UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 0R 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ending: June 30, 2011

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number:

DRS Inc.

(Exact Name of Registrant as Specified in its Charter)

Nevada	20-5914452
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

4004 NE 4th ST, Suite 107-315, Renton WA	98056
(Address of principal executive offices)	(Zip Code)

206-920-9104
(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. [ ] Yes [X] No

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data Filed required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [X] Yes [ ] No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K 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 amendments to this Form 10-K. [ ]

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 [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [x] No []

The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant as of December 31, 2010 was $898,163.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: We had 18,882,268 shares outstanding of common stock as of September 28, 2011.

DOCUMENTS INCORPORATED BY REFERENCE

None.

Table of Contents		Page
A Warning About Forward-Looking Statements		4
PART I
Item 1	Business	4
Item 1A	Risk Factors	8
Item 1B	Unresolved Staff Comments	12
Item 2	Properties	12
Item 3	Legal Proceedings	13
Item 4	Submission of Matters to a Vote of Security Holders	14
PART II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Shares	14
Item 6	Selected Financial Data	15
Item 7	Management Discussion and Analysis of Financial Condition and Results of Operations	15
Item 7A	Quantitative and Qualitative Disclosures about Market Risk	18
Item 8	Financial Statements and Supplementary Data	18
	(The financial statements and supplementary data required by this item are set forth at the end of this Annual Report on Form 10-K beginning on page 31)
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	18
Item 9A	Controls and Procedures	19
Item 9B	Other Information	20
PART III
Item 10	Directors, Executive Officers and Corporate Governance	20
Item 11	Executive Summary and Compensation	22
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	24
Item 13	Certain Relationships and Related Transactions, and Director Independence	26
Item 14	Principal Accountant Fees and Services	26
PART IV
Item 15	Exhibits, Financial Statements, Schedules	27
	Index to Financial Statements	29
	Index to Exhibits	29

A WARNING ABOUT FORWARD-LOOKING STATEMENTS

We make forward-looking statements in this annual report on Form 10-K that are subject to risks and uncertainties. These forward-looking statements include information about possible or assumed future results of our financial condition, operations, plans, objectives and performance. When we use the words “believe,” “expect,” “anticipate,” “estimate” or similar expressions, we are making forward-looking statements. Many possible events or factors could affect our future financial results and performance. This could cause our results or performance to differ materially from those expressed in our forward-looking statements. You should consider these risks when you review this annual report on Form 10-K, along with the following possible events or factors:

·	the financial and operating performance of our operations;

·	our ability to achieve and/or maintain profitability over time;

·	the successful execution of our growth strategies;

·	the impact of competition;

·	available market opportunities; and

·	the availability of working capital.

Additional risks and uncertainties are described elsewhere in this annual report on Form 10-K and in detail under “Item 1A. Risk Factors.” You are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date of this annual report on Form 10-K. Except where required by law, we do not undertake an obligation to revise or update any forward-looking statements, whether as a result of new information, future events or changed circumstances. Unless the context requires otherwise, the terms “we,” “us,” and “our” refer to DRS Inc., a Nevada corporation.

PART I

Item 1. Business

Overview

DRS Inc. was incorporated under the laws of the state of Nevada on November 17, 2006. Since inception, we have operated, at various times, as a drywall subcontractor, drywall scrapper, drywall recycler and hauler, as described below. Most of our business has been conducted in the states of Washington and Oregon in the residential construction sector for single and multi-family housing, including construction and remodels.

In September 2010, we suspended operations in the lines of business that we were active in at the time, due to continuing operating losses and lack of capital to sustain operations. At that time, we were operating as a drywall installer and scrapper. We had previously suspended operations as a drywall recycler in May 2009, when we entered into an operating agreement with a senior employee wherein he agreed to take over operations of our drywall recycling facility and assume all operating expenses related to operating that facility. Thus, since the first quarter of the fiscal year ended June 30, 2011, we have not produced any sales revenue. At the same time, our operating costs were reduced to minimal levels, so that operating losses would be minimized while we endeavored to raise capital to restart our operations. As previously reported, it has been our intention to re-enter the drywall recycling business but to remain out of the other lines of business in which we were previously engaged, at least until the Company has sufficient capital to sustain operations going forward. In the meantime, revenues and related expenses that occurred within the fiscal year have been reclassified as discontinued operations, which classification could be reversed if we resume operations in a timely manner.

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As a drywall installer, we stocked (providing required materials including sheetrock) and installed the drywall, finished the drywall surface with a “taping and mudding” process, and then applied a coat of primer and “texturing” (or wall decoration) of the surface leaving a finished product that is ready for finish painting.

The scrapping business involved the collection and removal of drywall scrap from the job site, both from job sites where we performed the installation of the drywall, as well as job-sites where other sub-contractors performed the installation of the drywall. Typically, based on our experience, 15-20% of the new drywall material that is delivered to a job site becomes scrap. Our employees loaded the scrap onto our trucks and broom swept the site as part of our service. We charged for such services based on the total square footage of drywall that was originally delivered to the job site. For additional charge, we also sometimes prepared the area for finish painting.

The drywall recycling business involved the pulverizing of drywall scrap into two products: gypsum powder and scrap paper. Approximately, 90% of the drywall scrap becomes gypsum powder and the remaining 10% becomes scrap paper, with minimal material being lost in the process. The gypsum powder was sold to farmers for fertilizer and soil amendment, and the paper was sold to farmers for use as animal bedding. We were instrumental in developing a process to efficiently convert drywall scrap into these two end-products at a facility located in Ridgefield, Washington which we operated from 2007 to 2009. However, in May 2009, we exited this business when we entered into an operating agreement with an employee, Brian Thompson, Sr. Mr. Thompson agreed to take responsibility for all operating costs of the recycling operation in return for receiving 98% of the revenues. The core assets used in the operation are owned by Daniel Mendes (DRS’ current President) and George Guimont (DRS’ former Secretary/Treasurer). DRS is contingently liable for royalties that accrue on the use of these core assets, and provides a vehicle free of charge to the recipient of these royalties as an offset against past royalties payable.

During the past year, we have sought to raise capital to re-enter the drywall recycling business. We have reported periodically that we anticipate needing up to $1 million to fulfill our plan to accomplish this. We have found it challenging to accomplish this capital raise to date, given the state of the housing sector in the northwest, as well as our lack of operating success in the past. However, we have recently added new management talent and have taken steps that we believe will ultimately be successful in accomplishing our business goal of re-entering the drywall recycling business.

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Economics of the Drywall Recycling Business

As a general rule of thumb, 15-20% of the new drywall delivered to a job site becomes scrap and a typical 2300 square foot house. The amount of scrap drywall from a typical 2,300 square foot single family home, based on our experience, ranges from 1208 to 1610 square feet of drywall, weighing 1.026 to 1.288 tons for typical one-half inch drywall. The number of housing starts varies year-to-year in the United States but in 2006 (a high year) there were 1,800,900 housing starts, and in 2009 (a low very year, representing the lowest level of housing starts in nearly 30 years) there were 553,900 housing starts. An estimate of the amount of drywall scrap generated from single family home construction in 2009 ranges from 658,000 to 713,000 tons of drywall scrap annually. In 2006, this same range would have been 1.8 to 2.5 million tons. This scrap must be disposed of in some way. It is our belief based on experience that most drywall scrap is delivered to landfill sites. In the northwest, landfill operators charge approximately $120 per ton to drop drywall scrap at their landfill sites. Thus a drywall sub-contractor or scrapper should be willing to pay a tipping fee to drop scrap at our recycling facility. We have typically been able to charge $60 per ton on average for scrap delivered to us and we anticipate being able to continue charging at least this much in the future. In addition, gypsum powder has been sold by us and by the operator of the Ridgefield facility for $60-75 per ton. Thus the revenue opportunity for each ton of scrap processed by us is in the range of $100-125 per ton. Monthly operating expenses range from $25,000 - $30,000 per month for each facility. We think that these figures are very compelling, as the break-even point for each such facility is quite low and the capital costs to set up such a facility are less than $1 million, thus the payback on each facility based on reasonable throughput, is relatively short. We believe that by rolling-out numerous drywall recycling facilities across the United States, we can create substantial return on investment for investors in our company.

Readers should note that the methods for estimating the amount of drywall to be used in an installation job and the estimates used to determine the amount of drywall scrap are believed by management to be reasonable and are typical of similar estimations used throughout the industry.

