Capital LLC converted $6,075 of its Note dated 2-14-2017 into 125,000,000 shares of common stock. As the conversion was completed within the terms of the convertible note agreement, no gain or loss was recognized as a result of this conversion.

On October 6, 2017, Crown Bridge Partners LLC converted $6,501 of its Note dated 12-21-2016 into 144,470,000 shares of common stock. As the conversion was completed within the terms of the convertible note agreement, no gain or loss was recognized as a result of this conversion.

On October 5, 2017, Crossover Capital LLC converted $6,925 of its Note dated 2-14-2017 into 142,000,000 shares of common stock. As the conversion was completed within the terms of the convertible note agreement, no gain or loss was recognized as a result of this conversion.

On October 31, 2017, Tangiers Investment Group LLC converted $4,331 of its Note dated 6-13-2016 in the amount of into 125,000,000 shares of common stock. As the conversion was completed within the terms of the convertible note agreement, no gain or loss was recognized as a result of this conversion.

On October 31, 2017, Tangiers Investment Group LLC converted $6,750 of its Note dated 6-13-2016 in the amount of into 192,857,143 shares of common stock. As the conversion was completed within the terms of the convertible note agreement, no gain or loss was recognized as a result of this conversion.

On November 2, 2017, LG Capital Funding LLC Converted $6,681 of its Note dated 1-3-2017 into 133,622,200 shares of common stock. As the conversion was completed within the terms of the convertible note agreement, no gain or loss was recognized as a result of this conversion.

On November 4, 2017, Crossover Capital LLC converted $8,075 of its Note dated 2-14-2017 into 165,000,000 shares of common stock. As the conversion was completed within the terms of the convertible note agreement, no gain or loss was recognized as a result of this conversion
 

 
15

On November 8, 2017, Crown Bridge Partners LLC converted $7,858 of its Note dated 12-21-2016 into 174,626,000 shares of common stock. As the conversion was completed within the terms of the convertible note agreement, no gain or loss was recognized as a result of this conversion.
  
On November 14, 2017, Crown Bridge Partners LLC converted $9,421 of its Note dated 12-21-2016 into 198,242,000 shares of common stock. As the conversion was completed within the terms of the convertible note agreement, no gain or loss was recognized as a result of this conversion.
 
On November 15, 2017, Crown Bridge Partners LLC converted $7,538 of its Note dated 12-21-2016 into 167,511,777 shares of common stock. As the conversion was completed within the terms of the convertible note agreement, no gain or loss was recognized as a result of this conversion.

On November 15, 2017, Crossover Capital LLC converted $7,735 of its Note dated 2-14-2017 into 158,200,000 shares of common stock. As the conversion was completed within the terms of the convertible note agreement, no gain or loss was recognized as a result of this conversion

On November 16, 2017, Tangiers Investment Group LLC converted $13,613 of its Note in the amount of into 396,880,466 shares of common stock. As the conversion was completed within the terms of the convertible note agreement, no gain or loss was recognized as a result of this conversion.

On November 29, 2017, JMJ Financial converted $13,270 of its Note dated 5-1-2017 into 132,700,000 shares of common stock. As the conversion was completed within the terms of the convertible note agreement, no gain or loss was recognized as a result of this conversion

On December 5, 2017, Tangiers Investment Group LLC converted $16,769 of its Note dated 7-18-2016    into 488,892,128 shares of common stock. As the conversion was completed within the terms of the convertible note agreement, no gain or loss was recognized as a result of this conversion.

On December 6, 2017, JMJ Financial converted $4,700 of its Note dated 5-1-2017 into 94,000,000 shares of common stock. As the conversion was completed within the terms of the convertible note agreement, no gain or loss was recognized as a result of this conversion.

On December 13, 2017, JMJ Financial converted $19,317 of its Note dated 5-1-2017 into 129,000,000 shares of common stock. As the conversion was completed within the terms of the convertible note agreement, no gain or loss was recognized as a result of this conversion.  This conversion pays the Note in full.

On December 14, 2017, Crown Bridge Partners LLC converted $12,596 of its Note dated 12-21-2016 into 279,900,000 shares of common stock. As the conversion was completed within the terms of the convertible note agreement, no gain or loss was recognized as a result of this conversion.

