ITEM 1: BUSINESS
American Business Services, Inc. was incorporated under the laws of the state of Colorado on September 20, 1991.
We are a consulting company that consults with businesses in the area of marketing, raising capital, going public, going private, mergers and acquisitions and other areas. From our incorporation to date, our president, Mr. Ray, has been the only employee of ABS.
Mr. Ray has only devoted a part of his time to the business of ABS.
We have never declared bankruptcy, have never been in receivership, and have never been involved in any legal action or proceedings. We have not made any significant purchase or sale of assets, nor has the registrant been involved in any mergers, acquisitions or consolidations. We are not a blank check registrant as that term is defined in Rule 419(a)(2) of Regulation C of the Securities Act of 1933, because we have a specific business plan and purpose, have been in business for about 20 years and have generated revenues for that period of time. Neither the registrant, nor its officers, directors, promoters or affiliates, has had preliminary contact or discussions with, nor do we have any present plans, proposals, arrangements or understandings with any representatives of the owners of any business or company regarding the possibility of an acquisition or merger.
Operations
We are a consulting company. Our consulting services vary with each client and payment for our services will likewise vary with each client.
We consult with companies in the areas of marketing, capital raising, developing corporate documents, and business development. We assist in developing marketing programs and defining market potential. We assist companies in raising working capital, primarily by introducing a client to possible capital sources such as venture capital firms. We assist companies in developing corporate documents such as articles of incorporation, bylaws, and corporate minutes.
We assist companies in going public by assisting the development of offering memorandums and making introductions to professional firms that offer specific services according to their needs, such as legal firms, accounting firms, and stock brokers. We assist public companies in becoming private companies by advising the company on spinning out their present business or by finding a merger candidate for their public entity. We also assist companies restructuring their company, including recapitalization and other changes.
For our services, we are paid a consulting fee. The consulting fee can be an hourly fee, which hourly fee can vary, depending on the services performed.
Subsidiaries
ABS has one wholly owned subsidiary.
American Business Services Corp. is a Colorado corporation incorporated on March 1, 2011. It is a dormant company and has never traded.
ABS previously owned a second subsidiary company, Our Best Wishes, Inc.
Our Best Wishes, Inc. is a Nevada corporation incorporated on September 1, 2005. Our Best Wishes had limited operations from inception to the date of this registration statement. In 2012, the registrant assigned 100% of Our Best Wishes over to another company. No payment was made in consideration for the transfer, and there was never any business in the subsidiary.
Revenue
We receive revenue as consulting fees from our clients. Fees charged will vary, depending upon the work involved. We do not anticipate that revenues will significantly increase until we are able to add additional personnel to assist in consulting.
Competition
The consulting business has many competitors. Companies usually choose their consultants by who they feel has the most experience in certain fields for which they have a particular need at the time. Consulting fees are determined on a case by case basis, depending on the work performed.
Patents and Trademarks
We do not, at this time, have any patents or trademarks.
Government Regulations
Our normal consulting business does not fall under any government regulations.
Employees
At this time, we have no employees other than Phil E. Ray, our sole executive officer, who is also a director, and A. Terry Ray, our secretary and treasurer. A. Terry Ray has also served as an officer and director of the Company but has received no compensation for her services and therefore is not considered a paid employee. All functions including development strategy, negotiations and administration are currently being provided by our sole executive officer.
Reports to Security Holders
We will file the necessary quarterly and other reports with the Securities and Exchange Commission. Although we will not be required to deliver our annual or quarterly reports to security holders, we intend to forward this information to security holders upon receiving a written request to receive such information. The reports and other information filed by us will be available for inspection and copying at the public reference facilities of the Securities and Exchange Commission located at 100 F Street N.E., Washington, D.C. 20549.
Copies of such material may be obtained by mail from the Public Reference Section of the Securities and Exchange Commission at 100 F Street, N.E., Washington, D.C. 20549, at prescribed rates. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. In addition, the Commission maintains a World Wide Website on the Internet at: http://www.sec.gov that contains reports and information statements and other information regarding registrants that file electronically with the Securities and Exchange Commission.
ITEM 1A.
ITEM 1A. RISK FACTORS
Not applicable to a smaller reporting company.
ITEM 1B.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2.