Our main source of competition for the sale of powered gypsum is gypsum mined from underground mines. One of the main sources of mined gypsum is the state of Nevada where it is mined extensively. We have in the past ourselves, and currently through the Ridgefield facility, been successful at displacing gypsum sales to farmers in the Pacific Northwest who have sourced gypsum from Nevada sources, due to the transportation cost savings, as well as the fineness of our gypsum powder, compared to mined gypsum. We believe that our powdered gypsum is a viable product that competes effectively with mined gypsum.

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Intellectual Property and Labor

The Company has no patents, registered trademarks, licenses, franchises, concessions, royalty agreements or labor contracts. We use the common law trademarks “DRS” and our “Go Green with Blue” design.

Regulation

Drywall recycling facilities such as the one described above would be subject to licensing and reporting requirements by a number of governmental authorities. These governmental authorities include federal, state and local health, environmental, labor relations, sanitation, building, zoning, fire, safety and other departments. Changes in any of these laws or regulations could have a material adverse effect on our business, financial condition and results of operations. We do not foresee any material effects of current federal, state, or local regulation on any aspect of planned operations. As we develop other recycling facilities in multiple jurisdictions going forward, we will be subject to various environmental and business regulations.

Research and Development

During our last two fiscal years the Company dedicated no funds to research and development.

Compliance with Environmental Laws

We do not believe that we are subject to any federal, state and local environmental laws and regulations which would have a material adverse effect upon our capital expenditures, net income or competitive position. As such we have not expended any capital resources on compliance with federal, state or local environmental laws. Nevertheless, new laws or regulations could have a material adverse effect on our business, financial condition and results of operations.

Employees

As of June 30 2011, other than our executive officers, we did not have any employees. Employees who were previously employed by us were terminated as of September 24, 2010, as a result of our decisions to wind-down the installation and scrapping businesses. We did not have, or intend to have in the future, employment contracts with any personnel as they are “at will” employees.

Available Information

We file voluntarily annual, quarterly and current reports, as well as information/proxy statements with the SEC under the informational and periodic reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The information and reports are filed electronically. You may read copies of any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that will contain copies of the reports and information we file electronically. The address for the Internet site is www.sec.gov.

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Recent Developments

None

Item 1A. Risk Factors Relating to DRS Inc. and its Business

Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below and the other information in this prospectus before you purchase any of our common stock. If any of these actually occurs, our business, financial condition or results of operations could suffer. In this event you could lose all or part of your investment.

Risks Related to Our Business

The inclusion of a going concern qualification in our audited financial statements may make it difficult for us to raise additional capital.

Our auditors have included an explanatory paragraph in their report accompanying our audited financial statements for the years ended June 30, 2011 and 2010 relating to a substantial doubt about our ability to continue as a going concern. This qualification may make it more difficult for us to raise additional capital when needed. Our auditors believe that there are conditions that raise substantial doubt about our ability to continue as a going concern. The accompanying financial statements do not include any adjustments relating to the recoverability of reported assets or liabilities should we be unable to continue as a going concern. We believe we need a capital infusion of up to $1 million in order to re-enter the scrap drywall recycling business, with follow-on investment required depending on how aggressively we intend to expand.

We have a limited operating history and have losses which we expect to continue into the future. There is no assurance our future operations will result in profitable revenues. If we cannot generate sufficient revenues to operate profitably, we may suspend or cease operations.

We were incorporated in November 2006 and have a limited operating history. We have derived all revenues from drywall installation, scrapping and recycling services. Since inception, we have incurred significant net losses. We incurred net losses of $963,053, $786,373 and $579,777 for the twelve months ended June 30, 2011, 2010 and 2009, respectively. As of June 30, 2011, we had an accumulated deficit of $13,376,909. We are a young company in a very competitive marketplace, and as such, run a risk of not being able to compete effectively. Our ability to achieve and maintain profitability and positive cash flow is dependent, among other things, upon our ability to:

·	add and maintain facilities necessary to process drywall scrap;

·	attract drywall sub-contractors and drywall scrap removal specialists to bring their scrap drywall to our facilities;

·	find and maintain customers for gypsum powder and paper scrap;

·	develop and maintain quality control, sales, information systems and other procedures for the efficient functioning of the business; and,

·	continue to monitor, implement and maintain internal controls and control procedures.

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Based upon current plans, we expect to incur operating losses in future periods. We cannot guarantee that we will be successful in generating sufficient revenues to support operations in the future. Failure to generate sufficient revenues could cause us to go out of business and you could lose your investment. We believe we need a capital infusion of up to $1 million in order to re-enter the scrap drywall recycling business, with follow-on investment required depending on how aggressively we intend to expand.

Our operations have not been profitable in recent periods or since inception of the Company

We have incurred losses in recent years, and have accumulated a deficit of $13,376,909 as of June 30, 2011. We are unable to forecast or predict reasonably when we will have profitable operations. In recent years, we have operated in three different business segments of the drywall industry, and have not been able to produce a profit. There can be no assurance that our new business plan will result in profitable operations in the future. If we cannot produce a profit and/or raise sufficient capital to support operations, we could go out of business and you could lose your investment.

We need to obtain additional financing which may not be available on acceptable terms, if at all

After the initial capital infusion, we will probably need additional funds to complete further development of our business plan to achieve a sustainable revenue level, where ongoing operations can be funded out of current revenues. There is no assurance that any additional financing will be available, or if available, that it will be on terms that will be acceptable to us. We may have difficulty obtaining additional funds as and if needed, and we may have to accept terms that would adversely affect our shareholders. Additional equity financings are likely to be dilutive to holders of our common stock, and debt financing, if available, may involve significant payment obligations and covenants that restrict how we operate our business.

Our operating results may fluctuate significantly based upon outside factors that are difficult to predict. As such, our inability to plan for or withstand long term downturns in operations due to such factors may require us to suspend or cease operations.

We operate in a cyclical industry that is subject to rapid change. Such fluctuations could be the result of a number of causes, including demand fluctuations in the housing market which could affect the amount of drywall scrap available to us, competition from other users of drywall scrap and sellers of gypsum powder, and economic pressures within the agricultural sector. These fluctuations may be severe and prolonged, and could delay or hinder the market acceptance of our services and seriously impact our revenues and harm our business, financial condition and results of operations. Accordingly, our quarterly results may vary significantly, which could cause our stock price to decline.

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Compliance with government regulations applicable to us could have a material adverse effect on our business, financial condition and results of operations

Our facility is subject to licensing and reporting requirements by a number of governmental authorities. These governmental authorities include federal, state and local health, environmental, labor relations, sanitation, building, zoning, fire, safety and other departments. Changes in any of these laws or regulations could have a material adverse effect on our business, financial condition and results of operations.

The loss of key personnel or our inability to attract and retain qualified personnel could significantly disrupt our ability to execute our business plan

Our continued success largely will depend on the efforts and abilities of our executive officers and other key employees. We rely heavily on our President, Daniel Mendes and our Chief Financial Officer, Blair Mullin, for our success. Their experience and input create the foundation for our business and they are responsible for directing and controlling our activities. Should we lose their services for any reason, we will incur costs associated with recruiting replacements and delay in our operations. If we are unable to replace either of them with other suitably trained individuals, we may be forced to scale back or curtail our business plan. As a result of this, your investment in us could become devalued. Neither Mr. Mendes nor Mr. Mullin have an employment contract with the Company. Mr. Mendes owns and operates a separate business which occupies most of his time and therefore, we run the risk of him running into conflicts of time. In addition, our success will depend upon our ability to attract and retain highly motivated and qualified employees in the future. The inability to recruit and retain such individuals may have a material adverse effect on our business or results of operations.

Our lack of diversification may affect business if demand is reduced

Our business has plan is based on a specialized area within the construction industry. As such, we do have a somewhat diversified source of revenue in that, once we recommence operations, we intend to source revenues from both the construction and agricultural sectors. But change in either one or both of these sectors of the economy could have an adverse effect on our business, and operating results and financial conditions could deteriorate as a result.

FINRA sales practice requirements may limit a shareholder’s ability to buy and sell our stock

The Financial Industry Regulatory Authority (“FINRA”) has adopted rules that relate to the application of the SEC’s penny stock rules in trading our securities and require that a broker/dealer have reasonable grounds for believing that the investment is suitable for that customer, prior to recommending the investment. Prior to recommending speculative, low priced securities to their non-institutional customers, broker/dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, the FINRA believes that there is a high probability that speculative, low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker/dealers to recommend that their customers buy our common stock, which may have the effect of reducing the level of trading activity and liquidity of our common stock. Further, many brokers charge higher transactional fees for penny stock transactions. As a result, fewer broker/dealers may be willing to make a market in our common stock, reducing a shareholder's ability to resell shares of our common stock.