On December 28, 2017, Tangiers Investment Group LLC converted $20,621 of its Note dated 7-18-2016    into 601,195,335 shares of common stock. As the conversion was completed within the terms of the convertible note agreement, no gain or loss was recognized as a result of this conversion.
 

 
16

On January 12, 2018, Crown Bridge Partners LLC converted $12,600 of its Note dated 12-21-2016 into 280,000,000 shares of common stock. As the conversion was completed within the terms of the convertible note agreement, no gain or loss was recognized as a result of this conversion.
 
On January 29, 2018, Crossover Capital LLC converted $7,325 of its Note Dated 7-24-2017 into 150,000,000 shares of common stock. As the conversion was completed within the terms of the convertible note agreement, no gain or loss was recognized as a result of this conversion.

On March 16, 2018, Crossover Capital LLC converted $12,325 of its Note Dated 7-24-2017 into 250,000,000 shares of common stock. As the conversion was completed within the terms of the convertible note agreement, no gain or loss was recognized as a result of this conversion. 

On March 16, 2018, JMJ Financial converted $6,505 of its Note dated 4-28-2017 into 351,000,000 shares of common stock. As the conversion was completed within the terms of the convertible note agreement, no gain or loss was recognized as a result of this conversion.
 
On March 19, 2018, Crown Bridge Partners LLC converted $15,829 of its Note dated 12-21-2016 into 351,760,000 shares of common stock. As the conversion was completed within the terms of the convertible note agreement, no gain or loss was recognized as a result of this conversion.

On March 21, 2018, Tangiers Investment Group LLC converted $19,201 of its Note dated 7-18-2016 into 548,564,286 shares of common stock. As the conversion was completed within the terms of the convertible note agreement, no gain or loss was recognized as a result of this conversion.

On May 22, 2018, Tangiers Investment Group LLC converted $13,600 of its Note dated 11-10-2017 into 302,222,222 shares of common stock. As the conversion was completed within the terms of the convertible note agreement, no gain or loss was recognized as a result of this conversion.

During the twelve-month period ended August 31, 2018, $40,000 of beneficial conversion features were recorded resulting from convertible debts issued during the same period.  Please refer to Note 4 for further information regarding the discounts on the convertible debt transactions.
 
As of February 28, 2019 and August 31, 2018, the Company has not granted any stock options.
 
During 2018 and 2019 the Company did not sell any Common Shares.  The only shares issued were for Conversion of Notes.
  
Stock Based Compensation
 
We have accounted for stock-based compensation under the provisions of FASB Accounting Standards codification (ASC) 718-10-55.  (Prior authoritative literature:  FASB Statement 123 (R), Share-based payment.)  This statement requires us to record any expense associated with the fair value of stock-based compensation.  Determining fair value requires input of highly subjective assumptions, including the expected price volatility.  Changes in these assumptions can materially affect the fair value estimate.
 
17

NOTE 4 – DEBT TRANSACTIONS

Convertible Notes Payable – Related Party

R.L. Cashman

On April 17, 2017, the Company issued a convertible note to Robert Cashman (a related party) for $12,500 of cash consideration.  The note bears interest at 10%, matures on April 17, 2018, and is convertible into common stock at 50% of the average bid price of the stock during the 30 days prior to the conversion. The Company recorded a debt discount equal to $12,500 due to this conversion feature and amortized $4,658 during the year ended August 31, 2017, with a remaining debt discount of $7,842 amortized during the year ended August 31, 2018.  The note was repaid in full during the fiscal year ended August 31, 2018.

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the conversion price floor and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.0005. In the event that the authorized shares were not sufficient, the Company has obtained authorization from a majority of shareholders such that the appropriate number of shares will be available or issuable for settlement to occur.
   