ITEM 2. PROPERTIES
We do not lease offices at this time. Our executive offices are presently in the home of Mr. Ray, ABS president, at 6521 Ocaso Drive, Castle Pines, Colorado, 80108, and are provided at no charge to us. We believe that our current office situation will be adequate for the foreseeable future, however, as ABS moves into the field of preparing documents for filing with EDGAR, it is anticipated that additional space will be required and ABS will seek out such space for lease as the need arises. Our telephone number is 303-730-7939.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
There is no litigation pending or threatened by or against us.
ITEM 4.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable
PART II
ITEM 5.
ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
a) Market Information. There has been no trading market for the registrant's common stock since inception. There can be no assurance that a trading market will ever develop or, if such a market does develop, that it will continue.
Holders. There were approximately 36 record holders of the registrant's common stock as of April 1, 2014.
Dividends. Holders of the registrant's common stock are entitled to receive such dividends as may be declared by its board of directors. No dividends on the registrant's common stock have ever been paid, and the registrant does not anticipate that dividends will be paid on its common stock in the foreseeable future.
Securities authorized for issuance under equity compensation plans. No securities are authorized for issuance by the registrant under equity compensation plans.
Performance graph. Not applicable.
Sale of unregistered securities.
In 2013, we sold 490,000 shares of our common stock for cash proceeds of $24,500.
These transactions were exempt under Section 4(2) of the Securities Act of 1933, as amended, due to the facts that the investor was an accredited investor, had acquired the shares for investment purposes and not with a view for re-distribution, had access to sufficient information concerning the Company, and the certificate(s) representing such shares will bear a restrictive legend.
b) Use of Proceeds. The funds received from the sale of shares of our common stock during 2013 and 2012 have been used to provide us with working capital
c) Purchases of Equity Securities by the issuers and affiliated purchasers. None.
d) Securities authorized for issuance under equity compensation plans. No securities are authorized for issuance by the registrant under equity compensation plans.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable to a smaller reporting company.
ITEM 7.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-looking Statements
Statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operation, as well as in certain other parts of this Annual report on Form 10-K (as well as information included in oral statements or other written statements made or to be made by the registrant) that look forward in time, are forward-looking statements made pursuant to the safe harbor provisions of the Private Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, expectations, predictions, and assumptions and other statements which are other than statements of historical facts. Although the registrant believes such forward-looking statements are reasonable, it can give no assurance that any forward-looking statements will prove to be correct. Such forward-looking statements are subject to, and are qualified by, known and unknown risks, uncertainties and other factors that could cause actual results, performance or achievements to differ materially from those expressed or implied by those statements. These risks, uncertainties and other factors include, but are not limited to the registrant’s ability to estimate the impact of competition and of industry consolidation and risks, uncertainties and other factors set forth in the registrant’s filings with the Securities and Exchange Commission, including without limitation to this Annual Report on Form 10-K.
American Business Services undertakes no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Form 10-K.
Critical Accounting Policies
The following discussion as well as disclosures included elsewhere in this Form 10-K are based upon our audited financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. These financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America.
The preparation of these financial statements requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingencies. American Business Services continually evaluates the accounting policies and estimates used to prepare the financial
statements. The registrant bases its estimates on historical experiences and assumptions believed to be reasonable under current facts and circumstances. Actual amounts and results could differ from these estimates made by management.
Trends and Uncertainties
We are currently not aware of any trends that are reasonably likely to have a material impact on our liquidity.
Promissory Notes Outstanding
As of December 31, 2013 the Company owed a related party $12,000 under a note payable, repayable in full on December 31, 2014. The loan bears interest at 6% and a balance of $740 interest had been accrued on this loan at December 31, 2013.
We currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources. If we are unable to raise funds for the above purposes, it is uncertain if we will be able to continue as a going operation.
We currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources.
General and administrative expenses will continue to increase as we implement sales and marketing initiatives.
Liquidity and Capital Resources
For the year ended December 31, 2013, we used $24,245 in operating activities, compared to $9,585 we generated during the year ended December 31, 2012. During the twelve months ended December 31, 2013 we recognized a loss of $21,103 and used a further $3,142 in operating cash flow through increased other receivables and reduced taxes payable. By comparison, during the twelve months ended December 31, 2012, we generated a profit of $7,280 and generated a further $2,305 in operating cash flow from increases in accrued payables and taxes payable.