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Our Board of Directors’ right to authorize the issuance of shares of common stock in separate series could adversely impact the rights of holders our common stock

Our Board of Directors has the right to authorize the issuance of shares of common stock or preferred stock in one or more series, and to fix the voting powers, designations, preferences and rights or qualifications, limitations or restrictions thereof, without further vote or action by shareholders. The terms of any new series of common stock or preferred stock, which may include priority claims to assets and dividends and special voting rights, could adversely affect the rights of the holders of other classes of our stock and thereby reduce the value of other classes of our stock. The issuance of stock could discourage certain types of transactions involving an actual or potential change in control of our company, including transactions in which the holders of our existing stock might otherwise receive a premium for their shares over then current prices, otherwise dilute the rights of holders of our existing stock, and may limit the ability of such shareholders to cause or approve transactions which they may deem to be in their best interests, all of which could have a material adverse effect on the market price of our stock.

Our stock price may be volatile

The market price of our common stock will likely fluctuate significantly in response to the following factors, some of which are beyond our control:

·	Variations in our quarterly operating results due to a number of factors, including but not limited to those identified in this “RISK FACTORS” section;

·	Changes in financial estimates of our revenues and operating results by securities analysts or investors;

·	Changes in market valuations of companies in the construction industry;

·	Announcements by us of commencement of, changes to, or cancellation of significant contracts or capital commitments;

·	Additions or departures of key personnel;

·	Future sales of our common or preferred stock;

·	Stock market price and volume fluctuations attributable to inconsistent trading volume levels of our stock; and

·	Commencement of or involvement in litigation.

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We do not anticipate paying dividends

We have never paid cash or other dividends on our common stock and do not anticipate doing so in the foreseeable future. Payment of dividends on our common stock is within the discretion of our Board of Directors and will depend upon our earnings, our capital requirements and financial condition, and other factors deemed relevant by our Board of Directors.

Item 1B. Unresolved Staff Comments

Not applicable.

Item 2. Properties

Office Space and Plants

We maintain our principal corporate office address at a mail drop located at 4004 NE 4th Street, Renton, WA 98056. Both of our executive officers, Mr. Mendes and Mr. Mullin maintain offices at their personal residences, for which they do not charge the Company any rent.

We also lease a facility at 5906-B 238th Street SE, Woodinville, Washington 98072, which formerly was our primary operations facility. DRS leases the Woodinville operations facility from Northshore Properties, LLC. The lease, executed April 8, 2009 is for 60 months and continues until terminated upon 60 days written notice by either party after the first 60 months. The monthly base rent for the facility is $3,425 and we are also responsible for our proportionate share of common area maintenance, property tax, insurance, sewer, water and electricity charges. In September, 2010, we entered into an agreement with Biffle Company and G&B Trucking to sublease a portion of the property for the balance of the lease. The remaining portion of the rent that is paid by the Company is now approximately $1,500, including our proportionate share of common area maintenance, property tax, insurance, sewer, water and electricity charges.

Management believes our current office and operations facilities are adequate for the Company’s current operational needs. If needed, we believe suitable alternative office and/or operations facilities could be obtained by us at reasonable rates.

We also lease a warehouse in Ridgefield, Washington, from the Port of Ridgefield. The warehouse is approximately 20,000 square feet. The space is used by Drywall Recycling Services, Inc. to use for their scrap drywall processing facility, pursuant to an operating agreement wherein they are responsible for payment of rent to the Port of Ridgefield. The operating agreement continues for an indefinite term. This lease will expire in December 2013. The Port of Ridgefield has indicated it would like to terminate this lease early in order to use the land for other purposes. Accordingly, we have entered into informal discussions with the Port to explore ways to accommodate them; however, we are under no obligation to terminate the lease prior to December 2013 unless we choose to do so.

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Item 3. Legal Proceedings

The following is a summary of litigation to which the company is a party:

McEvoy Oil Company sued for non-payment of invoices totalling $17,709.51. On December 16, 2010, a judgment was granted to the plaintiff, awarding interest and costs totalling $5,445.06. In addition, plaintiff is entitled to 18% interest on the judgment amount until it is paid in full. As of June 30, 2011, the total amount accrued was 23,325.85.

Pacific Fibre Products Inc. filed a lawsuit for non-payment of invoices totaling $8,853.60. On September 24, 2010, the plaintiff was granted a judgment, awarding interest and costs totalling $1,913.54. In addition, plaintiff is entitled to receive 12% interest on the judgment amount until it is paid in full. In February, 2011, the Company paid the plantiff $4,000 in full settlement of the judgement.

Poly-America L.P. filed a lawsuit for non-payment of invoices totaling $7,540.60. On October 22, 2009, plaintiff was granted a judgment, awarding it interest and costs totaling $1,708.00. In addition, plaintiff is entitled to receive 5% interest on the judgment amount until it is paid in full.

Scan Coin North, Inc. filed a lawsuit for non-payment of invoices totaling $5,762.55. On December 7, 2010, plaintiff was granted a judgment, awarding it interest and costs totaling $3,323.28. In addition, plaintiff is entitled to receive 5% interest on the judgment amount until it is paid in full.

Industrial Hydraulic Services filed a lawsuit for non-payment of invoices totaling $3,047.91, which has not been concluded.

National Service bureau filed a lawsuit for non-payment of invoices totaling $4,488.21, which has not been concluded.

Nelson Distributing, Inc. filed a lawsuit for non-payment of invoices totaling $37,320.07. On December 15, 2010, plaintiff was granted a judgment, awarding it interest and costs totaling $6,827.13. In addition, plaintiff is entitled to receive 18% interest on the judgment amount until it is paid in full.

During the quarter ended March 31, 2011, Teletrac Inc. filed a suit against the company claiming an unpaid invoice balance of $30,960.30 plus 12% interest since March 28, 2010, attorney’s fees and court costs. This lawsuit has not been concluded.

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

None.

PART II

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

Market Information

Our common stock trades on the OTCBB and the OTCQB under the symbol “DRSX”. The following table shows the high and low bid prices for our common stock for each full quarter that the common stock has been quoted on these quotation systems (with the exception of the quarter-ended December 31, 2009 since the stock was not quoted until the second month of that quarter). This information was obtained from a professional quotation service. The below quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.

Quarter Ended	High		Low
December 31, 2009 (partial quarter)	$	.45	$	.36
March 31, 2010	$	.90	$	.26
June 30, 2010	$	.95	$	.61
September 30, 2010	$	.85	$	.54
December 31, 2010	$	.67	$	.31
March 31, 2011	$	.31	$	.12
June 30, 2011	$	.22	$	.055

As of September 28, 2011, there were 18,882,268 shares of our common stock outstanding and approximately 100 stockholders of record. Additionally, as of September 28, 2011, there are 2,033,332 options to purchase our common stock outstanding, at a weighted average exercise price of $.34.

Disclosures Relating to Shares Issued Pursuant to S-1 Registration Statement

Our S-1/A Registration Statement was declared effective on February 5, 2009. We commenced an offering on February 6, 2009 which closed on February 5, 2011. All 3,000,000 common shares registered for sale by the Company pursuant to the S-1/A were sold. The SEC file number of the S-1/A is 333-152419.

During fiscal year 2009, the Company issued 34,450 shares of common stock and received proceeds of $34,450. There were no offering expenses. The proceeds were used to purchase equipment.

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During fiscal year 2010, the Company issued 682,000 shares of its common stock. The Company received proceeds of $270,000 for the issuance. In addition, the Company issued 1,200,000 shares of common stock to consultants for services rendered valued at $20,025. There were no offering expenses. The proceeds were used to offset operating expenses of the Company.

During fiscal year 2011, the Company issued 100,000 shares of common stock and received proceeds of $1,000. In addition, the Company issued 996,500 shares of common stock for services rendered valued at $9,966.

It was anticipated that $1,750,000 of the proceeds of the offering would be used to purchase equipment and the balance used for marketing, sales and general administrative expense or other items at the discretion of the Board of Directors, out of a total net proceeds of $2,940,000. Approximately $80,000 was used for purchase of equipment out of the total proceeds of $328,440 and the balance to offset general expenses of the Company.

Dividends

We have not paid dividends on our common stock and do not anticipate paying dividends in the foreseeable future.

Item 6. Selected Financial Data

Not applicable.

You should read the information contained in Item 7, Management’s Discussion and Analysis of Financial Condition and Result of Operations in conjunction with the Consolidated Financial Statements and Notes thereto, and the other financial data appearing elsewhere in this Report.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Result of Operations

Summary of Operations

Overview

You should read the following discussion and analysis in conjunction with the Consolidated Financial Statements and Notes thereto, and the other financial data appearing elsewhere in this Report.

