ITEM 1. DESCRIPTION OF BUSINESS
American Commerce Solutions, Inc. was incorporated in Rhode Island in May 1991 under the name Jaque Dubois, Inc. and was re-incorporated in Delaware in 1994. In July 1995, the Company's name was changed to JD American Workwear, Inc. In December 2000 the shareholders voted to change the name of the company to American Commerce Solutions, Inc. to more accurately portray the activities of the company. In August 2012, the Company was reincorporated in Florida.
American Commerce Solutions, Inc. (the "Company" or "American Commerce") is a multi-industry holding company for its operating subsidiary. As of June 14, 2016, the Company had one wholly owned subsidiary operating in the auto rental segment. The operating subsidiary is Best Way Auto & Truck Rental, Inc. On May 26, 2016, the Company ceased operation of its wholly-owned subsidiary, International Machine and Welding, Inc.
The Company intends to expand its holdings by acquiring additional subsidiaries to facilitate its business plan. The current business plan has been in development since June 2000.
Operating Subsidiaries.
Best Way Auto & Truck Rental, Inc.
On March 31, 2016, the Company executed a letter agreement pursuant to which it acquired Best Way Auto & Truck Rental, Inc. as a wholly owned subsidiary from Three Sisters Trust. Best Way Auto & Truck Rental, Inc. - https://bestwayrentalsusa.com. Prior to this transaction, we have had no relationship with Three Sisters Trust, its beneficiaries or trustees. Best Way operates as an automobile and truck sales and rental company. Best Way is opening and operating rental locations across the United States with an emphasis on college and university locations with a rewards program geared to sales and financing of automobiles to first time car buyers. To date, Best Way has opened ten locations and further intends to open franchise operations beginning in Florida.
We have agreed to issue 342,709,427 shares of our common stock (a combination of treasury shares and unissued shares), plus an additional number of shares to be determined to provide Three Sisters Trust with not less than 51% of the issued and outstanding shares of our common stock; provided that the shares to be issued will result in the issue of our entire authorized shares.
In connection with the acquisition of Best Way, we will divest our interest in International Machine, heretofore our sole wholly owned subsidiary, in a transaction with our directors, Daniel Hefner and Robert Maxwell, the terms of which are to be determined.
Also, in connection with the acquisition of Best Way, our indebtedness to International Machine and to our related parties will be eliminated.
All parties to the transaction deem the transaction to be complete on March 31, 2016. Pursuant to the letter agreement, the parties agreed to move with all deliberate speed to prepare, execute and exchange a definitive stock exchange agreement, board actions, irrevocable instructions to Jersey Stock Transfer to issue our shares to Three Sisters Trust, the delivery of the Best Way securities to us accompanied by a medallion guaranteed stock power and to achieve the goals and objectives outlined in the letter agreement.
International Machine and Welding, Inc.
On May 27, 2016, the Company ceased operation of its wholly-owned subsidiary International Machine and Welding, Inc. and sold substantially all of the subsidiary's assets, including real estate and certain machines. Other assets will be sold at auction. The projected gross sale is expected to be approximately $1,600,000. This sale and the anticipated final documentation of the Best Way acquisition will transfer ownership of the subsidiary to Robert Maxwell and Daniel Hefner, current officers and directors of the Company or their assigns in exchange for a return of stock and/or reduction o monies owed to Messrs. Maxwell and Hefner.
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International Machine and Welding, Inc. provides specialized machining services for heavy industry. Target customers in the region include mining, agriculture processing, maritime, power generation and industrial machinery companies. Additional operations include heavy equipment service to the construction, forestry, waste and scrap industries. The operation provides complete service of the equipment, which includes rebuilding undercarriages, engines, transmissions, final drives and hydraulics. The effective service area for the operation located in the Southeastern region of the United States is a prime and lucrative market for such services. Growth in this region of the United States (population, infrastructure, and building) has created long term needs for construction equipment. All of these machines require periodic maintenance, and at certain points major overhauls.
International Machine and Welding, Inc. also sells OEM and after-market repair parts for heavy equipment. The operation has an extensive cross-reference listing and network of sources. One of the major competitive advantages of the operation is its ability to determine exactly what the customer needs and fulfill the requirement. In many cases, the customer may not have service manuals or to be able to identify part numbers. If a customer has more than one type of machine, which is quite common, they may have to contact a number of different suppliers to get parts for multiple machines. Our operation identifies the required parts and arranges the necessary repairs. As a result, the customer only has to make one phone call for all of their needs. This also makes International Machine and Welding, Inc. an attractive alternative for sales to customers outside the United States. Orders can be accumulated throughout the month and be sent on consolidated shipments. This has created a niche market for the direct parts sales division. The operation currently has a couple of customer relationships in the Caribbean. Management believes that this market has not been fully targeted by its competitors and offers potential as a source of increased business.
BUSINESS STRATEGY
The Company has adopted a business strategy that focuses on expansion through acquisition. The key elements of acquisition targets must include solid management, profitability, geographical location, compatibility and/or undervalued companies that can be enhanced by shared services and opportunities.
MARKETING AND SALES
Auto Rental Segment
Best Way Auto & Truck Rental operates its rental business in ten recently opened locations primarily to college students. Management is of the opinion that rentals will come from colleges within a 100-mile radius of its facilitiess. Direct salesmen will established relationships with specific customers and the Company will expand the business relationship through quality and value. The expansion of the market also is expected to increase the serviceable territory to include the entire United States.
We believe that this niche market is largely untapped by the larger rental agencies.
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COMPETITION
Auto Rental Segment
The principal competitors of the automobile rental industry consists of national and regional companies. Management believes that the willingness to rent automobiles to college students gives it a competitive advantage.
CUSTOMER DEPENDENCE
Auto Rental Segment
Best Way Auto & Truck Rental will have a broad and diverse base of customers as business expands. However, the focus is on college students. Due to this concentration, the results of operations of a location could be affected by changes in the economic, regulatory, or other related conditions impacting on targeted consumer.
EMPLOYEES
As of June 14, 2016, the Company and its operating subsidiary had 33 full-time employees, five part-time employees and the parent operation has two full time executives.
FUTURE ACQUISITIONS
The Company remains dedicated to its basic business plan, which calls for growth through acquisition of strategic business opportunities. Discussions and negotiations continue with multiple companies.
FORWARD LOOKING STATEMENTS
This Annual Report on Form 10-K (including the Exhibits hereto) may contain "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding, among other things, the financial condition and prospects of the Company and its subsidiary, results of operations, projections, plans for future business development activities and the opportunities available within its market areas, capital spending plans, financing sources, projections of financial results or economic performance, capital structure, the effects of competition, statements of plans, expectations, or objectives of the Company, and the business of the Company and its subsidiary. These forward-looking statements are typically identified by words or phrases such as "believe," "expect," "anticipate," "plan," "estimate," "intend," and other similar words and expressions, or future or conditional verbs such as "should," "would," and "could" and other characterizations of future events or circumstances. In addition, the Company may from time to time make such written or oral "forward-looking statements" in future filings with the Securities and Exchange Commission (including exhibits thereto), in its reports to stockholders, and in other communications made by or with the approval of the Company.
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These forward-looking statements reflect the current views of the Company at the time they are made and are based on information currently available to the management of the Company and upon current expectations, estimates, and projections regarding the Company and its industry, management's beliefs with respect thereto, and certain assumptions made by management. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors (many of which are outside the control of the Company), which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Such forward-looking statements speak only to the date that such statements are made, and the Company undertakes no obligation to update any forward-looking statements, whether as the result of new information, future events, the occurrence of unanticipated events, or otherwise. The following sets forth some, but not necessarily all, of the factors that may cause the Company's actual results to vary materially from those which are the subject of any forward-looking statements.
ITEM 1A.
ITEM 1A. RISK FACTORS
Accumulated Deficit and Operating Losses and Anticipated Earnings; Explanatory Language in Auditor's Report. The Company had an accumulated deficit at February 29, 2016 of $19,654,784. The Company had a net loss of $244,513 for the year ended February 29, 2016. Additionally, the Company is in default on several notes payable. The auditor's opinion on the financial statements expresses substantial doubt about the Company's ability to continue as a going concern. The financial statements are presented on the basis that the Company is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the ordinary course of business. While there can be no assurance of this outcome, management believes its plan of operation will allow the Company to achieve this goal.
