NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
American Business Services, Inc. (the Company), was incorporated in the State of Colorado on September 20, 1991. The Company provides merger and acquisition financial consulting services. The Company may also engage in any other business permitted by law, as designated by the Board of Directors of the Company.
Basis of Presentation
The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars. The Companys year-end is December 31.
Use of Estimates
The preparation of consolidated 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 consolidated 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, 2015 and 2014 the Company had no balance of accounts receivable.
Financial Instruments
The carrying value of the Companys financial instruments, comprising cash, other receivables, notes payable and accrued interest related party, approximates fair value due to their short term maturities.
Property and equipment
Property and equipment are recorded at cost and depreciated under accelerated and straight line methods over each item's estimated useful life.
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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.
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. To the extent that the Company has net operating loss or other tax carryforwards, a full valuation allowance has been applied resulting in no deferred tax expense or benefit. The Company does not anticipate any current tax expense payable or benefit receivable.
Revenue recognition
Revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service has been provided, and collectability is assured. Specifically, revenue from consulting services is recognized subsequent to client services being performed at an agreed upon price, and collectability is reasonably assured.
Advertising costs
Advertising costs are expensed as incurred. The Company incurred no advertising costs during the twelve months ended December 31, 2015 or 2014.
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.
The Company did not have a stock compensation plan in operation during the twelve months ended December 31, 2015 or 2014.
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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 or outstanding during the twelve months ended December 31, 2015 or 2014.
Products and services, geographic areas and major customers
The Companys business of financial consulting constitutes one operating segment. All fee revenues each year were domestic and to external customers.
Recent Accounting Pronouncements
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe that their future adoption of any such pronouncements may be expected to have a material impact on its financial condition of the result of its operations as reported in its financial statements.
NOTE 2. GOING CONCERN
The Company has suffered a loss from operations and has negative cash flows from operations, and in all likelihood will be required to make significant future expenditures in connection with marketing efforts along with general administrative expenses. These conditions raise substantial doubt about the Companys ability to continue as a going concern.
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 or related parties. By doing so, the Company hopes to generate sufficient capital to execute its business plan of providing financial consulting services on an ongoing basis. Management believes that actions presently being taken to obtain additional funding provide the opportunity for the Company to continue as a going concern.
NOTE 3. NOTES RECEIVABLE RELATED PARTIES
During 2015 the Company did not lend any funds to related parties, and there were no balances due at December 31, 2015.
The Company lends money through notes receivable on an ongoing basis to various companies related by common control. The notes were due to be repaid to the Company at various dates through December 2013. The Company recognized no interest income on the notes. The Company had established a reserve for any loans not repaid within one year.
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At June 30, 2014 all of these notes had been sold or repaid as follows:
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A note from Centennial Growth Equities, Inc. a company controlled by Mr. Ray, an officer and director at the time the note was made, dated January 10, 2007 in the amount of $17,000, for money that ABS loaned to Centennial Growth Equities in 2006. This note matured on December 31, 2008 and was renewed through December 31, 2013. The note had been accruing interest as of January 1, 2011 at an annual interest of 4% per annum. No interest had been paid on this note.
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A note from Centennial Growth Equities, Inc. a company controlled by Mr. Ray, an officer and director at the time the note was made, dated January 10, 2007, in the amount of $4,200, for money that ABS loaned to Centennial Growth Equities in 2007. This note matured on December 31, 2011, and was renewed through December 31, 2013. The note began accruing interest as of January 1, 2012 at a rate of 4% per annum. No interest had been paid on this note.
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A note from Centennial Growth Equities, Inc. a company controlled by Mr. Ray, an officer and director at the time the note was made, dated January 10, 2007 in the amount of $3,900 for money that ABS loaned to Centennial Growth Equities in 2008. This note matured on December 31, 2011 and was renewed through December 31, 2013. The note began accruing interest as of January 1, 2012 at a rate of 4% per annum. No interest had been paid on this note.
During the three months ended March 31, 2014 the Company exercised its right to convert the three notes receivable from Centennial Growth Equities, Inc. into 2,500,000 shares of its common stock. This stock was then sold to a related party for $6,000. As these notes receivable had been fully provided against in prior periods the Company recognized a gain of $6,000 on the sale. As the sale was to a related party, the gain on sale has been recognized in additional paid in capital.
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A note from Original Source Music, Inc., an unaffiliated entity, dated June 1, 2010 in the amount of $2,000 for money loaned to Original Source Music by ABS in 2010. This amount was used as working capital. The note matured on June 28, 2013.
During the three months ended March 31, 2014 the Company received payment from Original Source Music, Inc. in the amount of $2,000 in complete satisfaction of the obligation. As this note receivable had been provided against in full in previous periods, we recognized a gain of $2,000 on repayment of this note receivable.
NOTE 4. OTHER RECEIVABLE
As at December 31, 2014, the Company wrote off a balance of $1,577. This represented income tax repayable from the carry back of tax losses arising in 2013 to offset taxable profits arising in prior years which will generate a repayment of taxes paid in prior years. Due to collectability concerns, this tax receivable was written-off as at December 31, 2014.
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NOTE 5. FIXED ASSETS
Fixed asset values recorded at cost are as follows:
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December 31, 2015
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December 31, 2014
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Office Equipment
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$ -
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$ -
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Vehicle
|
-
|
-
|
|
-
|
-
|
Less Accumulated Depreciation
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-
|
-
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Total
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$ -
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$ -
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No depreciation expense was recognized during the twelve months ended December 31, 2015 or 2014 as the cost of these assets has already been fully depreciated.