For the years ended December 31, 2013 and 2012, we did not pursue any investing activities.
For the year ended December 31, 2013, we repaid $11,800 in related party notes payable and received $24,500 in sales of common stock. As a result, we had net cash provided by financing activities of $12,700 for the year ended December 31, 2013.
For the year ended December 31, 2012, we received $3,000 from the sale of common stock. As a result, we had net cash provided by financing activities of $3,000 for the year ended December 31, 2012.
The accompanying financial statements have been prepared assuming that the registrant will continue as a going concern. As shown in the accompanying financial statements, the registrant has incurred losses of $21,103 for the year ended December 31, 2013, and a working capital deficiency which raises substantial doubt about the registrant’s ability to continue as a going concern.
Management believes the registrant will continue to incur losses and negative cash flows from operating activities for the foreseeable future and will need additional equity or debt financing to sustain its operations until it can achieve profitability and positive cash flows, if ever. Management plans to seek additional debt and/or equity financing for the registrant, but cannot assure that such financing will be available on acceptable terms.
The registrant’s continuation as a going concern is dependent upon its ability to ultimately attain profitable operations, generate sufficient cash flow to meet its obligations, and obtain additional financing as may be required. Our auditors have included a “going concern” qualification in their auditors’ report dated April 1, 2014. Such a “going concern” qualification may make it more difficult for us to raise funds when needed. The outcome of this uncertainty cannot be assured.
The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. There can be no assurance that management will be successful in implementing its business plan or that the successful implementation of such business plan will actually improve the registrant’s operating results.
Results of operations for the year ended December 31, 2013 compared to the year ended December 31, 2012.
For the year ended December 31, 2013, the registrant did not earn any revenues. We paid general and administrative expenses of $29,713 and interest expenses of $1,675. We earned other income of $8,200 and received income tax credit of $2,085. As a result, we had net loss of $21,103 for the year ended December 31, 2013.
Comparatively, for the year ended December 31, 2012, the registrant recognized revenues of $12,080, related party revenue of $27,100, and income from reserve reversal of $2,000. As a result, we had total revenue of $41,180. We had general and administrative expenses of $31, 342 and interest expenses of $481. We earned other income of $8, and made a provision for income taxes of $2,085. As a result, we had net income of $7,280 for the year ended December 31, 2012.
General and administrative expenses, which consist of fees paid for legal, accounting, and auditing services, were incurred primarily to enable the registrant to satisfy the requirements of a reporting company.
Recently Issued Accounting Standards
Management does not believe that any other recently issued, but not yet effective, accounting standard if currently adopted would have a material effect on the accompanying financial statements.
Off Balance Sheet Arrangements
None.
Disclosure of Contractual Obligations
None.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
American Business Services, Inc.
Page
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statement of Changes in Stockholders' Deficit
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
American Business Services, Inc.
Castle Rock, Colorado
We have audited the accompanying consolidated balance sheets of American Business Services, Inc. as of December 31, 2013 and the related consolidated statement of operations, changes in stockholders' deficit and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements as of December 31, 2012 and for the year then ended were audited by another auditor who expressed an unqualified opinion on February 28, 2013.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of American Business Services, Inc. as of December 31, 2013, and the consolidated results of its operations, changes in stockholders’ deficit and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements the Company has suffered losses and negative cash flow from operations which raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Arvada, Colorado
March 31, 2014
Cutler & Co.,LLC
RONALD R. CHADWICK, P.C.
Certified Public Accountant
2851 South Parker Road, Suite 720
Aurora, Colorado 80014
Telephone (303)306-1967
Fax (303)306-1944
Email: rcpc35@hotmail.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
American Business Services, Inc.
Castle Rock, Colorado
I have audited the accompanying consolidated balance sheet of American Business Services, Inc. as of December 31, 2012, and the related consolidated statements of operations, stockholders' equity and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of American Business Services, Inc. as of December 31, 2012, and the consolidated results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements the Company has suffered a loss from operations and negative cash flows from operations raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Aurora, Colorado
Ronald R. Chadwick, P.C.
February 28, 2013
RONALD R. CHADWICK, P.C.