Convertible Notes Payable – Third Party

JMJ Financial Group

On April 28, 2017, the Company issued a convertible note to JMJ Financial Group for $55,000 of cash consideration.  The note bears interest at 12%, matures on April 28, 2018, and is convertible into common stock at 50% of the lowest 3 closing market prices of the previous 20 trading days prior to conversion. The Company recorded a debt discount equal to $37,080 due to this conversion feature. The Company also recorded a $6,000 and $11,920 debt discounts due to accrued interest and origination fees required by the agreement to be accrued at the beginning of the note. The note had accrued interest of $7,222 and $8,628 as of August 31, 2018 and February 28, 2019, respectively.  The debt discounts had a balance at August 31, 2017 of $36,164 and a balance of $0 at August 31, 2018.  The Company recorded debt discount amortization expense of $18,836 during the year ended August 31, 2017 and $36,164 during the year ended August 31, 2018.   The Company converted $31,570 of principal and $12,222 of interest into shares during the year ended August 31, 2018.  The Company converted $7,095 of principal into shares during the period ended November 30, 2018.   This note is currently in default.

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the conversion price floor and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.00005. In the event that the authorized shares were not sufficient, the Company has obtained authorization from a majority of shareholders such that the appropriate number of shares will be available or issuable for settlement to occur.

 
LG Capital Funding, LLC

On January 3, 2017, the Company issued a convertible note to LG Capital Funding LLC for $28,000 for cash consideration.  The note bears interest at 8%, matures on September 3, 2017, and is convertible into common stock at 50% of the lowest 3 closing market prices of the previous 20 trading days prior to conversion. The Company recorded a debt discount equal to $26,000 due to this conversion feature. The Company also recorded a $2,000 debt discount due to issuance costs. The note had accrued interest of $84 as of August 31, 2017 and $0 at August 31, 2018.  The debt discounts had a balance at August 31, 2017 of $9,589 and $0 at August 31, 2018.  During the year ended August 31, 2017, $15,930 of principal and $706 of accrued interest was converted into shares; see Note 3 for more information. The Company made cash payments of $5,770, to end with a balance of $6,300 as of August 31, 2017.   The note was fully converted into shares during the three months ended November 30, 2017.  The Company recorded debt discount amortization expense of $18,411 during the year ended August 31, 2017 and $9,589 during the three months ended November 30, 2017.   The entire balance of the Note has been converted to stock.

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the conversion price floor and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.00005. In the event that the authorized shares were not sufficient, the Company has obtained authorization from a majority of shareholders such that the appropriate number of shares will be available or issuable for settlement to occur.
 
 
18


Tangiers Capital Group

On June 13, 2016, the Company issued a convertible note to Tangiers Capital Group for $38,500 of cash consideration.  The note bears interest at 10%, matures on June 13, 2017, and is convertible into common stock at 50% of the lowest 3 closing market prices of the previous 20 trading days prior to conversion. The Company recorded a debt discount equal to $35,000 due to this conversion feature. The Company also recorded a $3,500 debt discount due to issuance fees. The note had accrued interest of $7,272 and $10,890 and $3,850 as of November 30, 2017 and August 31, 2017.  The debt discounts had a balance at November 30, 2017 and August 31, 2017 of $0 and $0, respectively. The Company recorded debt discount amortization expense of $0 and $30,167 during the three months ended November 30, 2017 and the year ended August 31, 2017, respectively.  During the three months ended November 30, 2017 and the year ended August 31, 2017, $4,982 of principal and $3,743 of interest and $33,518 of principal and $4,220 of accrued interest was converted into shares, respectively; see Note 3 for more information.  The note has now been fully converted as of November 30, 2017.

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the conversion price floor and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.00005. In the event that the authorized shares were not sufficient, the Company has obtained authorization from a majority of shareholders such that the appropriate number of shares will be available or issuable for settlement to occur.

On July 18, 2016, the Company issued a convertible note to Tangiers Capital Group for $27,500 of cash consideration.  The note bears interest at 10%, matures on July 18, 2017, and is convertible into common stock at 50% of the lowest 3 closing market prices of the previous 20 trading days prior to conversion. The Company recorded a debt discount equal to $25,000 due to this conversion feature. The Company also recorded a $2,500 debt discount due to issuance fees. The note had accrued interest of $0 and $8,401 and as of August 31, 2018 and August 31, 2017.  The debt discounts had a balance at August 31, 2018 and August 31, 2017 of $0 and $0, respectively. The Company recorded debt discount amortization expense of $24,185 and $3,315 during the year ended August 31, 2017 and the year ended August 31, 2016, respectively.  $27,500 of principal and $39,694 of interest were converted into shares during the year ended August 31, 2018; see Note 3 for further information.
 
