10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

ýQuarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2016

☐Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ___________ to __________

Commission File No. 0-18958

Grote Molen, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Nevada	20-1282850
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
322 West Griffith Road
Pocatello, Idaho 83201
(Address of principal executive offices, including zip code)
(208) 234-9352
(Registrant's telephone number, including area code)

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.  Yes ý  No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ý    No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ý

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐  No ý

As of August 15, 2016, there were 22,200,000 shares of the Registrant's common stock, $0.001 par value per share, outstanding.

GROTE MOLEN, INC. AND SUBSIDIARY

FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2016

PART I - Financial Information

Item 1.  Financial Statements
	Condensed Consolidated Balance Sheets as of June 30, 2016 and December 31, 2015 (unaudited)	2
	Condensed Consolidated Statements of Operations for the Three Months and Six Months Ended June 30, 2016 and 2015 (unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2016 and 2015 (unaudited)	4
	Notes to Condensed Consolidated Financial Statements (unaudited)	5
Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations		10
Item 3.  Quantitative and Qualitative Disclosures About Market Risk		16
Item 4.  Controls and Procedures		16
PART II - Other Information
Item 1.  Legal Proceedings		17
Item 1A.  Risk Factors		17
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds		17
Item 3.  Defaults upon Senior Securities		17
Item 5.  Other Information		17
Item 6.  Exhibits		18
Signatures		19

1

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

GROTE MOLEN, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
	June 30, 2016		December 31, 2015
ASSETS
Current assets:
Cash	$	13,552	$	9,251
Accounts receivable		25,670		27,565
Accounts receivable – related parties		5,035		11,365
Inventories		864,581		708,893
Deposits		100,400		64,685
Prepaid expenses		403		356
Total current assets		1,009,641		822,115
Property and equipment, net		131,272		139,688
Intangible assets, net		62,820		63,068
Total assets	$	1,203,733	$	1,024,871
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	89,904	$	73,020
Accounts payable – related parties		3,897		1,950
Accrued interest payable – related parties		61,888		53,507
Accrued interest payable		28,085		22,686
Current portion of long-term debt – related party		-		2,943
Notes payable – related parties		364,399		130,127
Notes payable		167,600		136,100
Total current liabilities		715,773		420,333
Long-term debt:
Note payable		145,928		145,139
Total long-term debt		145,928		145,139
Total liabilities		861,701		565,472
Stockholders' equity:
Preferred stock, $.001 par value, 5,000,000 shares authorized,  no shares issued and outstanding		-		-
Common stock, $.001 par value, 100,000,000 shares authorized, 22,200,000 shares issued and outstanding		22,200		22,200
Additional paid-in capital		147,800		147,800
Retained earnings		172,032		289,399
Total stockholders' equity		342,032		459,399
Total liabilities and stockholders' equity	$	1,203,733	$	1,024,871

See notes to condensed consolidated financial statements

2

GROTE MOLEN, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Revenues:
Sales	$	289,383		$	280,018		$	458,055		$	582,194
Sales to related parties		12,960			11,456			16,580			26,045
Total revenues		302,343			291,474			474,635			608,239
Cost of revenues:
Cost of sales		203,610			197,785			326,071			412,633
Cost of related party sales		9,175			8,092			11,803			18,460
Total cost of revenues		212,785			205,877			337,874			431,093
Gross profit		89,558			85,597			136,761			177,146
Operating costs and expenses:
Selling, general and administrative		110,383			112,552			228,439			222,430
Depreciation and amortization		4,208			4,536			8,664			9,074
Total operating costs and expenses		114,591			117,088			237,103			231,504
Loss from operations		(25,033	)		(31,491	)		(100,342	)		(54,358	)
Other expense:
Interest expense – related parties		6,612			5,474			8,532			9,997
Interest expense		4,405			1,990			8,493			3,680
Total other expense		11,017			7,464			17,025			13,677
Loss before income taxes		(36,050	)		(38,955	)		(117,367	)		(68,035	)
Income tax (provision) benefit		-			(34	)		-			(34	)
Net loss	$	(36,050	)	$	(38,989	)	$	(117,367	)	$	(68,069	)
Net loss per common share -
Basic and diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)
Weighted average shares outstanding -
Basic and diluted		22,200,000			22,200,000			22,200,000			22,200,000

See notes to condensed consolidated financial statements

3

GROTE MOLEN, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Six Months Ended June 30,
	2016			2015
Cash flows from operating activities:
Net loss	$	(117,367	)	$	(68,069	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		8,664			9,074
(Increase) decrease in:
Accounts receivable		1,895			(9,050	)
Accounts receivable – related parties		6,330			32,008
Inventories		(155,688	)		(187,084	)
Deposits		(35,715	)		152,405
Prepaid expenses		(47	)		4
Increase (decrease) in:
Accounts payable and accrued expenses		16,884			22,781
Accounts payable – related parties		1,947			900
Accrued interest payable – related parties		8,381			4,579
Accrued interest payable		5,399			4,391
Net cash used in operating activities		(259,317	)		(38,061	)
Cash flows from investing activities		-			-
Net cash used in investing activities		-			-
Cash flows from financing activities:
Proceeds from long-term note payable		5,300			22,000
Proceeds from notes payable – related parties		300,000			-
Proceeds from notes payable		31,500			30,000
Repayment of notes payable – related parties		(65,728	)		(15,500	)
Repayment of long-term debt – related party		(2,943	)		(22,490	)
Repayment of long-term note payable		(4,511	)		(14,559	)
Net cash provided by (used in) financing activities		263,618			(549	)
Net increase (decrease) in cash		4,301			(38,610	)
Cash, beginning of the period		9,251			60,808
Cash, end of the period	$	13,552		$	22,198

See notes to condensed consolidated financial statements

4

GROTE MOLEN, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30, 2016

(UNAUDITED)

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNICANT ACCOUNTING POLICIES

Organization

Grote Molen, Inc. ("Grote Molen") was incorporated under the laws of the State of Nevada on March 15, 2004.  BrownWick, LLC ("BrownWick"), a wholly owned subsidiary, was formed in the State of Idaho on June 5, 2005.  The principal business of Grote Molen and BrownWick (collectively the "Company") is to distribute grain mills, kitchen mixers and related accessories for home use.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Grote Molen and BrownWick.  All significant inter-company balances and transactions have been eliminated.

Basis of Presentation

The accompanying condensed consolidated financial statements as of June 30, 2016 and for the three months and six months ended June 30, 2016 and 2015 are unaudited.  In the opinion of management, all adjustments have been made, consisting of normal recurring items, that are necessary to present fairly the consolidated financial position as of June 30, 2016 as well as the consolidated results of operations for the three months and six months ended June 30, 2016 and cash flows for the six months ended June 30, 2016 and 2015 in accordance with U.S. generally accepted accounting principles.  The results of operations for any interim period are not necessarily indicative of the results expected for the full year.  The interim condensed consolidated financial statements and related notes thereto should be read in conjunction with the audited consolidated financial statements and related notes thereto for the year ended December 31, 2015.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Earnings Per Share

The computation of basic earnings per common share is based on the weighted average number of shares outstanding during the period.

The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the period plus the common stock equivalents which would arise from the exercise of stock options and warrants outstanding using the treasury stock method and the average market price per share during the period.  Common stock equivalents are not included in the diluted earnings per share calculation when their effect is anti-dilutive.  We have not granted any stock options or warrants since inception of the Company.  Therefore, our basic earnings per share is the same as diluted earnings per share for the three months and six months ended June 30, 2016 and 2015.

5

Comprehensive Income (Loss)

Comprehensive income (loss) is the same as net income (loss).