NOTE 6. RELATED PARTY PAYABLE
During the years ended December 31, 2015 and 2014, the new majority stockholder, Smith Electric Vehicles Corp. advanced $82,098 and $11,128 respectively, on behalf of the Company to pay current invoices received for services that had been rendered to the Company. These advances are unsecured, bear no interest and are repayable on demand.
NOTE 7. NOTE PAYABLE RELATED PARTY
During 2015, the Company, had no notes payable due to related parties.
NOTE 8. STOCKHOLDERS DEFICIT
Preferred Stock
The Company is authorized to issue 10,000,000 shares of preferred stock with a par value of $0.001 per share.
No shares of preferred stock were issued and outstanding during the twelve months ended December 31, 2015 and 2014.
Common Stock
The Company is authorized to issue 90,000,000 shares of preferred stock with a par value of $0.001 per share.
No shares of common stock were issued during the year ended December 31, 2015
As of December 31, 2015 there were 7,030,000 shares of common stock issued and outstanding.
Additional Paid in Capital
During the twelve months ended December 31, 2015, there was no additional paid in capital received.
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During the twelve months ended December 31, 2014, the Company exercised its right to convert the three notes receivable from Centennial Growth Equities, Inc. into 2,500,000 shares of its common stock. This stock was then sold to a related party for $6,000. As these notes receivable had been fully provided against in prior periods, the Company recognized a gain of $6,000 on the sale. As the sale was to a related party, the gain on sale has been recognized in additional paid in capital.
During the twelve months ended December 31, 2014, we sold our subsidiary, American Business Services Corp., for $100 to a related party. As the subsidiary had net liabilities of $9,010 at the date of the sale we recognized a gain of $9,110 on the sale. As the sale was to a related party, the gain on sale was recognized in additional paid in capital.
NOTE 9. OTHER INCOME
During the twelve months ended December 31, 2015 the Company did not recognize other income.
During the year ended December 31, 2014 the Company received payment from Original Source Music, Inc. in the amount of $2,000 in complete satisfaction of an outstanding note receivable. As this note receivable had been provided against in full in previous periods, we recognized a gain of $2,000 on repayment of this note receivable. We also wrote-off the other receivable of $1,577 during the year-ended December 31, 2014 for net other income (expense) of $423.
NOTE 10. SALE OF SUBSIDIARY
During the twelve months ended December 31, 2015, the Company had no subsidiary sale transactions.
On March 28, 2014 we sold our wholly owned subsidiary, American Business Services Corp., to a related party for $100. The subsidiary had assets of $3,730, liabilities of $12,740 for a net value of ($9,010). The Company had previously recognized these losses in the consolidated financial statements as the loss was carried on the books of the Company as a negative value. The Company had no other basis in the stock and accordingly recognized a gain of $9,110 on the sale. As the sale was to a related party, the gain on sale was recognized in additional paid in capital.
NOTE 11. SALE AND TRANSFER OF A MAJOR STOCKHOLDERS INTERESTS
During the twelve months ended December 31, 2015, there has been no sale or transfer of a major stockholders interest.
On July 3, 2014 Mr. Phil E. Ray, the majority stockholder of American Business Services, Inc., sold 6,000,000 shares of common stock that he owned to Smith Electric Vehicles Corp., a Delaware corporation. These shares constitute the entire holding of Mr. Ray and comprise approximately 85.3% of the outstanding shares of the Company.
In addition to the sale of the stock, Mr. Ray resigned all positions as an officer of the Company. Upon his resignation the Board of Directors appointed Bryan L. Hansel as President and Chief Executive Officer and Mr. John Micek as the Chief Financial Officer and Jacques Schira as the Secretary.
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NOTE 12. RELATED PARTIES
For the year ended December 31, 2015, we recognized no related parties revenue.
For the year ended December 31, 2014, we recognized revenue of $4,000 from a related party for consulting fees. The related party was Venture Capital, owned by Phil Ray, the majority owner of our Company prior to it being sold to Smith Electric Vehicles Corp..
We do not have any standard arrangements by which employees or directors are compensated for any services provided as employees or directors. No cash has been paid to employees or directors in their capacity as such.
The Company occupies office space provided by Smith Electric Vehicles Corp. at no cost. The value of the space is not considered materially significant for financial reporting purposes.
NOTE 13. SUBSEQUENT EVENTS
In accordance with ASC 855-10. Subsequent Events the Company has analyzed its operations subsequent to December 31, 2015 to the date these financial statements were issued and has determined that there are no subsequent events that need to be disclosed in these financial statements.
On March 25, 2015 Smith Electric Vehicles Corp. entered into a $500,000 loan agreement with FDG Electric Vehicles Limited. The drawdown date of the agreement is March 30, 2015 with a repayment date of June 30, 2015. The loan agreement does not have a stated interest rate. The collateral for this loan agreement is all common stock or other form of derivatives of American Business Services, Inc., now or at any time hereafter, and prior to the termination hereof, owned or acquired by Smith Electric Vehicles Corp. In the event of default, this could result in a change of control of American Business Services, Inc. This note was repaid to FDG Electric Vehicles Limited on October 5, 2015.
On October 5, 2015 Smith Electric Vehicles Corp. entered into a $1,000,000 loan agreement with Active Way International Limited. The draw down date was October 8, 2015, with a repayment date of October 5, 2016. The stated interest rate is 18%. The collateral for this loan agreement is all common stock or other form of derivatives of American Business Services, Inc., now or at any time hereafter, and prior to the termination hereof, owned or acquired by Smith Electric Vehicles Corp. In the event of default, this could result in a change of control of American Business Service, Inc.
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