UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549




FORM
10-K


(Mark
One)


ýANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934







For the
fiscal year ended: December
31, 2008




 ̈TRANSITION REPORT UNDER
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the
transition period from ________ to ________





Commission
file number: 000-52769





VINYL PRODUCT,
INC.


(Name of
Small Business Issuer in its charter)





Nevada
              
              26-0295367(State
      or other jurisdiction of Identification No.)
              
              (I.R.S.
      Employer incorporation or
organization)





2210 South Ritchey Street, Santa Ana,
      California
                
                92705(Address
      of principal executive offices)
                
                (Zip
      Code)





Registrant’s
telephone number, including area code: (714)
210-8888





Securities
registered under Section 12(b) of the Exchange Act:





None





Securities
registered under Section 12(g) of the Exchange Act:





Common Stock, par value
$0.0001 per share


(Title
of Class)





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.


 ̈Yes ý No





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Exchange Act. ̈ Yes ý  No





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. ý  Yes    ̈  No





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. ý  Yes    ̈  No





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.





Large
      accelerated filer    ̈
            Accelerated
      filer      ̈Non-accelerated
      filer      ̈
            Smaller
      reporting company     ý(Do
      not check if a smaller reporting company)











Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).


 ̈Yes ý  No





State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant’s most recently completed second fiscal
quarter.    $0





APPLICABLE
ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY


PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:





Indicate
by check mark whether the registrant has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court. ̈  Yes    ̈  No





(APPLICABLE
ONLY TO CORPORATE REGISTRANTS)





Indicate
the number of shares outstanding of each of the registrant’s classes of common
stock, as of the latest practicable date.At March 30, 2009 there were 22,263,200
shares of common stock outstanding.





DOCUMENTS
INCORPORATED BY REFERENCE


None





ii





TABLE
OF CONTENTS





FORWARD-LOOKING
      STATEMENTS
              iiPART
      I
              1Item
      1. Description of Business
              1Item
      1A. Risk Factors.
              13Item
      1B. Unresolved Staff Comments.
              22Item
      2. Properties.
              22Item
      3. Legal Proceedings.
              23Item
      4. Submission of Matters to a Vote of Security Holders.
              23PART
      II
              23Item
      5. Market for Registrant’s Common Equity, Related Stockholder Matters and
      Issuer Purchases of Equity Securities.
              23Item
      6. Selected Financial Data.
              25Item
      7. Management’s Discussion and Analysis of Financial Condition and Results
      of Operations.
              25Item
      7A. Quantitative and Qualitative Disclosures About Market
      Risk.
              30Item
      8. Financial Statements and Supplementary Data.
              30Item
      9. Changes in and Disagreements With Accountants on Accounting and
      Financial Disclosure.
              31Item
      9A. Controls and Procedures.
              31Item
      9B. Other Information.
              33PART
      III
              33Item
      10. Directors, Executive Officers and Corporate
Governance.
              33Item
      11. Executive Compensation.
              36Item
      12. Security Ownership of Certain Beneficial Owners and Management and
      Related Stockholder Matters.
              38Item
      13. Certain Relationships and Related Transactions, and Director
      Independence.
              39Item
      14. Principal Accounting Fees and Services.
              40PART
      IV
              41Item
      15. Exhibits, Financial Statement Schedules.
              41











FORWARD-LOOKING
STATEMENTS




This
Annual Report on Form 10-K and the documents incorporated by reference into the
Annual Report on Form 10-K include forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934.  These forward-looking statements can be
identified by the use of forward-looking terminology, including the words
“believes,” “estimates,” “anticipates,” “expects,” “intends,” “plans,” “may,”
“will,” “potential,” “continue,” or “should,” or, in each case, their negative
or other variations or comparable terminology.  We believe that the
expectations reflected in such forward-looking statements are
accurate.  However, we cannot assure you that such expectations will
occur.  Our actual results, performance, or outcomes could differ
materially from those expressed or implied in the forward-looking
statements.  Factors that could cause or contribute to such
differences include, but are not limited to:





·
            an
      interruption in supply from our sole vendor of vinyl
    products;·
            a
      change in consumer preferences away from outdoor products manufactured
      from vinyl;·
            our
      inability to develop a successful franchise program;·
            our
      ability to raise capital as necessary to fund the development of our
      franchise program;·
            our
      lack of product diversification;·
            the
      failure of our franchise operations to generate the revenues we expect or
      the need to subsidize our franchise operations;·
            the
      impact of current economic conditions on our business;·
            competition
      from one or more other companies that seek to develop national vinyl
      products chains;·
            our
      ability to retain our officers, directors, key personnel, and
      management;·
            our
      inability to manage growth; and·
            the
      other factors set forth under “Risk Factors” included in this
      prospectus.




We
caution you that the foregoing list of important factors is not
exclusive.  You should not rely on these forward-looking statements,
which speak only as of the date of this report.  We operate in a very
competitive environment.  New risks emerge from time to
time.  It is not possible for our management to predict all risks, nor
can we assess the impact of all factors on our business or the extent to which
any factor, or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements we may
make.  Except as required by law, we are not obligated to publicly
release any revisions to these forward-looking statements to reflect events and
circumstances occurring after the date of this prospectus or to reflect the
occurrence of unanticipated events.





By their
nature, forward-looking statements involve risks and uncertainties because they
relate to events and depend on circumstances that may or may not occur in the
future.  We caution you that forward-looking statements are not
guarantees of future performance and that our actual results of operations,
financial condition and liquidity, and developments in the industry in which we
operate may differ materially from those made in or suggested by the
forward-looking statements contained in this Annual Report on Form
10-K.  In addition, even if our results of operations, financial
condition and liquidity, and developments in the industry in which we operate
are consistent with the forward-looking statements contained in this Annual
Report on Form 10-K, those results or developments may not be indicative of
results or developments in subsequent periods.





ii





PART
I





Item
1. Description of Business





General





Vinyl
Products, Inc. and its subsidiary (collectively, the "Company," "we," "us,"
"our" or terms of similar import) markets and installs a variety of
aesthetically durable, low-maintenance vinyl products, including fencing, patio
covers, decking, railing and trim categories, for the residential
market.  Our products are used largely in renovation and remodeling by
our customers who include homeowners and homeowner
associations.  During 2008, fencing products represented approximately
62% of our gross income (revenue) and patio covers represented approximately 28%
of our income.  We have increased sales and revenue in each of our
five years of existence, and our gross profit has exceeded 44% in all but our
first year of operations.





Development
of the Business





We
originally were incorporated under the name Red Oak Concepts, Inc. in the State
of Delaware on May 24, 2007 to serve as a vehicle for a business combination
through a merger, capital stock exchange, asset acquisition or other similar
business combination.  On October 9, 2007, our board of directors and
the holders of all of our outstanding shares of common stock approved a change
of domicile of the corporation by merging with a Nevada corporation titled Red
Oak Concepts, Inc.  The merger between the Delaware corporation and
the Nevada corporation was effective on December 4, 2007.





On August
15, 2007, we filed a registration statement on Form 10-SB to register our class
of common stock under the Securities Exchange Act of 1934, as amended, that
became effective as of October 14, 2007.





On
November 20, 2008, we entered into a Share Exchange Agreement with The Vinyl
Fence Company, Inc. ("TVFC") and all of its shareholders to acquire all of the
outstanding shares of that corporation's common stock in exchange for an
aggregate of 22,100,000 shares of our common stock, as described below (the "
Share Exchange Agreement").





On
November 21, 2008, we amended our articles of incorporation to change our name
to Vinyl Products, Inc.





TVFC was
organized on April 18, 2003 under the laws of the State of
California.  TVFC funded its organization and operations through
founder contributions.  In the spring of 2003, TVFC began marketing
its products to the public and in November 2003, it entered into a vinyl
products supply agreement with U.S. Polymers, Inc.  The principals of
TVFC began to formulate the sales and marketing plan currently employed by TVFC
prior to its organizing and have continually refined their approach based on
carefully monitored results of marketing activities.





TVFC
began generating revenues from operations and realized a net profit from
operations, exclusive of payments to shareholders, in its first year of
operations.   TVFC has realized an increase in revenues in each
of its six years of operation.





Through
2007, TVFC elected to be treated as a Subchapter S corporation under the
Internal Revenue Code of 1986, as amended (the "Code"), and all of its profits
were distributed to its shareholders as dividends.   The
shareholders of TVFC elected to convert the company to a Subchapter C
corporation under the Code as of January 1, 2008.











The
Share Exchange





On
November 20, 2008, we entered into a Share Exchange Agreement with TVFC and its
shareholders to acquire all of the outstanding shares of that corporation's
common stock in exchange for an aggregate of 22,100,000 shares of our common
stock.  Upon the acquisition, TVFC became our wholly owned subsidiary
and we acceded to the business conducted by TVFC.





Under the
Share Exchange Agreement:





·
            we
      exchanged one share of our common stock for each outstanding common share
      of TVFC;





·
            we
      agreed to honor and assume options granted by TVFC to its employees to
      purchase up to 133,800 shares of common stock, which are exercisable at a
      price of $.50 per share through September
2009;





·
            the
      board of directors and management of our Company resigned and appointed
      Gordon Knott and Garabed Khatchoyan , each of whom currently serves as a
      director of TVFC, to serve on our board of directors and serve as the
      president and secretary, respectively, of our
  Company;





·
            we
      agreed to amend our articles of incorporation to change our name to "Vinyl
      Products, Inc."; and





·
            the
      transaction was structured to qualify as a “tax-free transaction” under
      the Internal Revenue Code of 1986;





Other
Agreements of the Parties under the Share Exchange Agreement





In
addition to the transactions described above, the parties entered into the
following transactions as provided in or required by the Share Exchange
Agreement:





·
            On
      the closing of the share exchange, Susan Zachmann, Katherine Daniels and
      Barbara Deadwiley, the three holders of the Company's outstanding shares
      of common stock prior to the share exchange, returned an aggregate of
      300,000 shares of common stock to the treasury of the Company, so that
      after giving effect to the return of such shares, these persons owned an
      aggregate of 700,000 shares of our common
stock;





·
            Susan
      Zachmann and Katherine Daniels contributed to the capital of the Company
      all amounts of principal and interest due to them under promissory amounts
      evidencing loans made by each them to the Company in the principal amount
      of $14,950 ($29,950 of principal in the aggregate);
  and





·
            We
      agreed to register for public resale under the Securities Act of 1933, as
      amended, pursuant to a registration rights agreement described below, an
      aggregate of 3,133,800 shares of our common stock, including (i) 2,300,000
      Exchange Shares; (ii) 700,000 shares of our common stock held by holders
      thereof upon to the closing of the share exchange (representing all
      outstanding shares of common stock on such date prior giving effect to the
      issuance of the shares under the Share Exchange Agreement), subject to
      their entering into a Lock-Up/Leak Out Agreement, described below, and
      (iii) 133,800 shares of common stock issuable upon the exercise of options
      we assumed under the Share Exchange
Agreement.





2




On the
closing of the share exchange, we entered into a registration rights agreement
with the holders of the shares of common stock described in the foregoing
paragraph which governs the terms and conditions upon which we agreed to
register their shares of common stock and the shares of common stock issuable
upon exercise of the options for public resale under the Securities Act of
1933.  We agreed to file such registration statement within 90 days of
the closing of the share exchange, subject to our right to withdraw or delay the
filing of the registration statement under certain circumstances without
penalty, and to pay all costs and expenses incident to such
registration.  We agreed to maintain the effectiveness of the
registration statement for a minimum of twelve months following its effective
date.





Also on
the closing of the share exchange, we entered into a series of Lock Up/Leak Out
Agreements with the holders of an aggregate of 2,700,000 shares of our common
stock, which includes those persons who held all 700,000 outstanding shares of
our common stock prior to the closing of the share exchange and those holders of
TVFC's common stock who were not affiliates of TVFC on the date of the share
exchange with TVFC, who received a total of 2,000,000 shares of our common stock
in the share exchange.  Under the Lock Up/Leak Out Agreements, all
stockholders have agreed that (i) they will not sell or transfer any shares of
our common stock held as of the consummation of the share exchange until six
months after the effective date of the registration statement that includes
their shares to be filed pursuant to the Registration Rights Agreement (other
than to their affiliates, who must agree to the terms of the Lock Up/Leak Out
Agreement upon such transfer), and (ii) after the end of that six-month lock up
period, such persons (or their transferees) will not sell or transfer more than
1/36th of the
number of share of common stock originally owned by such person during each
month thereafter.





For
accounting purposes, the share exchange transaction was treated as a reverse
acquisition with TVFC as the acquirer and Red Oak Concepts, Inc. as the acquired
party.  The accounting rules for reverse acquisitions require that
beginning November 20, 2008, the date of the reverse acquisition, our balance
sheet includes the consolidated assets and liabilities of TVFC and our equity
accounts were recapitalized to reflect the net equity of TVFC.  When
we refer in this report to business and financial information for periods prior
to the consummation of the reverse acquisition, we are referring to the business
and financial information of TVFC unless the context suggests
otherwise.





Our
Industry





In 2006,
the total demand for commercial and residential fencing in North America was
estimated to be over 1 billion linear feet of installed fence valued at over $6
billion.  In 2006, demand for residential fencing was estimated to be
nearly $3 billion of the total fence market value.





The
residential fencing market consists of five major fence styles: privacy, post
and rail, chain link, ornamental, and post and wire/wire
mesh.  Privacy fence is the most prevalent fence style installed in
the residential market, accounting for over 50% of total sales.  The
fencing market may be segmented among the four distinct material categories:
wood, metal, plastic and mineral-based or masonry
materials.  Currently, wood is the dominant construction material used
in residential fencing, followed by metal, together accounting for over 70% of
total fence sales.





Plastics
are relatively new materials in the fencing industry.  The dominant
plastic material is polyvinyl chloride, or vinyl, which was introduced to the
market in the late 1970s.  Vinyl achieved its product growth stage in
the early 1990s and demand for vinyl fence has grown steadily.  Market
acceptance of vinyl fence varies by region from over 30% penetration to less
than 5% penetration.  Vinyl post-and-rail fence has successfully
penetrated and displaced as much as 50% of wood in many regional markets.
However, vinyl only has about a 16% share of the North American privacy fence
market.





3





In
addition to vinyl fence, other plastic-based fence materials include
polyethylene, polystyrene, polypropylene and wood-plastic
composites.  A recent study estimates demand for all plastic-based
fence materials in the North American residential market to be over $600 million
or nearly 25% of the total market in 2006.





Management
believes that plastic-based fence will continue to grow in market share over the
next five years, with the most significant growth in demand for vinyl and for
new wood-plastic composite privacy fence.  It is expected that both
materials will be replacing wood.  While the new wood-plastic fence
products seem to have an edge over vinyl with respect to availability of a wide
range of darker colors and the look and texture of wood, which seem to be
preferable to consumers, plastic fence manufacturers have developed new privacy
fence products with embossed wood grain and earth tone colors as well as low
gloss to mimic wood.  Both vinyl and wood-plastic suppliers are
looking to take advantage of the growing consumer demand for low-maintenance,
non-shiny, plastic fence by tapping into the huge portion of the wood privacy
market that will not consider white vinyl as an option.





The
fencing industry in North America comprises: (i) manufacturers of fencing
products, including all of the product material groups, numbering in the
hundreds, (ii) distributors, including lumber yards and home centers that carry
wood and vinyl fencing and (iii) independent sellers, contractors and installers
of all sizes, such as our Company.  There are also numerous mail order
companies that focus on the do-it-yourself consumer.  Manufacturers
sell their products to all segments of the downstream supply
chain.  Home centers and lumber yards generally sell products to
contractors and homeowners.  Typically, homebuilders and home centers
subcontract the installation of fencing to contractors.  Most
product-specific retailer and general contractors install or arrange for
installation of products.





Given the
number of manufacturers of residential fencing products, components and systems
in North America and the limited capital required to operate in our space, the
barriers to entering into the market are insignificant.  In the retail
space in which we operate, retailers that sell and install only fence, decks and
related products and in which marketing and sales are directed to retail
consumers, the market is typified by numerous small companies that seek to gain
market share only in their limited geographic operating areas.  It is
our experience that these entities typically employ rudimentary marketing and
advertising programs and tend to be concerned with immediate product sales
rather than building a business.  There are no national chains
dedicated exclusively to the retail sale and installation of vinyl fencing and
patio products, though we are aware of a company that is seeking to build a
regional presence in the Western portion of the U.S. by acquiring local
sellers/installers.





Recent
studies suggest that certain trends are developing in the residential fence
industry that may directly or indirectly impact our business,
including:





·
            Pressure-treated
      lumber, the industry standard, is being challenged by new materials, such
      as vinyl and wood composites, that are available in colors and supported
      by extended warranties similar to other building
  products.


·
            With
      both contractors and homeowners faced with an array of new choices,
      branding is playing an increasingly important
  role.


·
            Time-pressed
      homeowners are expecting to do less routine maintenance, including fence
      painting and repair.


·
            Distributors
      are carrying a broader selection of fence and gates, and more brands than
      ever before.





4





·
            A
      modular approach to fence design and construction has made it easier for
      contractors to install more product in less
  time.


·
            New
      materials and their technical differences make distributor knowledge more
      important than ever for informing their
  customers.


·
            Manufacturers
      in other building products areas have adapted their proprietary material
      technologies to fence, which could signify the entry of larger
      participants into the industry, which could alter the market
      significantly.





During
periods of economic uncertainty, when spending on discretionary items is
reduced, many homeowners forego the purchase of new homes and choose to improve
their existing residences.  As the majority of our business is geared
to remodeling, we do not believe that our business is as sensitive to these
economic trends as the new home construction market.  We believe
renovation or the addition of fences, patio covers, decks and railings to
existing homes is an increasing trend and reflects an extension of the
home.  However, we are uncertain as to the effect tightening credit
and declining home values will have on our business, if any.





Our
Key Competitive Strengths





We
believe that we have developed a number of operating and institutional paradigms
that provide us with important advantages over our competitors that we
anticipate will enable us to implement and achieve our strategic growth
plan.  These competitive strengths include:





·
            Marketing
      and Sales Strategy:  We have developed and implement a marketing
      and sales strategy that emphasizes prospect development early in the
      purchasing cycle.  Our marketing materials seek to attract
      prospective purchasers by offering them neutral party information about
      exterior vinyl products in order to develop a trust between
      us.  We aim to educate and consult with prospects so that we are
      viewed as the only logical option in the context of a value-driven, as
      opposed to price-driven, purchase.  It has been our experience
      that diligent homeowners who research the buying process are willing to
      spend a little more for a worry-free purchasing and ownership
      experience.  We believe that our marketing and sales strategy
      can be replicated in any location and we will utilize this strategy at the
      franchises we will seek to develop in the
  future.