The information set forth in Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, including, among others (i) expected changes in the Company’s revenues and profitability, (ii) prospective business opportunities and (iii) the Company’s strategy for financing its business. Forward-looking statements are statements other than historical information or statements of current condition. Some forward-looking statements may be identified by use of terms such as “believes”, “anticipates”, “intends” or “expects”. These forward-looking statements relate to the plans, objectives and expectations of the Company for future operations. Although the Company believes that its expectations with respect to the forward-looking statements are based upon reasonable assumptions within the bounds of its knowledge of its business and operations, in light of the risks and uncertainties inherent in all future projections, the inclusion of forward-looking statements in this report should not be regarded as a representation by the Company or any other person that the objectives or plans of the Company will be achieved. In light of these risks and uncertainties, there can be no assurance that actual results, performance or achievements of the Company will not differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. The foregoing review of important factors should not be construed as exhaustive. The Company undertakes no obligation to release publicly the results of any future revisions it may make to forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

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Overview

The Company was incorporated in November 2006 and during its history has operated as a drywall installer, a drywall scrapper and a drywall recycler. In September, 2010, we decided to refocus our attention on the drywall scrap recycling operations, while withdrawing for the time-being from both the drywall installation business and the drywall scrapping business. To this end, we intend to raise capital to repurchase the drywall scrap recycling processing operation that we previously owned, or open a brand new facility in a different part of the country, and to expand the recycling operation by opening new facilities in multiple locations. We believe we need an initial capital infusion of up to $1 million in order to re-enter the scrap drywall recycling business, with follow-on investment required depending on how aggressively we intend to expand.

Results of Operations

For the Fiscal Years Ended June 30, 2010 and June 30, 2009

The revenues and related expenses for the fiscal years ended June 30, 2011 and 2010 have been classified as discontinued operations, based on our decision in September 2010 to wind-down our operations in the drywall installation and scrapping businesses. During fiscal 2011 and 2010, we had losses from discontinued operations of 337,783 and 188,971 respectively. We also have had losses from continued operations in fiscal 2011 and 2010 of $625,270 and $597,402, respectively.

The Company presently incurs minimal expense in order to maintain filing of periodic and current reports with the SEC, and to cover a small amount of legal, accounting and other professional fee expense as required periodically.

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Administrative costs for the twelve months ended June 30, 2011 and June 30, 2010 are as follows:

	30-Jun-11			30-Jun-10

Salaries & benefits	$	0		$	120,040
Automobile expense		4,390			2,456
Bad debt expense		(42,313	)		93,555
Bank fees		6,090			6,192
Impairment expense		265,243			0
Insurance		37,884			37,426
Licenses		965			4,249
Marketing		286			24,361
Meals		82			213
Administration		2,328			10,662
Professional & consulting fees		166,117			111,900
Rent expense		26,518			74,507
Taxes		3,987			26,934
Telephone		27,286			23,733

Totals	$	498,863		$	536,228

During fiscal 2011, we incurred administrative costs of $498,863 which was a decrease of 7% from fiscal 2010, but the loss from continuing operations in fiscal 2011 included an impairment charge of $265,243, without which administrative expense in fiscal 2011 would have been $233,620, a decrease of 56%. The loss from continuing operations included an impairment charge of $265,243 because the security deposit held by a third party to secure payments on equipment leases was claimed by the third party as damages for lease payments unpaid.

The Company intends to keep expenses at minimum levels while continuing to explore ways to execute on its business plan.

In the twelve months ended June 30, 2011, our President, Daniel Mendes chose to take zero compensation in return for his services as the Company’s President (principal executive officer). He made this choice so that he would not be a financial burden to the company and because if the company became successful he would be adequately compensated through the appreciation in the value of his shares of common stock that he already owns. As such, the financial statements reflect a lower loss than what would have been the case had he received compensation. The market value of total compensation of the services provided by Daniel Mendes during the twelve month period was approximately $200,000.

Liquidity & Capital Resources

Cash on hand at June 30, 2011 was $10,952 compared to $24,500 at June 30, 2010. We used $262,774 for operations in the twelve months of 2011, which was mostly offset by net financing activities of $249,226. Financing activities consisted mainly of loans from shareholders, a convertible debenture, and other advances.

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The Company had working capital deficits of $1,511,758 at June 30, 2011 and $1,050,873 at June 30, 2010, an increase of $460,885, resulting from increases in current liabilities as well as a decrease in current assets. Our operating losses and lack of working capital indicate a significant lack of liquidity that must be overcome in order for the company to move forward.

During the last three fiscal quarters ended June 30, 2011, we did not generate any revenues due to our decisions in September, 2010 to cease operations in both the scrapping business and the drywall installation business. Based on our current plans we likely will not generate revenues until such time as we able to resume operations in the drywall recycling business. However, there is no assurance that we will be successful in re-entering the drywall recycling business. We cannot guarantee that we will be successful in generating sufficient revenues to support operations in the future. Failure to generate sufficient revenues will cause us to go out of business.

In order for the Company to move forward, it must raise new capital. We intend to issue stock through a private placement pursuant to Section 4(2) of The Securities Act of 1933. The offering will be made to a select group of individuals who either are current shareholders or who are sufficiently familiar with the Company to successfully evaluate the risks associated with this endeavor. We have successfully concluded small private offerings in the past and feel confident in our ability to raise needed capital in the future. The Company considers a private raise to be the most cost effective way to meet its capital needs. We are considering engaging a FINRA broker-dealer to assist in our efforts, but have not as of this date, identified an appropriate broker-dealer.

New Developments

Not applicable.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

The Company does not hold any assets or liabilities requiring disclosure under this item.

Item 8. Financial Statements and Supplementary Data

The financial statements and supplementary data required by this item are set forth at the end of this Annual Report on Form 10-K beginning on page 31.

Item 9. Changes in and Disagreements with Accountants and Financial Disclosure

There are no changes in or disagreements with accountants on accounting and/or financial disclosure at this time.

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Item 9A. Controls and Procedures

Disclosure Controls and Procedures

Our management, with the participation of our President, who is our principal executive officer, as well our Chief Financial Officer, who is our Principal Financial and Accounting Officer, have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), in connection with the preparation of this Annual Report on Form 10-K, as of June 30, 2011. Based on the review described above, our President and our Chief Financial Officer have determined that our disclosure controls and procedures were effective as of the end of the period covered by this report, and that no changes to controls and procedures were made or were needed to be made during the last quarter that materially affected, or was reasonably likely to materially affect, internal control over financial reporting.

Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. 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.

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. In addition, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, 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 error or mistake. 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 on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

Our management assessed our internal control over financial reporting as of June 30, 2011 based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on such assessment, our management concluded that our internal control over financial reporting was effective as of June 30, 2011 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles.

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This annual report on Form 10-K does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting.

Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report on Form 10-K.

There were no changes in our internal control over financial reporting that occurred during the fourth quarter ended June 30, 2011, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Directors, Executive Officers, Promoters and Control Persons

The following individuals served as the directors and executive officers of our Company during the fiscal year ended June 30, 2011. All directors of our Company hold office until the next annual meeting of shareholders, unless they resign before a shareholders’ meeting is held. The executive officers of our Company are appointed by our Board of Directors and hold office until their death, resignation or removal from office.

The following table lists our directors and provides their respective ages and titles as of June 30, 2011.

Name	Age	Title	Director Since
Daniel Mendes	52	President, Director, Principal Executive Officer, Controller	2007
Philip Blair Mullin	57	Chief Financial Officer, Director, Principal Financial and Accounting Officer	2011

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Daniel Mendes

Daniel Mendes has served as a director of the Company since its inception on November 17, 2006 and has served as Secretary/Treasurer of the Company from November 17, 2006 to August 1, 2007 and as President and Principal Executive Officer of the Company from August 1, 2007 to present. Mr. Mendes also served as Secretary/Treasurer and Principal Financial and Accounting Officer, from December 1, 2010 to June 27, 2011. Prior to joining DRS, since 1996 and continuing through to the present time, Mr. Mendes has owned and operated Redhawk Construction, a drywall installation company. Mr. Mendes’ term as director continues until the next meeting of shareholders and his term as President continues until removed from office by the Board of Directors.

Mr. Mendes has accumulated approximately 30 years of business experience since graduating from Santa Clara University with a Bachelor’s degree in Finance. He has held positions of increasing responsibility in the management of transportation companies. In 1996, he became owner and operator of Redhawk Construction, a drywall installation business, which he continues to own and operate at the present time. As a small business owner, Mr. Mendes has developed the skills necessary to lead and direct DRS Inc. as President and Director, at this stage of development of the Company and for the foreseeable future.