AMERICAN BUSINESS SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2013 AND 2012
December 31, 2013
December 31, 2012
ASSETS
Current assets
Cash
$ 4,099
$ 15,644
Notes receivable - related parties
-
-
Other receivable
1,577
-
Total current assets
5,676
15,644
Fixed assets, net
-
-
Total Assets
$ 5,676
$ 15,644
LIABILITIES & STOCKHOLDERS' DEFICIT
Current liabilities
Accrued interest payable - related party
$ 740
$ 481
Note payable - related party - current portion
12,000
11,800
Income taxes payable
-
1,824
Total current liabilities
12,740
14,105
Notes payable - related party
-
12,000
Total Liabilities
12,740
26,105
Stockholders' Deficit
Preferred stock, $0.001 par value; 10,000,000 shares authorized; none issued and outstanding
-
-
Common stock, $0.001 par value; 90,000,000 shares authorized; 7,030,000 and 6,540,000 shares issued and outstanding as at December 31, 2013 and 2012, respectively
7,030
6,540
Additional paid in capital
25,270
1,260
Retained deficit
(39,364)
(18,261)
Total Stockholders' Deficit
(7,064)
(10,461)
Total Liabilities and Stockholders' Deficit
$ 5,676
$ 15,644
The accompanying notes are an integral part of the consolidated financial statements.
AMERICAN BUSINESS SERVICES, INC.
CONSOLIDATED STATMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
Year Ended
December 31,
Year Ended
December 31,
Revenue
$ -
$12,080
Revenue - related party
-
27,100
Income from reserve reversal
-
2,000
Total revenue
-
41,180
Operating Expenses:
General and administrative
29,713
31,342
Total operating expenses
29,713
31,342
Income (loss) from operations
(29,713)
9,838
Other income (expense)
Other income
8,200
Interest expense
(1,675)
(481)
Other income (expense) net
6,525
(473)
Income (loss) before provision for income taxes
(23,188)
9,365
Provision (credit) for income tax
(2,085)
2,085
Net income (loss)
$(21,103)
$7,280
Net income (loss) per share (Basic and fully diluted)
$(0.00)*
$0.00*
Weighted average number of common shares outstanding
6,946,385
6,482,500
* denotes a profit/(loss) of less than $0.01 per share
The accompanying notes are an integral part of the consolidated financial statements.
AMERICAN BUSINESS SERVICES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
The accompanying notes are an integral part of the consolidated financial statements.
AMERICAN BUSINESS SERVICES, INC.
CONSOLIDATED STATMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
Year Ended
Dec. 31,
Year Ended
Dec. 31,
Cash Flows From Operating Activities:
Net income (loss)
$ (21,103)
$7,280
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Other receivable
(1,577)
-
Accrued payables
-
Accrued interest payable
-
Taxes payable
(1,824)
1,824
Net cash provided by (used for)operating activities
(24,245)
9,585
Cash Flows From Investing Activities:
Net cash provided by (used for) investing activities
-
-
Cash Flows From Financing Activities:
Note payable related party - repayment
(11,800)
-
Sales of common stock
24,500
3,000
Net cash provided by (used for) financing activities
12,700
3,000
Net Increase (Decrease) In Cash
(11,545)
12,585
Cash At The Beginning Of The Period
15,644
3,059
Cash At The End Of The Period
$ 4,099
$ 15,644
Schedule of Non-Cash Investing and Financing Activities
None
Supplemental Disclosure
Cash paid for interest
$ 1,416
$ -
Cash paid for income taxes
$ (508)
$ 2,085
The accompanying notes are an integral part of the consolidated financial statements.
AMERICAN BUSINESS SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
American Business Services, Inc. (the “Company”), was incorporated in the State of Colorado on September 20, 1991. The Company is a consulting company that consults with businesses in the area of marketing, raising capital, going public, going private, mergers and acquisitions and other areas. The Company may also engage in any other business permitted by law, as designated by the Board of Directors of the Company.
Principles of consolidation
The accompanying consolidated financial statements include the accounts of American Business Services, Inc. and its sole wholly owned subsidiary company, American Business Services Corp., which is inactive. All intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and cash equivalents
The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents.
Accounts receivable
The Company reviews accounts receivable periodically for collectability and establishes an allowance for doubtful accounts and records bad debt expense when deemed necessary. At December 31, 2013 and 2012 the Company had no balance of accounts receivable.
Property and equipment
Property and equipment are recorded at cost and depreciated under accelerated and straight line methods over each item's estimated useful life.