We recently ceased operations of International Machine and we have minimal working capital with which to execute our business plan. On May 27, 2016, we ceased operations of our wholly-owned subsidiary, International Machine. As a result we have minimal working capital. We anticipate needing additional working capital as our business expands. We cannot assure you that we will be able to obtain the necessary funds to proceed with our business plan or that will provide sufficient working capital to enable us to continue to operate profitably or accomplish the proposed expansion of our business.
Growth Plans and Risk of Expansion. The Company adopted and implemented a business strategy, which seeks growth and expansion through the acquisition of synergistic companies. Accordingly, the growth and financial performance of the Company will depend, in large part, upon the Company's ability to identify and locate suitable acquisitions, to manage such growth and the resultant diverse operations, to manage the margins of the acquired operations, and to attract, hire, train, and retain qualified supervisory personnel and other operational employees to meet the Company's needs as it expands, as well as the availability of sufficient working capital. Difficulties resulting from the failure of the Company to manage and control its growth could materially adversely affect the Company's operating results and financial condition.
Our subsidiary faces intense competition in these uncertain financial times and its financial results can be negatively affected. All aspects of the automobile business are highly competitive. The firms that Best Way competes with include large well-known firms who have substantially greater financial and personnel resources. Our subsidiary competes for business on the basis of our experience in the industry, its ability to execute business transactions and the strength of our relationships with its clients. Intense competition could negatively affect its operations.
No Assurance of Acquisitions. Although the Company has had preliminary discussions with potential acquisition candidates, the Company has not completed any acquisitions in the fiscal year ended February 29, 2016. The Company does have current understandings or arrangements (oral or written) relating to specific acquisitions, but cannot give specific timing to close the potential acquisitions. Until binding agreements are in place there can be no assurance that any proposed acquisition will be consummated or that adequate, acceptable and affordable financing will be available.
Furthermore, to the extent that acquisitions are consummated, the Company's success or failure will depend upon management's ability to integrate the acquired business into the company and implementation of adequate management skills and systems necessary to accomplish the Company's strategy. Additionally, the Company is unable to predict whether or when, once integrated, any acquisition may achieve comparable levels of revenues, profitability, or productivity as existing Company operations, or otherwise perform as expected (including achievement of expected synergies or financial benefits). The Company may face competition for desirable acquisitions from entities that may possess greater resources than the Company.
Acquisition Risks. Acquisitions involve a number of special risks, some or all of which could have a material adverse effect on the Company's results of operations and financial condition. Such risks include, but are not limited to, the diversion of management's attention from core operations, difficulties in the integration of acquired operations and retention of personnel, customers, and suppliers, unanticipated problems or legal liabilities, tax and accounting issues, and the inability to obtain all necessary governmental and other approvals and consents.
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Need for Additional Financing. Proceeds from notes payable and long-term debt provided the working capital needs and principal payments on long-term debt through most of fiscal 2016. However, the Company will need to obtain additional financing in order to finance its acquisition and growth strategy. There can be no assurance that debt or equity financing will be available to the Company on acceptable terms, if at all. If the Company does require additional financing and it cannot be obtained or the terms of such financings are unfavorable, it may have a material adverse impact on our operations and profitability, and the Company may need to curtail its business plan and strategy.
Loss of Certain Members of Our Management Team Could Adversely Affect the Company. The Company is dependent to a significant extent on the continued efforts, abilities and funding of our current officers and directors. If the company was to lose the services of either of these individuals or other key employees or consultants before a qualified replacement could be obtained, the business could be materially affected.
Expected Volatility in Share Price. The market price of our stock has traded in a wide range. From March 1, 2001 through February 29, 2016 the price of our common shares has ranged from $0.0008 to $0.78 per share. The price of our common stock may be subject to fluctuations in response to quarter-to-quarter variations in operating results, creation or elimination of funding opportunities, restriction of the acquisition plans, and favorable or unfavorable coverage of our officers and Company by the press.
ITEM 1B.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2.
ITEM 2. PROPERTIES
International Machine and Welding, Inc. owns in fee simple title a 38,000 square foot facility in Bartow, Florida, which currently serves as the principal executive offices of American Commerce Solutions. A note payable to Center State Bank, originally at $875,000 encumbers this building. As of February 29, 2016, the balance on this note is $435,308. The loan bears interest at 6%, with monthly principle and interest payments of $4,865 and a balloon payment for the remainder of the loan on the maturity date of June 24, 2016. The note is secured by all of Division 1's fixed assets.
For a period of not less than one year following the acquisition of Best Way, the Company's rent will be reduced to one-half its currently rate. After such one-year period, the Company will have the option to renew the lease with International Machine at the same costs for an additional one-year period.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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PART II
ITEM 5.
ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
MARKET INFORMATION
Since the April 1996 closing of the Company's initial public offering, the Company's Common Stock has traded in the over-the-counter market on the National Association of Securities Dealers, Inc. OTC Bulletin Board System ("OTCBB"). Until January 31, 2001 the company's common stock traded under the symbol "JDAW." In connection with the name change, since February 10, 2001, the common stock has traded under the symbol "AACS." The following table sets forth the range of high and low closing bid quotations of the Common Stock as reported by the OTCBB for each fiscal quarter for the past two fiscal years. High and low bid quotations reflect inter-dealer prices without adjustment for retail mark-ups, markdowns or commissions and may not necessarily represent actual transactions.
On February 29, 2016 the closing bid price of the Company's Common Stock as reported by the OTCBB was $0.0023 and there were approximately 2,000 shareholders of record.
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DIVIDENDS
The Company has never declared or paid a dividend on its Common Stock, and does not anticipate paying any cash dividends on its Common Stock in the foreseeable future. The Company expects to retain, if any, its future earnings for expansion or development of the Company's business. The decision to pay dividends, if any, in the future is within the discretion of the Board of Directors and will depend upon the Company's earnings, capital requirements, financial condition and other relevant factors such as contractual obligations. There can be no assurance that dividends can or will ever be paid.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information about our Equity Compensation Plans.
RECENT SALES OF UNREGISTERED SECURITIES
On March 31, 2016, the Company executed a letter agreement pursuant to which the Company acquired Best Way Auto & Truck Rental, Inc. as a wholly owned subsidiary from Three Sisters Trust.
We have agreed to issue 342,709,427 shares of our common stock (a combination of treasury shares and unissued shares), plus an additional number of shares to be determined to provide Three Sisters Trust with not less than 51% of the issued and outstanding shares of our common stock; provided that the shares to be issued will result in the issue of our entire authorized shares.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
As a smaller reporting company we are not required to provide the information required by this item.
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ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion is intended to further the reader's understanding of the Company's financial condition and results of operations, and should be read in conjunction with the Company's consolidated financial statements and related notes included elsewhere herein. This discussion also contains forward-looking statements. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of the risks and uncertainties set forth elsewhere in this Annual Report and in the Company's other SEC filings. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. The Company is not party to any transactions that would be considered "off balance sheet" pursuant to disclosure requirements under ITEM 303(c).
Trends and Uncertainties
The Company currently has minimal revenues in Best Way, and has ceased operations of International Machine which represents the operations discussed below and is investigating potential businesses and companies for acquisition to create and/or acquire a sustainable business. Our ability to generate revenues in Best Way and acquire or create a sustainable business may be adversely affected by our current financial conditions, availability of capital and/ or loans, general economic conditions which can be cyclical in nature along with prolonged recessionary periods, and other economic and political situations.
The Company has generated recurring losses and cash flow deficits from its operations since inception and has had to continually borrow to continue operations. These matters raise substantial doubt about the Company's ability to continue as a going concern. The continued operations of the Company are dependent upon its ability to raise additional capital, obtain additional financing and/or generate positive cash flows from operations. As further described in "Liquidity and Capital Resources", management believes that it will be successful in obtaining additional financing, from which the proceeds will be primarily used to execute its new operating plans. The Company plans to use its available cash and new financing to develop and execute its new business plan and hopefully create and maintain a self-sustaining business. However, the Company can give no assurances that it will be successful in achieving its plans or if financing will be available or, if available, on terms acceptable to the Company, or at all. Should the Company not be successful in obtaining the necessary financing to fund its operations, and ultimately achieve adequate profitability and cash flows from operations, the Company would need to curtail certain or all of its operating activities.