Philip Blair Mullin

Mr. Mullin has served as a director of the Company since June, 2011, and was appointed Chief Financial Officer of the Company at the same time. Prior to assuming these duties, Mr. Mullin served the Company as a consultant to assist with the development of a revised business plan and go-forward strategy. In previous positions, Mr. Mullin served and President, CEO and Director of Samarium Group Corporation (now Samaranta Mining Corporation) from 2009 to 2010, as Chief Financial Officer of Zi Corporation from 2006 to 2009, as Chief Financial Officer of Homax Products Inc from 2005 to 2006, as Interim Vice President Finance of Yakima Products Inc. in 2005. From 2003 to 2005, Mr. Mullin served as consultant to numerous clients, and was a Partner in Tatum Partners (later Tatum LLC), an executive services firm from 2003 to 2010. From 2001 to 3002, Mr. Mullin was President and CEO of Blair Mullin & Associates, Inc., an owner-operated consulting firm. From 2000 to 2001, Mr. Mullin served as President and Chief Operating Officer of International DisplayWorks, Inc., which was a successor company to Morrow Snowboards, Inc., where Mr. Mullin served as President and Chief Financial Officer from 1997 to 2000. Mr. Mullin earned an MBA from University of Western Ontario and BA from Wilfrid Laurier University, in Canada.

Mr. Mullin has over 25 years of deep and varied business leadership and operational experience, both domestically and abroad, in a wide range of industries, as executive, consultant and banker. Expertise includes financial and operational leadership; planning, forecasting and budgeting; cost reduction and containment; internal controls; quality assurance; profitability and liquidity improvement; corporate finance including debt and equity financings; out-of-court debt restructuring; organizational development; investor relations; and SOX compliance.

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Compliance with Section 16(a) of the Exchange Act

Section 16 of the Securities Exchange Act of 1934 requires that every person who is the beneficial owner of more than 10% of a class of securities of an issuing company, and officers and directors of companies who issue securities, pursuant to Section 12 of the Exchange Act to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of their common stock and other equity securities. These Section 16 reporting persons are required by Securities and Exchange Commission regulations to furnish us with copies of all Section 16 forms they file.

However, because our common shares are registered pursuant to Section 15(d) and not Section 12 of the Exchange Act, those persons described in the preceding paragraph, Mr. Mendes and Mr. Mullin, are not required to file such reports, and have not done so to date.

Code of Conduct

We have adopted a code of conduct that describes the ethical and legal responsibilities of all of our employees, including our principal executive officer, our principal financial and accounting officer and, to the extent applicable, the members of our board of directors. This code includes, but is not limited to, the requirements of the Sarbanes-Oxley Act of 2002 pertaining to codes of ethics for chief executives and senior financial and accounting officers. Our board of directors has reviewed and approved this code of conduct. Our employees agree in writing to comply with the code at commencement of employment and periodically thereafter. Our employees are encouraged to report suspected violations of the code through various means, and they may do so anonymously. If we make substantive amendments to the code or grant any waiver, including any implicit waiver, to our principal executive, financial or accounting officer, or persons performing similar functions, we will disclose the nature of such amendment or waiver on our website and/or in a report on Form 8-K in accordance with applicable rules and regulations.

Our Code of Conduct is filed as an exhibit to this Form 10-K and is available to any person, without charge who requests a copy in writing addressed to DRS, Inc. Attention: President, using the mailing address on the front page of this Form 10-K.

Item 11. Executive Compensation

The table below shows the compensation of the Company's principal executive officers for the fiscal years ended June 30, 2011, 2010 and 2009. No named executive officer's salary and bonus exceeded $100,000 in any of the applicable years. The following information includes the dollar value of base salaries, bonus awards, the number of stock options granted and certain other compensation, if any, whether paid or deferred. Note that Mr. Mendes and former Director and Officer George Guimont both voluntarily agreed to not receive salaries or other compensation from DRS Inc. during the fiscal years ending June 30, 2011, June 30, 2010 and June 30, 2009.

SUMMARY COMPENSATION TABLE
Name and Principal Position	Fiscal Year	Salary ($)		All Other Compensation ($)		Total ($)
Daniel Mendes Director, President and Principal Executive Officer	2011	$	0	$	0	$	0
	2010	$	0	$	0	$	0
	2009	$	0	$	0	$	0

George Guimont Director, Secretary/Treasurer and Principal Financial and Accounting Officer	2011	$	0	$	0	$	0
	2010	$	0	$	0	$	0
	2009	$	0	$	0	$	0

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Narrative Disclosure to Summary Compensation Table

Daniel Mendes does not currently receive a salary or other compensation from the Company. Philip Mullin has not entered into a compensation arrangement since becoming a Director and Officer of the Company. We have not entered into employment agreements or consulting agreements with either of them. Moreover, there are no arrangements or plans in which we provide pension, retirement, perquisites or similar benefits for executive officers. Although we do not currently compensate our officers, we reserve the right to provide compensation at some time in the future. Our decision to compensate our officers will depend on our available cash resources and the suitability of equity as a form of compensation.

Outstanding Equity Awards

We currently do not have a formal equity compensation plan in place for employees or executive officers. There are currently no options outstanding that are held by employees or executive officers.

Compensation of Directors

The Company does not pay compensation to its directors for their service at this time. We have no present plan for compensating our directors for their service.

Employment Contracts

As of the date hereof, we have not entered into employment contracts with any of our officers and do not intend to enter into any employment contracts until such time as our board of directors deems it prudent to do so.

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Compensation Committee Interlocks and Insider Participation

The Company’s Board of Directors has not established a compensation committee. When necessary, the entire Board of Directors performs the tasks that would be required of a compensation committee.

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

Equity Compensation Plan Information

The following table shows, as of June 30, 2011, the number of shares to be issued upon exercise of outstanding options, warrants and rights, the weighted average exercise price of such options, warrants and rights, and the number of remaining securities available for future issuance under equity compensation plans. The Company does not have a formal written equity compensation plan. From time to time when deemed necessary or advisable, the Board of Directors has approved the granting of stock options, which includes the following purposes:

1.	Options granted as inducements to investors to purchase stock;

2.	Options granted as inducements to loan money; and,

3.	Options granted to employees, directors, consultants and advisors as performance incentives or rewards.

There are no set guidelines for these option grants. The number of options available for exercise as of September 28, 2011 was 2,033,332.

Plan Category	Number of Securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of Securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by security holders	0	0	0
Equity compensation plans not approved by security holders	2,033,332	$.34	0
Total	2,033,332	$.34	0

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Security Ownership of Certain Beneficial Owners and Management

The following table sets forth the beneficial ownership, as of September 28, 2011, of our common stock by each person known by us to be the beneficial owner of more than 5% of our outstanding common stock, each of our directors and executive officers; and all of our directors and executive officers as a group. The information presented below regarding beneficial ownership of our common stock has been presented in accordance with the rules of the SEC and is not necessarily indicative of ownership for any other purpose. This table is based upon information derived from our stock records. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, we believe that each of the shareholders named in this table has sole voting and investment power with respect to the shares indicated as beneficially owned. Applicable percentages are based upon 18,882,268 shares of common stock outstanding as of September 28, 2011.

	Beneficial Ownership
Name of Beneficial Owner	Shares		Percentage
Daniel Mendes 4004 NE 4th ST, Suite 107-315 Renton, WA 98056		5,399,500		28.60	%
George Guimont 15421 72nd DR SE Snohomish, WA 98296		5,401,517		28.61	%
Philip Blair Mullin PO Box 904, Battle Ground, WA 98604		996,550		5.28	%
V3 Services, Incorporated 4 Orchard Way, Yardley, PA 19067		1,180,000		6.25	%
Water's Edge Advisors Inc. 1650 Sycamore Ave., Suite 5, Bohemia, NY 11716		1,534,140		8.12	%
Karen Okazaki Wong (1) 211 W. Prospect Street Seattle, Washington 98119		1,799,997		9.53	%
Terry Wong (2) 211 W. Prospect Street Seattle, Washington 98119		1,799,997		9.53	%
All Executive officers and directors as a group (2 persons)		6,396,050		33.87	%

(1) Includes 799,998 shares of common stock held or issuable in connection with options held of record by her husband, Terry Wong and the Terry Wong Trust, a trust controlled by Mr. Wong. Ms. Karen Okazaki Wong holds 333,333 shares of DRS common stock. Additionally, Ms. Wong has options to purchase up to 666,666 shares of our common stock.