The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the conversion price floor and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.00005. In the event that the authorized shares were not sufficient, the Company has obtained authorization from a majority of shareholders such that the appropriate number of shares will be available or issuable for settlement to occur.
  
On November 10, 2017, Service Team Inc issued a 12% Convertible Promissory Note payable to Tangiers Investment Group LLC (the "Investor") in the principal amount of $23,000. The Note, which is due on November 10, 2018, was funded by the Investor in the sum of $20,000 and $3,000 was retained by the Investor through an original issue discount or "OID" for due diligence and legal expense related to this transaction. The Note is convertible into shares of the Registrant's common stock, par value $0.001, at a conversion price of 50% of the lowest trading price of the Company's common stock during the 25 consecutive trading days prior to the date on which Holder elects to convert all or part of the Note.  The Company recorded a $20,000 discount due to the beneficial conversion feature.  During the year ended August 31, 2018, $18,526 of discount amortization was recorded, to result in a remaining debt discount balance of $4,474 as of August 31, 2018.  During the three months ended November 30, 2018, the remaining discount balance of $4,474 was amortized leaving a remaining debt discount balance of $0 as of November 30, 2018.  Accrued interest at August 31, 2018 and February 28, 2019 was $2,760 and $3,324, respectively.  This note is currently in default.

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the conversion price floor and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.00005. In the event that the authorized shares were not sufficient, the Company has obtained authorization from a majority of shareholders such that the appropriate number of shares will be available or issuable for settlement to occur.

On February 27, 2018, Service Team Inc issued a 12% Convertible Promissory Note payable to Tangiers Investment Group LLC (the "Investor") in the principal amount of $23,000. The Note, which is due on February 27, 2019, was funded by the Investor in the sum of $20,000 and $3,000 was retained by the Investor through an original issue discount or "OID" for due diligence and legal expense related to this transaction. The Note is convertible into shares of the Registrant's common stock, par value $0.001, at a conversion price of 50% of the lowest trading price of the Company's common stock during the 25 consecutive trading days prior to the date on which Holder elects to convert all or part of the Note.  The Company recorded a $20,000 discount due to the beneficial conversion feature and a $3,000 discount due to the original issue discount.   During the year ended August 31, 2018, $11,658 of discount amortization was recorded, to result in a remaining debt discount balance of $11,342 as of August 31, 2018.  During the three months ended November 30, 2018, the Company amortized $5,750 of the debt discount leaving a remaining balance of $5,592 as of November 30, 2018.  Accrued interest at August 31, 2018 and February 28, 2019 was $2,760 and $4,140, respectively.

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the conversion price floor and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.00005. In the event that the authorized shares were not sufficient, the Company has obtained authorization from a majority of shareholders such that the appropriate number of shares will be available or issuable for settlement to occur.
  
 
19

Iconic Holdings LLC

On July 10, 2017, the Company issued a convertible note to Iconic Holdings of $34,993 for consideration of certain machine tools.  The note bears interest at 10%, matures on July 10, 2018, and is convertible into common stock at 50% of the lowest 3 closing market prices of the previous 20 trading days prior to conversion. The Company recorded a debt discount equal to $31,812 due to this conversion feature. The Company also recorded a $3,181 debt discount due to issuance fees. The note had accrued interest of $8,706 as of February 28, 2019 and $5,206 as of August 31, 2018.  The debt discounts had a balance at August 31, 2017 of $25,118 and $0 as of August 31, 2018. The Company recorded debt discount amortization expense of $9,875 during the year ended August 31, 2017 and $25,118 during the year ended August 31, 2018.  This note is currently in default.

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the conversion price floor and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.00005. In the event that the authorized shares were not sufficient, the Company has obtained authorization from a majority of shareholders such that the appropriate number of shares will be available or issuable for settlement to occur.

Crown Bridge Partners, LLC.