Revenue recognition
Revenue is recognized on an accrual basis as earned under contract terms. Specifically, revenue from consulting services is recognized subsequent to client services being performed at an agreed upon price, and collectability is reasonably assured.
Advertising costs
Advertising costs are expensed as incurred. The Company incurred no advertising costs during the twelve months ended December 31, 2013 or 2012.
Income tax
The Company accounts for income taxes pursuant to ASC 740. Under ASC 740 deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Through October 2011 the Company was an S-Corp for income tax purposes, and therefore a pass-through entity paying no income tax at the corporate level. The Company had no known material tax assets or liabilities at end 2011. In 2012 the Company recorded an income tax payable of $1,824 at approximately 20% of pretax earnings of $9,365, and an income tax expense of $2,085 when combined with $261 of final tax items from 2011 settled in 2012. In 2013 the Company incurred a loss of $21,103 which is available to carryback against taxable profits arising in prior years and consequently the Company is entitled to a repayment of all taxes paid in respect of 2011 and 2012.
Net income (loss) per share
The net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares of common outstanding. Warrants, stock options, and common stock issuable upon the conversion of the Company's preferred stock (if any), are not included in the computation if the effect would be anti-dilutive and would increase the earnings or decrease loss per share. The Company had no potentially dilutive debt or equity instruments issued or outstanding during the twelve months ended December 31, 2013 or 2012.
Financial Instruments
The carrying value of the Company’s financial instruments, as reported in the accompanying balance sheets, approximates fair value due to their short term maturities.
Long-Lived Assets
In accordance with ASC 350, the Company regularly reviews the carrying value of intangible and other long-lived assets for the existence of facts or circumstances, both internally and externally, that may suggest impairment. If impairment testing indicates a lack of recoverability, an impairment loss is recognized by the Company if the carrying amount of a long-lived asset exceeds its fair value.
Products and Services, Geographic Areas and Major Customers
The Company’s business of financial consulting constitutes one operating segment. All fee revenues each year were domestic and to external customers.
Stock-based compensation
The Company accounts for employee and non-employee stock awards under ASC 718, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to non-employees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable.
The Company did not have a stock compensation plan in operation during the twelve months ended December 31, 2013 or 2012.
NOTE 2. GOING CONCERN
The Company has suffered a loss from operations and has negative cash flows from operations, and in all likelihood will be required to make significant future expenditures in connection with marketing efforts along with general administrative expenses. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
The Company may raise additional capital through the sale of its equity securities, through an offering of debt securities, or through borrowings from financial institutions or related parties. By doing so, the Company hopes to generate sufficient capital to execute its business plan of providing financial consulting services on an ongoing basis. Management believes that actions presently being taken to obtain additional funding provide the opportunity for the Company to continue as a going concern.
NOTE 3. NOTES RECEIVABLE - RELATED PARTIES
The Company lends money through notes receivable on an ongoing basis to various companies related by common control. The notes are due to be repaid to the Company at various dates through December 2013. The Company recognizes no interest income on the notes. The Company has established a reserve for any loans not repaid within one year.
As at December 31, 2013 and 2012, the Company had $27,100 in notes receivable outstanding with a corresponding note reserve of $27,100. No reserve expense was recognized during the twelve months ended December 31, 2013 or 2012.
NOTE 4. OTHER RECEIVABLE
As at December 31, 2013, the Company recognized a balance of $1,577 as another receivable. This represents income tax repayable from the carry back of tax losses arising in the current year to offset taxable profits arising in prior years which will generate a repayment of taxes paid in prior years.
NOTE 5. FIXED ASSETS
Fixed asset values recorded at cost are as follows:
December 31, 2013
December 31, 2012
Office Equipment
$ 7,188
$ 7,188
Vehicle
33,108
33,108
40,296
40,296
Less Accumulated Depreciation
(40,296)
(40,296)
Total
$ -
$ -
No depreciation expense was recognized during the twelve months ended December 31, 2013 or 2012 as the cost of these fixed assets has already been fully depreciated.
NOTE 6. NOTE PAYABLE - RELATED PARTY
As of December 31, 2013 the Company owed a related party $12,000 under a note payable, repayable in full on December 31, 2014. The loan bears interest at 6% and a balance of $740 interest had been accrued on this loan at December 31, 2013.