·
            Service:  We
      take pride in the level of service we offer to customers and believe that
      our sales and installation practices contribute strongly to a positive,
      worry-free ownership experience among our customers.  We work
      closely with customers to educate them as to vinyl products generally and
      to assist them in the design of the ideal outdoor living space tailored to
      their personal preferences and the architectural motif of their
      home.  We install our own products in a manner so that our
      customers never have to think about their investment.  We
      believe that we offer a level of professional service beyond that provided
      by our competitors and that our commitment to service and quality
      differentiates us from other fence distributors and
      installers.  We are the only vinyl fence company in Orange
      County, CA with an A+ rating by the Better Business
  Bureau.





·
            Management:  Our
      senior management team has operated TVFC for five years, building revenue
      in each year of our existence.  One of our owners has been
      involved in the vinyl fence and patio cover industry for twelve years and
      is experienced with all aspects of our industry and
    business.





·
            Quality
      of Product:  All of our products are manufactured from the
      highest quality co-extruded polyvinyl chloride, which maximizes strength
      and durability, and is ultra-resistant to UV damage.  Our
      products are engineered to last for the life of a home, are virtually
      maintenance-free and are not subject to the same functional disadvantages
      experienced by wood and other natural building materials, including the
      potential for warping, moisture damage, splintering and fragmentation, rot
      and insect infestation.





5





Our
Strategy





We are
committed to enhancing profitability and cash flows through the following
strategies:





Maximizing Efficiency and Profitability
at our Existing Retail Location:  We will examine all facets of our
operations at our existing retail facility, including the number of our sales
installation personnel and their duties and responsibilities, to maximize
operating efficiencies and achieve optimum profitability.





Franchising:  We
are not aware of any participant in the exterior vinyl products industry that
operates on a national basis nor are we aware of any organization that is
seeking to establish a nation-wide presence in the exterior vinyl product
industry.  We believe that a significant opportunity exists to develop
a national franchise to establish our products and Company as a unique brand and
to exploit the anticipated increase in sales of outdoor vinyl
products.  We will seek to become the dominant participant in the sale
of exterior vinyl products on a national basis by developing a franchise program
that will utilize our well conceived and sophisticated marketing and sales
program.  We believe that our marketing and sales program represents a
significant advancement compared to the techniques used by other retail sellers
in the industry and that our approach can be replicated successfully in any
geographic area.  A key element of our franchise program will be to
offer franchise opportunities for relatively small markets that will be priced
commensurate with the level of potential revenues that can be generated from
that market.  We believe that we will benefit from the economies of
scale derived from multiple franchises that will give us the opportunity to
deploy national advertising and promotional programs that are beyond the
financial and creative capabilities of other retail sellers of exterior vinyl
products.  The development of a successful franchise operation would
represent the possibility to compound revenue growth without requiring a
corresponding increase in infrastructure, which we expect would add to our
bottom line.  We believe that this will allow us to capture market
share and build strong consumer brand awareness, which eventually may serve as a
barrier to competitive entry to others on a national level.





Branding:  The
development of a successful franchise operation would give us the opportunity to
build and establish our Company and our products as national
brands.  We will not seek to develop or implement a campaign to
develop a brand but rather employ advertising and marketing strategies that
focus on product sales.  As our franchise base grows in size and
geographic scope, we believe that our products and Company name could develop
naturally into a national brand.  We believe that our franchise
program can provide the revenue to deploy a creative and sophisticated
advertising and marketing campaign that is atypical in our industry and beyond
the financial and creative means of other industry participants.





Our
Products and Services





We offer
a comprehensive line of aesthetically durable, low-maintenance
products.  We believe that the range and variety of our product
offerings allow consumers to design much of their outdoor living space using our
products.  Our products include:





·
            Fencing:
      privacy, picket, wall toppers, in white, tan or simulated wood
      (brown);


·
            Patio
      Covers: solid and louvered in white or
tan;


·
            Decking:
      gray or brown;


·
            Gazebos:
      white or tan;





6





·
            Railings:
      white or tan; and


·
            Gates:
      white, tan or simulated wood





We also
sell the various hardware, accessories and other fixtures to finish the products
we install.





The
products we sell and install are manufactured from the highest quality polyvinyl
chloride.  The vinyl is "co-extruded," which maximizes strength and
durability and allows for the application of multiple surface layers to impart
specific properties such as ultra-violet (UV) absorption, soft touch, matted
finishes and energy reflection.  The manufacturer of our vinyl
products, U.S. Polymers, Inc., advises us that the vinyl is manufactured with
the highest UV inhibitors and Titanium DiOxide, a UV absorber that efficiently
transforms destructive UV light energy into heat, in the industry.





Our
products offer a number of significant advantages over wood in that they
eliminate many of wood’s major functional disadvantages, which include warping,
splitting and other damage from moisture. Unlike wood, our products are
resistant to moisture damage, provide a splinter-free surface, do not rot and
are not subject to insect infestation.  These features eliminate most
of the on-going maintenance requirements associated with wood products and
contribute to a worry-free ownership experience.  Though initially
more expensive than comparable wood products, the durability and
maintenance-free characteristics of our products render them less costly than
wood over the life of the products.  Customers inform us that these
attributes contribute significantly to their selection of vinyl over products
manufactured from wood and other materials.





Vinyl
manufactured by U.S. Polymers carries a limited 30-year replacement
warranty.  In furtherance of our effort to provide the highest quality
purchasing and ownership experience, we offer a one- year limited warranty on
the installation workmanship.





Our
project designers/salesmen work closely with clients, first to educate them
about exterior vinyl product offerings, and then to develop customized designs
to satisfy virtually any preference and achieve a personalized feel and
appearance that reflects the home's architecture and customer's
personality.  The manner in which we deal with our customers and seek
to secure sales is closely associated with our marketing strategy, described
more fully below under the heading "Sales and Marketing."





Sales
generally are consummated either at our showroom, where we maintain samples of
virtually all of our products, or at the customer's
home.  Installation typically occurs six to eight weeks after
receiving the 50% deposit on an order, the balance being due upon
installation.  We work with a national bank to provide financing to
customers who require financial assistance.





Installation
is accomplished by a crew of two of our employees and generally is completed
within a day or two of commencement.





We
generally carry $100,000 to $150,000 of inventory to meet anticipated
requirements for installations that will occur during the ensuing two-week
period.





Sales
and Marketing





Our goal
is to position and brand our Company as the category leader and standard-bearer
in the outdoor vinyl product marketplace.  The strategy we have
implemented to achieve our goal closely unites our approach to marketing and
consumer sales with corporate branding and has application at the local store
level (our retail location and potential future franchises) and on a national
corporate level.  Since our inception, we have carefully monitored the
various sales approaches to which consumers favorably respond and have made
deductions about buying patterns that we have incorporated into our sales and
marketing approach.





7





Consumer
Sales





Strategy.





The home
is typically the largest capital purchase people make.  Accordingly,
it is management's experience that people are willing to invest the time and
effort to ensure they have made the right decision in connection with
expenditures for improvements and additions.  We have found that the
average prospect often takes in excess of six months to research a
home-improvement project, such as fencing, patio covers and decks, before
calling for estimates and then taking additional time before actually
consummating the purchase.  Homeowners may talk with numerous home
centers, specialized retail distributors and independent contractors before
deciding what specific product to purchase and from whom to make the
purchase.  We also have found that in many cases the lowest price
point is not the foremost concern of consumers, rather value for the dollar
(after a decision as to aesthetics) represents the most important
consideration.  In management's estimation, value can be measured as a
combination of the purchasing and ownership
experience.  Value-conscious consumers ultimately are seeking to
determine if their expectations have been met – asking if they received what
they were promised, from the product itself and its installation.





Our sales
efforts seek to connect with home owners' intrinsic desire to take the time to
make an informed, value-driven purchasing decision.  We employ an
educational and consultative approach to our initial contacts with
prospects.  We seek to strategically educate prospects as to exterior
vinyl products and the selection, purchasing and installation
process.   For example, we provide prospects with literature
compiled from third-party (neutral) consumer protection agencies, which we find
carries a tremendous amount of credibility with the prospect.  Through
this approach, we are able to discreetly reveal the multiple short-cuts that our
competitors (typically contractors) take to minimize their individual overhead
costs at the expense of the consumer, while highlighting the advantages of the
buying and ownership experience our Company provides.  It is our
experience that most contractors do not employ a systematic and effective
approach to properly educate prospects as to how to obtain the best value for
their money.  Consequently, there are no apparent differences among
contractors, which may result in purchasers opting for the lowest
bidder.





Our
approach differentiates us from other retail distributors of exterior vinyl
products because throughout the sales process we have taken the time and made
the effort to develop a relationship with a prospect and have avoided the
hard-sell pitch so prevalent in the home improvement industry.  When a
consumer makes a decision as to what product to purchase and from whom, it is
our intention that they feel as if they are making the most informed,
appropriate decision and receiving the best value for their
dollar.  We seek to establish good-will with prospects that takes them
through the consummation of the purchase and through the ownership
experience.  Management believes that the value-driven consumer
ultimately is willing to pay more for the product that offers peace-of-mind and
a stress-free purchasing and ownership experience.





8





Tactical
Implementation





We employ
virtually all media (other than television) to elicit interest in our Company,
including direct mail, print, roadside signage, tradeshows, a proactive referral
program and internet advertising.  Our advertisements and promotional
materials are designed to capture information from prospective purchasers with
each response to an advertisement or request for information.  Our
objective is to be aware of those prospects who may be considering making a
purchase and who are conducting their research and educating
themselves.  Once in our data base, we can continue to provide these
prospects with additional sales literature and purchasing incentives to shorten
the timeframe of their individual buying cycles.  As we provide
prospects with more information about our Company, we are afforded further
opportunities to differentiate our Company from our competitors by highlighting
our operational advantages.  We believe that we are the only vinyl
exterior product company in Southern California collecting this information
because our competitors are focused only on prospects who are prepared to
receive an estimate, which represents a smaller portion of the overall prospect
base.  Ultimately, it is our intention to close sales with prospects
before our competitors have an opportunity to bid on the job.





For our
Orange County location, the preponderance of our advertising budget currently is
allocated to print media.  However, we carefully track the
cost-per-lead and cost-of-sale for each individual advertising medium which
allows us to strategically redirect and adjust marketing and advertising dollars
to the media that yield the highest return on expenditures.  We will
continue to systematically test the effectiveness of  direct mail,
tradeshows, canvassing, pay-per-click, and other online and off-line lead
generation services to determine which are most effective in generating revenue
at any given time and adjust our efforts appropriately.





We expect
to employ this technique as we seek to build our network of franchises, as
described below.  Our plan is to determine the message and mediums
that have proven to be effective in Orange County and utilize these as the
initial elements to conceive a marketing and advertising mix on a national basis
or within the geographic scope of our franchisees' locations.  In
addition, we may engage a marketing company to assist us to identify demographic
and cultural tendencies in each of the geographic areas in which we may have
franchises and develop appropriate marketing campaigns on behalf of our
franchisees.





Franchising
Program





We are
not aware of any participant in the exterior vinyl products industry that
operates on a national basis.  We believe that a significant
opportunity exists for us to develop a national franchise to establish our
products and Company as a unique brand.  We also believe that our
business approach and operating model can be replicated successfully in other
locations.  We have not yet established the parameters of our
franchise program, including such matters as franchise sale cost and ongoing
fees and royalties, franchise territories or the advertising and marketing
approach we will take either as to sales of franchises or the marketing campaign
for the franchise system.  We currently are in discussions with
several franchise consultants who will be expected assist us in conducting
research and developing a franchise program and the related materials required
to execute our plan.  We will not select a franchise consultant until
we are certain that our respective corporate philosophies are in
accord.





Any
activities we undertake in furtherance of our franchise program will be subject
to the detailed reports and information generated by our franchise consultant
based upon the results of the research and surveys it generates.  We
expect that our first few franchises will be located in Southern California in
sufficiently close proximity to our executive offices to allow us to closely
monitor their activities, minimize support costs and optimize brand marketing
within our geographic area but which will not impinge upon our Orange County
showroom sales.  Initially, senior management, who developed our sales
and marketing techniques, will be directly responsible for interviewing
prospective franchisees and selecting the ultimate franchise owners to ensure
that they possess the qualities our management is seeking in
franchisees.





9





Franchise
consultants typically are responsible for providing the complete range of
information, implementation strategies, policies, procedures, operating manuals,
marketing tools and other materials required to develop and implement a
competitive franchise program.  The information and printed materials
we will provide to prospective franchisees with respect to sales of franchises
and the policies and procedures we develop to manage the operations of
franchisees is subject to regulation by the Federal Trade Commission and the
laws of the various states in which we may operate.  We expect that
the materials provided to us by our franchise consultant will be compliant in
all such respects but we anticipate that we will retain legal counsel to ensure
initial and ongoing compliance with all applicable laws and
regulations.  We expect that our franchise consultant will work with
us to ascertain our objectives, operating strengths and other factors that
affect our business and guide us through each step of developing and
implementing a program.





Branding





Our
objective is for our organization to become the national leader in exterior
vinyl product sales.  The essence of this process will be to build our
brand so that prospects regard our Company as the one that provides the
value-driven solution to their exterior vinyl product requirements.





Despite
the sheer size of the fencing industry, beyond the home centers in which
exterior vinyl products represent only a small portion of their business, our
industry is characterized by a profusion of small, local retail stores that lack
focus and a clear marketing message.  In our view, all of our
competitors look, sound and act alike and there exists a void to be filled by a
company that is credible, trustworthy, professional and focused on assisting
customers rather than on selling customers.





We are
seeking to become the dominant participant in the exterior vinyl products
industry on a national basis through our franchises by deploying a focused
advertising campaign and building our brand.  In an industry noted for
its lack of marketing creativity, we will deploy a sophisticated and
well-conceived marketing strategy to advance our Company to a position of
national leadership.  We expect that the economies of scale afforded
by multiple franchises will give us the opportunity to deploy advertising and
promotional programs that are beyond the financial and creative capabilities of
our competitors, and coincidentally allow us to build strong consumer brand
awareness, which may serve as a barrier to competitive entry on a national
level.





Building
brand awareness through advertising is expensive and, in management's
estimation, does not provide an immediate and measurable return on invested
capital.  Rather, it is our intention to continue to utilize a
direct-response advertising campaign in which there will be a strong and
immediate call-to-action to drive leads and generate revenue.  We
believe that a cohesive direct-response campaign will build our brand naturally
because of the repetition and penetration of the advertisements in the
marketplace.





During
the first years of our franchising efforts, we expect to allocate the most
significant portion of our operating budget, as a percentage of revenue
generated, to marketing and advertising.  We will closely monitor lead
and sales generation relative to advertising dollars expended to a particular
media to determine the highest rate of return and apportion our advertising
expenditures accordingly.  We believe that this approach will afford
us with the greatest latitude to quickly and systematically determine which
advertising mediums are the most effective in generating revenues.  By
implementing an aggressive approach early in the franchising phase, we believe
that we will have the opportunity to:





·
            determine
      which mediums provide the highest return on
  capital;


·
            quickly
      convey our brand to the market;


·
            overcome
      any “small business/new business” stigma that prospects in an expansion
      area may experience; and





10





·
            capture
      most of the prospects in the area who are in the early stages of the
      buying cycle, allowing us to build a database of “future
      buyers.”





Product
Supply





We have
entered into an agreement to purchase all our vinyl product requirements from
U.S. Polymers, Inc., located in Montebello, California, approximately twenty
miles from our headquarters.  We use vinyl provided by U.S. Polymers
in all jobs undertaken in Orange County, California.  In return, U.S.
Polymers granted us the exclusive license to sell its products in that territory
and provides us with price discounts if we meet specified consumption
levels.  Under the agreement, we purchase raw materials consisting of
extruded vinyl that has been formed into a variety of 16-foot-length profiles
(posts, rails, pickets, etc.), which represents approximately 78% of all
materials we use in our business.   We utilize three computerized
routing machines to cut and route the vinyl products to the required
specifications for each purchase order.  The original agreement, as
subsequently amended to extend the termination date, is effective through August
29, 2010.





U.S.
Polymers has been a reliable provider of high-quality vinyl products and has
satisfied our supply requirements on a timely basis to date.  The
products have proven to be easy to install and trouble-free for our customers to
maintain.  Products manufactured by U.S. Polymers carry a limited
30-year replacement warranty.  We have not experienced any significant
difficulties working with U.S. Polymers nor have we received any serious
customer complaints about the quality of the product.  Over the five
years our management has been involved with TVFC and now the Company, we have
not had to replace any of the product we have installed because of defective
materials.





We
believe that in the event U.S. Polymers is unable to supply our requirements for
vinyl fencing products, there are numerous other suppliers available to us that
could provide substantially similar quality products at comparable prices on
short notice.





Any
disruption in the supply of the materials comprising the products we sell could
have a material adverse effect on our business in the short term until we were
able to negotiate purchase terms with new suppliers.





Backlog





Given
that we collect a fifty percent deposit on all order when executed, our backlog
at any given time is equal to twice the amount of the customer deposit balance
at that date.  As of December 31, 2008, the Company's backlog of
unfilled orders was $322,000, represented by 50% deposits totaling
$161,000.  We anticipate that we will fill all of this backlog within
one to three months.  The Company's backlog of unfilled orders at
December 31, 2007 was $364,000.  The amount of our backlog at any
given time may not be representative of our potential annual earnings both
because orders turn over quickly and the seasonal nature of our business may not
accurately reflect our level of activity.  Orders tend to diminish
during the holiday season and into the rainy season, which typically encompasses
the early winter months in Southern California.




Competition





We market
our exterior vinyl products to the home improvement sector where we compete with
entries manufactured from lumber, wood-plastic composites, other
high-performance plastics, metal-based products, masonry products and other
construction materials.  Currently, wood and metal are the most
prevalent materials used in residential fencing, accounting for over 70% of the
total market value, and wood is by far the most common material used in decking
products.  Though the appearance of vinyl products is improving
rapidly, many purchasers prefer the look and feel of wood, which also is
somewhat less expensive than vinyl in initial purchase price but, we believe,
has a higher cost of ownership given its on-going maintenance
costs.  Superior product quality and ease of ownership is the
principal means by which our products compete against wood.  We
believe that our products compete favorably with vinyl products offered by our
competitors as to price, quality, aesthetics and variety.





11





Our
industry is populated by (i) numerous small, local retail stores that specialize
in vinyl products, (ii) home improvement contractors and (iii) home improvement
centers for which exterior vinyl products represent a small portion of their
total product offerings and that typically subcontract installation to third
parties.  In the space in which we operate, retailers that sell and
install only fence, decks and related products and in which marketing and sales
is directed to consumers, the market is characterized by numerous small
companies that limit their operational scope to their immediate geographic
operating areas.  We believe that we compete effectively against these
entities based upon our sophisticated sales and marketing techniques not
typically employed by the local retailers





As we
develop our franchise operations, we expect that we will compete with numerous
other franchisors for franchisees.  Most of these franchisors will
have greater market recognition and greater financial, marketing and human
resources than we do and we can not be certain that we will be able to compete
effectively to attract franchisees.