There are no trends, events or uncertainties that have had or are reasonably expected to have a material impact on the net sales or revenues or income from continuing operations. There are no significant elements of income or loss that do not arise from our continuing operations except for the fair value change on derivative financial instruments and settlement on arbitration.
RESULTS OF OPERATIONS
MANUFACTURING
The soon to be divested manufacturing subsidiary, International Machine, generates its revenues from three divisions. On May 27, 2016, the Company ceased operations of International Machine and sold substantially all of its assts, including real estate and certain machines. Division 1 provides specialized machining and repair services to heavy industry and original equipment manufacturers. Division 2 provides repair and rebuild services on heavy equipment used in construction and mining as well as sales of used equipment. Division 3 provides parts sales for heavy equipment directly to the customer. The primary market of this segment is the majority of central and south Florida with parts sales expanding its market internationally. The Company does not have discrete financial information on each of the three manufacturing divisions, nor does the Company make decisions on the divisions separately; therefore they are not reported as segments.
FISCAL YEAR 2016 COMPARED TO FISCAL YEAR 2015
General
The Company's consolidated net sales decreased to $2,053,256 for the fiscal year ended February 29, 2016, a decrease of $186,099 or 8%, from $2,239,355 for the fiscal year ended February 28, 2015. Management believes the decrease is due to changes in the construction industry as machines are between their life cycles.
Gross profit for the consolidated operations decreased to $1,052,873 for the fiscal year ended February 29, 2016 from $1,161,982 for the fiscal year ended February 28, 2015. Gross profit as a percentage of sales decreased in fiscal year 2016 to 51% from 52% in fiscal year ended 2015.
Selling, general and administrative expenses decreased to $1,307,875 for fiscal 2016 from $1,323,467 for fiscal 2015, a decrease of $15,592 or 2%.
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Consolidated interest expense in fiscal 2016 was $81,210 compared to $90,360 in fiscal 2015. The decrease in interest expense is due to the Company reducing the overall debt during the year.
Consolidated interest income in fiscal 2016 was $30,706 compared to $24,354 in fiscal 2015. The increase in interest income is primarily due to the increase in the principal balance of the note receivable in 2016.
The Company incurred a consolidated net loss of $244,513 for the year ended February 29, 2016 compared to $184,911 net loss for the year ended February 28, 2015. The increase in the net loss is primarily due to the decrease in sales.
Manufacturing
The manufacturing operation, International Machine and Welding, Inc. provided net sales of $2,053,256 for the fiscal year ended February 29, 2016 compared to $2,239,355 for the fiscal year ended February 28, 2015. The machining operations provided $771,165 or 38% of net sales with parts and service providing $1,282,091 or 62% of net sales for the fiscal year ended February 29, 2016 as compared to machining operations contributing $734,335 or 33% of net sales with parts and service providing $1,505,020 or 67% of net sales for the fiscal year ended February 28, 2015.
Gross profit from International Machine and Welding, Inc. was $1,052,873 for the fiscal year ended February 29, 2016 compared to $1,161,982 in fiscal 2015 providing gross profit margins of 51% and 52%, respectively.
Selling, general and administrative expenses for International Machine and Welding, Inc. were $993,506 for the fiscal year ended February 29, 2016 compared to $969,598 for the fiscal year ended February 28, 2015. The increase of $23,908 or 2.5% is primarily due to an increase of worker's compensation insurance and legal expenses.
Interest expense for International Machine and Welding, Inc. was $56,255 for the fiscal year ended February 29, 2016 compared to $63,031 for the fiscal year ended February 28, 2015. The decrease in interest expense is due to the Company reducing the overall debt.
LIQUIDITY AND CAPITAL RESOURCES
During the fiscal years ended February 29, 2016 and February 28, 2015, the Company used net cash for operating activities of ($30,897) and ($26,648), respectively. The decrease in cash from operating activities is mainly due to the decrease in inventory, net of the increase in accounts receivable for year 2016.
During the years ended February 29, 2016 and February 28, 2015, the Company used funds for investing activities of $114,469 and $139,600, respectively.
During the years ended February 29, 2016 and February 28, 2015, the Company provided cash from financing activities of $137,039 and $203,214, respectively. The decrease in net cash provided by financing activities is due to the decrease in the proceeds from notes payable.
Cash flows from financing activities provided for working capital needs and principal payments on long-term debt through fiscal 2016. To the extent that the cash flows from financing activities are insufficient to finance the Company's anticipated growth, or its other liquidity and capital requirements during the next twelve months, the Company will seek additional financing from alternative sources including bank loans or other bank financing arrangements, other debt financing, the sale of equity securities (including those issuable pursuant to the exercise of outstanding warrants and options), or other financing arrangements. However, there can be no assurance that any such financing will be available and, if available, that it will be available on terms favorable or acceptable to the Company.
Although management has reduced debt, new financing to finance operations and to facilitate additional production is still being sought. However, there can be no assurance that the Company will be able to raise capital, obtain debt financing, or improve operating results sufficiently to continue as a going concern.
We have no known demands or commitments and are not aware of any events or uncertainties as of February 29, 2016, that will result in or that are reasonably likely to materially increase or decrease our current liquidity.
Credit Lines for Subsidiary
On April 13, 2016, Best Way Auto and Truck Rental, Inc., was approved for a credit line of $1.6 million from Fleet Way Leasing Company in Feasterville, PA for the purchase of 70 new vehicles for the Company's rental fleet. This line of credit is based on a 24-month term. Negotiations continue to increase the line to $3.5 million to finance a total of 145 vehicles.
On April 27, 2016, Best Way Auto and Truck Rental, Inc., has received an additional $5 million credit line from Fleet Way Leasing Company in Feasterville, PA for use in purchasing an additional 180 vehicles for their new locations, which are scheduled to open in May.
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Capital Resources.
We had no material commitments for capital expenditures as of February 29, 2016 and February 28, 2015.
SEASONALITY
The diversity of operations in the manufacturing segment protects it from seasonal trends except in the sales of agricultural processing where the majority of the revenue is generated while the processors await the next harvest.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
We prepare our financial statements in conformity with Generally Accepted Accounting Principles, which requires management to make certain estimates and assumptions and apply judgments. We base our estimates and judgments on historical experience, current trends and other factors that management believes to be important at the time the financial statements are prepared and actual results could differ from our estimates and such differences could be material. We have identified below the critical accounting policies which are assumptions made by management about matters that are highly uncertain and that are of critical importance in the presentation of our financial position, results of operations and cash flows. Due to the need to make estimates about the effect of matters that are inherently uncertain, materially different amounts could be reported under different conditions or using different assumptions. On a regular basis, we review our critical accounting policies and how they are applied in the preparation our financial statements.
We believe that the following critical policies affect our more significant judgments and estimates used in preparation of our consolidated financial statements.
Use Of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Long-lived Assets. Long-lived assets such as property, equipment and identifiable intangibles are reviewed for impairment whenever facts and circumstances indicate that the carrying value may not be recoverable. When required impairment losses on assets to be held and used are recognized based on the fair value of the asset. The fair value is determined based on estimates of future cash flows, market value of similar assets, if available, or independent appraisals, if required. If the carrying amount of the long-lived asset is not recoverable from its undiscounted cash flows, an impairment loss is recognized for the difference between the carrying amount and fair value of the asset. When fair values are not available, the Company estimates fair value using the expected future cash flows discounted at a rate commensurate with the risk associated with the recovery of the assets. We did not recognize any impairment losses for any periods presented.
NEW ACCOUNTING PRONOUNCEMENTS
Except for rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of grandfathered standards, the FASB Accounting Standards Codification™ ("ASC") is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company.
We have reviewed the FASB issued Accounting Standards Update ("ASU") accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation's reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a smaller reporting company we are not required to provide the information required by this item.