NOTE 2 – DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS

Accounts receivable consist of the following:

	June 30, 2016		December 31, 2015
Trade accounts receivable – related parties	$	35	$	6,365
Employee advances		5,000		5,000
Total accounts receivable – related parties		5,035		11,365
Trade accounts receivable		25,670		27,565
	$	30,705	$	38,930

Property and equipment consist of the following:

	June 30, 2016			December 31, 2015
Office equipment	$	4,335		$	4,335
Warehouse equipment		16,927			16,927
Website development		2,000			2,000
Molds		150,615			150,615
		173,877			173,877
Accumulated depreciation		(42,605	)		(34,189	)
	$	131,272		$	139,688

Intangible assets consist of the following:

	June 30, 2016			December 31, 2015
License – definite lived	$	10,500		$	10,500
License – indefinite lived		62,720			62,720
Patent		100			100
		73,320			73,320
Accumulated amortization		(10,500	)		(10,252	)
	$	62,820		$	63,068

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NOTE 3 – RELATED PARTY DEBT

Notes payable – related parties are unsecured and are comprised of the following:

	June 30, 2016		December 31, 2015
Note payable to a stockholder, due on demand, with interest at 6% per annum	$	30,000	$	30,000
Note payable to a stockholder, due on demand, with interest at 6% per annum		3,500		3,500
Note payable to a stockholder, due on demand, with interest at 6% per annum		38,000		38,000
Note payable to a stockholder, due on demand, with interest at 6% per annum		10,000		10,000
Note payable to a stockholder, due on demand, with interest at 6% per annum		5,000		5,000
Note payable to a stockholder, due on demand, with interest at 8% per annum		9,000		9,000
Note payable to a stockholder, due on demand, with interest at 8% per annum		15,000		15,000
Note payable to a stockholder, due on demand, with interest at 8% per annum		2,000		10,500
Note payable to a stockholder, due May 1, 2017, with interest at 18% per annum, payable in 12 monthly payments of $27,504		242,772
Non-interest bearing advances from stockholders, with no formal repayment terms		9,127		9,127
Total	$	364,399	$	130,127

Long-term debt – related party is comprised of the following:

	June 30, 2016		December 31, 2015
Note payable to a stockholder, due in monthly installments of $4,000 through February 2016, with interest at 6.97 % per annum	$	-	$	2,943
Less current portion		-		(2,943	)
Long-term portion	$	-	$	-

Interest expense on related party debt was $6,612 and $5,474 for the three months ended June 30, 2016 and 2015 and $8,532 and $9,997 for the six months ended June 30, 2016 and 2015, respectively.  Accrued interest payable to related parties was $61,888 and $53,507 at June 30, 2016 and December 31, 2015, respectively.

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NOTE 4 – NOTES PAYABLE

Short-term notes payable to non-related parties are unsecured and are comprised of the following:

	June 30, 2016		December 31, 2015
Note payable, due on demand, with interest at 8% per annum	$	15,000	$	15,000
Note payable, due on demand, with interest at 8% per annum		20,000		20,000
Note payable, due on demand, with interest at 8% per annum		5,000		5,000
Note payable, due on demand, with interest at 8% per annum		7,000		7,000
Note payable, due on demand, with interest at 6% per annum		15,000		15,000
Note payable, due on demand, with interest at 6% per annum		10,000		10,000
Note payable, due on demand, with interest at 6% per annum		4,000		4,000
Note payable, due on demand, with interest at 6% per annum		5,600		5,600
Note payable, due on demand, with interest at 6% per annum		10,000		10,000
Note payable, due on demand, with interest at 6% per annum		10,000		10,000
Note payable, due on demand, with interest at 6% per annum		10,000		10,000
Note payable, due on demand, with interest at 6% per annum		10,000		10,000
Note payable, due on demand, with interest at 6% per annum		2,500		2,500
Note payable, due on demand, with interest at 6% per annum		9,000		9,000
Note payable, due on demand, with interest at 6% per annum		3,000		3,000
Note payable, due on demand, with interest at 6% per annum		20,000		-
Note payable, due on demand, with interest at 6% per annum		5,000		-
Note payable, due on demand, with interest at 6% per annum		6,500		-
Total	$	167,600	$	136,100

8

At June 30, 2016 and December 31, 2015, we had a long-term note payable to a bank with a principal balance of $145,928 and $145,139, respectively.  The long-term note payable is a line of credit promissory note bearing interest at an indexed rate plus 2% (4.50% at June 30, 2016), requiring monthly interest payments only, and maturing on May 16, 2021.  The note payable has a maximum line of credit of $150,000, and is secured by a deed of trust on certain real estate owned by one of the principal stockholders of the Company and by the Company's inventories, property and equipment, and intangible assets.

Accrued interest payable on notes payable was $28,085 and $22,686 at June 30, 2016 and December 31, 2015, respectively.

NOTE 5 – RELATED PARTY TRANSACTIONS

Pursuant to an agreement effective in February 2011, we pay a monthly management fee to a company owned by one of the major stockholders of the Company to manage our day-to-day business activities and to provide business space.  Historically we have paid monthly management fees in varying amounts to this related party pursuant to prior agreements approved by the stockholders of the Company.  The agreement is on a month-to-month basis and can be cancelled at any time by the vote of management.  The agreement was amended and restated on October 31, 2014 to increase the fee to $12,500 effective November 1, 2014.  Also included in management fees are monthly payments of $150 to another major stockholder of the Company for expense reimbursement.  Included in selling, general and administrative expenses were management fees totaling $37,950 for each of the three-month periods ended June 30, 2016 and 2015 and $75,900 for each of the six-month periods ended June 30, 2016 and 2015.

Each of the two principal stockholders of the Company owns a company that is our customer.  Sales to these related parties totaled $12,960 and $11,456 for the three months ended June 30, 2016 and 2015, respectively, or approximately 4% and 4%, respectively.  Sales to these related parties totaled $16,580 and $26,045 for the six months ended June 30, 2016 and 2015, respectively, or approximately 3% and 4%, respectively.  Accounts receivable from these related parties totaled $35 and $6,365 at June 30, 2016 and December 31, 2015, respectively.

Accounts payable to these related parties totaled $3,897 and $1,950 at June 30, 2016 and December 31, 2015, respectively.

See Note 3 for discussion of related party debt and interest expense.

NOTE 6 – CAPITAL STOCK

The Company's preferred stock may have such rights, preferences and designations and may be issued in such series as determined by our Board of Directors.  No shares of preferred stock were issued and outstanding at June 30, 2016 and December 31, 2015.

NOTE 7 – SUPPLEMENTAL STATEMENT OF CASH FLOWS INFORMATION

During the six months ended June 30, 2016 and 2015, we had no non-cash financing and investing activities.

During the six months ended June 30, 2016 and 2015, we paid cash for income taxes of $0 and $34, respectively.

During the six months ended June, 2016 and 2015, we paid cash for interest of $3,006 and $4,707, respectively.

NOTE 8 – SIGNIFICANT CUSTOMERS

In addition to the sales to related parties discussed in Note 5, we had sales to one customer that accounted for approximately 12% and 9% of total sales for the six months ended June 30, 2016 and 2015, respectively.

NOTE 9 – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

There were no new accounting pronouncements issued during the six months ended June 30, 2016 and through the date of this filing that we believe are applicable to or would have a material impact on the consolidated financial statements of the Company.

NOTE 10 – SUBSEQUENT EVENTS

We have evaluated events occurring after the date of our accompanying consolidated balance sheets through the date the financial statements were issued and have identified the following subsequent events that we believe require disclosure.

On July 15, 2016, we received proceeds of $50,000 from an unsecured promissory note payable to an unrelated party.  The note is payable on demand and bears interest at an annual rate of 6%.  The proceeds from the note were primarily used to retire other notes payable and related accrued interest payable.

On August 9, 2016, we received proceeds of $10,000 from an unsecured promissory note payable to an unrelated party.  The note is payable on demand and bears interest at an annual rate of 6%.