Government
Regulations





Our
operations and those of our franchisees are and will be subject to licensing and
regulation by a number of governmental authorities, which may include
construction, labor, sanitation, safety, fire, building and other agencies in
the state or municipality in which an operation is
located.  Difficulties in obtaining or failure to obtain the required
licenses or approvals could delay or prevent the development of a new franchise
in a particular area.  We and our franchisees are and will be subject
to federal and state environmental regulations, but these regulations have not
had a material effect on our operations.





Our
future franchise operations will be subject to Federal Trade Commission
regulation and several state laws which regulate the offer and sale of
franchises.  The FTC’s Trade Regulation Rule on Franchising
requires the Company to furnish to prospective franchisees a franchise offering
circular containing information prescribed by this rule.





State
laws that regulate the offer and sale of franchises and the franchisor —
franchisee relationship presently exist in a substantial number of
states.  Such laws generally require registration of the franchise
offering with state authorities and regulate the franchise relationship by, for
example, requiring the franchisor to deal with its franchisees in good faith,
prohibiting interference with the right of free association among franchisees,
limiting the imposition of standards of performance on a franchisee and
regulating discrimination against franchisees in charges, royalties or
fees.  Certain laws may restrict a franchisor in the termination of a
franchise agreement by, for example, requiring “good cause” to exist as a basis
for the termination, advance notice to the franchisee of the
termination.  These laws could negatively impact our franchise
operations.  The Company is not aware of any pending franchise
legislation which in its view is likely to affect significantly the operations
of the Company.





Employees





We employ
24 persons on a full-time basis, including: our two executive officers who are
responsible for the direction and hands-on management of our Company; six
project designers (marketing and sales persons); 14 operations personnel who
schedule, fabricate and install product and provide customer service; and two
accounting personnel who, together with Douglas Wells, our CFO (who provides his
services through CFO Services, Inc.), assist with financial planning,
maintaining financial records and preparing monthly and interim financial
statements and reports.





12





We have
an agreement with a professional employer organization (PEO), to manage all
payroll processing, workers’ compensation, health insurance, and other
employment-related benefits for our employees.  The PEO is a
co-employer of our employees along with us.  Although the PEO
processes our payroll and pays our workers’ compensation, health insurance and
other employment-related benefits, we are ultimately responsible for such
payments and are responsible for complying with state and federal employment
regulations.  The fees we pay the PEO are determined as a percentage
of our payroll and the additional services we may request from it.





We are
not party to any employment agreements and all of our employees are hired on an
at-will basis.  None of our employees are members of a
union.  We believe that we maintain good relations with all of our
employees.





Item
1A. Risk Factors.





An
investment in our securities involves a high degree of risk. You should consider
carefully all of the risks described below, together with the other information
contained in this Annual Report on Form 10-K before making a decision to invest
in our securities.  If any of the following risks occur, our business,
financial condition and results of operations may be materially adversely
affected.





RISKS
RELATED TO OUR BUSINESS




We
derive all of our revenues from the sale of outdoor home products manufactured
from vinyl and the growth of our business and the success of our franchises may
depend upon continuing consumer acceptance of vinyl products as an alternative
to products manufactured from wood and other traditional materials.





All of
the products we offer are manufactured from vinyl.  Vinyl was
introduced into the outdoor fencing, decking and home accessory industry in the
1970's and as of 2006 estimates suggest that demand for all plastic-based fence
materials in the North American residential market to be over $600 million or
nearly 25% of the total market in 2006.  The continued growth of sales
at our Company-owned showroom and at our future franchises may depend upon a
continuing increase in consumer acceptance of vinyl products as a construction
material for outdoor home products as an alternative to outdoor products
manufactured from wood and other traditional materials such, as stone and
metal.  If consumer preferences change and there is a decline in the
acceptance and sales of outdoor products manufactured from vinyl our business
and operating results could be negatively impacted.  Moreover, if
other materials are employed or developed for use in the outdoor home products
market that supplant outdoor products manufactured from vinyl, our business and
operating results could be harmed.





We currently purchase all of our
vinyl products from a single source and any interruption in supply, decline in
quality or increase in price could adversely affect our business and results of
operations.





We
purchase all of our major vinyl components of the products we sell from one
source that manufactures its products at a single facility in Southern
California.  Our business could be adversely affected in the
event:





·
            there
      is any interruption in supply from this entity, which could occur if,
      among other things, its equipment malfunctions or it experiences a fire or
      other catastrophic event,  in which case we might not be able to
      satisfy our customers' demand unless and until we found another
      source;





13





·
            the
      quality of the product we purchase from our supplier declines, which could
      prompt customers to purchase products from our competitors;
    or





·
            our
      supplier significantly increases costs that we cannot pass on to our
      customers, in which case our customers may purchase products from our
      competitors.





Our
reliance on a single supplier of vinyl product exposes our business to these and
other risks and potential problems that we cannot now foresee.  Any
such event could have a material adverse affect on our business and results of
operations.





Our
business growth strategy and future earnings will depend in large part on the
development and success of our franchise program and there are a substantial
number of risks associated with this strategy.





We will
pursue the development of a franchise program that we anticipate will be the
cornerstone of our future growth and expansion.  We expect to dedicate
significant financial and personnel resources to the development of our
franchise program and to derive substantial returns from our investment, both
from the payment of the initial franchise fees and from ongoing royalty and
other fees.  There are numerous significant risks attendant to
developing the program, including:





·
            We
      have never undertaken any research to establish the franchise potential of
      our business and we may not sell a sufficient number of franchises to
      recoup our initial investment in the program or to fund the ongoing costs
      of operating a franchise program;





·
            Neither
      we nor any member of our management team has any prior experience
      developing or operating a franchise program and we may not successfully
      manage this business;





·
            We
      may face delays and difficulties in connection with implementing our
      franchise program, which could increase costs and delay the recognition of
      revenue from such operations;





·
            Placing
      significant demands on our management, technical, financial and other
      resources;





·
            Diverting
      management's attention from our core business of selling vinyl
      fence;





·
            We
      may not accurately assess the qualifications of our franchisees and they
      may not possess the business abilities and access to financial resources
      necessary to successfully operate the franchise or to operate it in a
      manner consistent with our
standards;





We cannot
assure you that we will successfully manage the problems and difficulties we may
encounter in developing a franchise program.  To the extent that we do
not manage and surmount the problems and difficulties we may encounter, our
results of operations and financial condition may not meet our
expectations.  Moreover, such problems and difficulties may permeate
our existing operations to our financial and operational detriment which would
materially and adversely affect our financial condition and results of
operations.





14





We
may require additional cash both to implement our franchise program and, if we
do not generate sufficient revenue from such operations, to maintain our
franchise program.





As of the
date hereof, we believe that we will possess sufficient financial resources,
from cash on hand and revenue from existing operations, to fund the development
of and maintain a franchise program.  However, no member of our
management has experience building a franchise program and we may not have
evaluated or gauged our cash requirements adequately.  Moreover, we
may not have  properly accounted for factors beyond our control which
could increase the cost of developing and maintaining our franchise
program.  If the revenue we generate from our franchise operations
(both from sales of franchises and from ongoing franchising fees and royalties)
is not sufficient to support our franchise program, we will deplete our cash
position, suffer losses, and may require outside financing to maintain such
operations which may not be available to us on acceptable terms, if at
all.  If we do not have access to cash on acceptable terms when and as
required, we will not grow as quickly as we have anticipated and our business
and results of operations will suffer.





Our
business growth strategy and future earnings will depend in large part on the
success of our franchisees, over whose operations and business success we will
exercise limited control.





Our
franchisees will own, operate and oversee their franchise's daily operations and
will be independent third parties over whom we will not exercise
control.  Although we will attempt to properly select, train and
support franchisees and the franchisees will be contractually obligated to
operate their franchises in accordance with our standards, the ultimate success
and quality of any franchise rests with the franchisee.  If
franchisees do not successfully operate in a manner consistent with our
standards, our image and reputation could be harmed, which could affect our
ability to attract additional franchisees and which in turn could adversely
affect our business and operating results.  Further, we expect that a
significant portion of the fees we would earn from franchisees would be derived
from royalties calculated based on net sales and to the extent that our
franchisees do not operate their franchise profitably or remain financially
viable, we will not earn the revenues we expect, which would negatively impact
our business and results of operations.





We
may not be able to successfully integrate and oversee the growth of new
franchises, which could adversely affect our business, results of operations and
financial condition.





Our
efforts to develop a franchise operation will be accompanied by certain
extensive risks with respect to integrating new franchises into our operations,
including, the potential disruption of our ongoing business, additional expenses
associated with managing a larger organization and the maintenance of uniform
standards, controls and policies.  We may not be successful in
overcoming these risks or any other potential problems that arise from the
development of a franchise program.  If any of these risks
materialize, our operating results could be materially impacted, which could
negatively impact our financial condition.





Our franchisees could take actions
that could be harmful to our business.





Our
franchisees will be contractually obligated to operate their franchises in
accordance with all applicable laws but ultimately, franchisees are independent
third parties that we do not control.   Franchisees could take
actions that subject them to legal and financial liabilities and we may,
regardless of the actual validity of such a claim, be named as a party in an
action relating to, and/or be held liable for, the conduct of our franchisees if
it is shown that we exercise a sufficient level of control over a particular
franchisee’s operation.  Defending claims made against our franchisees
and being held liable for their actions could be costly and adversely impact our
operating results.





15





Our franchise operations will be
subject to government regulation that may adversely hinder or impact the growth
of our business.





As we
develop our franchise operations, our business will become subject to Federal
Trade Commission regulation and several state laws which regulate the offer and
sale of franchises.  We also will become subject to state laws that
regulate substantive aspects of the franchisor - franchisee relationship. The
FTC’s Trade Regulation Rule on franchising requires the Company to furnish
to prospective franchisees a franchise offering circular containing information
prescribed by the rule.  State laws that regulate the offer and sale
of franchises and the franchisor - franchisee relationship presently exist in a
substantial number of states.   Any failure by us to obtain or
maintain approvals to sell franchises could cause us to lose franchise revenues
and any failure to comply with these laws could expose us to liability for
damages to franchisees and fines or other penalties as well as causing us to
incur expensive legal cost.





We
cannot predict how the current economic downturn and tightening of credit
markets will affect our business.





The
demand for our products is correlated to changes in the level of activity in
home improvements.  This activity level, in turn, is affected by such
factors as home equity values, home equity loan withdrawals, consumer spending
habits, employment, interest rates and inflation.  Economic trends
indicate that home equity values in many markets have softened and that home
equity withdrawals have decreased, which may result in decreased home
improvement spending.  It is not known whether this trend will
continue or worsen.  Any economic downturn could reduce consumer
income or equity capital available for spending on discretionary items such as
fencing, which could adversely affect the demand for our products.





In
December 2008, a former employee initiated legal action against us alleging
improper termination and seeking unspecified damages.  If the court
hearing the case grants a significant monetary award, our financial condition
could be harmed.





On
December 5, 2008, a former employee of the Company filed a complaint in a
California State Court against the Company and its principals, Gordon Knott and
Garabed Khatchoyan.  The complaint arises from our termination of the
plaintiff based upon our belief that he misappropriated approximately $200,000
of materials from our warehouse.  The complaint includes nine
allegations, including (i) unlawful non-payment of wages; (ii) breach of implied
covenant of good faith and fair dealing; (iii) failure to pay earned wages upon
separation; (iv) defamation and (v) wrongful discharge.  The plaintiff
generally is seeking compensatory damages, attorneys' fees, punitive damages and
equitable relief but has made no specific demand for the monetary amount
sought.  In January 2009, our counsel filed a demurrer requesting that
the court dismiss most of the claims on the basis that they are deficient as a
matter of law.  The court will not hear the matter until March 3, 2009
and will not issue a ruling until some time thereafter.  If the court
were to award the plaintiff significant monetary damages, our financial
condition could be harmed and our ability to implement completely our
franchising strategy could be inhibited, which could negatively impact our
long-term growth and results of operations.





Past
seasonal fluctuations in our net sales and quarterly operating results may not
be a reliable indicator of future seasonal fluctuations.





Our
historical seasonality may not be a reliable indicator of our future
seasonality.  Quarterly variations in our net sales and income from
operations are principally attributable to seasonal trends in the demand for our
products.  We generally experience lower net sales levels during the
first and fourth quarters of each year, in which holidays and adverse weather
conditions in Southern California usually reduce the level of home improvement
activity.





Our
business could be harmed if we are unable to manage growth
effectively.





We have
experienced significant growth since our inception and believe that sustained
growth, including as may be achieved through our expansion plans, places a
strain on operational, human, and financial resources.  To manage our
growth, we must continue to improve operating and administrative systems and
services and attract and retain qualified management and sales
personnel.  We believe that maintaining and enhancing both our systems
and personnel at reasonable cost are instrumental to our success.  We
cannot give any assurances that we will be able to attract and retain qualified
personnel.  We cannot give any assurance that we will be able to
develop internal systems that will keep pace with the growth we expect over the
next five years.  Failure to manage growth effectively could have an
adverse effect on our business and operating results.





16





Our
performance will suffer if we do not compete effectively in the highly
competitive fencing market.





We must
compete with a significant number of companies in the fencing market, including
wood producers that currently have more production capacity than is required to
meet the demand for their products, and manufacturers of wood/plastic compound
fencing that are seeking to capture market share from wood and that are
aggressively pricing their products to that end.  In addition, we
compete against numerous retailers of vinyl products, many of which may offer
products at prices lower than we can.  If price became the most
significant purchasing consideration, we might not be able to compete with wood
products or other vinyl products retailers.  Our failure to compete
successfully in this market could have a material adverse effect on our business
and results of operations.





We
will compete against larger, better known entities to attract franchisees and we
may not be successful.





As we
develop our franchise operations, we expect that we will compete with numerous
other franchisors for franchisees.  Most of these franchisors have
greater market recognition and greater financial, marketing and human resources
than we do and we can not be certain that we will be able to compete effectively
to attract franchisees.  If we fail to attract a sufficient number of
franchisees and develop a material revenue stream from these operations, we
could suffer a loss of our investment and may have to allocate funds from our
showroom operations to our franchise business and our financial results could be
negatively impacted.





Our
business depends on our senior management team and the loss of any member of the
team could harm our business.





We
believe that our success will depend on the continued employment of Gordon Knot
and Garabed Khatchoyan, our president and secretary, respectively, who have
significant experience in our industry and who developed our sales and marketing
techniques.  Currently, neither Mr. Knot nor Mr. Khatchoyan has an
employment agreement with our Company.  Our future business and
financial results could be adversely affected if we were to lose the services of
either of such persons.  If either of these persons were unable or
unwilling to continue in his present position, that person could be difficult to
replace and our business could be harmed.  If either of these persons
left to join a competitor or form a competing Company, some of our customers
might choose to use the services of that competitor or new company instead of
our services.





If
we fail to hire and retain qualified personnel, we may not be able to achieve
our goals.





Our
success depends to a significant extent upon our ability to hire qualified
managerial and administrative personnel necessary to properly manage our
operations through our proposed franchise program.  If we our unable
to attract and retain qualified personnel, our business could be materially and
adversely affected.





17





We
have no independent audit committee. Our full board of directors functions as
our audit committee and is comprised of two directors who are not considered
independent. This may hinder our board of directors’ effectiveness in fulfilling
the functions of the audit committee.





Currently,
we have no independent audit committee, though we are not required to have
one.  Our full board of directors functions as our audit committee and
is comprised of directors who are not considered to be “independent” in
accordance with the requirements of Rule 10A-3 under the Securities
Exchange Act.  An independent audit committee plays a crucial role in
the corporate governance process, assessing the Company’s processes relating to
its risks and control environment, overseeing financial reporting, and
evaluating internal and independent audit processes.  The lack of an
independent audit committee may prevent the board of directors from being
independent from management in its judgments and decisions and its ability to
pursue the committee’s responsibilities without undue influence.  We
may have difficulty attracting and retaining directors with the requisite
qualifications.  If we are unable to attract and retain qualified,
independent directors, the management of our business could be
compromised.





Our
full board of directors acts as our compensation committee, which presents the
risk that compensation and benefits paid to these executive officers who are
board members and other officers may not be commensurate with our financial
performance.





A
compensation committee consisting of independent directors is a safeguard
against self-dealing by Company executives. Our board of directors acts as the
compensation committee and determines the compensation and benefits of our
executive officers and reviews policies relating to the compensation and
benefits of our employees.  Although all board members have fiduciary
obligations in connection with compensation matters, our lack of an independent
compensation committee presents the risk that our executive officers on the
board may set their personal compensation and benefits at levels that are not
commensurate with our financial performance.





RISKS
RELATED TO OUR COMMON STOCK





Our
officers and directors control us through their positions and stock ownership
and their interests may differ from other stockholders.





As of
March 30, 2009, there were 22,863,200 shares of our common stock issued and
outstanding.  Messrs. Knott and Khatchoyan, our directors and
president and secretary, respectively, collectively own 87.48% of our common
stock.  As a result, if they were to vote in concert with each other,
they are able to influence the outcome of stockholder votes on various matters,
including the election of directors and extraordinary corporate transactions
including business combinations.  Yet, their interests may differ from
those of other stockholders.  Furthermore, ownership of 87.91% of our
common stock by our all of officers and directors reduces the public float and
liquidity, and may affect the market price of our common stock if our common
stock becomes eligible to trade on the OTC Bulletin Board or other trading
medium.





There
is currently no trading market for our common stock.





Our
common stock is not quoted on any exchange or inter-dealer quotation system.
There is no trading market for our common stock and our common stock may never
be included for trading on any stock exchange or through any quotation system
(including, without limitation, the NASDAQ Stock Market and the OTC Bulletin
Board).  You may not be able to sell your shares due to the absence of
a trading market.





Any
market that develops for our common stock likely will be illiquid and the price
of our common stock could be subject to volatility unrelated to our
operations.





If a
market for our common stock develops, its market price could fluctuate
substantially due to a variety of factors, including market perception of our
ability to achieve the development of our franchise program and otherwise meet
our growth projections and expectations, quarterly operating results of other
companies in the same industry, trading volume in our common stock, changes in
general conditions in the economy and the financial markets or other
developments affecting our business and the business of others in our
industry.  In addition, the stock market itself is subject to extreme
price and volume fluctuations.  This volatility has had a significant
effect on the market price of securities issued by many companies for reasons
unrelated to their operating performance and could have the same effect on our
common stock.





18





Limitations
on liability and indemnification matters.