(2) Includes 999,999 shares of common stock held or issuable in connection with options held of record by his wife, Karen Ozazaki Wong. Mr. Terry Wong, personally and through his trust, the Terry Wong Trust, holds 266,666 shares of common stock. Additionally, Mr. Wong, personally and through his trust, has options to purchase up to 533,332 shares of our common stock.

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Item 13. Certain Relationships and Related Transactions and Director Independence

There were no revenues from continuing operations generated from client companies owned by the Company’s management and other shareholders. During fiscal 2010, sales revenues of $176,319, were generated from client companies owned by the Company’s management and other shareholders.

Accounts receivables from related parties at June 30, 2011 and June 30, 2009 were $0.00 and $6,882, respectively.

The Company had entered into equipment rental agreements with the now former Secretary/Treasurer of the Company and a major shareholder. The rental agreements were on a month to month basis and the Company deposited $254,770 as security with this related party to secure the rental agreements. In September, 2010, we revised our agreement with the former Secretary/Treasurer wherein he assumed liability for leases on several vehicles. The security deposit was claimed as damages against unpaid lease payments and was written off in fiscal 2011.

During fiscal year 2011, the Company issued notes payable to a shareholder and received proceeds of $197,307. Advances from this shareholder total $565,852 as of June 30, 2011. The loans are payable on demand. Although there was no stated interest on these notes, the Company imputed an interest rate of 11% and recorded interest expense of in the statement of operations.

Item 14. Principal Accountant Fees and Services

The following table presents the aggregate fees billed by Donahue Associates L.L.C. for services provided during our 2011 and 2010 fiscal years.

	2011		2010
Audit Fees	$	8,000	$	8,000
Audit Related Fees	$	3,000	$	3,000
Tax Fees	$	1,000	$	1,000
Total	$	12,000	$	12,000

Audit Fees. The fees identified under this caption were for professional services rendered by Donahue Associates L.L.C. for fiscal years 2011 and 2010 in connection with the audit of our annual financial statements and review of the financial statements included in our quarterly reports on Form 10-Q. The amounts also include fees for services that are normally provided by the independent public registered accounting firm in connection with statutory and regulatory filings and engagements for the years identified.

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Audit-Related Fees. The fees identified under this caption were for assurance and related services that were related to the performance of the audit or review of our financial statements and were not reported under the caption “Audit Fees.” Audit-related fees consisted primarily of fees paid for Securities and Exchange Commission reporting matters and consents related to our uniform franchise offering circulars.

Tax Fees. Tax fees consist principally of assistance related to tax compliance and reporting.

Approval Policy. Our audit committee approves in advance all services provided by our independent registered public accounting firm. All engagements of our independent registered public accounting firm in fiscal years 2011 and 2010 were pre-approved by Board of Directors.

PART IV

Item 15. Exhibits, Financial Statements, Schedules

Financial Statements and Schedules

The financial statements and schedules required to be filed hereunder are set forth at the end of this Annual Report on Form 10-K beginning on page F-1, and is accompanied by a Financial Statements Index.

Exhibits

The Exhibit Index attached behind the signature page is incorporated herein by reference.

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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.

	DRS Inc.
	By:
		Daniel Mendes, President
September 28, 2011		(principal executive officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:
	Daniel Mendes, President and Director (principal executive officer)
	September 28, 2011

By:
	Philip Blair Mullin, Chief Financial Officer and Director (principal financial and accounting officer)
	September 28, 2011

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FINANCIAL STATEMENTS INDEX

Management’s Report on Internal Control Over Financial Reporting	34
Independent Auditor’s Report	35
Balance Sheets	36
Statements of Operations	37
Statements of Cash Flows	38
Statement of Changes in Shareholder’s Equity	39
Notes to the Financial Statements	40

EXHIBIT INDEX

* The Exhibits attached to this Form 10-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to liability under that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

The following exhibits by incorporated by reference:

SEC Ref. No.	Title of Document
3.1	Articles of Incorporation – incorporated by reference to Form 10-K/A filed April 21, 2011
3.2	By-Laws - incorporated by reference to Form 10-K/A filed April 21, 2011
3.3	Certificate of Amendment – filed herein
10.1	Consulting Agreement dated May 18, 2007 by and between Ron Royce and Dan Guimont, Daniel Mendes and DRS Inc. - incorporated by reference to Form 10-K/A filed April 21, 2011
10.2	Amendment to Consulting Agreement by and Between Ron Royce and Dan Guimont, Daniel Mendes and DRS Inc. - incorporated by reference to Form 10-K/A filed April 21, 2011
10.3	Operating Agreement dated May 15, 2009 between Drywall Recycling Services Inc. and DRS Inc. - incorporated by reference to Form 10-K/A filed April 21, 2011
14.1	Code of Conduct - incorporated by reference to Form 10-K/A filed April 21, 2011
17.1	Resignation of George Guimont as Director and Secretary/Treasurer - incorporated by reference to Form 10-K/A filed April 21, 2011
31.1	Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – filed herein
31.2	Certification of the Principal Financial/Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – filed herein
32.1	Certification of the Principal Executive Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* - filed herein
32.2	Certification of the Principal Financial/Accounting Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* - filed herein

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DRS Inc.

Audited Financial Statements

For the Years Ended June 30, 2011 and June 30, 2010

Management's Report on Internal Control Over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13-a-15(f) and 15d-15(f) under the Exchange Act as a process designed by, or under the supervision of, the Company's principal executive and principal financial officers and effected by the Company's board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles and includes those policies and procedures that:

· pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

· provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorization of management and directors of the Company; and

· provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. 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.

Management assessed the effectiveness of the Company's internal control over financial reporting as of June 30, 2011. In making this assessment, management used the criteria established in "Internal Control-Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on this assessment, management believes that, as of June 30, 2011 the Company's internal control over financial reporting is effective.

There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

Daniel Mendes, President and Secretary/Treasurer (principal executive officer)

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DONAHUE ASSOCIATES, L.L.C.

27 BEACH ROAD, SUITE CO5-A

MONMOUTH BEACH, NJ. 07750

Phone: (732) 229-7723

Independent Auditor’s Report

The Shareholders,

DRS Inc.

We have audited the accompanying balance sheets of DRS Inc. as of June 30, 2011 and June 30, 2010 and the related statements of operations and changes in shareholders’ equity, and cash flows for the years then ended. These financial statements are the responsibility of management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted by the Public Company Accounting Oversight Board in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements presented are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the balance sheets of DRS Inc. as of June 30, 2011 and June 30, 2010 and the related statements of operations and changes in shareholders’ equity, and cash flows for the years then ended, in conformity with generally accepted accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 13 to the financial statements, the Company has suffered recurring losses and negative cash flows from operations that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also discussed in Note 13. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Monmouth Beach, New Jersey

September 23, 2011

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DRS Inc.

Balance Sheets

As of June 30, 2011 and June 30, 2010

ASSETS	30-Jun-11			30-Jun-10

Current assets:
Cash & short term investments	$	10,952		$	24,500
Accounts receivable (net of allowance for bad debt)		0			139,461
Accounts receivable- related parties		0			6,882
Stock subscription receivable		0			4,950
Total current assets	$	10,952		$	175,793

Other assets:
Fixed assets- net		90,536			362,067
Security deposit- related party		0			254,770

Total assets	$	101,488		$	792,630

LIABILITIES & SHAREHOLDERS' EQUITY

Current liabilities:
Accounts payable & accrued expenses	$	591,249		$	438,403
Notes payable		300,000			300,000
Advances payable		39,535			0
Advances payable to shareholder		565,852			368,545
Capital lease payable		26,074			119,718
Total current liabilities	$	1,522,710		$	1,226,666

Convertible debenture payable- net		55,564			0
Capital lease payable		85,441			214,999

Shareholders' equity:
Common stock- $.001 par value, authorized 25,000,000 shares,
issued and outstanding, 17,785,718 shares at 6/30/10 and
18,882,268 at 6/30/11	$	18,882		$	17,785
Additional paid in capital		11,795,800			11,747,036
Retained deficit		(13,376,909	)		(12,413,856	)
Total shareholders' deficit		(1,562,227	)		(649,035	)

Total Liabilities & Shareholders' Deficit	$	101,488		$	792,630
Please see the notes to the financial statements.

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DRS Inc.