9

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements.  These statements reflect the Company's views with respect to future events based upon information available to it at this time.  These forward-looking statements are subject to certain uncertainties and other factors that could cause actual results to differ materially from these statements.  These uncertainties and other factors include, but are not limited to the risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2015 in Part I, Item 1A under the caption "Risk Factors."  The words "anticipates," "believes," "estimates," "expects," "plans," "projects," "targets" and similar expressions identify forward-looking statements.  Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made.  The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, changes in assumptions, future events or otherwise.

You should read the following discussion in conjunction with our condensed consolidated financial statements, which are included elsewhere in this report.  The following information contains forward-looking statements. (See "Forward-Looking Statements" and "Risk Factors.")

General

Grote Molen, Inc. ("Grote Molen") was incorporated under the laws of the State of Nevada on March 15, 2004. BrownWick, LLC ("BrownWick"), a wholly owned subsidiary, was formed in the State of Idaho on June 5, 2005. The principal business of Grote Molen and BrownWick (collectively the "Company") is to distribute electrical and hand operated grain mills, kitchen mixers and related accessories for home use.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires our management to make assumptions, estimates and judgments that affect the amounts reported in the financial statements, including the notes thereto, and related disclosures of commitments and contingencies, if any. We consider our critical accounting policies to be those that require the more significant judgments and estimates in the preparation of financial statements, including the following:

Accounts Receivable

Trade accounts receivable are carried at original invoice amount less an estimate made for doubtful accounts. We determine the allowance for doubtful accounts by identifying potential troubled accounts and by using historical experience and future expectations applied to an aging of accounts. Trade accounts receivable are written off when deemed uncollectible. Recoveries of trade accounts receivable previously written off are recorded as income when received. We determined that no allowance for doubtful accounts was required at June 30, 2016 and December 31, 2015.

Inventories

Inventories, consisting primarily of grain mills, kitchen mixers, parts and accessories, are stated at the lower of cost or market, with cost determined using primarily the first-in-first-out (FIFO) method. We purchase substantially all inventories from two foreign suppliers, and have been dependent on those suppliers for substantially all inventory purchases since we commenced operations.

10

Deposits

At times, we are required to pay advance deposits toward the purchase of inventories from our principal suppliers. Such advance payments are recorded as deposits, a current asset in the accompanying consolidated financial statements.

Property and Equipment

Property and equipment are carried at cost, less accumulated depreciation. Depreciation is computed using the straight-line method based on the estimated useful lives of the assets, which range from 3 to 10 years. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed and any resulting gain or loss is recognized in operations for the period. The cost of maintenance and repairs is charged to operations as incurred. Significant renewals and betterments are capitalized.

Intangible Assets

Intangible assets are recorded at cost, less accumulated amortization. Amortization of definitive lived intangible assets is computed using the straight-line method based on the estimated useful lives or contractual lives of the assets, which range from 10 to 30 years.

Impairment of Long-Lived Assets

We periodically review our long-lived assets, including intangible assets, for impairment when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. No events or changes in circumstances have occurred to indicate that the carrying amount of our long-lived assets may not be recoverable. Therefore, no impairment loss was recognized during the three months and six months ended June 30, 2016 and 2015.

Revenue Recognition

We record revenue from the sales of grain mills, kitchen mixers and accessories in accordance with the underlying sales agreements when the products are shipped, the selling price is fixed and determinable, and collection is reasonably assured.

Warranties

We provide limited warranties to our customers for certain of our products sold.  We perform warranty work at our service center in Pocatello, Idaho or at other authorized service locations.  Warranty expenses have not been material to our consolidated financial statements.

11

Income Taxes

We account for income taxes in accordance with FASB ASC Topic 740, Income Taxes, using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

FASB ASC Topic 740, Income Taxes, requires us to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, we must measure the tax position to determine the amount to recognize in our consolidated financial statements. We performed a review of our material tax positions in accordance with recognition and measurement standards established by ASC Topic 740 and concluded we had no unrecognized tax benefit that would affect the effective tax rate if recognized for the three months and six months ended June 30, 2016 and 2015.

We include interest and penalties arising from the underpayment of income taxes, if any, in our consolidated statements of operations in general and administrative expenses. As of June 30, 2016 and December 31, 2015, we had no accrued interest or penalties related to uncertain tax positions.

Fair Value of Financial Instruments

Our financial instruments consist of cash, accounts receivable, accounts payable and notes payable. The carrying amount of cash, accounts receivable and accounts payable approximates fair value because of the short-term nature of these items.  We believe the carrying amount of the notes payable approximates fair value because the interest rates on the notes approximate market rates of interest.

Results of Operations

Sales

Our business is not seasonal; however, our quarterly sales, including sales to related parties, may fluctuate materially from period to period.  At times, we derive a significant portion of our revenues from sales to related parties.  Each of our two principal stockholders owns a company that may be a significant customer.  Our sales were comprised of the following:

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Sales	$	289,383	$	280,018	$	458,055	$	582,194
Sales – related parties		12,960		11,456		16,580		26,045
Total sales	$	302,343	$	291,474	$	474,635	$	608,239

Sales to related parties totaled approximately 4% and 4% of total sales for the three months ended June 30, 2016 and 2015, and approximately 3% and 4% of total sales for the six months ended June 30, 2016 and 2015, respectively.

Our total sales increased $10,869, or approximately 4%, during the three months ended June 30, 2016 compared to the three months ended June 30, 2015.  On a year-to-date basis, however, our total sales decreased $133,604, or approximately 22%, during the six months ended June 30, 2016 compared to the six months ended June 30, 2015.   While we experienced an increase in sales in 2015 attributable to the successful introduction of our new WonderMix kitchen mixer, we believe year-to-date sales in 2016 were negatively impacted by a continuing overall slow-down in the preparedness market and a prolonged slow economic recovery in the United States.  We believe sales of the Wondermix will also increase in 2016; however, there can be no assurance that we will be successful in these endeavors.

12

Cost of Sales

Total cost of sales for the three months ended June 30, 2016 was $212,785, compared to $205,877 for the three months ended June 30, 2015, an increase of $6,908, or approximately 3%.  On a year-to-date basis, total cost of sales for the six months ended June 30, 2016 was $337,874, compared to $431,093 for the six months ended June 30, 2015, a decrease of $93,219, or approximately 22%. Our cost of sales consists of the purchase price of our products incurred to our suppliers plus inbound shipping costs.  We do not manufacture our own products.  Our costs to purchase products for resale remained relatively constant during the first six months of 2016.  Therefore, the increase in our cost of sales during the three months ended June 30, 2016 compared to the three months ended June 30, 2015 was primarily attributed to the increase in sales volume, and the decrease in our cost of sales during the six months ended June 30, 2016 compared to the six months ended June 30, 2015 was primarily attributed to the decrease in sales volume. Included in cost of sales were costs of related party sales of $9,175 and $8,092 for the three months ended June 30, 2016 and 2015, and $11,803 and $18,460 for the six months ended June 30, 2016 and 2015, respectively.  Total cost of sales as a percentage of total sales was approximately 70% and 71% for the three months ended June 30, 2016 and 2015, and approximately 71% and 71% for the six months ended June 30, 2016 and 2015, respectively.

Cost of sales as a percentage of sales may fluctuate from period to period, based on the mix of products sold during a particular period and pricing arrangements with our suppliers.  In addition, we purchase substantially all inventories from two foreign suppliers, and have been dependent on those suppliers for substantially all inventory purchases since we commenced operations.  International manufacturing is subject to factors that can have a material impact on our costs of sales, including: availability of labor at costs consistent with historical levels; changes in labor or other laws; instability of social, political and economic factors; freight costs, including domestic and international customs and tariffs; unexpected changes in regulatory environments; costs and availability of manufacturing materials; and other factors.

Selling, General and Administrative Expenses

Selling general and administrative expenses remained relatively constant in 2016 compared to 2015.  Our selling, general and administrative expenses were $110,383 for the three months ended June 30, 2016, compared to $112,552 for the three months ended June 30, 2015, a decrease of $2,169, or approximately 2%.  Our selling, general and administrative expenses were $228,439 for the six months ended June 30, 2016, compared to $222,430 for the six months ended June 30, 2015, an increase of $6,009, or approximately 3%.