As
permitted by the corporate laws of the State of Nevada, we have included in our
Articles of Incorporation a provision to eliminate the personal liability of our
directors for monetary damages for breach or alleged breach of their fiduciary
duties as directors, subject to certain exceptions.  In addition, our
bylaws provide that we are required to indemnify our officers and directors
under certain circumstances, including those circumstances in which
indemnification would otherwise be discretionary, and we will be required to
advance expenses to our officers and directors as incurred in connection with
proceedings against them for which they may be indemnified.  If we are
required to indemnify, both for the costs of their defense in any action or to
pay monetary damages upon a finding of a court or in any settlement, our
business and financial condition could be materially and adversely
affected.





Issuance
of stock to fund our operations may dilute your investment and reduce your
equity interest.




We may
need to raise capital in the future to fund the construction and development of
new facilities or for other purposes.  Any equity financing may have
significant dilutive effect to stockholders and a material decrease in our
stockholders’ equity interest in us.  Equity financing, if obtained,
could result in substantial dilution to our existing stockholders.  At
its sole discretion, our board of directors may issue additional securities
without seeking stockholder approval, and we do not know when we will need
additional capital or, if we do, whether it will be available to
us.





We
are authorized to issue "blank check" preferred stock without stockholder
approval, which could adversely impact the rights of holders of our common
stock.





Our
articles of incorporation authorize the issuance of up to 10,000,000 shares of
preferred stock with such designations, rights and preferences as may be
determined from time to time by the board of directors.  Accordingly,
our board of directors is empowered, without stockholder approval, to issue
preferred stock with dividend, liquidation, conversion, voting, or other rights
which could adversely affect the voting power or other rights of the holders of
the common stock.  In the event of issuance, the preferred stock could
be utilized, under certain circumstances, as a method of discouraging, delaying
or preventing a change in control of the Company.  Although we have no
present intention to issue any shares of authorized preferred stock, there can
be no assurance that we will not do so in the future.




Substantial
sales of our common stock, or the perception that such sales are likely to
occur, could cause the price of our common stock to decline.




The
market price, if any, of our common stock could decline as a result of sales of
substantial amounts of our common stock into the market or the perception that
these sales could occur.  In addition, these factors could make it
more difficult for us to raise funds through future offerings of common
stock.  We have an aggregate of 22,863,200 shares of common stock
outstanding as of March 30, 2009 of which 2,700,000 shares are subject to the
terms of certain Lock Up/Leak Out Agreements that prohibit sales until six
months after the effective date of a registration statement by which the shares
are registered for resale under the Securities Act.  As shares subject
to the Lock Up/Leak Out Agreements become available for resale, the market price
of our common stock could drop significantly.





19





We
identified material weaknesses and deficiencies in our internal controls and
procedures and the actions we have taken to remediate these weaknesses and
deficiencies may not be sufficient to prevent the underlying issues from arising
again or permit us to avoid other material weaknesses or deficiencies in the
future.





As
described under Item 9A- Controls and Procedures, we determined that during the
fiscal year ended December 31, 2008 our wholly-owned operating subsidiary, TVFC,
had material weaknesses and deficiencies in its financial controls and
procedures.  Under standards established by the Public Company
Accounting Oversight Board, or PCAOB, a “material weakness” is a deficiency, or
a combination of deficiencies, in internal control over financial reporting,
such that there is a reasonable possibility that a material misstatement of the
Company’s annual or interim financial statements will not be prevented or
detected on a timely basis.  The material weaknesses we identified
were in connection with the theft of inventory and services by employees that we
did not detect until after the occurrences of fraud.  The material
weaknesses were a result of our failure to develop and maintain a Company-wide
anti-fraud program over the initiating and processing of financial transactions
and the failure of senior management to maintain sufficient oversight related to
inventory control and labor utilization.  We have taken what we
believe to be appropriate action to address these material weaknesses in our
internal control over financial reporting, including making personnel changes
and implementing physical and documentary controls and procedures that we
believe will prevent instances of theft of inventory and related losses from
occurring in the future.





The
controls and procedures we implemented to remediate the weaknesses we discovered
may not be adequate or enable us to remedy the specific material weaknesses and
deficiencies in our controls and procedures that lead to the fraud and that the
controls and procedures we implemented will permit us to avoid other material
weaknesses or significant deficiencies in the future.  Continued
weaknesses and deficiencies in our controls and procedures could negatively
affect our business, for example, making it more difficult and costly for
us to attract and retain independent board members or by causing negative
reaction in the financial markets due to a loss of confidence in the reliability
of our financial statements, which could make it more difficult to finance our
operations through the sale equity or debt and erode the price of our stock if
it is admitted to quotation on the OTC Bulletin Board or is traded on another
trading medium.





As
our operating subsidiary transitions from a private company to a public company,
we may have difficulty satisfying the additional financial and other reporting
and corporate governance requirements imposed upon by the Sarbanes-Oxley Act of
2002 and federal securities laws.  We expect that evolving regulation
of corporate governance and public disclosure will result in additional expenses
and continuing uncertainty.




Prior to
the share exchange, we were a "shell" company that had no operations and TVFC,
our operating subsidiary, had operated its business as a private
company.  This Form 10-K represents the first periodic report we are
filing with the Securities and Exchange Commission (the "SEC") as an operating
company.  Our management is only beginning to acquire the experience
necessary to prepare reports required under the Exchange Act and the knowledge
necessary to comply with other new financial and corporate governance
requirements to the Company's business is now subject, including certain
provisions of the Sarbanes-Oxley Act of 2002 and the regulations promulgated
thereunder.  These laws and regulations impose significant compliance
obligations upon the Company and its management.  We expect that as we
transition from a private to a public company, our Company will be required to
commit additional financial and personnel resources to satisfy our obligations
under the Exchange Act and the Sarbanes-Oxley Act and will result in the
diversion of our senior management’s time and attention from our day-to-day
operations.  In particular, we may be required to:




•
              create
      or expand the roles and duties of our board of directors and management
      and to create board
committees;





20





•
            hire
      additional financial and accounting personnel and other experienced
      accounting and finance staff with the expertise to address the complex
      accounting matters applicable to public
  companies;


•
            establish
      an internal audit function;


•
            enhance
      and formalize closing procedures at the end of our accounting
      periods;


•
            involve
      to a greater degree outside counsel and accountants in the activities
      listed above;


•
            establish
      an investor relations function; and


•
            establish
      new internal policies, such as those relating to disclosure controls and
      procedures and insider trading.




We may
not be successful in complying with these obligations and compliance with these
obligations could be time-consuming and expensive and negatively impact our
results of operations.




Failure
to achieve and maintain effective internal control over financial reporting in
accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have a
material adverse effect on our business.




As a
private company, TVFC's internal control over financial reporting may not have
met all the standards contemplated by Section 404 of the Sarbanes-Oxley Act
that the Company is required to meet in complying with its reporting obligations
under the Exchange Act.  Since the date of the Share Exchange
Agreement, we have been implementing controls and procedures designed to ensure
that information we are required to disclose in our reports under the Exchange
Act is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms, and that such information is accumulated
and communicated to management to allow timely decisions regarding required
disclosure.  We are required to evaluate and test our internal
controls over financial reporting to enable management to report on, and our
independent registered public accounting firm to attest to, such internal
controls as required by Section 404 of the Sarbanes-Oxley
Act.  The weaknesses we identified in our internal controls over
financial reporting during the period covered by this report and the remediation
efforts we implemented represent the commencement of an ongoing process to
ensure that we accurately report our financial results.





Commencing
with our annual report for the year ending December 31, 2009, we will be
required to include our independent auditor’s attestation on management’s report
on internal control over financial reporting.  If the auditor's
attestation contains material qualifications or identifies material weaknesses
in our internal control over financial reporting, our business could be
negatively impacted including that it could:





·
            result
      in the diversion of management time and attention from operating our
      business and require us to allocate substantial financial resources to
      compliance and remediation
measures;





·
            make
      it more difficult and costly to attract and retain independent board
      members;





·
            cause
      a negative reaction in the financial markets due to a loss of confidence
      in the reliability of our financial statements, which could make it more
      difficult to finance our operations through the sale equity or debt and
      erode the price of our stock if it is admitted to quotation on the OTC
      Bulletin Board or is traded on another trading medium;
  and





·
            cause
      us to incur significant costs in order to improve our internal control
      over financial reporting and comply with Section 404, including
      increased auditing and legal fees and costs associated with hiring
      additional accounting and administrative staff, any of which would
      increase our operating expenses and would negatively affect our results of
      operations.





21





Our
common stock may be considered a “Penny Stock,” and thereby be subject to
additional sale and trading regulations that may make it more difficult to
sell.





If our
common stock is admitted to quotation on the OTC Bulletin Board, it likely will
open and trade, for the foreseeable future, at a price of less than $5 per
share.  In such case, our stock will be considered a “penny stock,”
unless it qualifies for one of the exemptions from the definition of “penny
stock” under Section 3a51-1 of the Exchange Act, which is
unlikely.  A “penny stock” encompasses any of the following (i) a
stock that trades at a price less than $5.00 per share; (ii) a stock that is not
traded on a “recognized” national exchange; (iii) a stock that is not quoted on
the Nasdaq Capital Market, or even if so, has a price less than $5.00 per share;
or (iv) a stock that was issued by a company that has been in business less than
three years with net tangible assets less than $5 million.





The
principal result or effect of being designated a “penny stock” is that
securities broker-dealers participating in sales of our common stock will be
subject to the “penny stock” regulations set forth in Rules 15-2 through 15g-9
promulgated under the Exchange Act.  For example, Rule 15g-2
requires broker-dealers dealing in penny stocks to provide potential investors
with a document disclosing the risks of penny stocks and to obtain a manually
signed and dated written receipt of the document at least two business days
before effecting any transaction in a penny stock for the investor’s account.
Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve the
account of any investor for transactions in such stocks before selling any penny
stock to that investor.  This procedure requires the broker-dealer to
(i) obtain from the investor information concerning his or her financial
situation, investment experience and investment objectives; (ii) reasonably
determine, based on that information, that transactions in penny stocks are
suitable for the investor and that the investor has sufficient knowledge and
experience as to be reasonably capable of evaluating the risks of penny stock
transactions; (iii) provide the investor with a written statement setting forth
the basis on which the broker-dealer made the determination in (ii) above; and
(iv) receive a signed and dated copy of such statement from the investor,
confirming that it accurately reflects the investor’s financial situation,
investment experience and investment objectives.  Compliance with
these requirements may make it more difficult and time consuming for holders of
our common stock to resell their shares to third parties or to otherwise dispose
of them in the market or otherwise.




We
do not foresee paying cash dividends in the foreseeable future.





We
currently intend to retain any future earnings for funding growth. We do not
anticipate paying any dividends in the foreseeable future. As a result, you
should not rely on an investment in our securities if you require dividend
income. Capital appreciation, if any, of our shares may be your sole source of
gain for the foreseeable future. Moreover, you may not be able to resell your
shares in our Company at or above the price you paid for them.





Item
1B. Unresolved Staff Comments.





Not
Applicable.





Item
2. Properties.





The
Company leases approximately 10,000 total square feet of office, showroom and
warehouse space at 2210 South Ritchey Street, Santa Ana, California pursuant to
four-year lease that expires on March 31, 2009.   We currently
pay monthly rent of $9,000 for the premises.  We anticipate that the
total annual rental expense for 2009 will be approximately
$108,000.  Management believes that its current facilities in Santa
Ana, California satisfy its current and anticipated future requirements but that
alternative space is available upon comparable terms if necessary.





22





Item
3. Legal Proceedings.





On
December 5, 2008, Frank Arias, a former employee of the Company filed a
complaint in the  Orange County Superior Court of California against
the Company and its principals, Gordon Knott and Garabed
Khatchoyan.  The complaint includes nine allegations, including (i)
unlawful non-payment of wages; (ii) breach of implied covenant of good faith and
fair dealing; (iii) failure to pay earned wages upon separation; (iv) defamation
and (v) wrongful discharge.  The complaint arises from the Company's
termination of Mr. Arias on September 30, 2008 on the basis that he purloined
approximately $200,000 of materials from our warehouse.   Mr.
Arias generally is seeking compensatory damages, attorneys' fees, punitive
damages and equitable relief but has made no specific monetary demand for
damages.  On January 5, 2009, Company counsel filed a demurrer
requesting that the court dismiss the case against Mr. Knott and Mr. Khatchoyan
and several of Mr. Arias' claims against the Company because they are deficient
as a matter of law.  Rather than opposing the Company's motion, Mr.
Arias elected to file an amended complaint.  Company counsel currently is
evaluating the first amended complaint to determine how to proceed.





Item
4. Submission of Matters to a Vote of Security Holders.





During
the fiscal year ended December 31, 2008, the holders of the outstanding shares
of our common stock as of November 20, 2008, were asked to vote on and approve
the share exchange.  The holders of all outstanding shares of common
stock as of November 20, 2008, approved the share exchange and related
transactions.





PART
II





Item
5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities.





Market
Information





Our
common stock does not trade, nor is it admitted to quotation, on any stock
exchange or other trading facility.  Management will seek to identify
a market maker to file an application with the Financial Industry Regulatory
Authority, Inc. to initiate quotation of our common stock on the OTC Bulletin
Board.  We have not identified a market maker that has agreed to file
such application.





We cannot
assure you that a trading market for our common stock will ever
develop.





Other
than 129,000 shares of common stock we are obligated to issue under the terms of
certain outstanding options, we are not obligated by contract or otherwise to
issue any securities and there are no other securities outstanding that are
convertible into or exchangeable for shares of our common stock.





As of
March 30, 2009, there were 22,263,200 shares of our common stock outstanding
held by 40 record holders and no outstanding shares of preferred
stock.




Registration
Rights





We have
agreed to register for public resale under the Securities Act an aggregate of
3,192,200 shares of common stock, including 3,000,000 shares of common stock
issued under the Share Exchange Agreement, 133,800 shares issuable upon the
exercise of options we assumed under the Share Exchange Agreement (of which, 600
were cancelled and 4,200 were exercised), and 59,000 shares we sold in a private
placement of our securities.  Of the shares subject to registration,
2,700,000 shares are subject to provisions of Lock Up/Leak Out Agreements
described below.





23





Under the
Lock Up/Leak Out Agreements referenced above, the stockholders subject thereto
have agreed, among other things, that (i) they will not sell or transfer any
shares of our common stock held as of the consummation of the share exchange
until six months after the effective date of the registration statement covering
their shares (other than transfers to their affiliates, who must agree to the
terms of the Lock Up/Leak Out Agreement upon such transfer), and (ii) after the
end of that six-month lock up period, such persons (or their transferees) will
not sell or transfer more than 1/36th of the
number of shares such person owned on the date of the agreement during each
month thereafter.





Dividend
Policy




To date,
we have not declared or paid any cash dividends on our common
stock.  The payment of dividends, if any, is at the discretion of the
board of directors and is contingent on many factors, including our revenues and
earnings, capital requirements and financial conditions.  We currently
intend to retain all earnings, if any, for use in business
operations.  Accordingly, we do not anticipate declaring any dividends
in the near future.




Equity
Compensation Plan Information





As of the
date of this report, we have not adopted any equity compensation
plans.





Shares
Available for Future Sale





All
outstanding shares of our common stock are “restricted securities,” as that term
is defined under Rule 144 promulgated under the Securities Act of 1933
("Securities Act"), because they were issued in private transactions not
involving a public offering.  Accordingly, none of the outstanding
shares of our common stock may be resold, transferred, pledged as collateral or
otherwise disposed of unless such transaction is registered under the Securities
Act or an exemption from registration is available, such as Rule 144 promulgated
under the Securities Act.





Rule 144
will not available for the resale of securities held by our principals prior to
the Share Exchange, unless the following conditions are met:





·
            at
      least one year has elapsed from the time that we reported the Share
      Exchange (November 20, 2009):


·
            we
      are is subject to the reporting requirements of Section 13 or 15(d) of the
      Exchange Act;


·
            we
      have filed all Exchange Act reports and material required to be filed, as
      applicable, during the preceding 12 months (or such shorter period that
      the issuer was required to file such reports and materials), other than
      Current Reports on Form 8-K.





Recent
Sales of Unregistered Securities.





In May
2007, we issued 1,000,000 shares of common stock at a price of $.0001 per share,
the par value thereof, to three of the founders of the Company in reliance on
the exemption from registration afforded by section 4(2) under the Securities
Act of 1933 and corresponding provisions of state securities laws, which exempt
transactions by an issuer not involving any public offering.





24





On
November 20, 2009, we issued and sold 22,100,000 shares of our common stock in
exchange for a like number of shares of the common stock of The Vinyl Fence
Company, Inc., representing all of the outstanding shares of that company's
capital stock.  We offered and sold these securities in reliance on
the exemptions from registration afforded by Section 4(2) and Regulation D (Rule
506) under the Securities Act of 1933, as amended, and corresponding provisions
of state securities laws, which exempt transactions by an issuer not involving
any public offering.





In
November 2008, we sold 59,000 shares of common stock at $1.00 per share to 10
individual private investors in a private placement
offering.   We offered and sold these securities in reliance on
the exemptions from registration afforded by Section 4(2) and Regulation D (Rule
506) under the Securities Act of 1933 and corresponding provisions of state
securities laws, which exempt transactions by an issuer not involving any public
offering.





During
the period January 1, 2009 through March 15, 2009, we issued 4,200 shares of
common stock to twenty persons, all of whom are employees of the Company, upon
the exercise of a like number of common stock purchase options we assumed under
the Share Exchange Agreement.  The shares were issued in transactions
not involving a public offering and exempt from registration pursuant to Section
4(2) of the Securities Act of 1933.





Item
6. Selected Financial Data.





The
information to be furnished under this Item 6 is not required of small reporting
issuers.





Item
7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations.





You
should read the following discussion and analysis of financial condition and
results of operations, together with our consolidated financial statements and
related notes thereto appearing elsewhere in this report.  In addition
to historical financial information, the following discussion contains
forward-looking statements that reflect our plans, estimates, and
beliefs.  Our actual results could differ materially from those
discussed in the forward-looking statements.  Factors that could cause
or contribute to these differences include those discussed below and elsewhere
in this report, particularly in the section entitled “Risk
Factors.”




General





We market
and install a wide variety of attractive, durable, low-maintenance vinyl
products, including fencing, patio covers, decking, railing and trim
categories.  During 2007, fencing products represented approximately
62% of our gross income (revenue) and patio covers represented approximately 28%
of our gross income.  Our products are used largely in renovation and
remodeling by our customers who include homeowners and homeowner
associations.  We have increased sales and revenue in each of our five
years of existence, and our gross profit have exceeded 44% in each year of
existence after our first year of operations.





We
differentiate our Company from others in the industry on the basis of the manner
in which we market and sell our products and the level of service we offer our
customers.  Given that the purchase of our products represents a
substantial investment in a customer's home, typically their most significant
capital asset, we seek to connect with home owners' intrinsic desire to take the
time to make an informed, value-driven purchasing
decision.  Throughout the sales process, we invest the time and effort
to develop a relationship with a prospect, as opposed to home centers,
specialized retail distributors and independent contractors that typically
employ a hard-sell pitch and seek to make a sale only when a consumer is
prepared to make a purchase.