NOTE 7. STOCKHOLDERS’ DEFICIT
Preferred Stock
The Company is authorized to issue 10,000,000 shares of preferred stock with a par value of $0.001 per share.
No shares of preferred stock were issued and outstanding during the twelve months ended December 31, 2013 and 2012.
Common Stock
The Company is authorized to issue 90,000,000 shares of preferred stock with a par value of $0.001 per share.
During the twelve months ended December 31, 2013 the Company issued 490,000 (2012- 60,000) shares of common stock for cash consideration of $24,500 (2012 - $3,000) or $0.05 (2012-$0.05) per share.
As at December 31, 2013 there were 7,030,000 shares of common stock issued and outstanding.
NOTE 8. OTHER INCOME
During the twelve months ended December 31, 2013 the Company recognized income of $8,200 on the sale of certain securities. These securities had been issued to the Company in settlement of an outstanding debt and had been provided for in full in a prior period.
NOTE 9. SUBSEQUENT EVENTS
In accordance with ASC 855-10. “Subsequent Events” the Company has analyzed its operations subsequent to December 31, 2013 to the date these financial statements were available to be issued on March 91, 2014 and has determined that it does not have any material subsequent events to disclose in these financial statements.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
None
ITEM 9A.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures:
We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act that are designed to insure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, or the persons performing similar functions, to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our CEO and CFO, or the persons performing similar functions, our management has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this annual report. Based on that evaluation, our CEO and CFO, or the persons performing similar functions, concluded that our disclosure controls and procedures were effective as of December 31, 2013.
Management’s Annual Report on Internal Control over Financial Reporting:
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is the process designed by and under the supervision of our CEO and CFO, or the persons performing similar functions, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external reporting in accordance with accounting principles generally accepted in the United States of America. Management has evaluated the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control over Financial Reporting - Guidance for Smaller Public Companies.
Under the supervision and with the participation of our CEO and CFO, or the persons performing similar functions, our management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2013, and concluded that it is effective.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the registrant’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the registrant to provide only management’s report in this annual report.
Evaluation of Changes in Internal Control over Financial Reporting:
Under the supervision and with the participation of our CEO and CFO, or those persons performing similar functions, our management has evaluated changes in our internal controls over financial reporting that occurred during the fourth quarter of 2013. Based on that evaluation, our CEO and CFO, or those persons performing similar functions, did not identify any change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Important Considerations:
The effectiveness of our disclosure controls and procedures and our internal control over financial reporting is subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the soundness of our systems, the possibility of human error, and the risk of fraud. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and the risk that the degree of compliance with policies or procedures may deteriorate over time. Because of these limitations, there can be no assurance that any system of disclosure controls and procedures or internal control over financial reporting will be successful in preventing all errors or fraud or in making all material information known in a timely manner to the appropriate levels of management.
ITEM 9B.
ITEM 9B. Other Information
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS, AND CORPORATE GOVERNANCE
(a) Identity of Officers and Directors
Our bylaws provide that the number of directors who shall constitute the whole board shall be such number as the board of directors shall at the time have designated. Each director shall be selected for a term of one year and until his successor is elected and qualified. Vacancies are filled by a majority vote of the remaining directors then in office with the successor elected for the unexpired term and until the successor is elected and qualified.
The officers and directors are as follows:
Name
Age
Positions Held
Term of Office
Phil E. Ray
CEO/ CFO/ Director
Inception to Present
6521 Ocaso Drive
Castle Pines, CO 80108
As of February 17, 2014, A. Terry Ray resigned as secretary and director of the registrant.
Phillip E. Ray
Mr. Ray has had experience in the management of public and non-public companies, including developing national marketing programs, advertising and publications, product development, investor relations, public securities offerings, corporate development, business plan preparation, financing strategies for developing companies and many other areas of corporate development and management.
Mr. Ray has served as the President, a director and a major shareholder of two Colorado-based companies, since he founded the businesses in 1991. American Business Services, Inc. and VentureVest Capital Corporation are engaged in business consulting in the areas of advertising, marketing, mergers and acquisitions and strategic planning, primarily for companies preparing for an initial public securities offering or a private securities placement.