On December 21, 2016, the Company issued a convertible note to Crown Bridge Partners, LLC.  for $42,500 of cash consideration.  The note bears interest at 6%, matures on December 21, 2017, and is convertible into common stock at 55% of the lowest 3 closing market prices of the previous 20 trading days prior to conversion. The Company recorded a debt discount equal to $36,000 due to this conversion feature. The Company also recorded a $6,500 debt discount due to issuance fees. The note had accrued interest of $0 as of August 31, 2017 and August 31, 2018.   The debt discounts had a balance at August 31, 2017 of $13,041 and $0 at August 31, 2018.    The Company recorded debt discount amortization expense of $29,459 during the year ended August 31, 2017 and $13,041 during the year ended August 31, 2018. During the year ended August 31, 2017, $10,954 of principal and $13,502 of interest were converted into shares and during the year ended August 31, 2018, principal of $31,546 and interest of $5,217 was converted into shares; see Note 3 for more information.

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the conversion price floor and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.00005. In the event that the authorized shares were not sufficient, the Company has obtained authorization from a majority of shareholders such that the appropriate number of shares will be available or issuable for settlement to occur.

On June 12, 2017, the Company issued a convertible note to Crown Bridge Partners, LLC. for $63,750 of cash consideration.  The note bears interest at 6%, matures on June 12, 2018, and is convertible into common stock at 55% of the lowest 3 closing market prices of the previous 20 trading days prior to conversion. The Company recorded a debt discount equal to $52,600 due to this conversion feature. The Company also recorded a $11,150 debt discount due to issuance fees. The note had accrued interest of $1,090 as of February 28, 2019 and $363 as of August 31, 2018.   The debt discounts had a balance at August 31, 2017 of $49,777 and $0 at August 31, 2018.    The Company recorded debt discount amortization expense of $13,973 during the year ended August 31, 2017 and $49,682 during the year ended August 31, 2018.  The Company converted $39,524 in principal and $1,500 in accrued interest into shares during the year ended August 31, 2018; see Note 3 for more information.  This note is currently in default.

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the conversion price floor and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.00005. In the event that the authorized shares were not sufficient, the Company has obtained authorization from a majority of shareholders such that the appropriate number of shares will be available or issuable for settlement to occur.
 
 
20

Crossover Capital Fund, LLC

On February 14, 2017, the Company issued a convertible note to Crossover Capital Fund, LLC for $40,000 of cash consideration.  The note bears interest at 10%, matures on February 14, 2018, and is convertible into common stock at 50% of the lowest 3 closing market prices of the previous 20 trading days prior to conversion. The Company recorded a debt discount equal to $34,000 due to this conversion feature. The Company also recorded a $6,000 debt discount due to issuance fees. The note had accrued interest of $0 as of August 31, 2017 and August 31, 2018.   The debt discounts had a balance at August 31, 2017 of $18,301 and $0 at August 31, 2018.  The Company recorded debt discount amortization expense of $21,699 during the year ended August 31, 2017 and $18,301 during the year ended August 31, 2018.  During the year ended August 31, 2018 principal of $32,487 and interest of $1,298 was converted into shares; see Note 3 for more information.

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the conversion price floor and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.00005. In the event that the authorized shares were not sufficient, the Company has obtained authorization from a majority of shareholders such that the appropriate number of shares will be available or issuable for settlement to occur.

On July 24, 2017, the Company issued a convertible note to Crossover Capital Fund, LLC for $40,000 of cash consideration.  The note bears interest at 10%, matures on July 24, 2018, and is convertible into common stock at 50% of the lowest 3 closing market prices of the previous 20 trading days prior to conversion. The Company recorded a debt discount equal to $40,000 due to this conversion feature. The note had accrued interest of $5,844 as of February 28, 2019 and $2,821 at August 31, 2018.   The debt discounts had a balance at August 31, 2017 of $35,836 and $0 at August 31, 2018.    The Company recorded debt discount amortization expense of $4,164 during the year ended August 31, 2017 and $35,836 during the year ended August 31, 2018.  During the year ended August 31, 2018, the Company converted $17,106 in principal and $2,544 of accrued interest into shares; see Note 3 for more information.  This note is currently in default.