25





Our
marketing efforts are designed to capture information about prospective
purchasers of exterior vinyl products early in the buying cycle.  We
maintain contact with them over the course of the decision-making process to
educate and consult with them about vinyl products generally, the purchasing and
installation process and the ownership experience.  We seek to
demonstrate to prospects that purchasing from us represents the best value for
their money in that we provide a worry-free ownership experience that we believe
is not available from other independent retailers, contractors or the national
home improvement chains.





There are
no national chains dedicated exclusively to the retail sale and installation of
vinyl fencing and patio products.  During 2009, we will seek to
establish a franchise program to take advantage of the considerable growth
expected by industry experts in sales of vinyl fencing and patio covers relative
to other fencing and patio cover materials.  Through this franchise
program we will seek to establish a national chain of vinyl fence and patio
cover distributorships to fill the void in the national vinyl fencing
market.  Our ultimate goal is to build a national
brand.  Though we have never undertaken detailed research regarding
our franchising potential, we believe that with proper training and motivation
our well-conceived and sophisticated marketing and sales program can be
replicated throughout the country.  We believe that we can benefit
from the economies of scale derived from multiple franchises that will give us
the opportunity to deploy national advertising and promotional programs that are
beyond the financial and creative capabilities of others in our industry and
negotiate improved pricing of the vinyl material from which our products are
manufactured.  We believe that this will allow us to capture
significant national market share and build strong consumer brand awareness,
which eventually may serve as a barrier to competitive entry to others on a
national level.





As of the
date hereof, we believe that we will possess sufficient financial resources,
from cash on hand and revenue from operations, to fund the development of our
franchise program.  However, no member of our management has
experience building a franchise program.  We may not have evaluated or
gauged our cash requirements adequately or properly accounted for factors beyond
our control which could increase the cost of developing and maintaining our
franchise program and cause us to seek outside financing which may not be
available to us on acceptable terms, if at all.  In addition,
expansion into a franchise program presents other possible risks for which we
may not adequately have accounted, including diversion of our management's time
from our core retail business, the failure of our franchisees and the potential
economic impact such failure could have on our business and the time and cost of
complying with laws and regulations relating to franchises and multi-state
operations.





Critical
Accounting Policies and Estimates




Our
financial statements are prepared in accordance with accounting principles
generally accepted in the United States, which require us 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 periods.  Management makes these estimates using the best
information available at the time the estimates are made; however actual results
could differ materially from those estimates (See Note A in the Notes to
Financial Statements).




Revenue
recognition





We record
customer deposits on sales as a current liability when received and we recognize
revenues when installations of the products are complete.





26





Accounts
Receivable





We
require a down payment of 50% of the purchase price at the time a sales
agreement is signed and the balance at completion of installation, which
minimizes our accounts receivable.  Bad debt losses have been minimal
(less than .3% of revenue since inception of the Company), and we record them as
they are incurred.





Inventory





Inventory
is stated at the lower of average cost or market value.  Inventory
consists of raw materials (approximately 80%) and fabricated materials awaiting
installation (approximately 20%).





Results
of Operations





Comparison
of the Years Ended December 31, 2008 and 2007





Income: Income for
the year ended December 31, 2008 was $4,157,860, an increase of $224,648, or
5.75%, from $3,933,212 for the comparable period in 2007. The increase was
the  result  of increased focus on marketing and
sales.





Gross
Profit:  Gross profit decreased from $2,070,324 in 2007 to
$2,032,606 in 2008, a decrease of 1.8%, and the gross profit percentage declined
from 52.6% in 2007 to 48.9% in 2008.  The decrease was due to
personnel problems in our fabricating and installation
departments.  We have addressed these issues by terminating three
employees. re-defining the roles of our staff responsible for fabrication and
installation, by restructuring our work force, and increasing the involvement of
the accounting manager in inventory control, which we believe have rectified the
problem.





Expenses:





Advertising
and marketing expense increased $10,648 or 5.7%, as we identified the proper mix
of advertising media to attract customers and grow our business.





Selling,
general and administrative expenses increased from $394,768 in 2007 to $489,313,
or 23.9%, in 2008.  The $94,545 was due primarily to increases of
$20,000 in fuel expense, $16,000 in depreciation, $27,000 in insurance (health,
liability and  umbrella coverage), and $23,000 in interest (including
credit card fees and financing discounts relating to customers who pay by credit
cards or finance their purchase).





Payroll
expenses increased from $646,918 to $984,605, an increase of $337,687 or
52.2%.  The was due to the conversion of $152,000 of notes receivable
from the two principals to salary, and the classification of distributions in
October, November and December 2008 to the two principals as salary rather than
as dividends.





Professional
fees increased from $109,538 to $159,668, or 45.8%.  This was due
primarily to increases in information  technology of $18,000,
marketing of $13,000, and legal and accounting relating to the Share Exchange
Agreement and annual audit of $10,000.





Rent
expense was relatively unchanged between periods.





Income
Taxes were $50,000 in 2008, resulting from TVFC's election to be treated as a
Subchapter C corporation under the Internal Revenue Code of 1986, as amended
(the "Code") as opposed to a Subchapter S corporation under the Code, as of
January 1, 2008.





27





Comparison of the Years
Ended December 31, 2007 and 2006





Income: Income for
the year ended December 31, 2007 was $3,933,212, an increase of $1,207,586, or
44.3%, from $2,725,626 for the comparable period in 2006. The increase was the
result of increased focus on marketing and sales, including increased
advertising and marketing expenses.





Gross
Profit:  Gross profit increased from $1,382,483 in 2006 to
$2,070,324 in 200, an increase of 49.8%, and the gross profit percentage
increased from 50.7% in 2007 to 52.6% in 2007.  These increases were
due to improved management of labor and material costs.





Expenses:





Advertising
and marketing expense increased $31,100 or 20.1%, which contributed to the
increase in income.





Selling,
general and administrative expenses increased from $242,157 in 2006 to $362,321,
or 49.6%, in 2007.  The $120,164 increase, was due primarily to
increases of approximately $16,000 in vehicle expense, $18,000 in insurance
(health, liability and  umbrella coverage), $40,000 in small tools,
and $40,000 in travel and entertainment expenses.





Payroll
expenses increased from $468,215 to $646,918, an increase of $178,703 or
38.2%.  This was due primarily to the addition of staff personnel to
handle the increased volume of business.





Professional
fees increased from $79,278 to $110,267, or 39.1%.  The $30,989
increase was due primarily to an increase of approximately $43,000 for
marketing, offset by a decrease in financial consulting of approximately
$9,000.





Rent
expense was relatively unchanged between periods.





Interest
expense increased from $12,436 to $21,988, or 76.8%, due to interest related to
line of credit borrowing. and  increased use of financing by
customers.





Liquidity
and Capital Resources





Our
current capital requirements are allocated principally among payroll; selling,
general and administrative expenses; rent; and advertising and marketing
expenses.  Historically, we have financed our business with cash flow
from operations.





Though we
believe that we have and will have available to us from operating revenue the
capital resources necessary to implement our proposed franchise program, we may
have underestimated the costs required or we may encounter unanticipated costs
and we may suffer delays and difficulties that may necessitate obtaining cash
from outside sources.  Currently, we have a $100,000 line of credit
available to us (of which $48,000 is unused and available) that likely would be
insufficient to fund substantial additional costs that may be associated with
the development of our franchise program.  Additional cash may not be
available to us on acceptable terms, if at all.  Initially, a
significant portion of the cash required to develop and execute our franchise
program will be allocated to the engagement of a franchise consultant to
undertake the research and surveys necessary to confirm our franchising
potential, to establish franchise pricing and territory and to provide the
complete range of information, implementation strategies, policies, procedures,
operating manuals, marketing tools and other materials required to develop and
implement a competitive franchise program.  Once a program has been
developed, we expect that we will allocate significant cash resources to
advertising, both to attract franchisees and to fund advertising of our
products.  We may not realize profit from this investment for several
years.





28





Cash
and Cash Equivalents




Our cash
and cash equivalents were $134,252 at December 31, 2007, and decreased to
$114,902 by December 31, 2008.





Net
cash provided by operating activities





Net cash
provided by operating activities was $281,915 for the year ended December 31,
2008, a decrease of $347,301 from $629,216 for the year ended December 31,
2007.  The decrease was primarily attributable to a decrease in net
income of $580,035, offset by the conversion of $152,000 of notes receivable
from the two principals to salary, and other working capital items,
net.





Net
cash used in investing activities





Net cash
used in investing activities was $42,309 for the year ended December 31, 2008, a
decrease of $78,060 from $120,369 for the year ended December 31, 2007. The
decrease was primarily attributable to the purchase of four vans and machinery
in 2007.




Net
cash used in financing activities





Net cash
used in financing activities was $258,957 for the year ended December 31, 2008
compared to $401,091 for the year ended December 31, 2007, a decrease of
$142,134, or 35%.  The decrease was attributable to a decrease in
dividends of $77,000 paid to the principals of TVFC; a contribution to capital
by two of the founding stockholders of TVFC of $29,900, the sale of common stock
of $59,000, all offset by a net change in vehicle and  equipment
financing proceeds less principal payments of $44,628





Contractual
Obligations and Off-Balance Sheet Arrangements.





We have
certain fixed contractual obligations and commitments.  The table
below summarizes our contractual obligations as of December 31, 2008 and for the
future periods identified.  The development of our franchise program,
changes in our business needs and other factors may result in our incurring
significant future obligations which would impact our cash and liquidity
position and requirements.  We cannot provide certainty regarding the
timing and amounts of payments.





Payments Due By PeriodContractual
                    Cash Obligations
                  
                  Total
                  
                  
                  Less than
                    One Year
                  
                  
                  1-3
                    Years
                  
                  
                  3-5
                    Years
                  
                  
                  After 5
                    YearsCapital
      Leases (1)
                  
                  $
                  53,295
                  
                  
                  $
                  18,647
                  
                  
                  $
                  34,648
                  
                  
                  $
                  -0-
                  
                  
                  $
                  -0-Operating
      Leases (2)
                  
                  $
                  237,762
                  
                  
                  $
                  104,280
                  
                  
                  $
                  133,482
                  
                  
                  $
                  -0-
                  
                  
                  $
                  -0-Total
      Contractual Cash Obligations
                  
                  $
                  291,057
                  
                  
                  $
                  122,927
                  
                  
                  $
                  168,130
                  
                  
                  $
                  -0-
                  
                  
                  $
                  -0-




(1)
            Capital
      Leases – Represents amounts due under purchase contracts for vehicles and
      equipment with interest rates varying from 4.9% to
  6.9%.


(2)
            Operating
      Leases - TVFC leases its 10,000 square foot facility under a
      non-cancelable lease arrangement that expires in March
      2011.  The lease is guaranteed by one of the TVFC’s
      stockholders.


(3)
            TVFC
      has available to it a $100,000 line of credit.  Borrowings under
      the line of credit totaled $52,000 as of March 27, 2009.  The
      interest rate is prime plus 3 percentage
points.





29





We are
not party to any off-balance sheet arrangements.





Quantitative
and Qualitative Disclosures About Market Risk





We do not
use derivative financial instruments in our investment portfolio and have no
foreign exchange contracts.  Our financial instruments consist of cash
and cash equivalents, trade accounts receivable and accounts
payable.





Recent Accounting
Pronouncements





In
February 2007, the FASB issued Statement of Financial Standards No. 159, “The
Fair Value for Financial Assets and Financial Liabilities – including an
amendment of FASB Statement No. 115”.  This statement permits entities
to choose to measure many financial instruments and certain other
items


at fair
value.





The
objective is to improve financial reporting by providing entities with the
opportunity to mitigate volatility in reported earnings caused by measuring
related assets and liabilities differently without having to apply complex hedge
accounting provisions.  This Statement is expected to expand the use
of fair value measurement, which is consistent with the Board’s long-term
measurement objectives for accounting for financial instruments, and is
effective as of the beginning of an entity’s first fiscal year that begins after
November 15, 2007.  Early adoption is permitted as of the beginning of
a fiscal year that begins on or before November 17, 2007, provided the entity
also elects to apply the provisions of FASB Statement No. 157, “Fair Value
Measurements”.  No entity is permitted to apply the Statement
retrospectively to fiscal years preceding the effective date unless the entity
chooses early adoption.  Early adoption of the standard is not
expected to have a material effect on the Company’s results of operations or its
financial position.





In
December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business
Combinations (“SFAS 141R”).  SFAS 141R will significantly change the
accounting for business combinations in a number of areas, including the
treatment of contingent considerations, contingencies, acquisition costs,
IPR&D and restructuring costs.    In additions, under
SFAS 141R, changes in deferred tax asset valuation allowances and acquired
income tax uncertainties in a business combination after the measurement period
will impact income tax expense.  SFAS 141R is effective for fiscal
years beginning after December 15, 2008.  The Company has not yet
determined the impact, if any, of SFAS 141R on its financial
statements.





In
December 2007, the FASB issued SFAS No. 160, “Non Controlling Interests in
Financial Statements, an amendment of ARB No. 51”.  SFAS 160 will
change the accounting and reporting of minority interests, which will be
re-characterized as non-controlling interests (NCI) and classified as a
component of equity.  This new consolidation method will significantly
change the account with minority interest holders.  SFAS 160 is
effective for fiscal years beginning after December 15, 2008.  The
Company has not yet determined the impact, if any, of SFAS 160 on its financial
statements.





Item
7A. Quantitative and Qualitative Disclosures About Market Risk.





The
information to be furnished under this Item 7A is not required of small
reporting issuers.





Item
8. Financial Statements and Supplementary Data.





30


Independent
      Auditor’s Report
                F-1Balance
      Sheet for the years ended December 31, 2008 and 2007
                F-2Statement
      of Operations for the years ended December 31, 2008 and
    2007
                F-3Statement
      of Stockholders’ Deficit for the years ended December 31,
    2008
                F-4Statement
      of Cash Flows for the years ended December 31, 2008 and
    2007
                F-5Notes
      to Financial Statements
                F-6-
      F-13
  
  REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  To the
Board of Directors and
 Stockholders
of Vinyl Products, Inc. (f/k/a Red Oak Concepts, Inc.):
  We have
audited the accompanying consolidated balance sheets of Vinyl Products, Inc.
(f/k/a Red Oak Concepts, Inc.) as of December 31, 2008 and 2007, and the related
statements of operations, shareholders’ equity, income, and cash flows for each
of the years in the two-year period ended December 31, 2008. Vinyl Products,
Inc.’s management is responsible for these financial statements. My
responsibility is to express an opinion on these financial statements based on
my 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 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 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 Vinyl Products, Inc. (f/k/a Red Oak
Concepts, Inc.) as of December 31, 2008 and 2007, and the results of its
operations and its cash flows for each of the years in the two-year period ended
December 31, 2008 in conformity with accounting principles generally accepted in
the United States of America.
  Traci
      J. Anderson, CPAHuntersville,
      NCFebruary
      27, 2009
  F-1
  VINYL
PRODUCTS, INC. (f/k/a RED OAK CONCEPTS, INC.)
 CONSOLIDATED
BALANCE SHEETS
 December
31, 2008 and 2007
 
 2008
                  
                  
                  2007ASSETSCURRENT
      ASSETS:Cash
      and Cash Equivalents
                  
                  $
                  114,901
                  
                  
                  $
                  134,251Accounts
      Receivable
                  
                  
                  57,575
                  
                  
                  
                  68,947Receivable
      from Shareholders
                  
                  
                  -
                  
                  
                  
                  152,000Stock
      Receivable
                  
                  
                  5,000
                  
                  
                  
                  -Inventory
                  
                  
                  156,865
                  
                  
                  
                  136,671Prepaid
      Expenses
                  
                  
                  47,451
                  
                  
                  
                  31,843Total
      Current Assets
                  
                  
                  381,792
                  
                  
                  
                  523,712PROPERTY
      AND EQUIPMENT:Property
      and Equipment
                  
                  
                  429,255
                  
                  
                  
                  386,946Less
      Accumulated Depreciation
                  
                  
                  148,084
                  
                  
                  
                  99,539Net
      Property and Equipment
                  
                  
                  281,171
                  
                  
                  
                  287,407OTHER
      ASSETS:Security
      Deposits
                  
                  
                  8,690
                  
                  
                  
                  8,690Total
      Other Assets
                  
                  
                  8,690
                  
                  
                  
                  8,690TOTAL
      ASSETS
                  
                  $
                  671,653
                  
                  
                  $
                  819,809LIABILITIES
      AND SHAREHOLDERS' EQUITYCURRENT
      LIABILITIES:Current
      Portion of Long-Term Liabilities
                  
                  $
                  18,646
                  
                  
                  $
                  23,716Note
      Payable to Shareholder
                  
                  
                  -
                  
                  
                  
                  29,900Accounts
      Payable and Accruals
                  
                  
                  255,401
                  
                  
                  
                  139,212Customer
      Deposits
                  
                  
                  161,658
                  
                  
                  
                  182,570Income
      Taxes Payable
                  
                  
                  -
                  
                  
                  
                  9,732Total
      Current Liabilities
                  
                  
                  435,705
                  
                  
                  
                  385,130LONG-TERM
      LIABILITIES:Vehicle
      and Installment Purchase Contracts
                  
                  
                  48,824
                  
                  
                  
                  68,780Less
      Current Portion Shown Above
                  
                  
                  18,646
                  
                  
                  
                  23,716Net
      Long-Term Liabilities
                  
                  
                  30,178
                  
                  
                  
                  45,064Total
      Liabilities
                  
                  
                  465,883
                  
                  
                  
                  430,194SHAREHOLDERS'
      EQUITY:Preferred
      Stock ($.0.0001 par value; 10,000,000 shares authorized; no shares issued
      and outstanding at December 31, 2008)
                  
                  
                  -
                  
                  
                  
                  -Common
      Stock ($0.0001 par value; 100,000,000 shares authorized; 22,859,000 shares
      issued and outstanding at December 31, 2008)
                  
                  
                  2,286
                  
                  
                  
                  2,280Paid
      in Capital
                  
                  
                  90,814
                  
                  
                  
                  (180
                  )Retained
      Earnings
                  
                  
                  112,670
                  
                  
                  
                  387,515Total
      Shareholders' Equity
                  
                  
                  205,770
                  
                  
                  
                  389,615TOTAL
      LIABILITIES AND SHAREHOLDERS' EQUITY
                  
                  $
                  671,653
                  
                  
                  $
                  819,809
 
 The
accompanying notes are an integral part of these financial
statements.
  F-2
 
 VINYL
PRODUCTS, INC. (f/k/a RED OAK CONCEPTS, INC.)
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 For
the Years Ended December 31, 2008 and 2007
 
