HIGHLAND
BUSINESS SERVICES, INC.
(A
Development Stage Enterprise)
NOTES TO
FINANCIAL STATEMENTS
For the
three months ended August 31, 2008 and 2007
(Unaudited)
NOTE
1 - BASIS OF PRESENTATION
In the
opinion of management, the accompanying unaudited condensed financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form
10-Q. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation of
the Company’s financial position as of August 31, 2008 and the results of its
operations and cash flows for the three months ended August 31, 2008 have been
made. Operating results for the three months ended August 31, 2008
are not necessarily indicative of the results that may be expected for the year
ended May 31, 2009.
These
condensed financial statements should be read in conjunction with the financial
statements and notes for the years ended May 31, 2008 and 2007, thereto
contained in the Company’s Form S-1 filed on September 30, 2008.
NOTE
2 - GOING CONCERN
Our
financial statements have been presented on the basis that it is a going
concern, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. Our ability to continue
in existence is dependent on its ability to develop additional sources of
capital and achieve profitable operations. Management’s plan is to pursue our
business plan. The accompanying financial statements do not include any
adjustments that might result from the outcome of these
uncertainties.
NOTE
3 - SERVICES CONTRIBUTED TO CAPITAL
Services
contributed by management to capital during the periods ended August 31, 2008
and 2007, totaled $2,290 and $1,110, respectively, and were based on the fair
value of such services. For 2008 those services consisted of management
compensation of $450 and office overhead of $1,840. For 2007 those services
consisted of management compensation of $450 and office overhead of
$660.
Our
office is in the home of our President/CEO and includes the fair value of space
and communications incurred on a month to month basis of $150.
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
You
should read this section in conjunction with our financial statements and the
related notes included in this Form 10-Q. Some of the information
contained in this section or set forth elsewhere in this Form 10-Q, including
information with respect to our plans and strategies for our business,
statements regarding the industry outlook, our expectations regarding the future
performance of our business, and the other non-historical statements contained
herein are forward-looking statements.
OVERVIEW
Highland
was incorporated on February 24, 2006 in the State of Nevada. We have
not yet begun our business operations and we currently have no revenue and no
significant assets. Highland has never declared bankruptcy, has never
been in receivership, and has never been involved in any legal action or
proceedings.
Since
becoming incorporated, Highland has not made any significant purchase or sale of
assets, nor has it been involved in any mergers, acquisitions or
consolidations. Highland is not a blank check registrant as that term
is defined in Rule 419(a)(2) of Regulation C of the Securities Act of 1933,
since it has a specific business plan or purpose.
CURRENT
BUSINESS OPERATIONS
As of the
date of this quarterly report, we have not started operations. Our
services are currently in the development stage and are not ready for commercial
sale. We anticipate they will be available in January
2009.
We are
planning to focus our operations on the development of a diverse network of
individuals and firms that can offer their professional services to public
companies. Our target market is primarily small companies that plan
to go public, are about to go public, or are experiencing a transitional phase
where they are in need of certain management personnel. These
companies often need assistance either short term or long term to ensure SEC
compliance. Using our service provider database, Highland will refer
qualified professionals to these companies for employment as independent
contractors. Highland will charge a referral fee to the service
provider of a negotiated percentage for a negotiated period of time based on the
specific partnership.
Our
management team is comprised of individuals who have significant experience in
dealing with public companies and public company service
providers. In our dealings with these relationships, we identified a
trend towards the growing need of assistance from professionals who offer
various areas of expertise for public companies. We continuously
received requests to place public companies in contact with SEC attorneys,
accountants, auditors, market markers and more. When we put these
companies in contact with the requested service provider, they were thankful and
never made statements of dissatisfaction in regards to their integrity,
professionalism, or quality of work. Conversely, the SEC attorneys,
accountants and auditors who received the referral were equally thankful for the
business. We saw this as an opportunity to fill a niche in the
marketplace that is currently deficient.
The
competitive research we’ve conducted in this area has uncovered only a handful
of businesses that offer similar services. All but one offer referral
services in only one area (Ex: CPA’s). Our plan is to offer referral
services in all needed areas for public companies. Companies in the
process of going public who are in need of multiple services can utilize us for
all of their needs. In the same respect, established smaller public
companies in need of an interim controller or financial officer can also find a
qualified professional through us.
PLAN OF
OPERATION
We have
devised a three step plan to develop and implement our business. This
plan may be revised in the future as management finds necessary. Any
modifications to our business plan will be clearly expressed to the
shareholders.
STEP
I
Step I
will primarily consist of contacting all of the attorneys, accountants,
auditors, and other service providers we have already built a relationship with
and determine if they are interested in becoming part of our database of service
providers. We plan to have agreements with 20 service providers by
January 2009.
ITEM 2. MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued
STEP
II
During
our second phase, we will work with legal counsel to construct the contracts and
other legal documents for the relationships we will form between us, the service
providers, and the public companies. We will also continue to enhance
our website and implement search engine placement tactics. We will
focus on our sales and marketing efforts by contacting local service providers
and public companies to offer them our referral service. Our goal is
to have 100-300 service providers in our database and have established 15
successful relationships by September 2009.