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ITEM 8.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements
American Commerce Solutions, Inc. and Subsidiary
As of February 29, 2016 and February 28, 2015 and for the Years Then Ended
Report of Independent Registered Public Accounting Firm
Contents
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STEVENSON & COMPANY CPAS LLC
A PCAOB Registered Accounting Firm
12421 N Florida Ave.
Suite.113
Tampa, FL 33612
(813)443-0619
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
American Commerce Solutions, Inc.
We have audited the accompanying balance sheets of American Commerce Solutions, Inc. as of February 29, 2016 and February 28, 2015, and the related statements of operations and comprehensive income, stockholders' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of American Commerce Solutions, Inc. as of February 29, 2016 and February 28, 2015, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, the Company has recurring losses resulting in an accumulated deficit and is in default on several notes payable. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans regarding those matters are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Stevenson & Company CPAS LLC
Stevenson & Company CPAS LLC
Tampa, Florida
June 15, 2016
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AMERICAN COMMERCE SOLUTIONS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
The accompanying notes are an integral part of the consolidated financial statements.
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AMERICAN COMMERCE SOLUTIONS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
The accompanying notes are an integral part of the consolidated financial statements
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AMERICAN COMMERCE SOLUTIONS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
The accompanying notes are an integral part of the consolidated financial statements
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AMERICAN COMMERCE SOLUTIONS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
The accompanying notes are an integral part of the consolidated financial statements.
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AMERICAN COMMERCE SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF FEBRUARY 29, 2016 AND FEBRUARY 28, 2015 AND FOR THE YEARS THEN ENDED
1. BACKGROUND INFORMATION
American Commerce Solutions, Inc., located and operating in West Central Florida, was incorporated in Rhode Island in 1991 under the name Jaque Dubois, Inc., and was re-incorporated in Delaware in 1994. In July 1995, Jaque Dubois, Inc. changed its name to JD American Workwear, Inc. In December 2000, the stockholders voted at the annual stockholders meeting to change the name of JD American Workwear, Inc. to American Commerce Solutions, Inc. (the "Company"). In August 2012, the Company was reincorporated in Florida.
The Company is primarily a holding company with a wholly owned subsidiary; International Machine and Welding, Inc. which is engaged in the machining and fabrication of parts used in heavy industry, and parts sales and service for heavy construction equipment.
2. GOING CONCERN
The Company has incurred substantial operating losses since inception resulting in an accumulated deficit. Additionally, the Company is in default on several notes payable. These factors raise substantial doubt about the Company's ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon its ability to reverse negative operating trends, raise additional capital, and obtain debt financing.
Management has revised its business strategy to include expansion into other lines of business through the acquisition of other companies in exchange for the Company's stock to facilitate manufacturing contracts under negotiation. In conjunction with the anticipated new contracts, management is currently negotiating new debt and equity financing, the proceeds from which would be used to settle outstanding debts at more favorable terms, to finance operations, and to complete additional business acquisitions. However, there can be no assurance that the Company will be able to raise capital, obtain debt financing, or improve operating results sufficiently to continue as a going concern.
The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary if the Company is unable to continue as a going concern.
3. SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed are:
Principles of Consolidation
The accompanying consolidated financial statements include the activity of the Company and its wholly owned subsidiary, International Machine and Welding. All intercompany transactions have been eliminated in consolidation.
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Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount 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
For the purpose of the financial statements cash equivalents include all highly liquid investments with maturity of three months or less. Cash and cash equivalents were $44,697 and $7,731 at February 29, 2016 and February 28, 2015, respectively.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of accounts receivable, notes receivable, and related party notes.
Customer Concentration
The Company generates a significant amount of revenues from sales and services provided to three different industries. The construction industry accounted for approximately 22% of revenues in fiscal 2016 compared to 22% in fiscal 2015 while the industrial and mining industries accounted for approximately 28% and 49% in fiscal 2016 compared to 26% and 51% in fiscal 2015, respectively, of the total revenues. Although the Company does not rely on a single customer, during the year ended February 29, 2016, one of the Company's customers accounted for approximately 42% of total revenues. This customer was Mosaic Company.
Accounts Receivable
Trade. Accounts receivable consist of billed and uncollected services or products. The Company records an allowance for doubtful accounts to allow for any amounts that may not be recoverable, which is based on an analysis of the Company's prior collection experience, customer credit worthiness, and current economic trends. Based on management's review of accounts receivable, no allowance for doubtful accounts is considered necessary at February 29, 2016 or February 28, 2015. The Company does not charge significant amounts of interest on past due receivables.
Factored. The Company accounts for its factoring of accounts receivable by selling and assigning all rights, title, and interest to certain of the Company's accounts receivable. The Company receives 80% of all approved invoices sold to the Factoring Company, who assumes the credit risk. Based on the Factoring Company's collections of these invoices the Company may receive additional consideration of up to 18%. The Company records the 80% as payment against the invoices sold and records 20% as an amount due from Factoring Company. Once the invoice exceeds 120 days outstanding, the remaining 20% of the receivable is recorded as expense. The Company terminated the factoring of accounts receivable on January 25, 2016.
Inventory
The Company follows FASB ASC 330, "Inventory". Inventories are stated at the lower of cost or net realizable value. The cost of inventories comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. The costs of conversion of inventories include raw materials and direct labor and fixed and variable production overheads, taking into account the stage of completion and the normal capacity of production facilities. The cost of inventories is determined using the first-in, first-out (FIFO) method. Inventory is reduced for the estimated losses due to obsolescence. This reduction is determined for groups of products based on purchases in the recent past and/or expected future demand.
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Property and Equipment
The Company follows ASC 360, Property, Plant, and Equipment, for its fixed assets. Property and equipment are stated at cost. The Company capitalizes all purchases with costs in excess of $500 and a useful life in excess of one year. Depreciation and amortization expense are calculated using the straight-line method of accounting over the following estimated useful lives of the assets:
Maintenance and repairs are charged to operations when incurred. Betterments and renewals are capitalized. When property and equipment are sold or otherwise disposed of, the asset account and related accumulated depreciation account are relieved, and any gain or loss is included in operations.
Notes Payable
Direct costs incurred with the issuance of notes payable are deferred and amortized over the life of the guaranty. For the years ended February 29, 2016 and February 28, 2015, the Company incurred amortization expense of $0 and $3,082, respectively.
Shipping and Handling
The Company records amounts billed to customers for shipping and handling costs as sales revenue. Costs incurred by the Company for shipping and handlings are included in cost of sales.
Revenue Recognition
In accordance with ASC 605, Revenue Recognition, the Company recognizes revenue when persuasive evidence of an arrangement exists, product delivery has occurred or the services have been rendered, the price is fixed or determinable and collectability is reasonably assured. Revenue is generated when products, repairs or parts are delivered to the customer. Revenue is recognized net of sales returns and allowances. Provisions for discounts and rebates to customers, estimated returns, allowances, and other adjustments are provided for in the same period the related sales are recorded.
Amounts collected on behalf of governmental authorities for sales taxes and other similar taxes are reported on a net basis.
Revenue derived from the sale of products not yet completed and delivered is deferred and recognized as revenue once the product has been delivered to the customer.
Long-lived Assets
Long-lived assets (which excludes goodwill and other indefinite-lived intangible assets) are assessed for impairment IAW ASC 360, Property and equipment when an indicator of impairment exists. The Company periodically evaluates whether events and circumstances have occurred that indicate possible impairment. When impairment indicators exist, the Company uses market quotes, if available or an estimate of the future undiscounted net cash flows of the related asset or asset group over the remaining life in measuring whether or not the asset values are recoverable. There have been no significant impairments of long-lived assets during the years ended February 29, 2016 and February 28, 2015.
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Financial Instruments
The Company's balance sheet includes certain financial instruments. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization.
ASC 820 Fair Value Measurements and Disclosures defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity's own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
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Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
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Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or 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); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
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Level 3 - Inputs that are both significant to the fair value measurement and unobservable.