 2008
                          
                          
                          2007Income
                          
                          $
                          4,157,860
                          
                          
                          $
                          3,933,212Cost
      of Goods Sold:Labor
                          
                          
                          806,356
                          
                          
                          
                          687,116Materials
                          
                          
                          1,278,524
                          
                          
                          
                          1,137,187Other
                          
                          
                          40,374
                          
                          
                          
                          38,585Total
      Cost of Goods Sold
                          
                          
                          2,125,254
                          
                          
                          
                          1,862,888Gross
      Profit
                          
                          
                          2,032,606
                          
                          
                          
                          2,070,324Expenses:Advertising
      and Marketing
                          
                          
                          196,660
                          
                          
                          
                          186,012Selling,
      General, and Administrative
                          
                          
                          401,775
                          
                          
                          
                          362,321Payroll
      Expense
                          
                          
                          984,605
                          
                          
                          
                          646,918Professional
      Fees
                          
                          
                          199,933
                          
                          
                          
                          110,267Rent
      Expense
                          
                          
                          103,790
                          
                          
                          
                          100,870Total
      Expenses
                          
                          
                          1,886,763
                          
                          
                          
                          1,406,388Net
      Operating Income
                          
                          
                          145,843
                          
                          
                          
                          663,936Other
      Income (Expense):Interest
      Income
                          
                          
                          6,585
                          
                          
                          
                          2,972Interest
      Expense
                          
                          
                          (47,273
                          )
                          
                          
                          (21,987
                          )Net
      Other Income (Expense)
                          
                          
                          (40,688
                          )
                          
                          
                          (19,015
                          )Income
      Before Income Taxes
                          
                          
                          105,155
                          
                          
                          
                          644,921Income
      Taxes
                          
                          
                          (50,000
                          )
                          
                          
                          (9,732
                          )Net
      Income
                          
                          $
                          55,155
                          
                          
                          $
                          635,189Basic
      and fully diluted earnings per share
                          
                          $
                          0.00
                          
                          
                          $
                          0.03Weighted
      average shares outstanding — basic
                          
                          
                          22,805,981
                          
                          
                          
                          22,800,000Weighted
      average shares outstanding — diluted
                          
                          
                          22,842,105
                          
                          
                          
                          22,800,000
 
 The
accompanying notes are an integral part of these financial
statements.
  F-3
 
 VINYL PRODUCTS, INC. (f/k/a RED OAK CONCEPTS,
INC.)
 CONSOLIDATED
STATEMENT OF SHAREHOLDERS' EQUITY
 For the Years Ended December 31, 2008 and 2007
 
 Preferred Stock
                            
                            Common Stock
                            
                            
                            Paid-in
                            
                            
                            RetainedShares
                            
                            
                            Stock
                            
                            
                            Shares
                            
                            
                            Stock
                            
                            
                            Capital
                            
                            
                            EarningsBalances,
      December 31, 2006
                            
                            
                            -
                            
                            
                            $
                            -
                            
                            
                            
                            2,000
                            
                            
                            $
                            2,000
                            
                            
                            $
                            -
                            
                            
                            $
                            159,326Shareholder
      Distributions
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (407,000
                            )Reverse
      Merger
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            22,798,000
                            
                            
                            
                            280
                            
                            
                            
                            (180
                            )
                            
                            
                            -Net
      Income for the year
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            635,189Balances,
      December 31, 2007
                            
                            
                            -
                            
                            
                            $
                            -
                            
                            
                            
                            22,800,000
                            
                            
                            $
                            2,280
                            
                            
                            $
                            (180
                            )
                            
                            $
                            387,515Issuance
      of Common Stock
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            59,000
                            
                            
                            
                            6
                            
                            
                            
                            61,094
                            
                            
                            
                            -Contribution
      of Capital
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            29,900
                            
                            
                            
                            -Shareholder
      Distributions
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (330,000
                            )Net
      Income for the year
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            55,155Balances,
      December 31, 2008
                            
                            
                            -
                            
                            
                            $
                            -
                            
                            
                            
                            22,859,000
                            
                            
                            $
                            2,286
                            
                            
                            $
                            90,814
                            
                            
                            $
                            112,670
 
 The
accompanying notes are an integral part of these financial
statements.
  F-4
  VINYL
PRODUCTS, INC. (f/k/a RED OAK CONCEPTS, INC.)
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 For
the Years Ended December 31, 2008 and 2007
 
 2008
                    
                    
                    2007CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      Income
                    
                    $
                    55,155
                    
                    
                    $
                    635,189Adjustments
      to Reconcile Net Income to Cash Provided by Operating
      Activities:Depreciation
                    
                    
                    48,545
                    
                    
                    
                    36,101Changes
      in Assets and Liabilities:Decrease
      (Increase) in Accounts Receivable
                    
                    
                    11,372
                    
                    
                    
                    (29,391
                    )Decrease
      (Increase) in Inventory
                    
                    
                    (20,194
                    )
                    
                    
                    (42,605
                    )Decrease
      (Increase) in Prepaid Expenses
                    
                    
                    (15,608
                    )
                    
                    
                    (27,715
                    )Increase
      (Decrease) in Accounts Payable & Accrued Expenses
                    
                    
                    136,509
                    
                    
                    
                    16,230Increase
      (Decrease) in Customer Deposits
                    
                    
                    (20,912
                    )
                    
                    
                    (20,569
                    )Increase
      (Decrease) in Credit Card Balances
                    
                    
                    (20,320
                    )
                    
                    
                    22,343Increase
      (Decrease) in Income Taxes Payable
                    
                    
                    (9,732
                    )
                    
                    
                    9,732Net
      Cash Provided by (Used in) Operating Activities
                    
                    
                    164,815
                    
                    
                    
                    599,315CASH
      FLOWS FROM INVESTING ACTIVITIESVehicle
      Purchases
                    
                    
                    -
                    
                    
                    
                    (53,064
                    )Leasehold
      Improvements
                    
                    
                    (36,494
                    )
                    
                    
                    (13,552
                    )Machinery
      and Equipment Purchases
                    
                    
                    3,813
                    
                    
                    
                    (45,721
                    )Office
      and Computer Equipment Purchases
                    
                    
                    (9,628
                    )
                    
                    
                    (8,032
                    )Decrease
      in Receivable from Shareholders
                    
                    
                    152,000
                    
                    
                    
                    -Net
      Cash Provided by (Used in) Investing Activities
                    
                    
                    109,691
                    
                    
                    
                    (120,369
                    )CASH
      FLOWS FROM FINANCING ACTIVITIESIssuance
      of Common Stock
                    
                    
                    61,100
                    
                    
                    
                    100Contribution
      of Capital
                    
                    
                    29,900
                    
                    
                    
                    -Line
      of Credit Payments
                    
                    
                    -
                    
                    
                    
                    (17,945
                    )Vehicle
      Loan Proceeds, Net of Principal Payments
                    
                    
                    (15,168
                    )
                    
                    
                    29,460Issuance
      of Stock Receivable
                    
                    
                    (5,000
                    )
                    
                    
                    -Note
      Payable Principal Payments
                    
                    
                    (4,789
                    )
                    
                    
                    (5,706
                    )Increase
      (Decrease) in Note Payable to Shareholder
                    
                    
                    (29,900
                    )
                    
                    
                    29,900Dividends
      Paid
                    
                    
                    (330,000
                    )
                    
                    
                    (407,000
                    )Net
      Cash Provided by (Used in) Financing Activities
                    
                    
                    (293,857
                    )
                    
                    
                    (371,191
                    )NET
      CASH INCREASE FOR THE PERIOD
                    
                    
                    (19,351
                    )
                    
                    
                    107,755CASH
      AT THE BEGINNING OF THE YEAR
                    
                    
                    134,252
                    
                    
                    
                    26,496CASH
      AT END OF THE YEAR
                    
                    $
                    114,901
                    
                    
                    $
                    134,251SUPPLEMENTAL
      DISCLOSURES OF CASH FLOW INFORMATION:CASH
      PAID DURING THE PERIOD FOR:INTEREST
                    
                    $
                    44,881
                    
                    
                    $
                    21,988TAXES
                    
                    $
                    68,532
                    
                    
                    $
                    -
  The
accompanying notes are an integral part of these financial
statements.
  F-5
 
 VINYL
PRODUCTS, INC.
 Notes
to Consolidated Financial Statements
 For
the Year Ended December 31, 2008
 
 NOTE A – SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
 
 Organization–Vinyl Products, Inc. (“the
Company”) was incorporated in the State of Delaware on May 24, 2007 under the
name Red Oak Concepts, Inc. to serve as a vehicle for a business combination
through a merger, capital stock exchange, asset acquisition or other similar
business combination.  The Company filed a registration statement on
Form 10 under the Securities Exchange Act of 1934, as amended, to register its
class of common stock on September 15, 2007 that was effective as of November
14, 2007.  On December 4, 2007, the Company changed its jurisdiction
of domicile by merging with a Nevada corporation titled Red Oak Concepts,
Inc.
 
 On
November 21, 2008, the Company changed its name to Vinyl Products, Inc. in
connection with a reverse acquisition transaction with The Vinyl Fence Company,
Inc. (“TVFC”), a California corporation.
 
 On November 20, 2008, the Company entered into a
Share Exchange Agreement (the “Exchange Agreement”) with The Vinyl Fence
Company, Inc. (“TVFC”), a company incorporated under the laws of the State of
California.  Pursuant to the terms of the Exchange Agreement, the
Company acquired all of the outstanding capital stock of TVFC from the TVFC
shareholders in exchange for 22,100,000 shares of the Company’s common
stock.  Because the acquisition is treated as a reverse acquisition,
the financial statements of the Company have been retroactively adjusted to
reflect the acquisition from the beginning of the reported periods. The stock
exchange transaction has been accounted as a reverse acquisition and
recapitalization of the Company whereby TVFC is deemed to be the accounting
acquirer (legal acquiree) and the Company to be the accounting acquiree (legal
acquirer).  The basis of the assets, liabilities and retained earnings
of TVFC has been carried over in the recapitalization, and earnings per share
have been retroactively restated to reflect the reverse
acquisition.
 
 Pursuant
to the Exchange Agreement, on November 21, 2008, the Company filed a Certificate
of Amendment to its Articles of Incorporation with the Secretary of State for
the State of Nevada to change its corporate name to “Vinyl Products, Inc.” to
better reflect its business.
 
 Business
Activity—The
Vinyl Fence Company, Inc. designs, fabricates and installs fencing, patio
covers, gates and railing made of co-extruded vinyl from its location in Santa
Ana, California.  The Company operates in one reportable segment, the
domestic vinyl products industry.
 
 Cash
and Cash Equivalents —The Company considers all highly liquid
investments with original maturities of three months or less to be cash
equivalents.  The Company routinely has deposits at a financial
institution that exceed federal depository insurance
coverage.  Management believes that maintaining the deposits at a
large reputable institution mitigates risks associated with these excess
deposits.
  F-6
 
 NOTE A – SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
 
 Management’s 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, the disclosure of contingent 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 these
estimates.
 
 Revenue Recognition —
Customer deposits are recorded as a current liability when
received.  Under California law, the customer has three days in which
to cancel the contract.  Revenues are recognized when the
installations of the products are complete.
 The
related cost of goods sold includes materials, installation labor, and
miscellaneous other costs.
 
 Comprehensive
Income–The
Company adopted Financial Accounting Standards Board Statement of Financial
Accounting Standards (SFAS) No. 130, “Reporting Comprehensive Income”, which
establishes standards for the reporting and display of comprehensive income and
its components in the financial statements.  There were no items of
comprehensive income applicable to the Company during the periods covered in the
financial statements.
 
 Advertising and Marketing
Expense—The
Company expenses all advertising and marketing costs as
incurred.  Advertising and marketing expense was $196,660 in the year
ended December 31, 2008, and $186,012 in the year ended December 31,
2007.
 
 Income Taxes—Prior to 2008, the Company
had elected to be taxed as a Subchapter S corporation, and as such the net
income of the Company was passed through to the Company’s two
shareholders.  The Company is now a Subchapter C corporation and is
subject to Federal and State income taxes.  See Note E.
 
 Fair Value of Financial
Instruments—The
carrying value of cash and cash equivalents, accounts receivables, accounts
payable and accrued expenses approximate their fair value based on the
short-term nature of these accounts.  Long-term debt obligations bear
fixed interest rates, and their fair value was estimated using a discounted cash
flow analysis based on the Company’s current incremental borrowing rate for
similar types of borrowing arrangements.  The estimated fair value of
the Company’s long-term debt obligations approximates the fair value at December
31, 2008 and 2007.
 
 Accounts
Receivable—The
Company sells to individual homeowners and homeowner
associations.  Accounts receivable are minimized by requiring a 50%
down payment at the time a sales agreement is signed, and the balance at
completion of installation.  Bad debt
losses are recorded as incurred.  Bad debt expense was $13,049 in 2008
and $6,801 in 2007.  Accounts receivable were $57,575 at December 31,
2008.
  F-7
 
 NOTE A – SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
  Inventory—Inventory is stated at the
lower of average cost or market value.  Inventory consists of raw
materials (approximately 80%) and fabricated materials awaiting installation
(approximately 20%).
 
 Impairment of Long-Lived
Assets– Using
the guidance of Statement of Financial Accounting Standards (SFAS) No. 144,
“Accounting for the Impairment
or Disposal of Long-Lived Assets”, the Company reviews the carrying value
of property, plant, and equipment for impairment whenever events and
circumstances indicate that the carrying value of an asset may not be
recoverable from the estimated future cash flows expected to result from its use
and eventual disposition. In cases where undiscounted expected future cash flows
are less than the carrying value, an impairment loss is recognized equal to an
amount by which the carrying value exceeds the fair value of assets. The factors
considered by management in performing this assessment include current operating
results, trends and prospects, the manner in which the property is used, and the
effects of obsolescence, demand, competition, and other economic
factors.
 
 Property and
Equipment —Property and equipment are carried at cost, net of accumulated
depreciation.  Depreciation is computed using the straight-line method
over the following estimated useful lives:
 
 Vehicles
                  2 –
      7 yearsFurniture
      and Fixtures
                  7 –
      15 yearsMachinery
      and Equipment
                  5 –
      15 yearsOffice
      and Computer Equipment
                  3 –
      20 yearsSigns
                  7
      years
 
 Leasehold
improvements are classified as property and equipment and are amortized using
the straight-line method over 15 years and 39 years.  When assets are
retired or otherwise disposed of, the cost and related accumulated depreciation
are removed from the accounts and any resulting gain or loss is recognized in
operations for the period.  The cost of maintenance and repairs is
charged to operations as incurred.  Significant renewals and
betterments are capitalized.  Depreciation expense was $48,545 in 2008
and $36,101 in 2007.
  F-8
 
 NOTE A – SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
 
 Recent Accounting
Pronouncements – In February 2007, the FASB issued Statement of Financial
Standards No. 159, “The Fair Value for Financial Assets and Financial
Liabilities – including an amendment of FASB Statement No. 115”.  This
statement permits entities to choose to measure many financial instruments and
certain other items
 at fair
value.  The objective is to improve financial reporting by providing
entities with the opportunity to mitigate volatility in reported earnings caused
by measuring related assets and liabilities differently without having to apply
complex hedge accounting at fair value.  The objective is to improve
financial reporting by providing entities with the opportunity to mitigate
volatility in reported earnings caused by measuring related assets and
liabilities differently without having to apply complex hedge accounting
provisions.  This Statement is expected to expand the use of fair
value measurement, which is consistent with the Board’s long-term measurement
objectives for accounting for financial instruments, and is effective as of the
beginning of an entity’s first fiscal year that begins after November 15,
2007.  Early adoption is permitted as of the beginning of a fiscal
year that begins on or before November 17, 2007, provided the entity also elects
to apply the provisions of FASB Statement No. 157, “Fair Value
Measurements”.  No entity is permitted to apply the Statement
retrospectively to fiscal years preceding the effective date unless the entity
chooses early adoption.  Early adoption of the standard is not
expected to have a material effect on the Company’s results of operations or its
financial position.
 
 In
December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business
Combinations (“SFAS 141R”).  SFAS 141R will significantly change the
accounting for business combinations in a number of areas, including the
treatment of contingent considerations, contingencies, acquisition costs,
IPR&D and restructuring costs.    In additions, under
SFAS 141R, changes in deferred tax asset valuation allowances and acquired
income tax uncertainties in a business combination after the measurement period
will impact income tax expense.  SFAS 141R is effective for fiscal
years beginning after December 15, 2008.  The Company has not yet
determined the impact, if any, of SFAS 141R on its financial
statements.
 
 In
December 2007, the FASB issued SFAS No. 160, “Non Controlling Interests in
Financial Statements, an amendment of ARB No. 51”.  SFAS 160 will
change the accounting and reporting of minority interests, which will be
re-characterized as non-controlling interests (NCI) and classified as a
component of equity.  This new consolidation method will significantly
change the account with minority interest holders.  SFAS 160 is
effective for fiscal years beginning after December 15, 2008.  The
Company has not yet determined the impact, if any, of SFAS 160 on its financial
statements.
 
 NOTE B – SUPPLEMENTAL CASH
FLOW INFORMATION
 
 Supplemental
disclosures of cash flow information for the year ended December 31, 2008 are
summarized as follows:
 
 Cash paid
during the period for interest and income taxes:
 
 Interest
                    
                    $
                    44,881Income
      Taxes
                    
                    $
                    68,532
 
  F-9
 
 NOTE C –
COMMITMENTS/LEASES
 
 The
Company leases its 10,000 square foot facility under a non-cancellable lease
arrangement that expires on March 31, 2009.  The lease is guaranteed
by one of the Company’s shareholders.  The Company intends to renew
the lease for a two-year period at the current rental rate, with an option to
renew for an additional two-year period.  Future minimum payments
under the current operating lease and the planned operating lease are $104,280
in 2009, $104, 280 in 2010, and $26,070 in 2011.
 
 The
Company has an available $100,000 line of credit which it opened in January
2006.  Borrowings under the line of credit were paid off in
2007.  The interest rate is prime plus 3 percentage
points.  See Note K.
 
 NOTE D — LONG-TERM DEBT
OBLIGATIONS
 
 The
Company acquired four vehicles under installment sales contracts with interest
rates varying from 4.9% to 6.9%.  The Company also acquired equipment
under a capital lease agreement with interest at 4.9%.  Future
payments under these agreements are as follows:
 
 2009
                    
                    $
                    18,6472010
                    
                    $
                    18,6472011
                    
                    $
                    12,7392012
                    
                    $
                    3,261
 
 NOTE E – INCOME
TAXES
 
 Prior to
2008, the Company had elected to be taxed as a Subchapter S corporation, and as
such the net income of the Company was passed through to the Company’s two
shareholders.  The Company is now a Subchapter C corporation and is
subject to Federal and State income taxes.
 