Pursuant to an agreement effective in February 2011, we pay a monthly management fee to a company owned by one of the major stockholders of the Company to manage our day-to-day business activities and to provide business space.  Historically we have paid monthly management fees in varying amounts to this related party pursuant to prior agreements.  The agreement is on a month-to-month basis and can be cancelled at any time by the vote of management.  The agreement was amended and restated on October 31, 2014 to increase the monthly fee to $12,500 effective November 1, 2014.  Also included in management fees are monthly payments of $150 to another major stockholder of the Company for expense reimbursement.  Included in selling, general and administrative expenses were management fees to related parties totaling $37,950 for each of the three-month periods ended June 30, 2016 and 2015 and $75,900 for each of the six-month periods ended June 30, 2016 and 2015.

13

Depreciation and Amortization Expense

Depreciation and amortization expense remained fairly constant and was $4,208 and $4,536 for the three months ended June 30, 2016 and 2015, and $8,664 and $9,074 for the six months ended June 30, 2016 and 2015, respectively.

Other Expense: Interest Expense

Other expense includes interest expense on our indebtedness, a significant portion of which is indebtedness to related parties.  Total interest expense – related parties was $6,612 and $5,474 for the three months ended June 30, 2016 and 2015, and $8,532 and $9,997 for the six months ended June 30, 2016 and 2015, respectively.  The increase in interest expense in the quarter ended June 30, 2016 was attributed to a new 18%, $300,000 promissory note from a related party in April 2016.  The decrease in interest expense to related parties on a year-to-date basis in the current year is due to the repayment in full of the long-term debt to related parties and a partial payment of notes payable – related parties during the six months ended June 30, 2016, partially offset by additional interest attributed to the $300,000 promissory note in April 2016.

Other expense also includes interest expense to non-related parties of $4,405 and $1,990 for the three months ended June 30, 2016 and 2015 and $8,493 and $3,680 for the six months ended June 30, 2016 and 2015, respectively.  The increase in interest expense to non-related parties in 2016 is primarily due to additional notes payable to non-related parties in 2015 and 2016.

Liquidity and Capital Resources

As of June 30, 2016, we had total current assets of $1,009,641, including cash of $13,552, and current liabilities of $715,773, resulting in working capital of $293,868.  Our current assets and working capital included inventories of $864,581 and deposits of $100,400.  Generally, we are required to pay significant advance deposits toward the purchase of inventories from our principal suppliers.

In addition, as of June 30, 2016, we had total stockholders' equity of $342,032.  We have financed our operations, the acquisition of inventories, and the payment of vendor deposits from our operations, short-term loans from our principal stockholders and non-related parties, a long-term note payable from a bank, and from the issuance of our common stock.  In April 2016, we borrowed $300,000 from a principal stockholder.

For the six months ended June 30, 2016, net cash used in operating activities was $259,317, as a result of our net loss of $117,367 and increases in inventories of $155,688, deposits of $35,715 and prepaid expenses of $47, partially offset by non-cash expenses of $8,664, decreases in accounts receivable of $1,895 and accounts receivable – related parties of $6,330, and increases in accounts payable and accrued expenses of $16,884, accounts payable – related parties of $1,947, accrued interest payable – related parties of $8,381 and accrued interest payable of $5,399.

By comparison, for the six months ended June 30, 2015, net cash used in operating activities was $38,061, as a result of our net loss of $68,069 and increases in accounts receivable of $9,050 and inventories of $187,084, offset by non-cash expenses of $9,074, decreases in accounts receivable – related parties of $32,008, deposits of $152,405 and prepaid expenses of $4, and increases in accounts payable and accrued expenses of $22,781, accounts payable – related parties of $900, accrued interest payable – related parties of $4,579 and accrued interest payable of $4,391.

14

We had no net cash provided by or used in investing activities for the six months ended June 30, 2016 and 2015.

For the six months ended June 30, 2016, net cash provided by financing activities was $263,618, comprised of proceeds from long-term note payable of $5,300, proceeds from notes payable – related parties of $300,000 and proceeds from notes payable of $31,500, partially offset by repayment of notes payable – related parties of $65,728, repayment of long-term debt – related party of $2,943 and repayment of long-term note payable of $4,511.

For the six months ended June 30, 2015, net cash used in financing activities was $549, comprised of proceeds from long-term note payable of $22,000 and proceeds from notes payable of $30,000, offset by repayment of notes payable – related parties of $15,500, repayment of long-term debt – related party of $22,490 and repayment of long-term note payable of $14,559.

At June 30, 2016, we had short-term notes payable – related parties totaling $364,399, which are payable to our principal stockholders, are unsecured, bear interest at rates ranging from 6% to 18% per annum and are generally due on demand.  In April 2016, we borrowed $300,000 from a principal stockholder.  The note bears interest at 18% and is payable in 12 monthly payments of $27,504 through May 2017.  The note had a balance of $242,772 as of June 30, 2016.

In addition, at June 30, 2016, we had short-term notes payable to non-related parties totaling $167,600, which are unsecured, bear interest at rates ranging from 6% to 8% per annum and are due on demand.

At December 31, 2015, our long-term debt – related party was comprised of the remaining principal balance of $2,943 of a note payable to a principal stockholder.  The note was paid in full in February 2016.

At June 30, 2016, we had a long-term note payable to a bank with a principal balance of $145,928.  The long-term note payable is a line of credit promissory note bearing interest at an indexed rate plus 2% (4.5% at June 30, 2016), requiring monthly interest payments only and maturing on May 16, 2021.  For the past several months, we have made monthly payments of principal and interest in varying amounts.  The note payable has a maximum line of credit of $150,000 and is secured by a deed of trust on certain real estate owned by one of the principal stockholders of the Company and by the Company's inventories, property and equipment, and intangible assets.

Accrued interest payable – related parties was $61,888 and $53,507 at June 30, 2016 and December 31, 2015, respectively.  Accrued interest payable to non-related parties was $28,085 and $22,686 at June 30, 2016 and December 31, 2015, respectively.

In the event sales during 2016 do not meet our expectations, we may require additional funding from the sale of our common stock or debt in order to meet our obligations.  Depending on the requirement to pay advance deposits on orders from our suppliers, we estimate we may require $50,000 to $100,000 of additional funding in 2016.  No assurances can be given that, if required, such funding will be available to us on acceptable terms or at all.

15

Recent Accounting Pronouncements

There were no new accounting pronouncements issued during the six months ended June 30, 2016 and through the date of this filing that we believe are applicable to or would have a material impact on the consolidated financial statements of the Company.

Off-Balance Sheet Arrangements

Pursuant to an agreement effective in February 2011, we pay a monthly management fee to a company owned by one of the major stockholders of the Company to manage our day-to-day business activities and to provide business space.  Historically we have paid monthly management fees in varying amounts to this related party pursuant to prior agreements.  The agreement is on a month-to-month basis and can be cancelled at any time by the vote of management.  The agreement was amended and restated on October 31, 2014 to increase the fee to $12,500 effective November 1, 2014.  

Also included in management fees are monthly payments of $150 to another major stockholder of the Company for expense reimbursement.  

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Not Applicable.  The Company is a "smaller reporting company."

Item 4.   Controls and Procedures

Evaluation of disclosure controls and procedures.

Under the supervision and with the participation of our management, including our President and Treasurer who serves as our principal executive and principal financial officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("the Exchange Act") as of June 30, 2016, the end of the period covered by this report.  Based upon that evaluation, our President and Treasurer concluded that our disclosure controls and procedures as of June 30, 2016 were effective such that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and (ii) accumulated and communicated to our management, including our President and Treasurer, as appropriate to allow timely decisions regarding disclosure.  A controls system cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

Changes in internal controls over financial reporting.