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of February 29, 2016. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include accounts receivable, other current assets, accounts payable, accrued compensation and accrued expenses. The fair value of the Company's notes payable is estimated based on current rates that would be available for debt of similar terms which is not significantly different from its stated value.
Commitments and Contingencies
The Company follows ASC 450-20, Loss Contingencies, to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. There were no commitments or contingencies as of February 29, 2016 and February 28, 2015.
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Deferred Income Taxes and Valuation Allowance
The Company accounts for income taxes under ASC 740 Income Taxes. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the consolidated financial statements carrying amounts of existing assets and liabilities and their respective income 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. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income in the period that included the enactment date. Due to the Company's continued losses, the Company has placed a full valuation allowance against the deferred tax asset.
No deferred tax assets or liabilities were recognized as of February 29, 2016 and February 28, 2015.
Share-based Expense
ASC 718, Compensation - Stock Compensation, prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).
The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, Equity - Based Payments to Non-Employees. Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.
Share-based expense for each of the years ended February 29, 2016 and February 28, 2015 was $0.
Earnings (Loss) per Share
The Company records stock as issued at the time consideration is received or the obligation is incurred.
The Company computes basic and diluted earnings per share amounts in accordance with ASC Topic 260, Earnings per Share. Basic earnings per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company.
The Company does not have any potentially dilutive instruments as of February 29, 2016 and, thus, anti-dilution issues are not applicable.
Related Parties
The Company follows ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions.
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Recent Pronouncements
From time to time, new accounting pronouncements are issued that we adopt as of the specified effective date. We believe that the impact of recently issued standards that are not yet effective may have an impact on our results of operations and financial position.
ASU Update 2014-09 Revenue from Contracts with Customers (Topic 606) issued May 28, 2014 by FASB and IASB converged guidance on recognizing revenue in contracts with customers on an effective date after December 31, 2017 will be evaluated as to impact and implemented accordingly.
ASU Update 2014-15 Presentation of Financial Statements - Going Concern (Sub-Topic 205-40) issued August 27, 2014 by FASB defines managements responsibility to evaluate whether there is a substantial doubt about an organizations ability to continue as a going concern. The additional disclosure required is effective after December 31, 2016 and will be evaluated as to impact and implemented accordingly.
In April 2015, the FASB issued ASU 2015-03, Interest-Imputation of Interest: Simplifying the Presentation of Debt Issuance Cost. The guidance requires an entity to present debt issuance costs in the balance sheet as a direct reduction from the carrying amount of the debt liability, consistent with debt discounts, rather than as an asset. Amortization of debt issuance costs will continue to be reported as interest expense. Debt issuance costs related to revolving credit arrangements, however, will continue to be presented as an asset and amortized ratably over the term of the arrangement. ASU 2015-03 is effective for reporting periods beginning after December 31, 2015 including interim periods within those annual periods.
In July 2015- FASB issued ASU 2015-11, Inventory, which simplifies the measurement principle of inventories valued under the First-In, First-Out ("FIFO") or weighted average methods from the lower of cost or market to the lower of cost and net realizable value. ASU 2015-11 is effective for reporting periods beginning after December 15, 2016, including interim periods within those annual periods. We do not expect the standard to have a material impact on our Consolidated Financial Statements.
In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes, which requires that deferred tax assets and liabilities be classified as noncurrent on the consolidated balance sheet, ASU 2015-17 is effective for annual periods beginning after December 15, 2016, including interim periods within those annual periods. Early adoption is permitted as of the beginning of an interim or annual reporting period. Upon adoption, ASU 2015-17 may be applied either prospectively or retrospectively. We do not expect the adoption of this guidance to have a material impact on our Consolidated Financial Statements.
In February 2016, the FASB issued ASU 2016-02, Leases, to improve financial reporting about leasing transactions. This ASU will require organizations that lease assets ("lessees") to recognize a lease liability and a right-of-use asset on its balance sheet for all leases with terms of more than twelve months. A lease liability is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis and a right-of-use asset represents the lessee's right to use, or control use of, a specified asset for the lease term. The amendments in this ASU simplify the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. This ASU leaves the accounting for the organizations that own the assets leased to the lessee ("lessor") largely unchanged except for targeted improvements to align it with the lessee accounting model and Topic 606, Revenue from Contracts with Customers.
The amendments in ASU 2016-02 are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earlies comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. The Company is evaluating the potential impact of ASU 2016-02 on its Consolidated Financial Statements.
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4. ACCOUNTS RECEIVABLE, FACTORED
During the years ended February 29, 2016 and February 28, 2015, the Company factored receivables of approximately $214,200 and $477,800, respectively. In connection with the factoring agreement, the Company incurred fees of approximately $6,800 and $14,700 during the years ended February 29, 2016 and February 28, 2015, respectively. Any and all of the Company's indebtedness and obligations to the Factoring Company is guaranteed by two stockholders and collateralized by the Company's inventory and fixed assets. The Company terminated the factoring of accounts receivable on January 25, 2016.
5. INVENTORIES
Inventories consist of the following:
6. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
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Depreciation expense for the years ended February 29, 2016 and February 28, 2015 was $162,612 and $195,475, respectively.
7. INVESTMENTS IN EQUITY SECURITIES
Investments in equity securities as of February 29, 2016 and February 28, 2015 are summarized based on the primary industry of the investee in the table below:
8. NOTES PAYABLE
Notes payable consist of:
*As of February 29, 2016, the notes payable listed above include notes in default totaling $216,988.
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The aggregate principal maturing in subsequent years is:
At February 29, 2016 and February 28, 2015, the above notes payable to related parties in the amount of $298,634 and $373,024, respectively, are not necessarily indicative of the terms and amounts that would have been incurred had comparable agreements been made with independent parties.
9. EQUITY
Preferred Stock - Series A
Holders of Series A convertible preferred stocks vote on a converted basis with the common stockholders on all matters to be brought to a vote of the stockholders. Each share of Series A convertible preferred stock can be converted into 1,289 shares of common stock. Dividends are payable in kind at the Company's option at a rate of ten percent annually. Payments of annual dividends have been deferred by the Company's Board of Directors on the outstanding Series A shares because of losses sustained by the Company. As of February 29, 2016, preferred dividends in arrears amounted to $118,377 or $1,161 per share.
Preferred Stock - Series B
The Series B convertible preferred stock has rights to receive cumulative six percent in kind dividends in preference to the payment of dividends on all other shares of capital stock of the Company. No dividends may be declared or paid on any other shares of stock until the full amount of the cumulative dividends on the Series B preferred stock has been paid. Each share of Series B convertible preferred stock can be converted into 1,000 shares of common stock. Cumulative dividends amounted to $4,075,255 at February 29, 2016. Dividends may be paid in stock at a conversion rate of $1.00 per share. For the years ended February 29, 2016 and February 28, 2015, no dividends were paid with additional shares of preferred stock.
Holders of Series B preferred stock vote on a converted basis with the common stockholders on all matters to be brought to a vote of the stockholders. The Series B preferred stockholders are entitled to elect one director out of the seven authorized directors of the Company's board.
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Common Stock
The following transactions with our officer's and a related party, in the aggregate amount of $310,000 and 121,568,627 shares of common stock, were reported in Form S8 as filed with the Securities and Exchange Commission on May 1, 2014:
During the year ended February 28, 2015, two executives who are stockholders of the Company deferred $232,400 of compensation earned during this period. The balance due to stockholders at February 29, 2016 and February 28, 2015, totaled $1,833,809 and $1,601,910, respectively. The amounts are unsecured, non-interest bearing, and have no specific repayment terms; however, the Company does not expect to repay these amounts within the next year. During the year ended February 28, 2015, the Company issued a total of 58,823,529 shares of common stock to each of the executives valued at $0.0051, in exchange for the reduction $300,000 of deferred compensation.
In April 2014, the Company exchanged $10,000 of debt due to the related party for 3,921,569 shares of common stock. The shares were valued at $0.0051 per share.
The Company issued 10,000,000 shares to an unrelated company in good faith negotiation of a potential acquisition. Shares issued were valued at $21,000, or $0.0021 per share, the fair market value at the date of the exchange. Based on an analysis of the transaction, the acquisition was never executed and therefore, the Company has written off the $21,000.