 Income
tax expense for the year ended December 31, 2008 is as follows:
 
 Federal
                    
                    $
                    38,000California
                    
                    $
                    12,000
 
 NOTE F – NET INCOME PER
COMMON SHARE
 
 The
Company’s reconciliation of the numerators and denominators of the basic and
fully diluted income per share is as follows for the years ended December 31,
2007 and 2008:
  F-10
 
 For the Year Ended December 30,
      2007Income
                    
                    
                    Shares
                    
                    
                    Per-Share(Numerator)
                    
                    
                    (Denominator)
                    
                    
                    AmountNet
      Income
                    
                    $
                    635,189Basic
      EPSIncome
      available to Common shareholders
                    
                    $
                    635,189
                    
                    
                    
                    22,800,000
                    
                    
                    $
                    .03(A)Effect
      of Dilutive SecuritiesStock
      Options
                    
                    
                    
                    
                    
                    
                    -0-Diluted
      EPSIncome
      available to Common shareholders
                    
                    $
                    635,189
                    
                    
                    
                    22,800,000
                    
                    
                    $
                    .03
 
 For the Year Ended December 31,
      2008Income
                    
                    
                    Shares
                    
                    
                    Per-Share(Numerator)
                    
                    
                    (Denominator)
                    
                    
                    AmountNet
      Income
                    
                    $
                    55,155Basic
      EPSIncome
      available to Common shareholders
                    
                    $
                    55,155
                    
                    
                    
                    22,805,981
                    
                    
                    $
                    .00(A)Effect
      of Dilutive SecuritiesStock
      Options
                    
                    
                    
                    
                    
                    
                    36,128Diluted
      EPSIncome
      available to Common shareholders
                    
                    $
                    55,155
                    
                    
                    
                    22,842,109
                    
                    
                    $
                    .00
 
 (A)
              See
      Note A.
 
 NOTE G – EMPLOYEE STOCK
OPTION PLAN
 
 On
September 24, 2008, the Company granted stock options to employees to purchase
133,800 shares of common stock at $.50 a share.  Three employees
subsequently left the Company and their options for 600 shares were
terminated.  The options expire on September 23, 2009.  As
of February 28, 2009, options to purchase 4,200 shares had been
exercised.
 
 NOTE H – THEFT
LOSS
 
 In
connection with the preparation of unaudited financial statements for the
quarter ended September 30, 2008, management of TVFC became aware of accounting
irregularities that resulted in being unable account for approximately $200,000
of inventory that TVFC had purchased that was not the subject of corresponding
sales orders.  During the course of TVFC's preliminary investigation
of the matter, management discovered that certain employees were committing
fraud against the company by stealing inventory and reselling it pursuant to
fraudulent sales orders that were never submitted to the
company.  These employees were retaining the sale price of the
inventory and, in some cases, using company employees to fabricate and install
the products on company time using company vehicles.
  F-11
 
 NOTE H – THEFT LOSS
(CONTINUED)
 
 During
the last quarter of 2008, management believed that it had identified most if not
all of the perpetrators of the fraud, and some of the instances in which
inventory was stolen and the jobs to which the inventory was allocated. The
fraud extended not only to the loss of the inventory and man hours for the labor
associated with the jobs at which the inventory was applied, but also some
degree of lost income that TVFC might have recognized if it had completed the
jobs.  However, since the sales prices for these fraudulent jobs were
substantially below TVFC’s normal sales prices, management believes that it
would not have been able to obtain many of these fraudulent sales as company
sales.
 
 Management
has taken what it believes to be appropriate action to address the material
weaknesses in internal control over financial reporting, including terminating
three employees, making other personnel changes, and implementing improved
physical and documentary controls and procedures.  However, management
does not expect that its disclosure controls and procedures or internal control
over financial reporting will prevent all errors or all instances of fraud in
the future.  A control system, no matter how well designed and
operated, can provide only reasonable, not absolute, assurance that the control
system’s objectives will be 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.  Inherent limitations in all control systems include the
realities that judgments in decision-making can be faulty, and that breakdowns
can occur because of simple errors or mistakes.  Controls can also be
circumvented by the individual acts of some persons, by collusion of two or more
people, or by management override of the controls.  The design of any
system of controls is based in part upon certain assumptions about the
likelihood of future events, and any design may not succeed in achieving its
stated goals under all potential future conditions.
 
 On
December 5, 2008, one of the terminated employees referred to above filed a
complaint in Superior Court against the company and its
principals.  The complaint alleges (i) unlawful non-payment of wages,
(ii) breach of implied covenant of good faith and fair dealing, (iii) failure to
pay earned wages upon separation, (iv) defamation, and (v) wrongful
discharge.  The employee is seeking compensatory damages, attorneys'
fees, punitive damages and equitable relief but has made no specific monetary
demand for damages.  On January 5, 2009, company counsel filed a
demurrer requesting that the court dismiss most of the claims because they are
deficient as a matter of law.
 
 Management
believes that the ultimate resolution of this matter will not have a material
adverse effect on the financial statements.
 
 NOTE I –
EQUITY
 
 Common
Shares
 
 The
Company is authorized to issue 100,000,000 shares of $.0001 par value common
stock, and as of December 31, 2008, the Company had 22,859,000 shares
outstanding.  During 2008 and 2007, the Company issued the following
shares of common stock:
 
 During
2008, the Company issued 59,000 shares for cash in the amount of $59,000 ($1.00
per share).
 
 During
2007, the Company issued 22,700,000 as a result of the reverse merger (see Note
A).
  F-12
 
 NOTE I – EQUITY
(CONTINUED)
 
 Preferred
Shares
 
 The
Company is authorized to issue 10,000,000 shares of $.0001 par value preferred
stock.  As of December 31, 2008, the Company had no preferred shares
outstanding.  During 2008 and 2007, the Company did not issue any
shares of preferred stock.
 
 NOTE J – STOCK
RECEIVABLE
 
 The
Company had $5,000 in Stock Receivable which represents stock that was purchased
in 2008 and paid for in February 2009.
 
 NOTE K – SUBSEQUENT
EVENTS
 
 In 2009,
the Company drew down $52,000 under its line of credit (see Note
C).
  F-13





Item
9. Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure.





There are
not and have not been any disagreements between the Company and our independent
accountants on any matter of accounting principles, practices or financial
statement disclosure.





Item
9A. Controls and Procedures.





Evaluation
of Disclosure Controls and Procedures





We are
required to maintain disclosure controls and procedures that are designed to
ensure that information required to be disclosed in our reports under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the SEC’s rules and forms, and that such information is
accumulated and communicated to management, including our President, who also is
our Principal Executive Officer (PEO), and Chief Financial Officer (CFO) as
appropriate, to allow timely decisions regarding required
disclosure.




In
connection with the preparation of this annual report on Form 10-K for the
year ended December 31, 2008, management, under the supervision of the PEO
and CFO, conducted an evaluation of the Company's disclosure controls and
procedures.  A control system, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the
objectives of the control systems are met.  In the course of
conducting the evaluation of our disclosure controls and procedures, we accorded
special attention to operational irregularities that caused our financial
results to fall short of management's expectations during the quarter ended
September 30, 2008.  Based on that evaluation, the PEO and CFO
concluded that the Company’s disclosure controls and procedures were not
effective at a reasonable assurance level as of December 31, 2008 due to
the material weaknesses discussed below.  Promptly after detecting and
analyzing the weaknesses, we took assertive action to remediate the weaknesses
and our PEO and CFO believe that, as of the filing date of this Form 10-K,
the Company’s disclosure controls and procedures are effective.




Management’s
Report on Internal Control over Financial Reporting





Management
is responsible for establishing and maintaining adequate internal control
structure and procedures over financial reporting (as defined in
Rules 13a-15(e) and 15d-15(e)) under the Exchange
Act.  Management conducted an assessment of the effectiveness of the
Company’s internal control over financial reporting as of December 31,
2008.  Internal control over financial reporting cannot provide
absolute assurance of achieving financial reporting objectives because of its
inherent limitations.  Internal control over financial reporting is a
process that involves human diligence and compliance and is subject to
lapses in judgment and breakdowns resulting from human
failures.  Because of such limitations, there is a risk that material
misstatements may not be prevented or detected on a timely basis by internal
control over financial reporting.  Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions or that the degree of
compliance with the policies or procedures may deteriorate.





A
material weakness in internal control over financial reporting is defined by the
Public Company Accounting Oversight Board’s Audit Standard No. 5 as a
deficiency, or a combination of deficiencies, in internal control over financial
reporting, such that there is a reasonable possibilitythat a material
misstatement of the Company's annual or interim financial statements will not be
prevented or detected on a timely basis.  A significant deficiency is
a deficiency, or a combination of deficiencies, in internal control over
financial reporting that is less severe than a material weakness, yet important
enough to merit attention by those responsible for oversight of the Company's
financial reporting.





31





Management
of our now wholly-owned subsidiary, TVFC, became aware of certain accounting
irregularities in the course of its review of monthly financial operations
reports for the month ended September 30, 2008 that demonstrated a significant
decline in TVFC's gross profit percentage over the previous several months and
that the profit percentage was not in line with management's
expectations.  In an itemized review of the monthly financial
information for the several prior quarters, management of TVFC was unable to
account for approximately $200,000 of inventory that TVFC had purchased that was
not the subject of corresponding sales orders.  During the course of
management's preliminary investigation of the matter upon the conclusion of the
quarter, it discovered that certain employees were committing fraud against TVFC
by stealing inventory and reselling it pursuant to fraudulent sales orders that
were never submitted to TVFC.  These employees were retaining the sale
price of the inventory and, in some cases, using TVFC's employees to fabricate
and install the products on TVFC's time using its equipment and
vehicles.





We
reported the loss resulting from the theft of inventory in our unaudited
consolidated financial statements for the quarter ended September 30, 2008, as
filed with the SEC in a Current Report on Form 8-K on November 26, 2008, and the
numerical information included in those financial statements is
accurate.  However, the notes to the financial statements did not
discuss the theft or provide an explanation for the declining financial
performance, as we continued to investigate the circumstances surrounding the
incidents.  Moreover, the management's discussion and analysis portion
of the November 26, 2008 Current Report made reference only to a decline in our
gross profit resulting from personnel problems in our fabricating and
installation departments but did not address material weaknesses in our
disclosure controls and procedures.  Rather, the discussion noted that
we addressed these issues by re-defining the roles of our staff responsible for
fabrication and installation and by restructuring our work force.





In
connection with management's investigation of the unaccounted for inventory, we
identified the following material weaknesses to our internal control over
financial reporting:





·
            Entity
      Level Controls:





The
Company failed to develop and maintain a Company-wide anti-fraud program over
the initiating and processing of financial transactions, as well as other
Company-wide procedures which may have an impact on internal controls over
financial reporting.





·
            Inventory
      and Labor Utilization Control:





Senior
management failed to maintain sufficient oversight over inventory usage and
labor utilization. As an example, this lack of proper oversight allowed certain
trusted employees to fabricate, ship and install products for fraudulent
jobs.





Because
of the material weaknesses, the PEO and CFO concluded that the Company did not
maintain effective internal control over financial reporting at a reasonable
assurance level as of December 31, 2008.





Management
has taken what it believes to be appropriate action to address these material
weaknesses in our internal control over financial reporting, including making
personnel changes and implementing physical and documentary controls and
procedures that we believe will prevent instances of theft of inventory and
related losses from occurring in the future.





32





The
remediation of the material weaknesses described has been among our highest
priorities.  Our board of directors (which serves as our audit
committee) will continually assess the progress and sufficiency of these
initiatives and make adjustments as and when necessary.  As of the
date of this report, our management believes that our efforts adequately
remediate the material weaknesses in internal control over financial reporting
described above.  However, our management does not expect that our
disclosure controls and procedures or internal control over financial reporting
will prevent all errors or all instances of fraud in the future.  A
control system, no matter how well designed and operated, can provide only
reasonable, not absolute, assurance that the control system’s objectives
will be met.  Further, the design of a control system must reflect the
fact that there are resource constraints and the benefits of controls must be
considered relative to their costs.  Because of the inherent
limitations in all control systems, no evaluation of controls can provide
absolute assurance that all control gaps and instances of fraud have been
detected. These inherent limitations include the realities that judgments in
decision-making can be faulty and that breakdowns can occur because of simple
errors or mistakes.  Controls can also be circumvented by the
individual acts of some persons, by collusion of two or more people, or by
management override of the controls.  The design of any system of
controls is based in part upon certain assumptions about the likelihood of
future events and any design may not succeed in achieving its stated goals under
all potential future conditions.





Except as
disclosed above, there were no changes in our internal control over financial
reporting that occurred during our last fiscal quarter that have materially
affected, or are reasonably likely to materially affect, the Company’s internal
control over financial reporting.





Item
9B. Other Information.





None.





PART
III





Item
10. Directors, Executive Officers and Corporate Governance.





The
following table sets forth certain information about our directors and executive
officers:





Name
                      
                      Age
                      
                      PositionGordon
      Knott
                      
                      49
                      
                      President
      and DirectorGarabed
      Khatchoyan
                      
                      44
                      
                      Secretary
      and DirectorDouglas
      Wells
                      
                      68
                      
                      Chief
      Financial
Officer





The
Company's directors are elected to hold office until the next annual meeting of
stockholders and until their respective successors have been elected and
qualified.  The Company's officers serve at the pleasure of the board
of directors.





Set forth
below is biographical information concerning our directors and executive
officers for at least the past five years.





Gordon
Knott has served as a member of our board of directors and our president since
our inception.  Mr. Knott has in excess of twenty years of sales and
sales management experience in the telecommunications industry servicing large
national accounts.  From 2000 to 2003 he was a senior account manager
for CopperCom, Inc., a leading manufacturer and designer of a full suite of
telecommunications products for the access network.  As a national
account representative, he was responsible for, among other things, sales of a
broad line of products in California and Hawaii, capturing a significant
opportunity with a wide range of hotels in Anaheim to provide all voice,
Internet and video.  From 1994 to 2000, he served as a national
account manager for Convergent Communications / TIE Comm. Inc., a provider of
data and telephone networking systems located in Irvine, California where he was
responsible for sales in the company's western region and establishing new
national accounts, among other things





33





Garabed
(Gary) Khatchoyan served as a member of our board of directors and our corporate
secretary since our inception.  Gary has over 20 years experience in
sales, business management and production management in the vinyl fence industry
and can handle virtually any issue that arises in our business.  From
1996 to 2002, he was associated with Quality Vinyl Products, a licensed fence
contractor located in North Hollywood, California, where he was responsible for
sales and marketing and training of fabrication and sales
staff.  Prior thereto has served in a variety of sales and marketing
positions in Southern California.





Douglas
Wells has served as the Chief Financial Officer of the Company since September
1, 2008.  Since 2007, he has been the president and sole shareholder
of CFO Services, Inc., a consulting firm that provides business advice and
CFO-type services to several companies.  From 2004 to August
2008,  he was employed by Avitus Group, a professional employer
organization, and provided CFO-type services to small business companies,
including our Company.  From 2001 to 2004, he was chief financial
officer of Vital Imaging, Inc., which had eight medical imaging centers in the
western U.S.  From 1999 to 2001, he served as the chief financial
officer of Care Network, Inc., a managed care company that provided workers
compensation medical management services to other businesses.  Prior
to 1999, he served in various executive capacities with a number of
companies.  Mr. Wells was an audit partner with Arthur Andersen where
he was in charge of its healthcare practice in Southern
California.  Mr. Wells is a Certified Public
Accountant.  Mr. Wells will not devote his full time to the business
of the Company.





Board
Committees





The board
of directors has responsibility for establishing broad corporate policies and
reviewing our overall performance rather than day-to-day
operations.  The primary responsibility of our board of directors is
to oversee the general direction and management of our Company and, in doing so,
serve the best interests of the Company and our stockholders.  The
board of directors selects, evaluates and provides for the succession of
executive officers and, subject to stockholder election,
directors.  It reviews and approves corporate objectives and
strategies, and evaluates significant policies and proposed major commitments of
corporate resources.  Our board of directors also participates in
decisions that have a potential major economic impact on our
Company.  Management keeps the directors informed of Company activity
through regular communication.





The board
of directors is currently composed of 2 people. All board action requires the
approval of a majority of the directors in attendance at a meeting at which a
quorum is present.  We will increase the size of our board of
directors as we deem necessary to accommodate the growth of our
business.





Board
Determination of Independence





As of the
date hereof, the Company has not adopted a standard of independence nor does it
have a policy with respect to independence requirements for its Board members or
that a majority of its board be comprised of "independent
directors."  As of the date hereof, none of our directors would
qualify as "independent" under any recognized standards of
independence.





Board
of Directors Committees





We do not
currently have a standing audit, nominating or compensation committee of the
board of directors, or any committee performing similar
functions.  Our board of directors performs the functions of audit,
nominating and compensation committees.  As of the date of this
report, no member of our board of directors qualifies as an “audit committee
financial expert” as defined in Item 407(d)(5) of Regulation S-K
promulgated under the Securities Act of 1933, as amended.  Since the
board of directors currently consists of two members, it does not believe that
establishing separate audit, nominating or compensation committees are necessary
for effective governance.





34





The Board
will consider establishing independent committees of the board as and when we
expand the board.





Stockholder Communications





We do not
presently provide a process for security holders to send communications to the
board of directors.  We expect to adopt a process for security holders
to send communications to the board of directors prior to the call of the
Company's next annual meeting of stockholders.  We will disclose the
stockholder communication process we adopt in the proxy statement we will mail
to all stockholders prior to the next annual stockholders meeting.





Code
of Ethics





We have
adopted a Code of Ethics that applies to our principal executive officers and
principal financial officer (or persons performing similar functions) that is
designed to comply with Item 406 of Regulation S-K.  A copy of our Code of
Ethics will also be furnished, without charge, in print to any person who
requests such copy by writing to the Company’s Secretary at: Vinyl Products,
Inc., 2210 South Ritchey Street, Santa Ana, California 92705.





35





Item
11. Executive Compensation.