Mr. Ray was Assistant Manager of Howlett Distributing in Las Vegas, Nevada, prior to founding his own advertising business in 1958. From 1958 until 1971, he served as owner and President of Advertising Productions of Nevada, Inc., an advertising service, and Phil E. Ray & Associates, a full-service advertising agency. Mr. Ray relocated to Colorado in 1971. In 1972, he founded and served as President and Chairman of the Board of Director
of Electromedics, Inc., a Colorado corporation, specializing in medical products. Electromedics became a public company in 1974 through an initial public securities offering. Electromedics developed into a company with diversified medical, industrial and consumer products.
Mr. Ray acquired the consumer products division of Electromedics in 1981, organized a new company and eventually merged that company with a public company to spend full time in business consulting and other ventures, including American Business Services, Inc. and VentureVest Capital Corporation. Mr. Ray was a founder and officer and director of Fresh Ideas Media, Inc. an advertising company located in Colorado. Fresh Ideas Media, Inc. became a public company in 2005 through an SB-2 registration. Mr. Ray, along with another principal of Fresh Ideas Media sold their controlling interest in that company in 2005. Fresh Ideas Media had a wholly owned subsidiary, Community Alliance, Inc., which was spun out with a Form 10, share for share, spinout, at the time that Mr. Ray and the other principal sold their shares of Fresh Ideas, Inc. Because Mr. Ray was a major shareholder in Fresh Ideas Media, he became a major shareholder in Community Alliance, of which he was an officer and director. Mr. Ray and another major shareholder sold their shares in Community Alliance in 2010, at which time he resigned as an officer and director of that company.
Management is of the opinion that the other activities of Phil Ray in VentureVest Capital Corporation will not conflict with the business activities of the registrant due to the terms of the license agreement.
Mr. Ray will continue to provide the time necessary time to continue the business in the same manner as he has done for the past 19 years.
Management is of the opinion that the other activities of Phil E. Ray in VentureVest Capital Corporation and other activities will not conflict with the business activities of the registrant.
The above named directors will serve in their capacity as director until our next annual shareholder meeting to be held within six months of our fiscal year's close. Directors are elected for one-year terms.
(b) Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act requires the registrant's officers and directors, and persons who beneficially own more than ten (10%) percent of a class of equity securities registered pursuant to Section 12 of the Exchange Act, to file reports of ownership and changes in ownership with the Securities and Exchange Commission and the principal exchange upon which such securities are traded or quoted. Reporting Persons are also required to furnish copies of such reports filed pursuant to Section 16(a) of the Exchange Act with the registrant.
Code of Ethics
We have not yet adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions.
Corporate Governance
There have been no changes in any state law or other procedures by which security holders may recommend nominees to our board of directors. In addition to having no nominating committee for this purpose, we currently have no specific audit committee and no audit committee financial expert. Based on the fact that our current business affairs are simple, any such committees are excessive and beyond the scope of our business and needs.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
The following table set forth certain information as to the compensation paid to our executive officers
Summary Compensation Table
Name and Principal Position
Year
Salary
Bonus
Stock Awards
Option Awards
Non-Equity Incentive Plan Comp
Nonqualified Deferred Comp Earnings
Phil E. Ray
$ 0
n/a
n/a
n/a
n/a
n/a
CEO/CFO
$ 0
n/a
n/a
n/a
n/a
n/a
Mr. Ray received $13,500 in consulting fees from registrant during the year ended December 31, 2013.
We do not have any standard arrangements by which directors are compensated for any services provided as a director. No cash has been paid to the directors in their capacity as such.
Outstanding Equity Awards
Our directors and officers do not have unexercised options, stock that has not vested, or equity incentive plan awards.
Options/SAR Grants
We do not currently have a stock option plan. No individual grants of stock options, whether or not in tandem with stock appreciation rights known as SARs or freestanding SARs have been made to any executive officer or any director since our inception; accordingly, no stock options have been granted or exercised by any of the officers or directors since inception.
Long-Term Incentive Plans and Awards
We do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance. No individual grants or agreements regarding future payouts under non-stock price-based plans have been made to any executive officer or any director or any employee or consultant since our inception; accordingly, no future payouts under non-stock price-based plans or agreements have been granted or entered into or exercised by our officer or director or employees or consultants since inception.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 1, 2014, the number and percentage of our outstanding shares of common stock owned by (i) each person known to us to beneficially own more than 5% of its outstanding common stock, (ii) each director, (iii) each named executive officer and significant employee, and (iv) all officers and directors as a group.