Certain notes to related parties have conversion features, whereby, at the holder's option, the notes may be converted, in whole or in part upon written notice, into the Company's common shares at a discount to the fair market value. The Company considered the value of the beneficial conversion features of the notes, and when deemed material, recorded the beneficial conversion value as deferred financing costs and amortized the amount over the period of the loan, charging interest expense. The convertible notes are to related parties, who have the majority of the voting rights. The related parties have waived their conversion rights since the inception of these notes until such time that the Company's market price of shares rise sufficiently or the Company amends the capital structure (through a reverse split or increase in the authorized shares) or combination of all factors, whereby a conversion of any single note, or portion thereof, will not exceed the authorized shares of the Company.
10. INCOME TAXES
The Company has incurred significant operating losses since its inception and, therefore, no tax liabilities have been incurred for the periods presented. As of February 29, 2016, the amount of unused tax losses available to carry forward and apply against taxable income in future years totaled approximately $19,655,000. The loss carry forwards began expiring in 2008. Due to the Company's continued losses, management has established a valuation allowance equal to the amount of deferred tax asset because it is more likely than not that the Company will not realize this benefit.
Temporary differences giving rise to the deferred tax assets, are as follows:
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The valuation allowance increased by $82,700 during the year ended February 29, 2016. Differences between the federal benefits computed at a statutory rate and the Company's effective tax rate and provision are as follows for the years ended February 29, 2016 and February 28, 2015.
The Internal Revenue Code contains provisions that may limit the net operating loss carry forwards available for use in any given year if significant changes in ownership interest of the Company occur.
We are subject to income tax audits by the Internal Revenue Service for the years 2014 - 2016.
11. RELATED PARTY TRANSACTIONS
During the years ended February 29, 2016 and February 28, 2015, two executives who are stockholders of the Company deferred $231,899 and $232,400, respectively, of compensation earned during the year. The balance due to stockholders at February 29, 2016 and February 28, 2015, totaled $1,833,809 and $1,601,910, respectively. The amounts are unsecured, non-interest bearing, and have no specific repayment terms; however, the Company does not expect to repay these amounts within the next year. During the year ended February 28, 2015, the Company issued 58,823,529 shares of common stock in settlement of $300,000 of deferred compensation to each of the two executives. The stock was valued at $0.0051.
Note receivable, related party balance at February 29, 2016 and February 28, 2015 is $1,009,792 is due on demand and can be settled by the related party through the issuance of common stock and therefore, no allowance is considered necessary.
Due from related party balance at February 29, 2016 and February 28, 2015 is $893,714 and $803,585, respectively, is due on demand and can be settled by the return of the Company's common stock by the two executives and therefore, no allowance is considered necessary.
In April 2014, the Company exchanged $10,000 of debt due to the related parties for 3,921,569 shares of common stock. The shares were valued at $0.0051 per share.
The above amounts are not necessarily indicative of the amounts that would have been incurred had comparable transactions been entered into with independent parties.
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12. SEGMENT INFORMATION
The Company had two reportable segments during 2016 and 2015; manufacturing and other. For the years ended February 29, 2016 and February 28, 2015 the Company has included segment reporting.
For the year ended February 29, 2016, information regarding operations by segment is as follows:
For the year ended February 28, 2015, information regarding operations by segment is as follows:
(a)
The "other" segment is mainly related to the holding company expenses and general overhead, as well as the stock based compensation awards.
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Segment 1, manufacturing, consists of International Machine and Welding, Inc. and derives its revenues from machining operations, sale of parts and service.
The manufacturing segment, International Machine and Welding, Inc. has a broad and diverse base of customers. The segment does have a significant customer which accounts for 42% of total sales; the loss of this customer would have a material adverse effect on the segment. Also, this segment generates a significant amount of revenues from sales and services provided to three different industries.
13. SUBSEQUENT EVENTS
On March 31, 2016, the Company executed a letter agreement pursuant to which the Company acquired Best Way Auto & Truck Rental, Inc. as a wholly owned subsidiary from 3 Sisters Trust.
We have agreed to issue 342,709,427 shares of our common stock (a combination of treasury shares and unissued shares), plus an additional number of shares to be determined to provide 3 Sisters Trust with not less than 51% of the issued and outstanding shares of our common stock; provided that the shares to be issued will result in the issue of our entire authorized shares.
In connection with the acquisition of Best Way Auto & Truck Rental, Inc., we will divest our interest in International Machine & Welding, Inc., heretofore our sole wholly owned subsidiary, in a transaction with our directors, Daniel Hefner and Robert Maxwell, the terms of which are to be determined.
Also, in connection with the acquisition of Best Way Auto & Truck Rental, Inc., our indebtedness to International Machine & Welding, Inc. and to our related parties will be eliminated.
On April 13, 2016, Best Way Auto and Truck Rental, Inc., was approved for a credit line of $1.6 million from Fleet Way Leasing Company in Feasterville, PA for the purchase of 70 new vehicles for the Company's rental fleet. This line of credit is based on a 24-month term. Negotiations continue to increase the line to $3.5 million to finance a total of 145 vehicles.
On April 27, 2016, Best Way Auto and Truck Rental, Inc., has received an additional $5 million credit line from Fleet Way Leasing Company in Feasterville, PA for use in purchasing an additional 180 vehicles for their new locations, which are scheduled to open in May.
On April 25, 2016, the Company appointed William Stamps and Harry Willner to the board of directors. There are no arrangements between the Company and Mr. Stamps or Mr. Willner pursuant to which they were selected as a director, nor have they been named to any committees of the board of directors.
Mr. Stamps and Mr. Willner are the CEO and General Manager, respectively, of Fleetway Leasing and Sales Company.
Management has evaluated subsequent events through the date the financial statements were issued. Based on our evaluation no other events have occurred requiring adjustment or disclosure.
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ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
During 2015, the Board of Directors of American Commerce Solutions, Inc. (the "Company") approved the withdrawal of Peter Messineo & Co. CPAs, LLC ("M&CO") as the Company's independent registered public accounting firm. In December 2015, Peter Messineo & Co. CPAs and Peter Messineo were suspended from practicing before the SEC.
Also during 2015, the Board of Directors of the Company approved the engagement of Stevenson & Company CPAS LLC as the Company's new independent registered public accounting firm. Stevenson & Company CPAS LLC conducted the review engagement on the Company's quarterly Financial Statements commencing with the May 31, 2015 quarterly review.
ITEM 9A.
ITEM 9A. CONTROLS AND PROCEDURES
We maintain "disclosure controls and procedures," as such term is defined in Rules 13a-15(e) 15d-15(e) of the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, Daniel Hefner our Chief Executive Officer and John Keena, our Chief Financial Officer, to allow timely decisions regarding required disclosure.
The Company's Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of the design and operation of the company's disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(f)) as of February 29, 2016 concluded that as of such date the company's disclosure controls and procedures were inadequate and ineffective and there were material weaknesses due to insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements and ineffective controls over period end financial disclosure and reporting processes.
Management's Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as that term is defined in Rule 13a-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the management is responsible for establishing and maintaining preparation of financial statements for external purposes consistent with generally accepted accounting principles in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.
Our chief executive officer and chief financial officer evaluated the effectiveness of our internal control over financial reporting as of February 29, 2016. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework 2013. Based on this evaluation, our CEO and CFO concluded that, as of February 29, 2016, our internal control over financial reporting was not effective due to material weaknesses in the system of internal control. A material weakness is a deficiency, or combination of deficiencies, that creates a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected in a timely manner.
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The material weaknesses assessed by our management were (1) we have not implemented measures that would prevent the Chief Executive Officer and the Chief Financial Officer from overriding the internal control system and (2) our board of directors has determined that our audit committee does not have an independent "financial expert" as such term is defined under federal securities law; (3) lack of a majority of outside directors on our board of directors, potentially resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; and, (4) inadequate segregation of duties consistent with control objectives and affecting the functions of authorization, recordkeeping, custody of assets, and reconciliation.
We do not believe that these material weaknesses have resulted in deficient financial reporting because both the chief executive officer and the chief financial officer are aware of their responsibilities under the SEC's reporting requirements and they both personally certify our financial reports.