Executive
Compensation





The
following table shows information concerning all compensation paid for services
to the Company in all capacities during the year ended December 31, 2008 or
accrued within the current fiscal year as to the principal executive officer,
principal financial officer, and each person whose total annual salary and bonus
exceeded $100,000 at the end of the last fiscal year (the “Named Executive
Officers”):





Summary
Compensation Table


Name (a)
                        Year
                          (b)
                        
                        Salary
                          ($) (c)
                        
                        
                        Bonus
                          ($) (d)
                        
                        
                        Stock
                          Awards
                          ($) (e)
                        
                        
                        Option
                          Awards
                          ($) (f)
                          (1)
                        
                        
                        Non-Equity
                          Incentive Plan
                          Compensation
                          ($) (g)
                        
                        
                        Nonqualified
                          Deferred
                          Compensation
                          Earnings
                          ($) (h)
                        
                        
                        All Other
                          Compensation
                          ($) (i)
                        
                        
                        Total ($)Gordon
      Knott,
                        2008
                        
                        $
                        60,000
                        
                        
                        $
                        45,500
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        $
                        186,615
                        (1)
                        
                        $
                        291,615President
      and Director
                        2007
                        
                        $
                        60,000
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        $
                        218,335
                        (2)(3)
                        
                        $
                        278,3352006
                        
                        $
                        57,692
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        $
                        165,835
                        (2)(3)
                        
                        $
                        223,527Garabed
      Khatchoyan,
                        2008
                        
                        $
                        60,000
                        
                        
                        $
                        45,500
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        $
                        188,188
                        (4)
                        
                        $
                        293,688Secretary
      and Director
                        2007
                        
                        $
                        60,000
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        $
                        210,100
                        (2)(5)
                        
                        $
                        280,1002006
                        
                        $
                        57,692
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        $
                        165,544
                        (2)(6)
                        
                        $
                        223,236Douglas
      Wells,
                        2008
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        $
                        20,000
                        (7)
                        
                        $
                        20,000Chief
      Financial Officer
                        2007
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -2006
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -




1.
            During
      2008, Mr. Knot received the total additional compensation referenced in
      column i consisting of: $165,000 paid as dividends by TVFC prior to the
      share exchange, $5,800 toward a health savings account, $980 for tax
      return preparation and $14,835 for vehicle
  leases.


2.
            Through
      2007, TVFC elected to be treated as a Subchapter S corporation under the
      Internal Revenue Code of 1986, as amended (the "Code"), and the amounts
      paid by the Company to the persons named in the table in column i
      represent profits distributed to its sole shareholders.  As of
      January 1, 2008, the shareholders of TVFC revoked their intention to treat
      that company as an "S" corporation and TVFC is now treated as a "C"
      corporation under the Code.  During 2007, Mr. Knott received a
      distribution from TVFC of $203,500 and Mr. Khatchoyan received a
      distribution from TVFC of $203,500.  During 2006, Mr. Knott
      received a distribution from TVFC of $161,000 and Mr. Khatchoyan received
      a distribution from TVFC of
$161,000.


3.
            Includes
      $14,835 in both 2007 and 2006 for automobile
  allowance.


4.
            During
      2008, Mr. Khatchoyan received the total additional compensation referenced
      in column i consisting of: $165,000 paid as dividends by TVFC prior to the
      share exchange, $5,800 toward a health savings account and $17,388 for
      vehicle leases.


5.
            Includes
      $16,600 paid as an automobile
allowance.


6.
            Includes
      $14,544 paid as an automobile
allowance.


7.
            Payments
      to CFO Services, Inc., which is wholly owned by Douglas E.
      Wells.





Employment
Contracts





We are
not party to any employment agreements.





Other
Compensatory Arrangements





We do not
currently have any stock option, incentive, equity, non-equity or compensatory
plans in place.  We may adopt such plans when and if our board of
directors deems them appropriate and will present any such plan adopted by our
board for approval by our stockholders at the next annual meeting after the
adoption thereof.





36





Outstanding
Equity Awards at Fiscal Year-End





As of
December 31, 2008, we had not approved any equity compensation plans and no
awards of any kind were outstanding.  None of our executive officers
has ever received any equity awards, including, options, restricted stock or
other equity incentives.





Compensation
of Directors





During
the 2007 and 2008 fiscal years, no member of our board of directors received any
compensation solely for service as a director.We do not have any
non-employee directors at this time and we have not adopted a policy for
compensating or reimbursing non-employee directors that may join our board of
directors.





We are
not party to any compensation arrangement with any of our directors nor have we
entered into any specific indemnification agreements with any member of our
board, though our Articles of Incorporation and bylaws provide that we are
required to indemnify our directors and officers to the fullest extent permitted
by Nevada law, as described below.





Indemnification
of Directors and Officers





Our
articles of incorporation provide for the indemnification of our directors,
officers, employees and agents to the fullest extent permitted by the laws of
the State of Nevada.  Section 78.7502 of the Nevada Revised Statutes
permits a corporation to indemnify any of its directors, officers, employees or
agents against expenses actually and reasonably incurred by such person in
connection with any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (except for an action
by or in right of the corporation), by reason of the fact that such person is or
was a director, officer, employee or agent of the corporation, provided that it
is determined that such person acted in good faith and in a manner which he
reasonably believed to be in, or not opposed to, the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.




Section
78.751 of the Nevada Revised Statutes requires that the determination that
indemnification is proper in a specific case must be made by (a) the
stockholders, (b) the board of directors by majority vote of a quorum consisting
of directors who were not parties to the action, suit or proceeding or (c)
independent legal counsel in a written opinion (i) if a majority vote of a
quorum consisting of disinterested directors is not possible or (ii) if such an
opinion is requested by a quorum consisting of disinterested
directors.





Our
bylaws provide that: (a) no director shall be liable to the Company or any of
its stockholders for monetary damages for breach of fiduciary duty as a director
except with respect to (i) a breach of the director’s loyalty to the Company or
its stockholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) liability which may
be specifically defined by law or (iv) a transaction from the director derived
an improper personal benefit; and (b) the Company shall indemnify to the fullest
extent permitted by law each person that such law grants to the Company power to
indemnify.





Any
amendment to or repeal of our articles of incorporation or by-laws shall not
adversely affect any right or protection of any of our directors or officers for
or with respect to any acts or omissions of such director or officer occurring
prior to such amendment or repeal.





37





We may
enter into indemnification agreements with each of our directors and officers
that are, in some cases, broader than the specific indemnification provisions
permitted by Nevada law, and that may provide additional procedural
protection.  As of the date of this report, we have not entered into
any indemnification agreements with our directors or officers, but may choose to
do so in the future.  Such indemnification agreements may require us,
among other things, to:


·
              indemnify
      officers and directors against certain liabilities that may arise because
      of their status as officers or
directors;
 ·
              advance
      expenses, as incurred, to officers and directors in connection with a
      legal proceeding, subject to limited exceptions;
  or
 ·
              obtain
      directors’ and officers’
insurance.





As
described under the heading Legal Proceedings, our president and secretary have
been named as defendants in a law suit brought by a former employee of the
Company for wrongful termination.  Company counsel has filed a
demurrer seeking to have all claims dismissed against these
individuals.  We have determined that the conduct for which our
executive officers are named as parties to the action was within the scope of
the indemnification provisions of our articles of incorporation and
bylaws.





We are
permitted to apply for insurance on behalf of any director, officer, employee or
other agent for liability arising out of his actions.




Disclosure
of Commission Position on Indemnification for Securities Act
Liabilities





Insofar
as indemnification for liabilities arising under the Securities Act of 1933, as
amended, may be permitted to our directors, officers and persons controlling us,
we have been advised that it is the Securities and Exchange Commission’s opinion
that such indemnification is against public policy as expressed in the
Securities Act of 1933, as amended, and is, therefore,
unenforceable.





Item
12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.





The
following table sets forth certain information, as of March 30, 2009 with
respect to the beneficial ownership of our outstanding common stock by (i) any
holder of more than five (5%) percent; (ii) each of our executive officers and
directors and (iii) our directors and executive officers as a group. Except as
otherwise indicated, each of the stockholders listed below has sole voting and
investment power over the shares beneficially owned.





Beneficial
ownership is determined in accordance with the rules of the SEC and generally
includes voting or investment power with respect to
securities.  Securities that entitle a holder to acquire shares of
common stock that are currently exercisable or exercisable within 60 days of
March 30, 2009 are deemed to be beneficially owned by the person holding such
securities for the purpose of computing the percentage of ownership of such
person, but are not treated as outstanding for the purpose of computing the
percentage ownership of any other person.





38





The
business address of the stockholders set forth below is c/o the Company, 2210
South Ritchey Street, Santa Ana, California 92705.




Holder
              
              Number
      of Shares
                Beneficially Owned (2)
              
              
              Percent of ClassGordon
      Knott
              
              
              10,000,000
              
              
              
              43.49
              %Garabed
      Khatchoyan
              
              
              10,000,000
              
              
              
              43.49
              %Douglas
      Wells (1)
              
              
              100,000
              
              
              
              *All
      directors and officers and as a group (3 persons)
              
              
              20,100,000
              
              
              
              87.42
              %


*
      Indicates less than one percent.





(1)
            Mr.
      Wells owns these shares through The Wells Family
  Trust


(2)
            Applicable
      percentage ownership is based on 22,863,200 shares of common stock
      outstanding as of March 30, 2009, together with securities exercisable or
      convertible into shares of common stock within 60 days of March 30, 2009
      for each stockholder.





Item
13. Certain Relationships and Related Transactions, and Director
Independence.





Related
Party Loans




On March
15, 2007, Gordon Knott and Garabed Khatchoyan, directors and officers of the
Company, each executed a promissory note in favor of TVFC entitling them to
borrow up to $250,000 from TVFC.  The notes provided for interest at
the rate of 5% per year and were due on March 15, 2009.  At March 15,
2008, Mr. Knott had borrowed the sum of $71,000 under the note, which had
accrued interest equal to $740, and Mr. Khatchoyan had borrowed the sum of
$81,000 under the note, which had accrued interest equal to $844.  At
March 15, 2008, the parties converted all amounts due under the notes, including
accrued interest, into salary and cancelled the promissory notes.





Related
Party Transactions





Douglas
Wells, our chief financial officer, was employed by Avitus Group and provided
CFO-type services to a number of companies.  We utilized the services
of Avitus Group from February 2006 through August 2008.  During our
engagement, we paid Avitus Group fees of $125,000.  We discontinued
utilizing these services when we engaged Mr. Wells to become our chief financial
officer as of September 1, 2008.





Promoters and Certain Control
Persons





Except as
set forth in our discussion above, none of our directors or executive officers
has been involved in any transactions with us or any of our directors, executive
officers, affiliates or associates which are required to be disclosed pursuant
to the rules and regulations of the SEC.





39





Policies
and Procedures for Review, Approval or Ratification of Transactions with Related
Persons




We have
not previously had a formal policy concerning transactions with related
persons.  We are in the process of adopting a written related-person
transactions policy that sets forth our policies and procedures regarding the
identification, review, consideration and approval or ratification of
“related-persons transactions.”  For purposes of our policy only, a
“related-person transaction” will be a transaction, arrangement or relationship
(or any series of similar transactions, arrangements or relationships) in which
we and any “related person” are participants involving an amount that exceeds
$50,000.  Transactions involving compensation for services provided to
us as an employee, director, consultant or similar capacity by a related person
will not be covered by this policy.  A related person will be any
executive officer, director or a holder of more than five percent of our common
stock, including any of their immediate family members and any entity owned or
controlled by such persons.




Under the
policy, we expect that where a transaction has been identified as a
related-person transaction, management must present information regarding the
proposed related-person transaction to our board of directors for consideration
and approval or ratification. The presentation will be expected to include a
description of, among other things, the material facts, and the direct and
indirect interests of the related persons, the benefits of the transaction to us
and whether any alternative transactions are available. To identify
related-person transactions in advance, we will rely on information supplied by
our executive officers, directors and certain significant
stockholders.  In considering related-person transactions, our board
of directors will take into account the relevant available facts and
circumstances including, but not limited to:





·
            the
      risks, costs and benefits to us;·
            the
      impact on a director’s independence in the event the related person is a
      director, immediate family member of a director or an entity with which a
      director is affiliated;·
            the
      terms of the transaction;·
            the
      availability of other sources for comparable services or products;
      and·
            the
      terms available to or from, as the case may be, unrelated third parties or
      to or from our employees generally.





Under the
policy, we expect that in the event a director has an interest in the proposed
transaction, the director must excuse himself or herself form the deliberations
and approval.  Our policy will require that, in determining whether to
approve, ratify or reject a related-person transaction, our board of directors
must consider, in light of known circumstances, whether the transaction is in,
or is not inconsistent with, the best interests of our Company and our
stockholders, as our board of directors determines in the good faith exercise of
its discretion.





Director
Independence.





The Company has not established its own
definition for determining whether its directors and nominees for directors are
“independent” nor has it adopted any other standard of independence employed by
any national securities exchange or inter-dealer quotation system.





Item
14. Principal Accounting Fees and Services.





AUDIT
FEES. The aggregate fees billed for professional services rendered by Traci J.
Anderson, CPA for the audits of the Company's annual financial statements for
the fiscal year ending on December 31, 2008 and the reviews of the financial
statements included in the Company's Quarterly Reports on Form 10-Q for the
fiscal year were $13,000.





AUDIT-RELATED
FEES.  The aggregate fees billed by Traci J. Anderson, CPA for
audit-related services rendered for the Company for the 2008 fiscal year were
$0.  Audit-related fees generally include fees in support of the
Company's filing of registration statements with the SEC and similar
matters.





40





TAX
FEES.  The aggregate fees billed by Traci J. Anderson, CPA for
tax-related services rendered for the Company for the 2008 fiscal year were
$0.  The tax-related services were all in the nature of tax compliance
and tax planning.





ALL OTHER
FEES. The aggregate fees billed for services rendered to the Company by Traci J.
Anderson, CPA, other than the audit services, audit-related services, and tax
services, were $0 for the 2008 fiscal year.





PRE-APPROVAL
POLICY. The Company has not established an audit committee nor adopted an audit
committee charter.  Rather, it is the responsibility of the entire
board of directors to serve the functions of an audit committee and to
pre-approve all audit and permitted non-audit services to be performed by the
independent auditors, such approval to take place in advance of such services
when required by law, regulation, or rule, subject to the de minimis exceptions
for non-audit services described in Section 10A(i)(1)(B) of the Securities
Exchange Act of 1934 that are approved by the board prior to completion of the
audit.





PART
IV





Item
15. Exhibits, Financial Statement Schedules.





(a)           Financial
Statements





The
following financial statements are filed as part of this report:





The
audited consolidated financial statements of Vinyl Products, Inc. and the report
of independent registered public accounting firm thereon are set forth under
Part II, Item 8 of this report.





(b)           Exhibits.





The
exhibits listed below are either included or incorporated by reference as
indicated:





Exhibit No.
              
              Exhibit Description2.1#
              
              Agreement
      and Plan of Merger October 10, 2007, among Red Oak Concepts, Inc., a
      Delaware corporation, Red Oak Concepts, Inc., a Nevada corporation, and
      the holders of all of the outstanding shares of common stock of each such
      corporation.2.2*
              
              Share
      Exchange Agreement dated  November 20, 20083.1^
              
              Certificate
      of Incorporation of Red Oak Concepts, Inc., a Delaware
      corporation.3.2^
              
              By-laws
      of Red Oak Concepts, Inc., a Delaware corporation.3.3#
              
              Articles
      of Incorporation of Red Oak Concepts, Inc., a Nevada
      corporation.3.4#
              
              By-laws
      of Red Oak Concepts, Inc., a Nevada corporation.3.5*
              
              Certificate
      of Amendment to Articles of Incorporation of Red Oak Concepts,
      Inc.4.1#
              
              Specimen
      common stock certificate of Vinyl Products, Inc.4.2*
              
              Form
      of Option Agreement issued by The Vinyl Fence Company, Inc., the
      obligations of which were assumed by the registrant pursuant to the Share
      Exchange Agreement.4.3*
              
              Registration
      Rights Agreement dated November 20, 2008 among the registrant and the
      recipients of the common stock received pursuant to the Share Exchange
      Agreement filed as Exhibit 2.1 hereto, the holders of the registrant's
      common stock immediately prior to the closing of the Share Exchange
      Agreement, the holders of certain options assumed by the registrant under
      the Share Exchange Agreement and the purchasers of shares of common stock
      in the registrant's private placement completed on November 24,
      2008.4.4*
              
              Lock
      Up/Leak Out Agreement dated November 20, 2008 between the registrant and
      each of Susan D. Zachmann, Katherine Daniels and Barbara
      Deadwiley.





41





4.5*
              
              Form
      of Lock Up/Leak Out dated November 20, 2008 between the registrant and
      each of Haber LLC, Themis LLC and Tailor Made Financial
    LLC.4.6*
              
              Form
      of Subscription Agreement between the Registrant and the purchasers in the
      private offering of securities completed on November 24,
    2008.4.7*
              
              Registration
      Rights Agreement dated November 24, 2008 among the registrant and the
      purchasers of shares of common stock in the registrant's private placement
      completed on November 24, 2008.10.1#
              
              Form
      of demand promissory note dated June 17, 2007 executed by Red Oak
      Concepts, Inc. in favor each of Susan Zachmann and Katherine Daniels each
      in the principal amount of $14,950.10.2*
              
              Lease
      agreement between AGA Partners and The Vinyl Fence Company, Inc., a
      California corporation dated January 31, 2005.10.3*
              
              Fabricator
      Agreement dated November 11, 2003 between U.S. Polymers, Inc., and The
      Vinyl Fence Company, Inc. as amended and extended on August 29,
      2008.10.4†
              
              Professional
      Employer Agreement dated June 23, 2005 between Better Business Systems,
      Inc. (now Avitus Group) and The Vinyl Fence Company,
  Inc.10.5◊
              
              Lease
      Renewal dated February 10, 2009 between AGA Partners and The Vinyl Fence
      Company, Inc.14.1*
              
              Code
      of Business and Ethical Conduct31.1◊
              
              Certification
      of Principal Executive Officer and Principal Financial Officer pursuant to
      Rule 13a-14 and Rule 15d 14(a), promulgated under the Securities and
      Exchange Act of 1934, as Amended.32.1◊
              
              Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
      Section
                906
      of the Sarbanes-Oxley Act of
2002.


#
            Incorporated
      by reference to the registrant's filing on Form 10-SB as filed with the
      Securities and Exchange Commission on August 15,
  2007.


^
            Incorporated
      by reference to the registrant's filing on Amendment No. 1 to Form 10-SB
      as filed with the Securities and Exchange Commission on September 4,
      2007.


*
            Incorporated
      by reference to the registrant's Current Report on Form 8K as filed with
      the Securities and Exchange Commission on November 26,
    2008.


†
            Incorporated
      by reference to the registrant's registration statement on Form S-1 as
      filed with the Securities and Exchange Commission on March 27,
      2009.


◊           Filed
herewith.





42





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 on March 31, 2009.





VINYL
      PRODUCTS, INC.By:
                /s/  Gordon
  KnottGordon
      Knott





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 indicated on March 31, 2009.





Signature
                                  
                                  Title/s/  Gordon Knott
                                  
                                  President,
      Principal Executive Officer  and DirectorGordon
      Knott/s/ Douglas E. Wells
                                  
                                  Chief
      Financial Officer and Principal Financial OfficerDouglas
      E. Wells/s/ Garabed Khatchoyan
                                  
                                  Secretary
      and DirectorGarabed
      Khatchoyan





43