Statements of Operations

For the Years Ended June 30, 2011 and June 30, 2010

	30-Jun-11			30-Jun-10
General & administrative expenses:
General administration	$	498,863		$	536,228
Total general & administrative expenses		498,863			536,228

Net loss from operations	$	(498,863	)	$	(536,228	)

Other revenue (expense):
Other income		0			5,800
Interest income		0			1,165
Interest expense		(126,407	)		(68,139	)

Net loss before provision for income taxes	$	(625,270	)	$	(597,402	)

Provision for income taxes		0			0

Loss from continuing operations		(625,270	)		(597,402	)

Loss from discontinued operations		(337,783	)		(188,971	)

Net loss	$	(963,053	)	$	(786,373	)


Loss per common share (basic & fully diluted):
Loss from continuing operations	$	(0.03	)	$	(0.05	)
Loss from discontinued operations		(0.02	)		0.00
Net loss per share	$	(0.05	)	$	(0.05	)
Please see the notes to the financial statements.

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DRS Inc.

Statements of Cash Flows

For the Years Ended June 30, 2011 and June 30, 2010

	30-Jun-11			30-Jun-10
Operating activities:
Net loss	$	(963,053	)	$	(786,373	)
Adjustments to reconcile net loss items
not requiring cash:
Depreciation expense		92,509			174,596
Bad debt expense		(42,313	)		93,555
Impairment expense		254,770			0
Interest expense		38,895			24,504
Consulting expense		9,966			0
Marketing & salary expense		0			20,025
Loss on asset disposals		0			14,218
Changes in other operating assets & liabilities:
Accounts receivable		181,774			89,343
Accounts receivable- related parties		6,882			(204	)
Prepaid expense		0			24,708
Stock subscription receivable		4,950			0
Accounts payable & accrued expenses		152,846			(25,884	)
Net cash used by operations	$	(262,774	)	$	(371,512	)

Investing activities:
Security deposits	$	0		$	8,000
Net cash used by investing activities		0			8,000

Financing activities:
Proceeds from issuance of convertible debenture	$	55,564		$	0
Issuance of common stock		1,000			265,050
Advances from shareholder		197,307			228,000
Proceeds from advances payable		39,535			0
Payment of capital lease		(44,180	)		(123,519	)
Net cash provided by financing activities		249,226			369,531

Net increase (decrease) in cash during the period	$	(13,548	)	$	6,019

Cash balance at July 1st		24,500			18,481

Cash balance at June 30th	$	10,952		$	24,500

Supplemental disclosures of cash flow information:
Interest paid during the period	$	20,834		$	69,110
Income taxes paid during the period	$	0		$	0
Please see the notes to the financial statements.

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DRS Inc.

Statement of Changes in Shareholder’s Equity

For the Years Ended June 30, 2011 and June 30, 2010

	Common Shares		Par Value		Additional Paid-in Capital		Retained Deficit			Shareholders' Deficit

Balance at June 30, 2009		15,903,718	$	15,903	$	11,458,893	$	(11,627,483	)	$	(152,687	)

Issuance of common stock		682,000		682		269,318					270,000

Shares issued for services		1,200,000		1,200		18,825					20,025

Net loss								(786,373	)		(786,373	)

Balance at June 30, 2010		17,785,718	$	17,785	$	11,747,036	$	(12,413,856	)	$	(649,035	)

Issuance of common stock		100,000		100		900					1,000

Shares issued for services		996,550		997		8,969					9,966

Issuance of convertible debentures						38,895					38,895

Net loss								(963,053	)		(963,053	)

Balance at June 30, 2011		18,882,268	$	18,882	$	11,795,800	$	(13,376,909	)	$	(1,562,227	)


Please see the notes to the financial statements.

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DRS Inc.

Notes to the Financial Statements

For the Years Ended June 30, 2011 and June 30, 2010

1.	Organization of the Company and Significant Accounting Principles

DRS Inc. (the “Company”) is a privately held corporation formed in November 2006 in the state of Nevada. The Company installs drywall for new construction and removes drywall and other rubbish from construction sites for disposal and recycling. The Company operates mainly in the state of Washington.

In September 2010, the Company discontinued its drywall installation and scrapping recycling business and has ceased business operations.

Use of Estimates- The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make reasonable estimates and assumptions that affect the reported amounts of the assets and liabilities and disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses at the date of the financial statements and for the years they include. Actual results may differ from these estimates.

Cash- For the purpose of calculating changes in cash flows, cash includes all cash balances and highly liquid short-term investments with original maturity dates of three months or less.

Fixed Assets- Fixed assets are stated at cost. Depreciation expense is computed using the straight-line method over the estimated useful life of the asset. The following is a summary of the estimated useful lives used in computing depreciation expense:

Office equipment 3 years

Vehicles 5 years

Equipment 3 Years

Furniture & fixtures 5 Years

Expenditures for major repairs and renewals that extend the useful life of the asset are capitalized. Minor repair expenditures are charged to expense as incurred.

Long Lived Assets- The Company reviews for the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset and its eventual disposition is less than its carrying amount.

Income taxes- The Company accounts for income taxes in accordance with generally accepted accounting principles which require an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually for differences between financial statement and income tax bases of assets and liabilities that will result in taxable income or deductible expenses in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets and liabilities to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period adjusted for the change during the period in deferred tax assets and liabilities.

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The Company follows the accounting requirements associated with uncertainty in income taxes using the provisions of Financial Accounting Standards Board (FASB) ASC 740, Income Taxes. Using that guidance, tax positions initially need to be recognized in the financial statements when it is more likely than not the positions will be sustained upon examination by the tax authorities. It also provides guidance for de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As of June 30, 2011, the Company has no uncertain tax positions that qualify for either recognition or disclosure in the financial statements. All tax returns from fiscal years 2007 to 2010 are subject to IRS audit.

Revenue Recognition- The Company realizes revenues from drywall installation and removal jobs when the existence of an unconditional binding arrangement with a client is present, the work has been performed, the Company fees are determined and fixed, and the assurance of the revenue collection is reasonably secured. Costs incurred to remove the drywall and dispose waste are charged to cost of revenues. Such costs include the cost of labor and supplies needed to remove waste from construction sites, the depreciation cost on the vehicles need to remove the waste, and fuel costs.

Bad Debt Expense- The Company provides, through charges to income, a charge for bad debt expense, which is based upon management's evaluation of numerous factors. These factors include economic conditions prevailing, a predictive analysis of the outcome of the current portfolio by client, and prior credit loss experience of each client. The Company uses the information from this analysis to develop an estimate of bad debt reserve based upon the amount of accounts receivable by client at the balance sheet date.

2. Fair Values of Financial Instruments

Cash, accounts receivable, accounts receivable related parties, stock subscription receivable, prepaid expenses, security deposit related party, accounts payable and accrued expenses, capital leases payable, advances payable, notes payable, convertible debenture payable, and loan payable- shareholder in the balance sheet are estimated to approximate fair market value at June 30, 2011 and June 30, 2010.

3. Concentration of Credit Risks

The Company’s president and former secretary/treasurer have provided personal guarantees on the leased vehicle discussed in Note 5. A withdrawal of this support may have a material adverse effect on the Company’s ability to lease equipment. In addition, the president and former secretary/treasurer combined own approximately 58% of the Company and therefore have the majority votes to elect all of the board of directors and control all of the Company’s operations.

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4. Discontinued Operations

In September 2010, the management elected to discontinue its drywall installation and scrapping business. The result of operations for the Company’s drywall installation and drywall scrapping business are included in discontinued operations for fiscal years 2011 and 2010. A detail of discontinued operations for fiscal years 2011 and 2010 is as follows.

	2011			2010

Revenues	$	323,601		$	1,890,961
Cost of revenues		(638,199	)		(2,040,239	)
Gross margin		(314,598	)		(149,278	)

Interest expense		(18,513	)		(25,475	)
Gain (loss) on asset disposals		(4,672	)		(14,218	)
Income tax benefit		0			0

Loss from discontinued operations	$	(337,783	)	$	(188,971	)

5. Fixed Assets- Net

The following table is a summary of fixed assets at June 30, 2011 and June 30, 2010:

	30-Jun-11			30-Jun-10

Vehicle	$	178,000		$	457,000
Equipment		23,980			227,459
Office equipment		6,532			6,532
Furniture & fixtures		0			15,035
Accumulated depreciation		(117,976	)		(343,959	)

Fixed assets- net	$	90,536		$	362,067

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Assets leased under capital lease agreements, more fully discussed in Note 8, are $178,000 at June 30, 2011 and $597,081 at June 30, 2010. Depreciation expense on these leased assets for fiscal years 2011 and 2010 is $35,580 and $193,589, respectively.