Accordingly, while we have identified material weaknesses in our system of internal control over financial reporting, we believe we have taken reasonable steps to ascertain that the financial information contained in this report is in accordance with generally accepted accounting principles. Our management has determined that current resources would be appropriately applied elsewhere and when resources permit, it will address and remediate material weaknesses through implementing various controls or changes to controls. At such time as we have additional financial resources available to us, we intend to enhance our controls and procedures. We will not be able to assess whether the steps we intend to take will fully remedy the material weakness in our internal control over financial reporting until we have fully implemented them and sufficient time passes in order to evaluate their effectiveness.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal controls over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) or Rule 15d-15(d) that occurred during the year ended February 29, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Auditor's Report on Internal Control over Financial Reporting
This Annual Report does not include an attestation report of the Company's independent registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this Annual Report.
ITEM 9B.
ITEM 9B. OTHER INFORMATION
None
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PART III
ITEM 10.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The following table sets forth information about each person who serves as an executive officer or director of the Company:
Directors of the Company hold office until the earlier of the next annual meeting of the stockholders and until their successors have been duly elected and qualified, or their death, resignation, or removal. Our officers are elected annually by the board of directors to hold office until the next annual meeting of our board and their successors have been duly elected and qualified. There are no family relationships between any of our officers and directors. Set forth below is a description of the business experience during the past five years or more and biographical information for directors and executive officers identified above:
Mr. Maxwell has been a director and the Chairman of the Board of Directors of the Company since June 2000. Mr. Maxwell serves as a consultant to International Machine and Welding, Inc., a subsidiary of the Company. He was the owner/operator of Florida Machine and Welding, Inc., located in Bartow, Florida, for 24 years until the sale of its assets in June 2000. Mr. Maxwell has served on various bank and charitable boards of directors.
Mr. Keena has been Chief Financial Officer and a director of the Company since March 31, 2016. Mr. Keena has been the founder and Chief Executive Officer and director of Best Way Auto & Trust Rental, Inc. since December 2015. From 2010 to 2014, Mr. Keena worked at Blessed Veterans, an entity assisting the employment of veterans in the United States. From 2004 to 2010, Mr. Keena was the general manager of Miami Chevrolet and fleet manager of over 3,000 automobiles per year.
Mr. Hefner has been President of the Company since September 2002 and Chief Executive Officer since March 2002. He previously served as Executive Vice President from June 2000 to June 2001 and as interim President from June 2001 through February 2002. Mr. Hefner has been a director of the Company since June 2000. Mr. Hefner formerly served as President of International Machine and Welding, Inc. He formerly served as President, and is now serving as President of International Commerce and Finance, Inc. an investment/consulting company for manufacturing and technology companies, and he has held this position since August 1999. Mr. Hefner has been active for the past eighteen years as an independent consultant to individuals or business seeking to begin operations or to create turnarounds of existing business. During the same period, Mr. Hefner also operated his own independent real estate brokerage operation where he continues to serve as President and Chief Executive Officer. From March to October 1999, Mr. Hefner was Chief Operating Officer for Chronicle Communications, Inc. (OTCBB: CRNC), a Tampa based printer.
Mr. Stamps has been a director of the Company since April 25, 2016. Mr. Stamps have been heavily involved in the car dealership business for 50 years and currently owns Colloniel Nissan, Volkswagen, Subaru and Hyundai, all located in Pennsylvania. He was a former CPA and is currently the Chief Executive officer of Fleet Way Leasing Company where he has been distributing vehicles to rental fleets across the United States.
Mr. Willner has been a director of the Company since April 25, 2016. Mr. Willner has over twenty years of experience managing companies with sales up to $20 million. Mr. Willner is currently one of the partners in Fleetway Leasing Company. Mr. Willner is an experienced banker since 1998, having been a founder, member of the Executive and Loan Committees of United Valley Bank. United Valley Bank completed pooling of interest with Jefferson Bank in Philadelphia. After United Valley Bank, Mr. Willner served as a director of Pennsylvania Business Bank that was purchased by NOVA Bank.
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Additional Board Members added April 18, 2016:
William Stamps has been heavily involved in the car dealership business for 50 years and currently owns Colloniel Nissan, Volkswagen, Subaru, and Hyundai all located in PA. He was a former CPA and is also the CEO of Fleet Way Leasing Company where he has been distributing vehicles to rental fleets across the USA. Mr. Stamps quoted, "I am very pleased to join the board with other aggressive executives inside of Best Way. I plan to use my knowledge, resources and experiences in the automotive industry to assist this company in franchising Best Way Rentals throughout the USA while also expanding on the core business fundamentals in every way I can."
Harry Willner has 20 + years of experience managing companies with sales up to $20M while directing a staff of 40 individuals in the company. Mr. Willner is currently one of the partners in Fleetway Leasing Company and has helped his company earn multiple awards for the Best Vehicle Leasing Company in Philadelphia. Mr. Willner states, "While managing sub-prime credit portfolios for 250 customers and overseeing a $13M budget, I plan to bring exceptional expertise to the table in many different avenues."
AUDIT COMMITTEE
The Audit Committee consists of John Keena and Robert Maxwell. The Audit Committee selects the independent auditors; reviews the results and scope of the audit and other services provided by the Company's independent auditor. The Audit Committee also reviews and evaluates the Company's internal control functions. The board of directors has determined that the audit committee does not have an independent "financial expert"; as such term is defined under federal securities law.
CODE OF ETHICS
We have adopted a code of ethics meeting the requirements of Section 406 of the Sarbanes-Oxley Act of 2002. We believe our code of ethics is reasonably designed to deter wrong doing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of violations; and provide accountability for adherence to the provisions of the code of ethics.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
The following summary compensation table sets forth cash and non-cash compensation awarded, paid or accrued, for the past two fiscal years of the Company's Chief Executive Officers, and all other, if any, whose total annual compensation exceeded $100,000 for the past three fiscal years (collectively, the " Named Executive Officers").
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SUMMARY COMPENSATION TABLE
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(1) Mr. Puissegur resigned as an officer and director on March 31, 2016 in conjunction with the acquisition of Best Way Auto and Truck Rental, Inc.
The Company does not have any annuity, retirement, pension, deferred or incentive compensation plan or arrangement under which any executive officers are entitled to benefits, nor does the Company have any long-term incentive plan pursuant to which performance units or other forms of compensation are paid. Executive officers may participate in group life, health and hospitalization plans if and when such plans are available generally to all employees. All other compensation consisted solely of health care premiums.
DIRECTOR COMPENSATION
Directors of the Company who are not employees or consultants do not receive any compensation for their services as members of the Board of Directors, but are reimbursed for expenses incurred in connection with their attendance at meetings of the Board of Directors.
COMPENSATION COMMITTEE
Robert E. Maxwell, Daniel L. Hefner and John Keena are members of the Compensation Committee, which reviews and makes recommendations with respect to compensation of officers, employees and consultants, including the granting of options under the Company's Non Qualifying Stock Option Plan approved effective July 10, 2002 and the Employee Stock Incentive Plan approved effective May 27, 2003. Additionally, the committee reviews executive compensation and makes recommendations to the Board of Directors.
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NONQUALIFYING STOCK OPTION PLAN
On July 10, 2002 the Company adopted a Non-qualifying Stock Option/Stock Appreciation Rights Plan and reserved 7,000,000 common shares of stock for employees, officers and consultants. These options are granted by the Board at their discretion. As of February 29, 2016 the Company has 57,400 options available for future issuance under this plan.
EMPLOYEE STOCK INCENTIVE PLAN
At February 29, 2016, the Company did not have any long-term incentive plans nor had it awarded any restricted shares to any Named Executive Officer. The table set forth below contains information with respect to the award of stock options during the fiscal year ended February 28, 2015 and 2014 to the Named Executive Officers covered by the Salary Compensation Table.
OPTION GRANTS TO NAMED EXECUTIVES IN LAST FISCAL YEAR
During 2016, the Company did not grant any option awards to our executive officers.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following table sets forth, for each Named Executive Officer in the Summary Compensation Table who holds stock options during fiscal 2016 and 2015.