There was no change in our internal control over financial reporting during the quarter ended June 30, 2016 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

16

PART II – OTHER INFORMATION

Item 1.  Legal Proceedings

We are not a party to any material pending legal proceedings.

Item 1A.  Risk Factors

See the risk factors described in Item 1A of the Company's 2015 annual report on Form 10-K filed with the SEC on March 30, 2016.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

During the three months ended June 30, 2016 we had no unregistered sales of equity securities.

Item 3.  Defaults upon Senior Securities

Not Applicable.

Item 4.  Mine Safety Disclosures

Not Applicable.

Item 5.  Other Information

Not Applicable.

17

Item 6:  Exhibits

The following exhibits are filed as part of this report:

Exhibit No.	Description of Exhibit
3.1	Articles of Incorporation (1)
3.2	Bylaws (1)
10.1	Promissory Note dated April 16, 2016*
10.2	Promissory Note dated May 5, 2016*
31.1	Section 302 Certification of Chief Executive and Chief Financial Officer*
32.1	Section 1350 Certification of Chief Executive Officer and Chief Financial Officer*
101 INS	XBRL Instance Document*
101SCH	XBRL Taxonomy Extension Schema*
101 CAL	XBRL Taxonomy Extension Calculation Linkbase*
101 DEF	XBRL Taxonomy Extension Definition Linkbase*
101 LAB	XBRL Taxonomy Extension Label Linkbase*
101 PRE	XBRL Taxonomy Extension Presentation Linkbase*

(1) Incorporated by reference from Exhibit Numbers 3.1 and 3.2 of the Company's registration statement on Form 10 filed with the SEC on May 14, 2010.

* Exhibits filed with this report.

18

SIGNATURES

Pursuant to the requirements 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.

	Grote Molen, Inc.
Dated:  August 15, 2016	By /s/ John B. Hofman
	John B. Hofman
	President, Secretary and Treasurer
	(Principal Executive and Accounting Officer)

19

EX-10.1

Exhibit 10.1

EX-10.2

Exhibit 10.2

EX-31.1

Exhibit 31.1

I, John B. Hofman, certify that:

1. I have reviewed this report on Form 10-Q of Grote Molen, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 15, 2016	/s/ John B. Hofman
	John B. Hofman
	President, Secretary and Treasurer
	(Principal Executive Officer and
	Principal Financial Officer)

EX-31.1

Exhibit 32.1

CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Grote Molen, Inc. (the "Company") on Form 10-Q for the quarter ended June 30, 2016 as filed with the Securities and Exchange Commission on or about the date hereof (the "Report"), I, John B. Hofman, President, Secretary and Treasurer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 15, 2016	/s/ John B. Hofman
	John B. Hofman
	President, Secretary and Treasurer

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act has been furnished to Grote Molen, Inc. and will be retained by Grote Molen, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Aug. 15, 2016
Document and Entity Information:
Entity Registrant Name	GROTE MOLEN INC
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
Trading Symbol	grote
Amendment Flag	false
Entity Central Index Key	0001456212
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		22,200,000
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2
Entity Incorporation, State Country Name	Nevada
Entity Incorporation, Date of Incorporation	Mar. 15, 2004

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Current Assets:
Cash	$ 13,552	$ 9,251
Accounts receivable	25,670	27,565
Accounts receivable - related parties	5,035	11,365
Inventories	864,581	708,893
Deposits	100,400	64,685
Prepaid expenses	403	356
Total current assets	1,009,641	822,115
Property and equipment, net	131,272	139,688
Intangible assets, net	62,820	63,068
Total Assets	1,203,733	1,024,871
Current Liabilities:
Accounts payable and accrued expenses	89,904	73,020
Accounts payable - related parties	3,897	1,950
Accrued interest payable - related parties	61,888	53,507
Accrued interest payable	28,085	22,686
Current portion of long-term debt - related party		2,943
Notes payable - related parties	364,399	130,127
Notes payable	167,600	136,100
Total current liabilities	715,773	420,333
Long-term debt:
Note payable	145,928	145,139
Total long-term debt	145,928	145,139
Total liabilities	861,701	565,472
Stockholders' equity:
Preferred stock, $.001 par value, 5,000,000 shares authorized, no shares issued and outstanding
Common stock, $.001 par value, 100,000,000 shares authorized, 22,200,000 shares issued and outstanding	22,200	22,200
Additional paid-in capital	147,800	147,800
Retained earnings	172,032	289,399
Total stockholders' equity	342,032	459,399
Total liabilities and stockholders' equity	$ 1,203,733	$ 1,024,871

XML

CONDENSED CONSOLIDATED BALANCE SHEETS PARENTHETICAL - $ / shares	Jun. 30, 2016	Dec. 31, 2015
CONDENSED CONSOLIDATED BALANCE SHEETS PARENTHETICAL
Preferred stock par value	$ 0.001	$ 0.001
Preferred stock shares authorized	5,000,000	5,000,000
Preferred stock shares issued
Preferred stock shares outstanding
Common stock par value	$ 0.001	$ 0.001
Common stock shares authorized	100,000,000	100,000,000
Common stock shares issued	22,200,000	22,200,000
Common stock shares outstanding	22,200,000	22,200,000

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Revenues:
Sales	$ 289,383	$ 280,018	$ 458,055	$ 582,194
Sales to related parties	12,960	11,456	16,580	26,045
Total revenues	302,343	291,474	474,635	608,239
Cost of revenues:
Cost of sales	203,610	197,785	326,071	412,633
Cost of related party sales	9,175	8,092	11,803	18,460
Total cost of revenues	212,785	205,877	337,874	431,093
Gross profit	89,558	85,597	136,761	177,146
Operating costs and expenses:
Selling, general and administrative	110,383	112,552	228,439	222,430
Depreciation and amortization	4,208	4,536	8,664	9,074
Total operating costs and expenses	114,591	117,088	237,103	231,504
Loss from operations	(25,033)	(31,491)	(100,342)	(54,358)
Other expense:
Interest expense - related parties	6,612	5,474	8,532	9,997
Interest expense	4,405	1,990	8,493	3,680
Total other expense	11,017	7,464	17,025	13,677
Loss before income taxes	(36,050)	(38,955)	(117,367)	(68,035)
Income tax (provision) benefit		(34)		(34)
Net loss	$ (36,050)	$ (38,989)	$ (117,367)	$ (68,069)
Net loss per common share - Basic and diluted
Weighted average shares outstanding - Basic and diluted	22,200,000	22,200,000	22,200,000	22,200,000

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash flows from operating activities:
Net loss	$ (117,367)	$ (68,069)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	8,664	9,074
(Increase) decrease in:
(Increase) Decrease in Accounts Receivable	1,895	(9,050)
(Increase) Decrease in Accounts Receivable - Related Parties	6,330	32,008
(Increase) Decrease in Inventories	(155,688)	(187,084)
(Increase) Decrease in Deposits	(35,715)	152,405
(Increase) Decrease in Prepaid Expenses	(47)	4
Increase (Decrease) in Accounts Payable and Accrued Expenses	16,884	22,781
Increase (Decrease) in Accounts Payable - Related Parties	1,947	900
Increase (Decrease) in Accrued Interest Payable - Related Parties	8,381	4,579
Increase (Decrease) in Accrued Interest Payable	5,399	4,391
Net cash used in operating activities	(259,317)	(38,061)
Cash flows from investing activities
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from long-term note payable	5,300	22,000
Proceeds from notes payable - related parties	300,000
Proceeds from notes payable	31,500	30,000
Repayment of notes payable - related parties	(65,728)	(15,500)
Repayment of long-term debt - related party	(2,943)	(22,490)
Repayment of long-term note payable	(4,511)	(14,559)
Net cash provided by (used in) financing activities	263,618	(549)
Net increase (decrease) in cash	4,301	(38,610)
Cash, beginning of the period	9,251	60,808
Cash, end of the period	$ 13,552	$ 22,198

XML

Note 1 - Organization and Summary of Signicant Accounting Policies

6 Months Ended

Jun. 30, 2016

Notes

Note 1 - Organization and Summary of Signicant Accounting Policies

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNICANT ACCOUNTING POLICIES

Organization

Grote Molen, Inc. (“Grote Molen”) was incorporated under the laws of the State of Nevada on March 15, 2004.  BrownWick, LLC (“BrownWick”), a wholly owned subsidiary, was formed in the State of Idaho on June 5, 2005.  The principal business of Grote Molen and BrownWick (collectively the “Company”) is to distribute grain mills, kitchen mixers and related accessories for home use. 