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the conversion price floor and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.00005. In the event that the authorized shares were not sufficient, the Company has obtained authorization from a majority of shareholders such that the appropriate number of shares will be available or issuable for settlement to occur
 
Promissory Notes Payable – Third Party
Forward Financing

On December 11, 2017, the Company issued a promissory note to Forward Financing for $61,405 of cash consideration.  The note bears interest at 41%, matures on June 20, 2018. The Company recorded a debt discount equal to $26,579 due to the unpaid interest which was added to the principal balance to be repaid during the 6 month note.  During the year ended August 31, 2018, the company amortized $26,579 of the debt discount into interest expense leaving a remaining total debt discount on the note of $0 as of August 31, 2018.  During the year ended August 31, 2018, the Company repaid $87,984 in principal on the note in cash leaving a net balance on the note of $0.  As of August 31, 2018; this note was repaid in full.
 
IOU Financial

On March 30, 2018, the Company issued a promissory note to IOU Financial for $120,000 of cash consideration.  The note bears interest at 32%, matures on March 30, 2019. The Company recorded a debt discount equal to $38,630 due to the unpaid interest which was added to the principal balance to be repaid during the 12 month note.  During the year ended August 31, 2018, the company amortized $16,299 of the debt discount into interest expense leaving a remaining total debt discount on the note of $22,331 as of August 31, 2018.  During the year ended August 31, 2018, the Company repaid $69,206 in principal on the note in cash leaving a balance on the note of $73,200 owed as of August 31, 2018.  During the period ended February 28, 2019, the company amortized $22,331 of the debt discount into interest expense leaving a remaining total debt discount on the note of $0 as of February 28, 2019.  During the period ended February 28, 2019, the Company repaid $89,424 in principal on the note in cash leaving a balance on the note of $0 owed as of February 28, 2019.


21

On January 22, 2019, the Company issued a promissory note to IOU Financial for $75,000 of cash consideration.  The note bears interest at 32%, matures on October 23, 2019.  The Company recorded a debt discount equal to $16,954 due to the unpaid interest which was added to the principal balance to be repaid during the 9 month note.  During the period ended February 28, 2019, the company amortized $2,289 of the debt discount into interest expense leaving a remaining total debt discount on the note of $14,665 as of February 28, 2019.  The proceeds of the loan were used to pay $27,244 to IOU Financial to pay the note dated March 30, 2018 in full.  And the remaining amount $47,776 was added to working capital.  During the period ended February 28, 2019, the Company repaid $14,394 in principal on the note in cash leaving a balance on the note of $77,560 owed as of February 28, 2019.
 
NOTE 5- RELATED PARTY TRANSACTIONS
 
Convertible Note Payable – Related Party

On April 17, 2017, the Company issued a convertible note to Robert Cashman (a related party) for $12,500 of cash consideration.  The note bears interest at 10%, matures on April 17, 2018, and is convertible into common stock at 50% of the average bid price of the stock during the 30 days prior to the conversion. The Company recorded a debt discount equal to $12,500 due to this conversion feature and amortized $4,658 during the year ended August 31, 2017, with a remaining debt discount of $7,842 amortized during the year ended August 31, 2018.  The note was repaid during the fiscal year ended August 31, 2018.

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the conversion price floor and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.0005. In the event that the authorized shares were not sufficient, the Company has obtained authorization from a majority of shareholders such that the appropriate number of shares will be available or issuable for settlement to occur.
 
Office Lease
 
Our principal executive offices are located in 600 square feet in a building at 18482 Park Villa Place, Villa Park, California 92861. The space is furnished by Robert L. Cashman, a related party, at no charge.
 
Preferred Stock Issued for Services
 
On December 4, 2017, the Company granted 50,000 additional Series A Preferred Stock shares to Robert Cashman, a related party.  The value assigned to the new shares was derived from a model utilizing control premiums to value the voting control of the preferred stock and was $1,000 which was recorded on the grant date as stock based compensation.  
 

 
22

NOTE 6 – INCOME TAXES
 
The Company accounts for income taxes under standards issued by the FASB. Under those standards, deferred tax assets and liabilities are recognized for future tax benefits or consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for significant deferred tax assets when it is more likely than not that such assets will not be realized through future operations.
 