The following table sets forth the number and percentage of our outstanding shares of common stock owned by:
(i) each person known to us to beneficially own more than 5% of its outstanding common stock,
(ii) each director,
(iii) each named executive officer and significant employee, and
(iv) all officers and directors as a group.
Name and Address
Amount
Percentage
Phil E. Ray
6,000,000
85.35%
6521 Ocaso Drive
Castle Pines, CO 80108
Officers and Directors
As a group (1 person)
6,000,000
85.35%
Based upon 7,030,000 outstanding common shares as of April 1, 2014.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Phil E. Ray is not independent as such term is defined by a national securities exchange or an inter-dealer quotation system. During the year ended December 31, 2013 and the year ended December 31, 2012, there were no transactions with related persons other than as described in the section below.
The Company lends money through notes receivable on an ongoing basis to various companies related by common control. The notes are due to be repaid to the Company at various dates through December 2013. The Company recognizes no interest income on the notes. The Company has established a reserve for any loans not repaid within one year.
As at December 31, 2013 and 2012, the Company had $27,100 in notes receivable outstanding with a corresponding note reserve of $27,100. No reserve expense was recognized during the twelve months ended December 31, 2013 or 2012.
As of December 31, 2013 the Company owed a related party $12,000 under a note payable, repayable in full on December 31, 2014. The loan bears interest at 6% and a balance of $740 interest had been accrued on this loan at December 31, 2013.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
On January 6, 2014, Ronald R. Chadwick, P.C. resigned as our registered independent public accountant. On January 6, 2014, we engaged Cutler & Co., LLC as our new registered independent public accountant.
Audit Fees
The aggregate fees billed and estimated to be billed for the fiscal years ended December 31, 2013 and 2012 for professional services rendered by Ronald R. Chadwick, P.C. and Cutler & Co., LLC for the audit of the registrant's annual financial statements and review of the financial statements included in the registrant's Form 10-Q or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for the fiscal years ended December 31, 2013 and 2012, were $9,500 and $9,500 respectively.
Audit related fees
The aggregate fees billed for the fiscal years ended December 31, 2013 and 2012 for assurance and related services by Ronald R. Chadwick, P.C. and Cutler & Co., LLC that are reasonably related to the performance of the audit or review of the registrant's financial statements for that fiscal year were $0 and $0.
Tax Fees
We did not incur any aggregate tax fees and expenses from Ronald R. Chadwick, P.C. and Cutler & Co., LLC for the 2013 and 2012 fiscal years for professional services rendered for tax compliance, tax advice, and tax planning.
All Other Fees
We did not incur any other fees from Ronald R. Chadwick, P.C. for the 2013 and 2012 fiscal years.
The board of directors, acting as the Audit Committee considered whether, and determined that, the auditor's provision of non-audit services was compatible with maintaining the auditor's independence. All of the services described above for fiscal year 2013 were approved by the board of directors pursuant to its policies and procedures. We intend to continue using Cutler & Co., LLC solely for audit and audit-related services, tax consultation and tax compliance services, and, as needed, for due diligence in acquisitions.
PART IV
ITEM 15.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)(1) List of financial statements included in Part II hereof:
Report of Independent Registered Public Accounting Firm
Consolidated balance sheets
Consolidated statements of operations
Consolidated statements of stockholders’ equity
Consolidated statements of cash flows
Notes to consolidated financial statements
(a)(2) List of financial statement schedules included in Part IV hereof:
None.
The following exhibits are included herewith:
*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.
Following are a list of exhibits which we previously filed in other reports which we filed with the SEC, including the Exhibit No., description of the exhibit and the identity of the Report where the exhibit was filed.
NO.
DESCRIPTION
FILED WITH
DATE FILED
Articles of Incorporation, Bylaws
Form S-1
October 26, 2011
Statement of Computation of Per Share Earnings (This Computation appears in the Financial Statements)
Form S-1
October 26, 2011
List of Subsidiaries
Form S-1
October 26, 2011
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
AMERICAN BUSINESS SERVICES, INC.
By: /s/ Phil E. Ray
Phil E. Ray
Chief Executive Officer
Dated: April 1, 2014
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: /s/ Phil E. Ray
Phil E. Ray
CEO, CFO, Controller, Director
Dated: April 1, 2014