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Grote Molen and BrownWick.  All significant inter-company balances and transactions have been eliminated.

Basis of Presentation

            The accompanying condensed consolidated financial statements as of June 30, 2016 and for the three months and six months ended June 30, 2016 and 2015 are unaudited.  In the opinion of management, all adjustments have been made, consisting of normal recurring items, that are necessary to present fairly the consolidated financial position as of June 30, 2016 as well as the consolidated results of operations for the three months and six months ended June 30, 2016 and cash flows for the six months ended June 30, 2016 and 2015 in accordance with U.S. generally accepted accounting principles.  The results of operations for any interim period are not necessarily indicative of the results expected for the full year.  The interim condensed consolidated financial statements and related notes thereto should be read in conjunction with the audited consolidated financial statements and related notes thereto for the year ended December 31, 2015.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Earnings Per Share

The computation of basic earnings per common share is based on the weighted average number of shares outstanding during the period.

The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the period plus the common stock equivalents which would arise from the exercise of stock options and warrants outstanding using the treasury stock method and the average market price per share during the period.  Common stock equivalents are not included in the diluted earnings per share calculation when their effect is anti-dilutive.  We have not granted any stock options or warrants since inception of the Company.  Therefore, our basic earnings per share is the same as diluted earnings per share for the three months and six months ended June 30, 2016 and 2015.

Comprehensive Income (Loss)

Comprehensive income (loss) is the same as net income (loss).

XML

Note 2 - Detail of Certain Balance Sheet Accounts

6 Months Ended

Jun. 30, 2016

Notes

Note 2 - Detail of Certain Balance Sheet Accounts

NOTE 2 – DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS

Accounts receivable consist of the following:

	June 30, 2016	December 31, 2015
Trade accounts receivable – related parties	$                       35	$                  6,365
Employee advances	5,000	5,000
Total accounts receivable – related parties	5,035	11,365
Trade accounts receivable	25,670	27,565
	$                30,705	$                38,930

Property and equipment consist of the following:

	June 30, 2016	December 31, 2015
Office equipment	$                4,335	$              4,335
Warehouse equipment	16,927	16,927
Website development	2,000	2,000
Molds	150,615	150,615
	173,877	173,877
Accumulated depreciation	(42,605)	(34,189)
	$            131,272	$          139,688

            Intangible assets consist of the following:

	June 30, 2016	December 31, 2015
License – definite lived	$              10,500	$            10,500
License – indefinite lived	62,720	62,720
Patent	100	100
	73,320	73,320
Accumulated amortization	(10,500)	(10,252)
	$              62,820	$            63,068

XML

Note 3 - Debt

6 Months Ended

Jun. 30, 2016

Notes

Note 3 - Debt

NOTE 3 – RELATED PARTY DEBT

Notes payable – related parties are unsecured and are comprised of the following:

	June 30, 2016	December 31, 2015
Note payable to a stockholder, due on demand, with interest at 6% per annum	$               30,000	$             30,000
Note payable to a stockholder, due on demand, with interest at 6% per annum	3,500	3,500
Note payable to a stockholder, due on demand, with interest at 6% per annum	38,000	38,000
Note payable to a stockholder, due on demand, with interest at 6% per annum	10,000	10,000
Note payable to a stockholder, due on demand, with interest at 6% per annum	5,000	5,000
Note payable to a stockholder, due on demand, with interest at 8% per annum	9,000	9,000
Note payable to a stockholder, due on demand, with interest at 8% per annum	15,000	15,000
Note payable to a stockholder, due on demand, with interest at 8% per annum	2,000	10,500
Note payable to a stockholder, due May 1, 2017, with interest at 18% per annum, payable in 12 monthly payments of $27,504	242,772
Non-interest bearing advances from stockholders, with no formal repayment terms	9,127	9,127
Total	$             364,399	$           130,127

Long-term debt – related party is comprised of the following:

	June 30, 2016	December 31, 2015
Note payable to a stockholder, due in monthly installments of $4,000 through February 2016, with interest at 6.97 % per annum	$                      -	$             2,943
Less current portion	-	(2,943)
Long-term portion	$                      -	$                    -

            Interest expense on related party debt was $6,612 and $5,474 for the three months ended June 30, 2016 and 2015 and $8,532 and $9,997 for the six months ended June 30, 2016 and 2015, respectively.  Accrued interest payable to related parties was $61,888 and $53,507 at June 30, 2016 and December 31, 2015, respectively.

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Note 4 - Notes Payable

6 Months Ended

Jun. 30, 2016

Notes

Note 4 - Notes Payable

NOTE 4 – NOTES PAYABLE

Short-term notes payable to non-related parties are unsecured and are comprised of the following:

	June 30, 2016	December 31, 2015
Note payable, due on demand, with interest at 8% per annum	$            15,000	$            15,000
Note payable, due on demand, with interest at 8% per annum	20,000	20,000
Note payable, due on demand, with interest at 8% per annum	5,000	5,000
Note payable, due on demand, with interest at 8% per annum	7,000	7,000
Note payable, due on demand, with interest at 6% per annum	15,000	15,000
Note payable, due on demand, with interest at 6% per annum	10,000	10,000
Note payable, due on demand, with interest at 6% per annum	4,000	4,000
Note payable, due on demand, with interest at 6% per annum	5,600	5,600
Note payable, due on demand, with interest at 6% per annum	10,000	10,000
Note payable, due on demand, with interest at 6% per annum	10,000	10,000
Note payable, due on demand, with interest at 6% per annum	10,000	10,000
Note payable, due on demand, with interest at 6% per annum	10,000	10,000
Note payable, due on demand, with interest at 6% per annum	2,500	2,500
Note payable, due on demand, with interest at 6% per annum	9,000	9,000
Note payable, due on demand, with interest at 6% per annum	3,000	3,000
Note payable, due on demand, with interest at 6% per annum	20,000	-
Note payable, due on demand, with interest at 6% per annum	5,000	-
Note payable, due on demand, with interest at 6% per annum	6,500	-
Total	$           167,600	$           136,100

            At June 30, 2016 and December 31, 2015, we had a long-term note payable to a bank with a principal balance of $145,928 and $145,139, respectively.  The long-term note payable is a line of credit promissory note bearing interest at an indexed rate plus 2% (4.50% at June 30, 2016), requiring monthly interest payments only, and maturing on May 16, 2021.  The note payable has a maximum line of credit of $150,000, and is secured by a deed of trust on certain real estate owned by one of the principal stockholders of the Company and by the Company’s inventories, property and equipment, and intangible assets.

            Accrued interest payable on notes payable was $28,085 and $22,686 at June 30, 2016 and December 31, 2015, respectively.

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Note 5 - Related Party Transactions

6 Months Ended

Jun. 30, 2016

Notes

Note 5 - Related Party Transactions

NOTE 5 – RELATED PARTY TRANSACTIONS

Pursuant to an agreement effective in February 2011, we pay a monthly management fee to a company owned by one of the major stockholders of the Company to manage our day-to-day business activities and to provide business space.  Historically we have paid monthly management fees in varying amounts to this related party pursuant to prior agreements approved by the stockholders of the Company.  The agreement is on a month-to-month basis and can be cancelled at any time by the vote of management.  The agreement was amended and restated on October 31, 2014 to increase the fee to $12,500 effective November 1, 2014.  Also included in management fees are monthly payments of $150 to another major stockholder of the Company for expense reimbursement.  Included in selling, general and administrative expenses were management fees totaling $37,950 for each of the three-month periods ended June 30, 2016 and 2015 and $75,900 for each of the six-month periods ended June 30, 2016 and 2015.