No provision for federal income taxes has been recorded due to the net operating loss carry forwards totaling approximately $905,148 as of February 28, 2019, that will be offset against future taxable income.  The available net operating loss carry forwards will expire in various years through 2035. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the future tax loss carry forwards.
 
The actual income tax provisions differ from the expected amounts calculated by applying the statutory income tax rate to the Company's loss before income taxes.  The components of these differences are as follows at February 28, 2019 and August 31, 2018:

 
 
2/28/19
   
8/31/18
 
 Net tax loss carry-forwards
 
$
905,148
   
$
896,914
 
 Statutory rate    
   
21
%
   
21
%
 Expected tax recovery
   
190,081
     
188,352
 
 Change in valuation allowance
   
(190,081
)
   
(188,352
)
 Income tax provision
 
$
-
   
$
-
 
 
               
 Components of deferred tax asset:
               
 Non capital tax loss carry forwards 
 
$
190,081
   
$
188,352
 
 Less: valuation allowance   
   
(190,081
)
   
(188,352
)
 Net deferred tax asset 
 
$
-
   
$
-
 


NOTE 7 – COMMITMENTS AND CONTINGENCIES
 
Litigation
 
None.
 
Operating Leases
 
Service Team Inc. leases facilities at 1818 Rosslynn Avenue, Fullerton, California, to manufacture its products.   The facility is leased for six and one half years at a price of $10,000 per month, for the first six months; and, $14,000 per month thereafter.  Service Team Inc pays for the fire insurance and property taxes on the building estimated to be approximately $2,000 per month. The location consists of three acres of land and one building of approximately 30,000 square feet.   As of February 28, 2019, the deferred rent related to this lease was $10,333.
 
Our principal executive offices are located in 600 square feet in a building at 18482 Park Villa Place, Villa Park, California 92861. The space is furnished by Robert L. Cashman, a related party, at no charge. 
 
NOTE 8 – SUBSEQUENT EVENTS
 
None

23

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
 
Overview of Our Company
 
Service Team Inc.  (the "Company") was incorporated pursuant to the laws of the State of Nevada on June 6, 2011.  The Company was organized to comply with the warranty obligations of electronic devices manufactured by companies outside of the United States.  The business proved to be unprofitable and the Company eliminated its warranty and repair operations.  On June 5, 2013, Service Team Inc. acquired 25,000 common shares of Trade Leasing, Inc., representing 100% ownership, for 4,000,000 shares of its common stock; in addition, both entities are under common control.  Trade Leasing, Inc., a California corporation, was incorporated on November 1, 2011, and commenced business January 1,

Trade Leasing Inc dba Delta Stag Manufacturing  is involved in the manufacture and repair of truck bodies.  The Company manufactures truck bodies that are attached to a truck chassis which consists of an engine, drive train, a frame with wheels, and in some cases, a cab.  The truck chassis is manufactured by third parties that are major automotive or truck companies.  These companies do not typically build specialized truck bodies.  The company is also involved in other products used by the trucking industry.     The company operates a complete manufacturing and repair facility in South Gate, California.  The facility manufactures both custom and standard production truck bodies in approximately 70 different models designed to fill the specialized demands of the user.   The vans are available for hauling dry freight or refrigerated freight.  The refrigerated vans are built with two to four inches of foam insulating that is sprayed in place for hauling refrigerated products such as meats, vegetables, flowers and similar products.  The Company installs different types of cooling systems in the trucks.  This varies from motor driven units installed outside the van body or refrigeration units driven off the engine of the truck.  Some refrigerated trucks use a system called "cold plate" where a large metal plate is cooled by power while the truck is parked.  The power is then unplugged and the truck will stay cool for many hours.  The Company's customers are auto dealers and users of trucks; such as dairies, food distributors and local delivery. The company has approximately 400 customers. One customer South Bay Ford represented more than 10% of sale in the last 12 months. The company is not dependent on a few major customers. Trade Leasing purchases raw materials from approximately 25 suppliers.  There are several hundred similar suppliers of comparable materials in the local area. Trade Leasing Inc. purchases refrigeration units from Thermo-king Corporation a division of United Technologies and Carrier Corporation, a division of Ingersol Rand Corporation. The two companies represent more than 80% of the refrigeration unit market. There are several other manufactures of refrigeration units that represent a small part of the market. Trade Leasing Inc. employs 34 factory workers and four management personnel.  The management personnel make all of the sales and manage the factory. The company has all of the government licenses necessary to conduct its business. These include 9 different city, county and state licenses covering vehicle transportation, air quality, hazard waste (Paint), land or building use, and sales tax.
 