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ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information regarding the beneficial ownership of the Company's outstanding Common Stock as of February 29, 2016, by: (i) each director and nominee for director of the Company, (ii) each Named Executive Officer, (iii) all directors and executive officers of the Company as a group, and (iv) each person known to the Company beneficially owning more than 5% of the outstanding Common Stock. Except as otherwise indicated, the persons named in the table have sole voting and investment power with respect to all of the Common Stock owned by them.
___________
(**)
Less than 1%
(1)
In accordance with Rule 13d-3 promulgated pursuant to the Securities Exchange Act of 1934, a person is deemed to be the beneficial owner of a security for purposes of the rule if he or she has or shares voting power or dispositive power with respect to such security or has the right to acquire such ownership within sixty days. As used herein, "voting power" is the power to vote or to direct the voting of shares, and "dispositive power" is the power to dispose or direct the disposition of shares, irrespective of any economic interest therein.
(2)
In calculating the percentage ownership for a given individual or group, the number of shares of Common Stock outstanding includes unissued shares subject to options, warrants, rights or conversion privileges exercisable within sixty days held by such individual or group, but are not deemed outstanding by any other person or group.
(3)
Includes (a) 348,360 shares of Common Stock held by his spouse Barbara Maxwell, (b) 92,212,681 shares of Common Stock beneficially owned as the President of International Commerce and Finance, Inc.
(4)
Includes (a) 36,946,360 shares of Common Stock held personally
(5)
Total shares controlled by all directors and executive officers as a group.
The Company has two classes of preferred stock outstanding comprised of 102 shares of Series A Preferred Stock and 3,944 shares of Series B Preferred Stock. Each outstanding class of preferred stock has voting rights and is convertible into Common Stock. Each share of Series A Preferred Stock converts to 1,289 shares of Common Stock and votes on an as converted basis. 3,207 shares of Series B Preferred Stock is convertible into 641,400 shares of Common Stock and 737 Series B Preferred Shares convert into 737,000 shares of Common Stock and votes on an as converted basis.
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Gerald Hoak, of 235 Deerfield Drive, Pottsville, PA 17901, owner of 20 shares or 19.61% of Series A Preferred Stock, and Merit Capital Associates, (substantially owned by Russ and Sylvia Newton) of 1221 Post Road East, Westport, CT 06880 owner of 40 shares or 39.22% of Series A Preferred Stock are the only owners of more than 5% of the class. No director or officer is the beneficial owner of any of the Series A or Series B Preferred Stock.
Beneficial Voting Power Held
The following table sets forth the voting power in the Company's equity securities, as of February 29, 2016 held by: (i) each director of the Company, (ii) each Named Executive Officer, (iii) all directors and executive officers as a group, and (iv) each person known by the Company to own more than 5% of any class of outstanding equity security of the Company. The voting power set forth in this table is the beneficial voting power held, directly and indirectly, by such person as of the date indicated assuming no conversion of the preferred stock (i.e., includes shares that may be acquired within 60 days by reason of option or warrant exercise but not those that could be obtained upon conversion of preferred stock).
_________
*
Less than 1%
(1)
Based upon 1,157,290,573 outstanding shares of common stock, 102 outstanding shares of Series A Preferred Stock and 3,944 outstanding shares of Series B Preferred Stock. Each share of Common Stock is entitled to one vote per share. Each outstanding share of Series A Preferred Stock is entitled to 1,289 votes. 3,207 shares of Series B Preferred Stock are entitled to 200 votes per share and 737 shares of Series B Preferred are entitled 1,000 votes each. Accordingly, as of February 28, 2015, the Series A Preferred Stock and Series B Preferred Stock are entitled to an aggregate of 131,478 votes and 1,378,400 votes, respectively. Voting rights are calculated in the same manner described in footnote 2 to table above disclosing the Security Ownership of Management and Certain Beneficial Owners ("Beneficial Ownership Table"). Totals could exceed 100% due to such calculations and overlapping beneficial voting rights held between holders as set forth herein.
(2)
Consisting of 414,955,105 shares of Common Stock.
(3)
Includes 348,360 shares of Common Stock held by his spouse Barbara Maxwell, and 1,376,671 shares of Common Stock beneficially owned by CALB.
(4)
Consisting of 259,833,285 shares of Common Stock. The corporation is controlled by Robert Maxwell and Daniel Hefner, officers and directors of Company
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ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
STOCKHOLDERS AGREEMENT
A Stockholders Agreement dated April 9, 1998 was entered into among ULLICO, the Company, David N. DeBaene, Annette DeBaene, Norman DeBaene, Thomas Lisi, and Steve Panneton (each, a "Holder"). The Stockholders Agreement provides that the Company shall have a right of first refusal before any Holder may transfer any shares of Common Stock. ULLICO has a right of second refusal and co-sale rights; if the Company does not elect to buy all of the securities it is offered. If ULLICO enters into an agreement to transfer, sell or otherwise dispose of all of its Preferred Stock, Warrants and any Common Stock issued upon conversion or exercise of the former (such agreement referred to as a "Tag-Along Sale"), each Holder has the right to participate in the Tag-Along Sale. If ULLICO, alone or with another person, accepts an offer from any party who is unaffiliated with it to purchase any of ULLICO's shares which results in such party having the ability to elect a majority of the Company's Board of Directors, then, at the request of ULLICO, each Holder shall sell all shares of Common Stock held by such Holder (referred to as a "Drag-Along Sale").
During the years ended February 29, 2016 and February 28, 2015, two executives who are stockholders of the Company deferred $231,899 and $232,400, respectively, of compensation earned during the year. The balance due to stockholders at February 29, 2016 totaled $1,833,809. The amounts are unsecured, non-interest bearing, and have no specific repayment terms.
Note receivable, related party balance at February 29, 2016 and February 28, 2015 is $1,009,792 is due on demand and can be settled by the related party through the issuance of common stock and therefore, no allowance is considered necessary.
Due from related party balance at February 29, 2016 and February 28, 2015 is $893,714 and $803,585, respectively, is due on demand and can be settled by the return of the Company's common stock by the two executives and therefore, no allowance is considered necessary.
In April 2014, the Company exchanged $10,000 of debt due to the related parties for 3,921,569 shares of common stock. The shares were valued at $0.0051 per share.
The above amounts are not necessarily indicative of the amounts that would have been incurred had comparable transactions been entered into with independent parties.
On May 27, 2016, the Company ceased operation of its wholly-owned subsidiary, International Machine and sold substantially all of its assets, including real estate and certain machines. Other assets will be sold at auction. The projected gross sale is expected to be $1.6M, more or less. This sale and the anticipated final documentation of the Best Way acquisition will transfer ownership of International Machine to Robert Maxwell and Daniel Hefner, officer and directors of the Company or their assigns in exchange for return of stock and/or reduction of monies owed to Messrs. Maxwell and Hefner.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Audit Fees
During 2016 and 2015, we were billed by our former accountant, Messineo & Co., CPAs, LLC, approximately $18,500 and $6,500 for audit and review fees associated with our 10-K and 10-Q filings.
During 2016 we were billed by our accountant, Stevenson & Co., CPAs, LLC, approximately $36,000 for audit and review fees associated with our 10-K and 10-Q filings.
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Audit related fees
None
Tax Fees
None.
All Other Fees
None
Audit Committee Pre-Approval Process, Policies and Procedures
Our principal auditors have performed their audit procedures in accordance with pre-approved policies and procedures established by our Audit Committee. Our principal auditors have informed our Audit Committee of the scope and nature of each service provided. With respect to the provisions of services other than audit, review, or attest services, our principal accountants brought such services to the attention of our Audit Committee, or one or more members of our Audit Committee for the members of our Board of Directors to whom authority to grant such approval had been delegated by the Audit Committee, prior to commencing such services.
ITEM 15.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)(1) List of Financial statements included in Part II hereof
(a)(2) List of Financial Statement schedules included in Part IV hereof: None
(a)(3) Exhibits
The exhibits that are filed with this report are set forth in the Exhibit Index below:
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EXHIBIT INDEX
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** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.