Each of the two principal stockholders of the Company owns a company that is our customer.  Sales to these related parties totaled $12,960 and $11,456 for the three months ended June 30, 2016 and 2015, respectively, or approximately 4% and 4%, respectively.  Sales to these related parties totaled $16,580 and $26,045 for the six months ended June 30, 2016 and 2015, respectively, or approximately 3% and 4%, respectively.  Accounts receivable from these related parties totaled $35 and $6,365 at June 30, 2016 and December 31, 2015, respectively. 

Accounts payable to these related parties totaled $3,897 and $1,950 at June 30, 2016 and December 31, 2015, respectively.

See Note 3 for discussion of related party debt and interest expense.

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Note 6 - Capital Stock

6 Months Ended

Jun. 30, 2016

Notes

Note 6 - Capital Stock

NOTE 6 – CAPITAL STOCK

The Company’s preferred stock may have such rights, preferences and designations and may be issued in such series as determined by our Board of Directors.  No shares of preferred stock were issued and outstanding at June 30, 2016 and December 31, 2015.

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Note 7 - Supplemental Statement of Cash Flows Information

6 Months Ended

Jun. 30, 2016

Notes

Note 7 - Supplemental Statement of Cash Flows Information

NOTE 7 – SUPPLEMENTAL STATEMENT OF CASH FLOWS INFORMATION

During the six months ended June 30, 2016 and 2015, we had no non-cash financing and investing activities.

During the six months ended June 30, 2016 and 2015, we paid cash for income taxes of $0 and $34, respectively.

During the six months ended June, 2016 and 2015, we paid cash for interest of $3,006 and $4,707, respectively.

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Note 8 - Significant Customers

6 Months Ended

Jun. 30, 2016

Notes

Note 8 - Significant Customers

NOTE 8 – SIGNIFICANT CUSTOMERS

In addition to the sales to related parties discussed in Note 5, we had sales to one customer that accounted for approximately 12% and 9% of total sales for the six months ended June 30, 2016 and 2015, respectively.

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Note 9 - Recently Issued Accounting Pronouncements

6 Months Ended

Jun. 30, 2016

Notes

Note 9 - Recently Issued Accounting Pronouncements

NOTE 9 – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

There were no new accounting pronouncements issued during the six months ended June 30, 2016 and through the date of this filing that we believe are applicable to or would have a material impact on the consolidated financial statements of the Company.

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Note 10 - Subsequent Events

6 Months Ended

Jun. 30, 2016

Notes

Note 10 - Subsequent Events

NOTE 10 – SUBSEQUENT EVENTS

We have evaluated events occurring after the date of our accompanying consolidated balance sheets through the date the financial statements were issued and have identified the following subsequent events that we believe require disclosure.

On July 15, 2016, we received proceeds of $50,000 from an unsecured promissory note payable to an unrelated party.  The note is payable on demand and bears interest at an annual rate of 6%.  The proceeds from the note were primarily used to retire other notes payable and related accrued interest payable.

On August 9, 2016, we received proceeds of $10,000 from an unsecured promissory note payable to an unrelated party.  The note is payable on demand and bears interest at an annual rate of 6%.

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Note 1 - Organization and Summary of Signicant Accounting Policies: Principles of Consolidation (Policies)

6 Months Ended

Jun. 30, 2016

Policies

Principles of Consolidation

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Grote Molen and BrownWick.  All significant inter-company balances and transactions have been eliminated.

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Note 1 - Organization and Summary of Signicant Accounting Policies: Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2016

Policies

Basis of Presentation

Basis of Presentation

            The accompanying condensed consolidated financial statements as of June 30, 2016 and for the three months and six months ended June 30, 2016 and 2015 are unaudited.  In the opinion of management, all adjustments have been made, consisting of normal recurring items, that are necessary to present fairly the consolidated financial position as of June 30, 2016 as well as the consolidated results of operations for the three months and six months ended June 30, 2016 and cash flows for the six months ended June 30, 2016 and 2015 in accordance with U.S. generally accepted accounting principles.  The results of operations for any interim period are not necessarily indicative of the results expected for the full year.  The interim condensed consolidated financial statements and related notes thereto should be read in conjunction with the audited consolidated financial statements and related notes thereto for the year ended December 31, 2015.

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Note 1 - Organization and Summary of Signicant Accounting Policies: Use of Estimates in The Preparation of Financial Statements (Policies)

6 Months Ended

Jun. 30, 2016

Policies

Use of Estimates in The Preparation of Financial Statements

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

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Note 1 - Organization and Summary of Signicant Accounting Policies: Earnings Per Share (Policies)

6 Months Ended

Jun. 30, 2016

Policies

Earnings Per Share

Earnings Per Share

The computation of basic earnings per common share is based on the weighted average number of shares outstanding during the period.

The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the period plus the common stock equivalents which would arise from the exercise of stock options and warrants outstanding using the treasury stock method and the average market price per share during the period.  Common stock equivalents are not included in the diluted earnings per share calculation when their effect is anti-dilutive.  We have not granted any stock options or warrants since inception of the Company.  Therefore, our basic earnings per share is the same as diluted earnings per share for the three months and six months ended June 30, 2016 and 2015.

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Note 1 - Organization and Summary of Signicant Accounting Policies: Comprehensive Income (loss) (Policies)

6 Months Ended

Jun. 30, 2016

Policies

Comprehensive Income (loss)

Comprehensive Income (Loss)

Comprehensive income (loss) is the same as net income (loss).

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Note 9 - Recently Issued Accounting Pronouncements: Recently Issued Accounting Pronouncements (Policies)

6 Months Ended

Jun. 30, 2016

Policies

Recently Issued Accounting Pronouncements

There were no new accounting pronouncements issued during the six months ended June 30, 2016 and through the date of this filing that we believe are applicable to or would have a material impact on the consolidated financial statements of the Company.

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Note 2 - Detail of Certain Balance Sheet Accounts: Schedule of Accounts, Notes, Loans and Financing Receivable (Tables)

6 Months Ended

Jun. 30, 2016

Tables/Schedules

Schedule of Accounts, Notes, Loans and Financing Receivable

	June 30, 2016	December 31, 2015
Trade accounts receivable – related parties	$                       35	$                  6,365
Employee advances	5,000	5,000
Total accounts receivable – related parties	5,035	11,365
Trade accounts receivable	25,670	27,565
	$                30,705	$                38,930

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Note 2 - Detail of Certain Balance Sheet Accounts: Property, Plant and Equipment (Tables)

6 Months Ended

Jun. 30, 2016

Tables/Schedules

Property, Plant and Equipment

	June 30, 2016	December 31, 2015
Office equipment	$                4,335	$              4,335
Warehouse equipment	16,927	16,927
Website development	2,000	2,000
Molds	150,615	150,615
	173,877	173,877
Accumulated depreciation	(42,605)	(34,189)
	$            131,272	$          139,688

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Note 2 - Detail of Certain Balance Sheet Accounts: Schedule of Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2016

Tables/Schedules

Schedule of Intangible Assets

	June 30, 2016	December 31, 2015
License – definite lived	$              10,500	$            10,500
License – indefinite lived	62,720	62,720
Patent	100	100
	73,320	73,320
Accumulated amortization	(10,500)	(10,252)
	$              62,820	$            63,068

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Note 3 - Debt: Schedule Of Notes Payable To Related Parties (Tables)