STEP
III
Step III
will involve extensive web development including the design and release of a
tool that will allow prospective clients to apply for their needed service in
minutes online. Our online application tool will allow both public
companies and service providers to express the full range of their needs quickly
and easily. Using this, we will be able to download their request,
and have a service provider or public company in mind (if available) when we
contact them, reducing the turn-time significantly. We will increase
our sales and marketing efforts by targeting both nationwide and internationally
based prospective clientele. To execute this, we plan to employ a
full or part-time sales professional. Our goal is to have 1,000
service providers in our database and 100 relationships formed by January
2011.
RESULTS
OF OPERATIONS
FOR THE
THREE MONTHS ENDED AUGUST 31, 2008 COMPARED TO THE THREE
MONTHS ENDED AUGUST 31, 2007
During
the three months ended August 31, 2008 and 2007, we did not have
revenues and our expenses consisted primarily of rent and minimal salary
compensation.
LIQUIDITY
AND CAPITAL RESOURCES
We have
cash assets at August 31, 2008 of $167. We will
be reliant upon shareholder loans or private placements of equity to fund any
kind of operations. We have secured no sources of loans. We did not
have any cash flows during the three months ended August 31, 2008
except earned interest income of $6 from the Company's savings account.
On a
short-term basis, we have not generated any revenues to cover
operations. Based on prior history, we will continue to have
insufficient revenue to satisfy current and recurring liabilities as we continue
development activities. For short term needs we will be dependent on receipt, if
any, of private placement proceeds. Our
assets consist of a savings account with a balance of
$167. Our total
liabilities are $-0- at August 31, 2008.
We have
only common stock as our capital resource.
MATERIAL
COMMITMENTS
We have
no material commitments for capital expenditures within the next year, however
if operations are commenced, substantial capital will be needed to pay for
development of our website, marketing, sales and normal start up
costs.
NEED FOR
ADDITIONAL FINANCING
We do not
have capital sufficient to meet our expected cash requirements, therefore, we
will have to seek loans or equity placements.
No
commitments to provide additional funds have been made by our management or
other stockholders. Accordingly, there can be no assurance that any
additional funds will be available to us to allow it to cover our expenses as
they may be incurred.
We will
need additional capital to support our proposed future
development. We have NO revenues. We have NO committed
source for any funds as of date here. No representation is made that
any funds will be available when needed. In the event funds cannot be
raised when needed, we may not be able to carry out our business plan, may never
achieve sales or income, and could fail in business as a result of these
uncertainties.
ITEM 2. MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued
We have
budgeted $20,000 for the period ending January 1, 2010. The funds allocated to
administrative expenses are intended to be used for indirect expenses to
maintain the daily operation of the business, such as travel expenses,
stationary and postage expenses, printing expenses and web site
development.
Management
plans to temporarily advance capital to maintain normal operations. Management
has agreed to provide temporary financing to the Company, but is not
contractually obligated to do so. If we fail to raise additional funding, we may
have to delay, scale back or discontinue some or all of our
objectives.
LIMITED
FINANCING.
We
may borrow money
to finance our future operations, although we
do not currently contemplate doing so. Any such borrowing
will increase the risk of loss to the investor in the event we are unsuccessful
in repaying such loans.
OFF-BALANCE SHEET
ARRANGEMENTS
As of
the date of this Quarterly Report, we do not have any off-balance sheet
arrangements that have or are reasonable likely to have a current or future
effect on our financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or capital
resources that are material to investors.
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not
applicable.
ITEM
4T. CONTROLS AND PROCEDURES
Evaluation
of Disclosure Controls and Procedures
As
required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the end
of the period covered by this quarterly report, being August 31, 2008, we have
carried out an evaluation of the effectiveness of the design and operation of
our company’s disclosure controls and procedures. This evaluation was carried
out under the supervision and with the participation of our management,
including our Chief Executive Officer. Based upon that evaluation, our Chief
Executive Officer concluded that our disclosure controls and procedures are
effective as at the end of the period covered by this report. There have been no
significant changes in our internal controls over financial reporting that
occurred during our most recent fiscal quarter ended August 31, 2008 that have
materially affected, or are reasonably likely to materially affect our internal
controls over financial reporting.
Disclosure
controls and procedures and other procedures that are designed to ensure that
information required to be disclosed in our reports filed or submitted under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported,
within the time period specified in the Securities and Exchange Commission’s
rules and forms. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be
disclosed in our reports filed under the Securities Exchange Act of 1934 is
accumulated and communicated to management, including our Chief Executive
Officer to allow timely decisions regarding required disclosure.
Our
management, including our Chief Executive Officer and Chief Accounting Officer,
does not expect that our disclosure controls and procedures or our internal
controls will prevent all errors and all fraud. A control system, no matter how
well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Further, the design
of a control system must reflect the fact that there are resource constraints,
and the benefits of controls must be considered relative to their costs. Because
of the inherent limitations in all control systems, no evaluation of the
controls can provide absolute assurance that all control issues and instances of
fraud, if any, within our company have been detected.
PART
II - OTHER INFORMATION