During fiscal years 2011 and 2010, the Company disposed of $482,479 and $139,571 of the leased assets and recorded a loss on the disposal of $4,672 and $14,218, respectively.

6. Debt

In October 2008, the Company issued a note payable to a creditor and received proceeds of $200,000. The loan is secured by the assets of the Company and is due on demand at an interest rate of 10%.

In January 2009, the Company issued a note payable to a creditor and received proceeds of $100,000. The loan is secured by the receivables of the Company and is due on demand at an interest rate of 12%.

In September 2010, the Company issued a convertible debenture and received proceeds of $55,564. The debenture allows the holder to convert the face value of the debenture to shares of common stock at $0.40 per share. The debenture carries an interest rate of 7% and matures in September 2013.

7. Provision for Income Taxes

Provision for income taxes is comprised of the following:
	30-Jun-11			30-Jun-10

Pretax loss	$	(963,053	)	$	(786,373	)

Current tax expense:
Federal	$	0		$	0
State		0			0
Total	$	0		$	0

Less deferred tax benefit:
Tax loss carry-forward		(981,998	)		(498,491	)
Allowance for recoverability		981,998			498,491

Provision for income taxes	$	0		$	0

A reconciliation of provision for income taxes at the statutory rate to provision
for income taxes at the company's effective tax rate is as follows:

Statutory U.S. federal rate		34	%		34	%
Statutory state and local rate		0	%		0	%
Less allowance for tax loss carry-forward		-34	%		-34	%
Effective rate		0	%		0	%

Deferred income taxes are comprised of the following:

Tax loss carry-forward	$	981,998		$	498,491
Allowance for recoverability		(981,998	)		(498,491	)
Deferred tax asset	$	0		$	0


Note: The deferred tax asset arising from the tax loss carry-forward expires in fiscal years 2026 to 2031 and may not be recoverable upon the purchase of the Company under current IRS statutes.

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8. Commitments and Contingencies

The Company has entered into a capital lease agreement for the vehicle equipment. Future minimum lease payments required under these leases is as follows:

2012	$	35,304
2013		35,304
2014		35,304
2015		26,478

Total minimum lease payments	$	132,390

Less amount representing interest		(20,875	)

Present value of minimum lease payments	$	111,515

During the fiscal year 2011, the Company assigned various capital leases to third parties of which the Company remains liable on in the event the third parties do not fulfill its obligations on the lease.

In addition, the Company leases space for its operations located in the State of Washington. Minimum payments due under these leases are as follows.

2012	$	114,155
2013		117,576
2014		59,039

Less amounts subject to sub lease agreements		(217,888	)

Total minimum lease payments	$	72,882

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9. Litigation

The following is a summary of litigation to which the company is a party.

McEvoy Oil Company sued for non-payment of invoices totalling $17,710. On December 16, 2010, a judgment was granted to the plaintiff, awarding interest and costs. In addition, plaintiff is entitled to 18% interest on the judgment amount until it is paid in full. As of June 30, 2011, the total amount accrued was $25,425 for this judgement.

Pacific Fibre Products Inc. filed a lawsuit for non-payment of invoices totalling $8,854. On September 24, 2010, the plaintiff was granted a judgment, awarding interest and costs totalling $1,914. In addition, plaintiff is entitled to receive 12% interest on the judgment amount until it is paid in full.

Poly-America L.P. filed a lawsuit for non-payment of invoices totalling $7,541. On October 22, 2009, plaintiff was granted a judgment, awarding it interest and costs. In addition, plaintiff is entitled to receive 5% interest on the judgment amount until it is paid in full. As of June 30, 2011, the total amount accrued was $10,045 for this judgement.

Scan Coin North, Inc. filed a lawsuit for non-payment of invoices totalling $5,763. On December 7, 2010, plaintiff was granted a judgment, awarding it interest and costs. In addition, plaintiff is entitled to receive 5% interest on the judgment amount until it is paid in full. As of June 30, 2011, the total amount accrued was $10,021 for this judgement.

Industrial Hydraulic Services filed a lawsuit for non-payment of invoices totalling $3,048, which has not been concluded. As of June 30, 2011, the total amount accrued was $5,069 for this judgement.

National Service bureau filed a lawsuit for non-payment of invoices totaling $4,488, which has not been concluded. As of June 30, 2011, the total amount accrued for this judgment was $6,063.

Nelson Distributing, Inc. filed a lawsuit for non-payment of invoices totaling $37,320. On December 15, 2010, plaintiff was granted a judgment, awarding it interest and costs. In addition, plaintiff is entitled to receive 18% interest on the judgment amount until it is paid in full. As of June 30, 2011, the total amount accrued for this judgment was $48,500.

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10. Issuances of Common Stock and Options Outstanding

During fiscal year 2010, the Company issued 682,000 shares of its common stock and received proceeds of $270,000. In addition, the Company issued 1,200,000 shares of common stock to consultants for services rendered valued at $20,025.

A list of options outstanding at June 30, 2011 is as follows:

		Average	Average
		Exercise	Years to
		Price	Maturity

Options outstanding at June 30, 2009	3,361,600	$0.41	2.56

Issued	6,000
Expired	(103,936)
Exercised	(14,000)

Options outstanding at June 30, 2010	3,249,664	$0.30	1.44

Issued	0
Expired	(1,216,332)
Exercised	0

Options outstanding at June 30, 2011	2,033,332	$0.34	5.62

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11. Net Loss per Share

Basic net loss per share has been computed based on the weighted average of common shares outstanding during the years. Diluted net loss per share gives the effect of outstanding common stock equivalents of the options outstanding at year end. The effects on net loss per share of the common stock equivalents, however, are not included in the calculation of net loss per share since their inclusion would be anti-dilutive.

Net loss per share has been computed as follows:

	30-Jun-11			30-Jun-10

Loss from continuing operations	$	(625,270	)	$	(597,402	)
Loss from discontinued operations		(337,783	)		(188,971	)
Net loss	$	(963,053	)	$	(786,373	)

Weighted average shares outstanding		18,225,543			16,785,800

Loss per common share (basic & fully diluted):
Loss from continuing operations	$	(0.03	)	$	(0.05	)
Loss from discontinued operations		(0.02	)		0.00
Net loss per share	$	(0.05	)	$	(0.05	)

12. Related Party Transactions

In fiscal year 2007, the Company entered into equipment rental agreements with the then secretary/treasurer of the Company and a majority shareholder. The secretary/treasurer resigned in fiscal 2011. The Company had deposited $254,770 as security to secure the rental agreements. The deposit was unsecured and non interest bearing. In fiscal year 2011, the related party claimed the deposit in lieu of past rental payments owed and unpaid. As a result, the Company impaired this asset and recorded an expense of $254,770 in the statement of operations for fiscal year 2011.

During fiscal year 2011 and fiscal year 2010, the Company received advances from the Company’s president and majority shareholder to sustain its operations. As of June 30, 2011 and June 30, 2010, advances outstanding to this shareholder were $565,852 and $368,545. The advances have no stated interest and are due on demand. Although there was no stated interest on these notes, the Company imputed an interest rate of 11% and recorded the expense in the statement of operations for fiscal years 2011 and 2010.

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13. Going Concern

The accompanying financial statements have been presented in accordance with generally accepted accounting principles, which assume the continuity of the Company as a going concern. However, the Company has discontinued its business operations in September 2010. The Company has incurred significant losses since its inception and continues to rely on advances from the president and others and on the issuance of shares to raise capital to fund its business operations.

Management’s plans with regard to this matter are as follows:

The Company intends to re-enter the drywall scrap recycling business that it discontinued in September 2010. For this purpose, the Company anticipates an initial capital infusion of $1 million by issuing common stock pursuant to Section 4(2) of The Security Exchange Act of 1933. The funds will be used repurchase assets disposed of in fiscal year 2011 to be used for our re-entry to the drywall scrap recycling business. Follow-on funds will be required depending on the rate of expansion of the drywall scrap recycling business.

14. Subsequent Events

On July 1, 2011, the Company received loan proceeds of $20,000 from Asher Enterprise LLC for general corporate use. The loan is unsecured and matures on March 21, 2012, bears interest of 8% and is convertible into common shares of the Company at a conversion price equal to 61% of the market price of the shares at the date of conversion, commencing 180 days from the date of closing.

On August 17, 2011, the Company received loan proceeds of $27,500 from Asher Enterprise LLC for general corporate use. The loan is unsecured and matures on May 10, 2012, bears interest of 8% and is convertible into common shares of the Company at a conversion price equal to 61% of the market price of the shares at the date of conversion, commencing 180 days from the date of closing.

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DRS Inc. 10-K