6 Months Ended

Jun. 30, 2016

Tables/Schedules

Schedule Of Notes Payable To Related Parties

	June 30, 2016	December 31, 2015
Note payable to a stockholder, due on demand, with interest at 6% per annum	$               30,000	$             30,000
Note payable to a stockholder, due on demand, with interest at 6% per annum	3,500	3,500
Note payable to a stockholder, due on demand, with interest at 6% per annum	38,000	38,000
Note payable to a stockholder, due on demand, with interest at 6% per annum	10,000	10,000
Note payable to a stockholder, due on demand, with interest at 6% per annum	5,000	5,000
Note payable to a stockholder, due on demand, with interest at 8% per annum	9,000	9,000
Note payable to a stockholder, due on demand, with interest at 8% per annum	15,000	15,000
Note payable to a stockholder, due on demand, with interest at 8% per annum	2,000	10,500
Note payable to a stockholder, due May 1, 2017, with interest at 18% per annum, payable in 12 monthly payments of $27,504	242,772
Non-interest bearing advances from stockholders, with no formal repayment terms	9,127	9,127
Total	$             364,399	$           130,127

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Note 3 - Debt: Schedule of Long-term Debt - Related Party (Tables)

6 Months Ended

Jun. 30, 2016

Tables/Schedules

Schedule of Long-term Debt - Related Party

	June 30, 2016	December 31, 2015
Note payable to a stockholder, due in monthly installments of $4,000 through February 2016, with interest at 6.97 % per annum	$                      -	$             2,943
Less current portion	-	(2,943)
Long-term portion	$                      -	$                    -

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Note 4 - Notes Payable: Schedule of Short-term Debt (Tables)

6 Months Ended

Jun. 30, 2016

Tables/Schedules

Schedule of Short-term Debt

	June 30, 2016	December 31, 2015
Note payable, due on demand, with interest at 8% per annum	$            15,000	$            15,000
Note payable, due on demand, with interest at 8% per annum	20,000	20,000
Note payable, due on demand, with interest at 8% per annum	5,000	5,000
Note payable, due on demand, with interest at 8% per annum	7,000	7,000
Note payable, due on demand, with interest at 6% per annum	15,000	15,000
Note payable, due on demand, with interest at 6% per annum	10,000	10,000
Note payable, due on demand, with interest at 6% per annum	4,000	4,000
Note payable, due on demand, with interest at 6% per annum	5,600	5,600
Note payable, due on demand, with interest at 6% per annum	10,000	10,000
Note payable, due on demand, with interest at 6% per annum	10,000	10,000
Note payable, due on demand, with interest at 6% per annum	10,000	10,000
Note payable, due on demand, with interest at 6% per annum	10,000	10,000
Note payable, due on demand, with interest at 6% per annum	2,500	2,500
Note payable, due on demand, with interest at 6% per annum	9,000	9,000
Note payable, due on demand, with interest at 6% per annum	3,000	3,000
Note payable, due on demand, with interest at 6% per annum	20,000	-
Note payable, due on demand, with interest at 6% per annum	5,000	-
Note payable, due on demand, with interest at 6% per annum	6,500	-
Total	$           167,600	$           136,100

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Note 1 - Organization and Summary of Signicant Accounting Policies (Details)	6 Months Ended
	Jun. 30, 2016
Details
Entity Incorporation, State Country Name	Nevada
Entity Incorporation, Date of Incorporation	Mar. 15, 2004

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Note 2 - Detail of Certain Balance Sheet Accounts: Schedule of Accounts, Notes, Loans and Financing Receivable (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Accounts receivable - related parties	$ 5,035	$ 11,365
Accounts receivable	25,670	27,565
Trade Accounts Receivable - Related Parties
Accounts receivable - related parties	35	6,365
Employee Advances
Accounts receivable - related parties	5,000	5,000
Accounts Receivable, Net	30,705	38,930
Trade Accounts Receivable
Accounts receivable	$ 25,670	$ 27,565

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Note 2 - Detail of Certain Balance Sheet Accounts: Property, Plant and Equipment (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Property, Plant and Equipment, Gross	$ 173,877	$ 173,877
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	(42,605)	(34,189)
Property and equipment, net	131,272	139,688
Office Equipment
Property, Plant and Equipment, Gross	4,335	4,335
Equipment
Property, Plant and Equipment, Gross	16,927	16,927
Software Development
Property, Plant and Equipment, Gross	2,000	2,000
Tools, Dies and Molds
Property, Plant and Equipment, Gross	$ 150,615	$ 150,615

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Note 2 - Detail of Certain Balance Sheet Accounts: Schedule of Intangible Assets (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Finite-Lived Intangible Assets, Gross	$ 73,320	$ 73,320
Finite-Lived Intangible Assets, Accumulated Amortization	(10,500)	(10,252)
Finite Lived Intangible Assets Net	62,820	63,068
License - definitive life
Finite-Lived Intangible Assets, Gross	10,500	10,500
License - indefinitive life
Finite-Lived Intangible Assets, Gross	62,720	62,720
Patents
Finite-Lived Intangible Assets, Gross	$ 100	$ 100

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Note 3 - Debt: Schedule Of Notes Payable To Related Parties (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Notes payable - related parties	$ 364,399	$ 130,127
Note 1
Notes payable - related parties	30,000	30,000
Note 2
Notes payable - related parties	3,500	3,500
Note 3
Notes payable - related parties	38,000	38,000
Note 4
Notes payable - related parties	10,000	10,000
Note 5
Notes payable - related parties	5,000	5,000
Note 6
Notes payable - related parties	9,000	9,000
Note 7
Notes payable - related parties	15,000	15,000
Note 8
Notes payable - related parties	2,000	10,500
Note 9
Notes payable - related parties	242,772
Note 10
Notes payable - related parties	$ 9,127	$ 9,127

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Note 3 - Debt: Schedule of Long-term Debt - Related Party (Details)	Dec. 31, 2015 USD ($)
Details
Due to Other Related Parties	$ 2,943	[1]
Current Portion of Long-Term Debt - Related Party	$ (2,943)

[1] Due in monthly installments of $4,000 through February 2016, with interest at 6.97 % per annum

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Note 3 - Debt (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Details
Interest expense - related parties	$ 6,612	$ 5,474	$ 8,532	$ 9,997
Accrued interest payable - related parties	$ 61,888		$ 61,888		$ 53,507

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Note 4 - Notes Payable: Schedule of Short-term Debt (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Notes payable	$ 167,600	$ 136,100
Note 11
Notes payable	15,000	15,000
Note 12
Notes payable	20,000	20,000
Note 13
Notes payable	5,000	5,000
Note 14
Notes payable	7,000	7,000
Note 15
Notes payable	15,000	15,000
Note 16
Notes payable	10,000	10,000
Note 17
Notes payable	4,000	4,000
Note 18
Notes payable	5,600	5,600
Note 19
Notes payable	10,000	10,000
Note 20
Notes payable	10,000	10,000
Note 21
Notes payable	10,000	10,000
Note 22
Notes payable	10,000	10,000
Note 23
Notes payable	2,500	2,500
Note 24
Notes payable	9,000	9,000
Note 25
Notes payable	3,000	$ 3,000
Note 26
Notes payable	20,000
Note 27
Notes payable	5,000
Note 28
Notes payable	$ 6,500

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Note 4 - Notes Payable (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Details
Notes Payable	$ 145,928	$ 145,139
Accrued interest payable	$ 28,085	$ 22,686

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Note 5 - Related Party Transactions (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015	Feb. 01, 2011
Details
Expense reimbursement to stockholder						$ 150
Management fee paid to related party	$ 37,950	$ 37,950	$ 75,900	$ 75,900
Sales to related parties	$ 12,960	$ 11,456	$ 16,580	$ 26,045
Percent of sales to related parties	4.00%	4.00%	3.00%	4.00%
Accounts receivable, related parties	$ 35		$ 35		$ 6,365
Accounts payable - related parties	$ 3,897		$ 3,897		$ 1,950

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Note 7 - Supplemental Statement of Cash Flows Information (Details) - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Details
Income Taxes Paid	$ 0	$ 34
Interest Paid	$ 3,006	$ 4,707

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Note 8 - Significant Customers (Details)	3 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Details
Concentration Risk, Customer	12%	9%