Liquidity and Capital Resources
 
As of February 28, 2019, we had assets of $577,502 including current assets of $398,338.   We have accounts payable of $114,419, and convertible notes payable – third party of $133,137.   Accrued interest and expenses of $123,468.    Accrued expenses are for work performed by employees during the organizational and operational stages of the Company. There is no firm date for which these are to be paid. It is to be repaid when we have funds available.  Since inception we have also raised $354,382 from the sale of our common stock.   We believe our ability to achieve commercial success and continued growth will be dependent upon our continued access to capital either through additional sale of our equity or cash generated from operations. We will seek to obtain additional working capital through the sale of our securities. We will attempt to obtain additional capital through bank lines of credit; however, we have no agreements or understandings with third parties at this time.
    
 
24

Results of Operations
 
Three Months Ended February 28, 2019, compared to the Three Months Ended February 28, 2018
 
Sales during the three month period ended February 28, 2019, were $919,177 compared to $844,875 for the three month period ending February 28, 2018.   Our cost of sales for the three month period ending February 28, 2019, was $854,318 compared to $706,267 for the three month period ending February 28, 2018. Our operating expenses for the three month period ending February 28, 2019, were $208,508 compared to $209,081 for the three month period ending February 28, 2018.  We had a net loss during the three month period ending February 28, 2019, of $(162,197); and a net loss of $(163,750) during the three month period ending February 28, 2018.

Six Months Ended February 28, 2019, compared to the Six Months Ended February 28, 2018
 
Sales during the six month period ended February 28, 2019, were $1,913,066 compared to $1,776,334 for the six month period ending February 28, 2018.   Our cost of sales for the six month period ending February 28, 2019, was $1,571,335 compared to $1,437,191 for the six month period ending February 28, 2018. Our operating expenses for the six month period ending February 28, 2019, were $339,174 compared to $361,023 for the six month period ending February 28, 2018.  We had a net loss during the six month period ending February 28, 2019, of $(48,671); and a net loss of $(242,070) during the six month period ending February 28, 2018.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.
 
Not Applicable
 
Item 4.  Controls and Procedures.
 
Evaluation of Disclosure Controls and Procedures
 
We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a – 15(c) and 15d – 15(e)). Based upon that evaluation, our principal executive officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer, as appropriate to allow timely decisions regarding required disclosure.
 
Inherent Limitations of Internal Controls
 
Our Principal Executive Officer does not expect that our disclosure controls or internal controls will prevent all error and all fraud. Although our disclosure controls and procedures were designed to provide reasonable assurance of achieving their objectives, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute assurance that the objectives of the system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented if there exists in an individual a desire to do so. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
 
Changes in Internal Control over Financial Reporting
 
There were no changes in our internal control over financial reporting, other than those stated above, during our most recent quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 


25

PART II—OTHER INFORMATION



Item 1.  Legal Proceedings.
 
None

Item 1A. Risk Factors.
 
Not applicable .
 
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.
 
None.
 
Item 3. Defaults Upon Senior Securities.
 
None.
 
Item 4.  Mine Safety Disclosures.
 
Not applicable.
    
Item 5. Other Information.
 
Item 6. Exhibits .

 
(a)  
The following exhibits are filed with this report.


26

SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 
 
Service Team Inc.
 
 
 
 
 
Date  April 5, 2019
By:
/s/ Robert L. Cashman
 
 
 
Robert L. Cashman
 
 
 
Chief Executive Officer and President
Principal Executive Officer
 
 
 
 
 
 
 
 
 
 
 
 
Date April 5, 2019
By:
/s/ Robert L. Cashman
 
 
 
Robert L. Cashman
 
 
 
Chief Financial Officer
Principal Financial and Accounting Officer
 
 
 
 
 



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